Patisserie Holdings plc
Admission Document
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Key Highlights
l
A leading UK branded café and casual dining group offering cakes, pastries, snacks, meals and
hot and cold drinks from 138 stores and Flour Power Bakery
l
All day trading format and affordable proposition
m
l
Favourably positioned across both the coffee shop and branded casual dining markets
m
l
average café spend per head of £8.84 (excluding Philpotts)
together forecast to be worth circa £6 billion and forecast to grow at over 8 per cent. per
annum1
Vertically integrated business model
m
almost all products made in-house
l
Broad customer appeal, supported by portfolio of five differentiated brands
l
Experienced management team with proven sector track record
l
Reported EBITDA for 52 weeks ended 30 September 2013 of £12.0 million (up 25.1 per cent.
over prior year)
m
l
pro forma EBITDA for the same period of £13.3 million, including recent Philpotts
acquisition2
99 per cent. of stores open for more than 12 months profitable on a store contribution basis
m
average payback on new store openings less than 24 months
l
Significant Group EBITDA margins of circa 20 per cent. and outstanding Group return on
capital employed of 34 per cent.
l
Over 250 potential further new sites identified in the UK by independent research
l
Rollout programme expected to be financed from internally generated cash flow
l
Maiden dividend expected to be paid in respect of the financial year ending 30 September
2015
1
2
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Source: PricewaterhouseCoopers LLP report dated December 2013 and Allegra Group Limited report dated October 2013.
Source: Unaudited proforma financial information included in Part V, prepared for illustrative purposes only.
13/05/2014 03:24
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the
contents of this document or as to the action you should take, you are recommended to seek your own personal financial advice
immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the
Financial Services and Markets Act 2000 (as amended), who specialises in advising on the acquisition of shares and other securities.
This document, which comprises an AIM admission document drawn up in accordance with the AIM Rules for Companies, has been issued
in connection with the application for admission to trading of the entire issued and to be issued ordinary share capital of the Company to
trading on AIM. This document contains no offer of transferable securities to the public within the meaning of section 102B of the FSMA, the
Act or otherwise. Accordingly, this document does not constitute a prospectus within the meaning of section 85 of the FSMA and has not been
drawn up in accordance with the Prospectus Rules or approved by the FCA or any other competent authority.
Application has been made for the ordinary share capital of the Company, issued and to be issued pursuant to the Placing, to be
admitted to trading on AIM. It is expected that Admission will become effective and that unconditional dealings will commence in the
Ordinary Shares on 19 May 2014. All dealings in Ordinary Shares prior to the commencement of unconditional dealings will be on a
“when issued” basis and of no effect if Admission does not take place and will be at the sole risk of the parties concerned. No
application has been, or is currently intended to be, made for the Ordinary Shares to be admitted to listing or trading on any other
stock exchange. The New Ordinary Shares to be issued pursuant to the Placing will, on Admission, rank pari passu in all respects with
the Existing Ordinary Shares, and will rank in full for all dividends and other distributions declared, made or paid on Ordinary
Shares after Admission.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to
larger or more established companies. AIM securities are not admitted to the Official List of the United Kingdom Listing Authority.
A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after
careful consideration and, if appropriate, consultation with an independent financial adviser. Each AIM company is required pursuant
to the AIM Rules for Companies to have a nominated adviser. The nominated adviser is required to make a declaration to the London
Stock Exchange on Admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. The London Stock
Exchange has not itself examined or approved the contents of this document.
AIM Sch
The Directors (whose names, addresses and functions appear on page 5 of this document) and the Company (whose registered office appears
on page 5 of this document) accept responsibility, both collectively and individually, for the information contained in this document and
compliance with the AIM Rules for Companies. To the best of the knowledge and belief of the Directors and the Company (who have taken
all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not
omit anything likely to affect the import of such information.
Annex I:
2(e)
1.1, 1.2
Annex III:
1.1, 1.2
Prospective investors should read this document in its entirety. An investment in the Company includes a significant degree of risk and
prospective investors should consider carefully the risk factors set out in Part II of this document.
Patisserie Holdings plc
(Incorporated under the Companies Act 2006 and registered in England and Wales with registered number 08963601)
Placing of 46,645,794 Ordinary Shares of one penny each at 170 pence per share
and
Admission to trading on AIM
Nominated Adviser and Broker
Canaccord Genuity
Share capital immediately
following Admission
Issued and fully paid
Amount
Number
Ordinary shares of one penny each
£1,000,000 100,000,000
Canaccord Genuity, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser and broker to the
Company in connection with the proposed Placing and Admission and will not be acting for any other person (including a recipient of this
document) or otherwise be responsible to any person for providing the protections afforded to clients of Canaccord Genuity or for advising
any other person in respect of the proposed Placing and Admission or any transaction, matter or arrangement referred to in this document.
Canaccord Genuity’s responsibilities as the Company’s nominated adviser and broker under the AIM Rules for Nominated Advisers are owed
solely to London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his decision to
acquire shares in the Company in reliance on any part of this document.
Apart from the responsibilities and liabilities, if any, which may be imposed on Canaccord Genuity by the FSMA or the regulatory regime
established thereunder, Canaccord Genuity does not accept any responsibility whatsoever for the contents of this document, including its
accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the
Company, the Ordinary Shares or the Placing and Admission. Canaccord Genuity accordingly disclaims all and any liability whether arising
in tort, contract or otherwise (save as referred to above) in respect of this document or any such statement.
A copy of this document is available, subject to certain restrictions relating to persons resident in any Restricted Jurisdiction, at the Company’s
website www.investors.patisserieholdings.co.uk. Neither the content of the Company’s website nor any website accessible by hyperlinks to
the Company’s website is incorporated in, or forms part of, this document.
Annex III: 10.1
IMPORTANT NOTICE
Cautionary note regarding forward-looking statements
This document includes statements that are, or may be deemed to be, “forward-looking statements”. These
forward-looking statements can be identified by the use of forward-looking terminology, including the terms
“believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should”
or, in each case, their negative or other variations or comparable terminology. These forward-looking
statements include matters that are not historical facts. They appear in a number of places throughout this
document and include statements regarding the Directors’ current intentions, beliefs or expectations
concerning, among other things, the Group’s results of operations, financial condition, liquidity, prospects,
growth, strategies and the Group’s markets.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events
and circumstances. Actual results and developments could differ materially from those expressed or implied
by the forward-looking statements. Factors that might cause such a difference, include, but are not limited
to the risk factors set out in Part II of this document.
Forward-looking statements may and often do differ materially from actual results. Any forward-looking
statements in this document are based on certain factors and assumptions, including the Directors’ current
view with respect to future events and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Group’s operations, results of operations, growth strategy and
liquidity. While the Directors consider these assumptions to be reasonable based upon information currently
available, they may prove to be incorrect. Prospective investors should therefore specifically consider the risk
factors contained in Part II of this document that could cause actual results to differ before making an
investment decision. Save as required by law or by the AIM Rules for Companies, the Company undertakes
no obligation to publicly release the results of any revisions to any forward-looking statements in this
document that may occur due to any change in the Directors’ expectations or to reflect events or
circumstances after the date of this document.
Notice to overseas persons
The distribution of this document in certain jurisdictions may be restricted by law and therefore persons into
whose possession this document comes 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.
The Ordinary Shares have not been, nor will they be, registered under the United States Securities Act of
1933, as amended, (the “US Securities Act”) and may not be offered, sold or delivered in, into or from the
United States except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the US Securities Act. Subject to certain exemptions, this document does not constitute an
offer of Ordinary Shares to any person with a registered address, or who is resident in, the United States.
There will be no public offer in the United States. Outside of the United States, the Placing Shares are being
offered in reliance on Regulation S under the US Securities Act. The Ordinary Shares will not qualify for
distribution under the relevant securities laws of Australia, Canada, the Republic of Ireland, the Republic of
South Africa or Japan, nor has any prospectus in relation to the Ordinary Shares been lodged with, or
registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance.
Accordingly, subject to certain exemptions, the Ordinary Shares may not be offered, sold, taken up, delivered
or transferred in, into or from the United States, Australia, Canada, the Republic of Ireland, the Republic of
South Africa, Japan or any other jurisdiction where to do so would constitute a breach of local securities laws
or regulations (each a “Restricted Jurisdiction”) or to or for the account or benefit of any national, resident
or citizen of a Restricted Jurisdiction. This document does not constitute an offer to issue or sell, or the
solicitation of an offer to subscribe for or purchase, any Ordinary Shares to any person in a Restricted
Jurisdiction and is not for distribution in, into or from a Restricted Jurisdiction.
The Ordinary Shares have not been approved or disapproved by the US Securities and Exchange
Commission, or any other securities commission or regulatory authority of the United States, nor have any
2
of the foregoing authorities passed upon or endorsed the merits of the offering of the Placing Shares nor have
they approved this document or confirmed the accuracy or adequacy of the information contained in this
document. Any representation to the contrary is a criminal offence in the US.
Basis on which financial information is presented
Unless otherwise indicated, financial information in this document, including the historical financial
information on the Group for the years ended 30 September 2011, 2012 and 2013 and the unaudited interim
financial information on the Group for the six months ended 31 March 2014 has been prepared in accordance
with IFRS.
Various figures and percentages in tables in this document, including financial information, have been
rounded and accordingly may not total. As a result of this rounding, the totals of data presented in this
document may vary slightly from the actual arithmetical totals of such data.
In the document, references to “pounds sterling”, “£”, “pence” and “p” are to the lawful currency of the
United Kingdom.
Market, economic and industry data
This document contains information regarding the Group’s business and the industry in which it operates and
competes, which the Company has obtained from various third party sources. Where information contained
in this document originates from a third party source, it is identified where it appears in this document
together with the name of its source. Such third party information has been accurately reproduced and, so
far as the Company is aware and is able to ascertain from information published by the relevant third party,
no facts have been omitted which would render the reproduced information inaccurate or misleading. The
Company has obtained the third party data in this document from industry studies, forecasts, reports, surveys
and other publications published or conducted by:
•
The Javelin Group Limited, Bickenhall Mansions, Bickenhall Street, London, W1U 6BP;
•
PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH; and
•
Allegra Group Limited (formerly Allegra Strategies Limited), Walkden House, 10 Melton Street,
London, NW1 2EB.
References to defined terms
Certain terms used in this document are defined and certain technical and other terms used in this document
are explained in the sections of this document under the headings “Definitions” and “Glossary”.
All times referred to in this document are, unless otherwise stated, references to London time.
3
CONTENTS
Page
DIRECTORS, SECRETARY AND ADVISERS
5
DEFINITIONS
6
GLOSSARY
9
PLACING STATISTICS
10
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
10
PART I
INFORMATION ON THE GROUP
11
PART II
RISK FACTORS
24
PART III
A.
HISTORICAL FINANCIAL INFORMATION ON THE GROUP
31
B.
ACCOUNTANTS’ REPORT ON THE HISTORICAL FINANCIAL
INFORMATION ON THE GROUP
58
PART IV
UNAUDITED INTERIM FINANCIAL INFORMATION ON THE GROUP
60
PART V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
66
PART VI
ADDITIONAL INFORMATION
68
PART VII
TERMS AND CONDITIONS OF THE PLACING
98
4
DIRECTORS, SECRETARY AND ADVISERS
Directors
Luke Oliver Johnson (Executive Chairman)
Paul Edward May (Chief Executive Officer)
Christopher (Chris) David Marsh (Finance Director)
Lee Dale Ginsberg (Non-executive Deputy Chairman, Senior
Independent Director)
James Michael Alexander Horler (Non-executive Director)
All of whose business address is at the Company’s registered
and head office
Registered and Head Office
146-158 Sarehole Road
Birmingham
B28 8DT
Company website
www.investors.patisserieholdings.co.uk
Company Secretary
Christopher David Marsh
Nominated Adviser and Broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Legal advisers to the Company
Osborne Clarke
One London Wall
London
EC2Y 5EB
Legal advisers to Canaccord
Genuity
Travers Smith LLP
10 Snow Hill
London
EC1A 2AL
Reporting Accountants
Grant Thornton UK LLP
Colmore Plaza
20 Colmore Circus
Birmingham
West Midlands
B4 6AT
Tax advisers to the Company
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Registrars
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
5
DEFINITIONS
The following definitions apply throughout this document, unless the context otherwise requires:
“Act”
the Companies Act 2006 (as amended)
“Admission”
the admission of the Ordinary Shares, issued and to be issued
pursuant to the Placing, to trading on AIM becoming effective in
accordance with Rule 6 of the AIM Rules for Companies
“AIM”
AIM, a market operated by the London Stock Exchange
“AIM Rules for Companies”
the AIM rules for companies published by the London Stock
Exchange from time to time
“AIM Rules for Nominated Advisers” the AIM rules for nominated advisers published by the London
Stock Exchange from time to time
“Articles”
the articles of association of the Company
“Board” or “Directors”
the directors of the Company, whose names are set out on page 5 of
this document
“Canaccord Genuity”
Canaccord Genuity Limited, the Company’s nominated adviser and
broker
“Company” or “Patisserie Holdings”
Patisserie Holdings plc, a company incorporated under the laws of
England and Wales with company number 08963601
“Concert Party”
for the purposes of the City Code, Luke Johnson, Ben Redmond,
RCP and Paul May
“Corporate Reorganisation”
the corporate reorganisation described in paragraph 2 of Part VI of
this document
“City Code”
the City Code on Takeovers and Mergers
“CREST”
the relevant system (as defined in the CREST Regulations) for
paperless settlement of share transfers and holding shares in
uncertificated form which is administered by Euroclear
“CREST Regulations”
the Uncertificated Securities Regulations 2001 (S.I. 2001 No. 3755)
(as amended)
“Disclosure and Transparency Rules”
the Disclosure and Transparency Rules made by the FCA pursuant
to section 73A of the FSMA
“EU”
the European Union
“Euroclear”
Euroclear UK & Ireland Limited, a company incorporated under the
laws of England and Wales
“Enlarged Share Capital”
the issued Ordinary Shares upon Admission, comprising the
Existing Ordinary Shares and the New Ordinary Shares
“ESOS”
the Company Schedule 4 Share Option Scheme, further details of
which are set out in paragraph 9 of Part VI of this document
“Executive Directors”
each of Luke Johnson, Paul May and Chris Marsh
“Existing Ordinary Shares”
the 80,733,361 Ordinary Shares in issue immediately prior to
Admission
6
“FCA”
the Financial Conduct Authority
“FSMA”
the Financial Services and Markets Act 2000 (as amended)
“Group”
prior to the Corporate Reorganisation, PAL and its subsidiary
undertakings and, with effect from the Corporate Reorganisation,
the Company and its subsidiary undertakings and “Group
Company” should be interpreted accordingly
“HMRC”
Her Majesty’s Revenue and Customs
“IFRS”
International Financial Reporting Standards
“Javelin”
The Javelin Group Ltd, a company incorporated under 03421813,
an ecommerce and omni-channel retail consultancy
“LIBOR”
London Interbank Offered Rate
“London Stock Exchange”
London Stock Exchange plc
“Long-Term Incentive Plan” or
“LTIP”
the Company Long-Term Incentive Plan to be adopted by the
Company, further details of which are set out in paragraph 9 of
Part VI of this document
“New Ordinary Shares”
the 19,266,639 new Ordinary Shares to be issued by the Company
pursuant to the Placing
“Non-executive Directors”
each of Lee Ginsberg and James Horler
“Official List”
the Official List of the FCA
“Ordinary Shares”
ordinary shares of one penny each in the capital of the Company
“Patisserie Valerie”
the patisserie and bakery business operated by the Group under the
Patisserie Valerie brand
“Philpotts”
Philpotts (Holdings) Limited, a company incorporated under the
laws of England and Wales with company number 05838607
“Philpotts Group”
Philpotts and its subsidiary, Philpotts Limited
“Philpotts Limited”
Philpotts Limited, a company incorporated under the laws of
England and Wales with company number 02001192
“PAL”
Patisserie Acquisition Limited, a company incorporated under the
laws of England and Wales with company number 06070007
(formerly named Patisserie Holdings Limited)
“Placing”
the conditional placing of the Placing Shares by Canaccord Genuity
as agent for and on behalf of the Company and the Selling
Shareholders pursuant to the terms of the Placing Agreement
“Placing Agreement”
the conditional agreement dated 14 May 2014 and made between
the (1) Company (2) Canaccord Genuity (3) the Directors and (4)
the Selling Shareholders, relating to the Placing, further details of
which are set out in paragraph 11(a) of Part VI of this document
“Placing Price”
170 pence per Placing Share
“Placing Shares”
the New Ordinary Shares to be issued by the Company and the Sale
Shares to be sold by the Selling Shareholders, in each case at the
Placing Price, pursuant to the Placing
Annex I:
21.1.1 (c)
7
“Prospectus Rules”
the prospectus rules made by the FCA pursuant to section 73A of
the FSMA
“PVHL”
Patisserie Valerie Holdings Limited, a company incorporated under
the laws of England and Wales with company number 05914839
“RCP”
Risk Capital Partners LLP, a limited liability partnership
incorporated under the laws of England and Wales with registered
number OC322005
“Registrar”
Capita Registrars Limited
“Relationship Agreement”
the relationship agreement between the Company and Luke
Johnson, further details of which are set out in paragraph 11(d) of
Part VI of this document
“Restricted Jurisdiction”
the United States, Canada, Australia, the Republic of South Africa,
the Republic of Ireland, Japan or any other country outside of the
United Kingdom where the distribution of this document may lead
to a breach of any applicable legal or regulatory requirements
“Sale Shares”
the 27,379,155 Existing Ordinary Shares being sold on behalf of the
Selling Shareholders pursuant to the Placing
“Selling Shareholders”
those persons whose names and addresses are set out in paragraph
18 of Part VI of this document
“Shareholder”
a holder of Ordinary Shares
“Share Option Schemes”
together, the ESOS and the LTIP
“UK”
the United Kingdom of Great Britain and Northern Ireland
“UK Corporate Governance Code”
the UK corporate governance code published by the Financial
Reporting Council from time to time
“UKLA” or “United Kingdom
Listing Authority”
the FCA, acting for the purposes of Part VI of the FSMA
“uncertificated” or “in
uncertificated form”
recorded on the register of Ordinary Shares as being held in
uncertificated form in CREST, entitlement to which, by virtue of the
CREST Regulations, may be transferred by means of CREST
“US”, “USA” or “United States”
the United States of America, each state thereof, its territories and
possessions and the District of Columbia and all other areas subject
to its jurisdiction
“VAT”
UK value added tax
8
GLOSSARY
The following glossary of terms applies throughout this document, unless the context otherwise requires:
“average spend per head”
total sales divided by the total number of transactions, inclusive of
value added tax. Where average spend per head is stated for the
Group, it excludes Philpotts
“CAGR”
compound annual growth rate
“deli”
delicatessen
“EBITDA”
earnings before interest, tax, depreciation and amortisation
“high end deli”
a delicatessen appealing to sophisticated and discerning customers
“payback”
profit from an investment equal to the initial outlay
“YoY”
year on year
9
PLACING STATISTICS
Placing Price
170 pence
Number of Existing Ordinary Shares
80,733,361
Number of New Ordinary Shares being issued by the Company pursuant to the Placing
19,266,639
Number of Sale Shares being sold pursuant to the Placing
27,379,155
Number of Ordinary Shares in issue following Admission
100,000,000
Percentage of Enlarged Share Capital being placed pursuant to the Placing
46.6%
Market capitalisation of the Company at the Placing Price following Admission
£170.0 million
Estimated net proceeds of the Placing receivable by the Company
ISIN number
Annex III 9.1
£32.0 million
GB00BM4NV504
SEDOL number
BM4NV50
AIM “ticker”
CAKE
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
20141
Publication of this document
14 May
Commencement of conditional dealings in the Ordinary Shares on AIM2
8.00 a.m. on 14 May
Admission and commencement of unconditional dealings in the Ordinary Shares
on AIM
8.00 a.m. on 19 May
CREST accounts credited
19 May
Despatch of definitive share certificates, where applicable, by
31 May
Notes:
1.
Each of the above dates is subject to change at the absolute discretion of the Company and Canaccord Genuity.
2.
It should be noted that, if Admission does not occur, all conditional dealings will be of no effect and any such dealings will be at
the sole risk of the parties concerned.
10
Annex III: 4.7
PART I
INFORMATION ON THE GROUP
Introduction
Patisserie Holdings is a leading UK branded café and casual dining group offering cakes, pastries, snacks,
meals and hot and cold drinks from 138 stores and the Flour Power City Bakery in the UK. It operates under
the following five differentiated brands across England and Scotland:
•
Patisserie Valerie;
•
Druckers – Vienna Patisserie;
•
Philpotts;
•
Baker & Spice; and
•
Flour Power City Bakery.
The Group is favourably positioned across both the UK coffee shop and branded casual dining markets,
which together are forecast to be worth in excess of £6 billion per annum and are forecast to grow at 8 per
cent. per annum*. The Group’s product mix and average café spend per head (£8.84) appeal to a wide range
of dining occasions and deliver strong trading throughout the day, week, month and year.
The Company operates a vertically integrated business model, with almost all products made in-house at
seven bakeries and delivered fresh daily. Products are primarily sold through stores and also a growing online
channel.
The Group’s executive management team, led by Luke Johnson, Paul May and Chris Marsh, has overseen a
period of growth from eight stores in 2006 to over 130 as at the date of this document, delivering seven years
of uninterrupted increases in revenue and EBITDA. The Group has a proven track record of successfully
opening an average of 15 new stores per annum over the three financial years ended 30 September 2013,
delivering an average 23 month payback period, and of acquiring and integrating new brands, with Philpotts
being the most recent.
99 per cent. of stores open for more than 12 months were profitable on a store contribution basis in the year
ended 30 September 2013.
The Group’s strategy is focused on continuing to deliver growth through enhancing the existing store estate
and opening new stores, funded by internally generated cash flow. Independent research conducted by
Javelin has identified over 250 further potential sites in the UK with similar characteristics to those currently
trading. The Directors consider the existing estate and openings opportunities currently available to be
significant and, consequently, acquisitions of further brands are only likely to be considered
opportunistically.
The Directors believe that the Group’s ambition and growth prospects are underpinned by a proven strategy
of new openings and vertical integration, fully owned and scalable logistics, a hub and spoke strategy
whereby central bakeries deliver high quality produce to surrounding stores, a strong team and favourable
positioning in an attractive, growing sector.
The Company is seeking to raise approximately £32.8 million (before expenses) through the Placing, the net
proceeds of which will be used, amongst other things, to repay all of the Group’s existing outstanding senior
debt of approximately £21.9 million and Shareholder loans of approximately £10.9 million. In addition, the
Placing will raise approximately £46.5 million (before expenses) for the Selling Shareholders. Further details
*Source: PricewaterhouseCoopers LLP report dated December 2013 and Allegra Group Limited report dated October 2013.
11
of the Selling Shareholders’ remaining interests in the Company are set out in paragraph 7 of Part VI of this
document.
Further details of the Placing are set out below.
The Group’s history and development
The first Patisserie Valerie café was opened on Frith Street in London’s Soho district in 1926 by Belgian-born
Madame Valerie, whose vision was to introduce continental patisserie products to the UK. During the Second
World War, the Frith Street premises were destroyed by bombing and Madame Valerie subsequently
re-established a new Patisserie Valerie store nearby on Old Compton Street, where her legacy continues to
this day.
For many years, Patisserie Valerie was run as a small group by the Scalzo family consisting of a partnership
of three brothers – Enzo, Robert and Victor, having acquired the Old Compton Street store in 1987 and
grown the group to eight sites. Victor Scalzo still remains a Shareholder in the Company and is employed by
the Group as Operations Director of Baker & Spice.
The current management team acquired a majority stake in the Group in September 2006 and has, since that
time, undertaken a successful rollout programme. Following Admission, the current management team is
expected to continue to hold a majority interest in the Company.
Since the initial acquisition and the appointment of the Executive Directors, the Group has achieved
impressive growth, both organically and through strategic acquisitions summarised as follows:
Organic expansion
The Group has opened 72 Patisserie Valerie stores in the past seven years, delivering an average 23 month
payback period for each store. New stores are typically profitable from the first month of opening.
In addition, the Group has selectively converted nine Druckers stores to the Patisserie Valerie brand; the
Directors believe that these conversions have delivered an attractive payback period.
12
Acquisitions
Under the stewardship of the Executive Directors, the Group has acquired the following four businesses,
totalling 70 stores at the date of acquisition:
•
Druckers (May 2007) – a Vienna patisserie comprising, at the time of acquisition, 42 stores and
offering a range of made-to-order gateaux, tarts, coffees and light meals, with cafés across the
Midlands and the North West of England. Since acquisition, nine Druckers stores have been
re-branded under the Patisserie Valerie brand, three leases have expired and eight non-core stores have
been closed.
•
Baker & Spice (February 2009) – a high end deli/bakery concept with four prime central London sites,
offering locally-sourced, fair trade, organic artisanal breads, cakes and deli foods.
•
Flour Power City Bakery (May 2013) – a single wholesale bakery site, offering organic, artisan baking
products including breads, cakes and pastries to restaurants and speciality food shops across London
and the Home Counties.
•
Philpotts (February 2014) – a premium sandwich and salad retailer, with a strong corporate and retail
lunch offering across 23 stores.
The Group today
As at the date of this document, the Group operates from a total of 138 stores across its brands as follows:
Patisserie Valerie (89), Druckers (22), Baker & Spice (4), and Philpotts (23), and from one bakery operated
under the Flour Power City Bakery brand. The Group’s main bakery is at its freehold head office located in
Birmingham and it has a further six bakeries located at existing stores, with capacity to support up to a
further 100 openings.
In addition to the 138 stores currently open and trading, the Group has either agreed terms or is in negotiation
with respect to a further 12 stores which are expected to be opened during this financial year and which
would bring the total number of new openings for the year ending 30 September 2014 to 20.
The market opportunity
The UK eating out market is estimated to be worth in excess of £70 billion per annum*. The Group is
favourably positioned across the two fastest growing sub-sectors of this market:
•
Coffee shops – hot drinks and cakes accounted for 66 per cent. of the Group’s revenue for the year
ended 30 September 2013. The UK branded coffee shops sector is forecast to grow from £2.3 billion
(2012) to £3.1 billion (2015), representing a 9.8 per cent. CAGR; and
•
Casual dining – food and other beverages accounted for 34 per cent. of the Group’s revenue for the
year ended 30 September 2013. The UK branded casual dining market is forecast to grow from
£3.2 billion (2012) to £3.9 billion (2015), representing a 7.0 per cent. CAGR.
The structural growth in the UK eating out market is being driven by a number of factors, including:
•
long term growth in consumer affluence, driving discretionary spend choice and, consequently,
a greater propensity to eat out;
•
busier working lifestyles, leading to increased snacking;
•
the changing nature of the UK high street reflecting retailers’ active management of their bricks and
mortar estates, freeing up potential sites; and
•
eating out becoming more widely accepted as a mainstream leisure activity.
*Source: PricewaterhouseCoopers LLP report dated December 2013 and Allegra Group Limited report dated October 2013.
13
In particular, the coffee shop and casual dining sub-sectors in which the Group operates are growing faster
than the total eating-out market for reasons including the following:
•
coffee is an increasingly regular, habitual spend;
•
coffee shops and branded casual dining establishments are becoming an increasingly important social
hub, have proved resilient during the economic downturn, and are seen as an affordable luxury; and
•
within the sub-sectors, branded coffee shops and restaurants are growing faster than independents
reflecting improved product quality and choice, the value consumers place on trusted brands and rapid
supply growth.
Accordingly, the Directors believe that the Group is well-positioned to continue offering indulgent but
affordable treats to a large and growing market which is anticipated to continue to benefit from a range of
structural growth drivers.
Competition and positioning
The coffee shop and casual dining markets remain fragmented with independents accounting for a significant
proportion of the market and relatively few operators of scale. The Directors believe that the Group’s
differentiated food-led offering, ranging from coffee and cakes to food and other beverages, means that there
are no rival chains of material scale which compete directly with the Group across its full range of
operations.
The Directors believe that the Group benefits from being favourably positioned across both the coffee shop
and casual dining markets because:
•
it combines the lower average spend all-day trading characteristics of coffee shops with the higher
average spend per head of casual dining operators at mealtimes;
•
its offering appeals to a wide range of different dining occasions and customers; and
•
its smaller kitchen compared to many casual dining operators means that new stores require less
capital investment and are able to operate in sites unsuitable for a restaurant.
These factors enable the Group to drive sales and profits to contribute to an outstanding Group return on
capital employed of 34 per cent. and significant Group EBITDA margins of 20 per cent.
As a result of its favourable positioning across fragmented markets, the Directors believe that the Group is
well placed to continue to deliver strong organic growth, with additional opportunities for potentially
attractive acquisitions of other, smaller branded groups.
Annex I:6.1
The Group’s business
Overview
The Group operates five differentiated brands each with a distinct business model and trading profile. All
brands are based on the core values of quality and value-for-money, offering customers indulgent but
affordable treats.
The Group’s all day trading format and core offering comprising premium but affordable cakes, pastries,
snacks and drinks attracts a low store average spend per head of £8.84 and appeals across a wide range of
customer demographics and occasions, generating consistent sales throughout the day, month, week and
year. Customers are offered a choice of eat in, takeaway and available to order online.
This offering is proven across a range of trading formats and locations, comprising a blend of coffee shops
and takeaway bakeries offering a variety of sweet and savoury products. The Group’s growth strategy
includes identifying and opening new stores in convenient locations on and off the High Street, in transport
terminals, retail parks and concessions. This strategy has been proven across the UK with the Company’s
current estate comprising 32 stores in London and 106 outside of London.
14
In comparison to restaurants, a new store requires lower capital expenditure reflecting its classic heritage and
design and ability to operate without a full-service kitchen. A hub and spoke model enables new stores to
access the existing Group infrastructure, thereby maximising efficiency and reducing risk. The portfolio of
differentiated brands gives the Group the ability to tailor stores to best suit their individual locations,
supporting broad customer appeal, flexibility and high rollout potential.
The Group’s business model is vertically integrated, complementing the similar operating models across all
of its five brands. The seven bakeries serve all stores with ordering and distribution centralised, reducing the
need for complex, high cost, on-site kitchens in every store. Labour and procurement is centrally managed
from the Group’s head office in Birmingham.
The Group’s brand portfolio
The Group currently operates under the following five differentiated brands, offering broad customer appeal,
flexibility and outstanding rollout potential:
Patisserie Valerie
Patisserie Valerie is an iconic brand established in Soho in 1926 offering
fine continental patisserie. Patisserie Valerie offers indulgent, freshlybaked premium cakes and pastries, high quality teas, coffees, continental
breakfasts and light meals. Formats include cafés, concessions, brasseries,
takeaways, kiosks and an online channel. Patisserie Valerie’s 89 stores are
located predominantly in London and across England, with a developing
Scottish presence, having opened new stores in Edinburgh, Glasgow and
Aberdeen since 30 September 2013. Patisserie Valerie has an average
spend per head of £9.62.
Druckers – Vienna Patisserie
Druckers – Vienna Patisserie is a Viennese cake shop and continental
coffee lounge established by Andre Drucker in 1964, offering a range of
made-to-order gateaux, tarts and patisserie, premium coffees and teas and
light meals. It operates 22 stores in England. Formats include cafés,
takeaways and online. Druckers – Vienna Patisserie has an average spend
per head of £6.33.
Philpotts
Philpotts is a premium sandwich and salad retailer, established in 1985,
with a strong corporate and retail lunch offering. Philpotts focuses on
gourmet sandwiches, salads, specialty savoury dishes, continental meats
and cheeses. Philpotts’ 23 stores include sandwich shops, online and
takeaway. Philpotts is headquartered in Darlington, County Durham with
stores located across England and Scotland. Philpotts has an average spend
per head of £4.80.
Baker & Spice
Baker & Spice is a high-end deli and bakery concept offering locally
sourced, fair trade, organic, artisanal breads, cakes and deli foods. The
offering includes premium cakes, artisan breads, cookies, treats, jams,
seasonal salads and vegetable dishes. Its four stores are located across
prime central London locations. Baker & Spice has the highest average
spend per head of the Group’s brands of £12.20.
15
Flour Power City Bakery
Flour Power City Bakery is an organic, artisan bakery and wholesaler
supplying markets and restaurants with high-quality breads, pastries, tarts
and cakes. The bakery is based in Lewisham and supplies stores in London
and the Home Counties.
The Group’s stores combine high quality, value-for-money, affordable treats with efficient service in a
visually appealing environment. The stores and the differentiated brands have been designed to offer flexible
locations that appeal to consumers for breakfast, a casual lunch, a quiet meeting in the afternoon or a relaxing
dinner. This flexibility drives all day trading which has benefitted the Group even during the traditionally
quieter mid-morning and mid-afternoon periods and therefore enable it to leverage its store footprint. The
Directors believe that this ability to trade throughout the day has been a core factor in the Group’s success
to date. The Group estimates that it serves 170,000 customers per week in stores. Average spend per head
across the Group varies throughout the day and across each of the brands but overall store average spend per
head is approximately £8.84.
The Group’s brands offer flexible menus varying by season to reflect available produce. In addition, each
store has the ability to vary its daily delivery from the Group’s bakeries allowing local managers some
flexibility to vary the food and drink offering depending on demand which helps each store to develop its
own individual character. The Group’s intention is to continue to expand its product range and the Directors
believe this will maintain the appeal of the brands to existing customers and will continue to attract a new,
wider customer base.
The flexible formats and menus across the brands leads to consistent sales throughout the day, week, month
and year as discussed in further detail below.
Group operating model
The Group has an efficient, scalable operational structure in which the Group’s brands are managed centrally
with a structure of local regional managers (responsible for up to 10 stores) with each reporting to the
Group’s head office. The Group’s estate is well maintained and operates with an experienced in-house new
openings team. A full time property director is responsible for sourcing new store sites, supported by a
longstanding third party agent network and internal designers responsible for ensuring consistency of store
look and layout.
Core to the Group’s operations is a hub and spoke model whereby central bakeries deliver high quality
handmade pastries, slices and cakes to surrounding stores. All pastries are produced in-house at seven
bakeries to rigorous standards and are delivered to stores daily. The hub and spoke model is designed to
maximise economies of scale with each bakery supporting multiple existing stores. Each store is also
equipped with a kitchen producing a combination of hot and cold food made to order. The Group’s current
hubs are capable of serving up to another 100 stores.
An in-house logistics team supports the bakeries. All deliveries are carried out by Group employees using
Group-owned vehicles, giving management full control and oversight. Ingredients are sourced from a
number of major suppliers and Group-wide procurement aims to deliver margin-enhancing purchasing
economies. Full back-up plans are in place in respect of all key suppliers.
Store locations
The Group trades strongly throughout England and Scotland, with the Patisserie Valerie and Philpotts brands
located nationwide and Druckers based in the Midlands/Northwest. Scotland has been an area of recent
growth with a bakery now open in Edinburgh and, since 30 September 2013, further stores have opened in
Edinburgh, Glasgow and Aberdeen.
16
The concentration of certain brands in some geographies is primarily as a result of the relevant brands’ roots
and heritage. A map showing the company’s store locations as at the date of this document is set out below:
Alongside a balanced geographical spread, the Group’s five brands are proven across different store formats
including high streets, retail and leisure parks, transport terminals, kiosks, brasseries and concessions.
A selection of these is set out below:
17
The Group’s strategy
Overview
The Group’s strategy is focused on both continuing to deliver growth through enhancing the existing store
estate and the opening of new stores funded by internally generated cash flow. Independent research
conducted by Javelin has identified over 250 further potential sites in the UK with similar characteristics to
those currently trading.
The Directors consider the existing store estate and openings opportunities currently available to be
significant and, consequently, acquisitions of further brands are only likely to be considered
opportunistically.
Rollout strategy
The Directors believe that the Group has significant growth potential within the UK and plan to continue to
grow the Group’s store portfolio by pursuing a measured rollout strategy. Under the current ownership and
management team, the Group’s estate has grown from eight stores in 2006 to 138 stores to date, including
72 new store openings, excluding acquisitions. The Directors believe that the processes and infrastructure
within the Group are all scalable and well supported by its hub and spoke operational model which enables
the Group to infill geographies where it is currently under-represented.
The Group has a cash generative new store model with typical capital expenditure and fit-out costing
approximately £250,000 and with an average payback period of 23 months. Stores are typically profitable
from the first month with average weekly sales of £14,000. The success of the concept in different locations
and geographies underpins the rollout potential with 99 per cent. of stores which have been open for more
than 12 months profitable on a store contribution basis and over 60 per cent. generating EBITDA in excess
of £100,000 (in each case, for the financial year ended 30 September 2013).
The Directors’ view of the Group’s roll-out potential is supported by a recent independent location planning
report which the Company commissioned from Javelin. The study analysed the catchment areas and
customer base of a number of existing Patisserie Valerie sites and assessed the potential of the Patisserie
Valerie brand alone, to expand to other locations across the UK. The study concluded that there is the
potential to more than triple the existing Patisserie Valerie store footprint in the UK, identifying over 250
potential new Patisserie Valerie sites based on their ability to meet existing average payback criteria and
achieve EBITDA generation consistent with already established stores. In addition to the sites identified by
Javelin, the Directors believe that further opportunities exist in retail parks, concessions, service stations,
transport terminals and brasseries.
The Group opened 19 new stores in the financial year ended 30 September 2013 and has opened eight stores
in the current financial year to date (excluding the Philpotts acquisition). The Group has either agreed terms
or is in negotiation with respect to a further 12 stores which are expected to be opened during the current
financial year and which would bring the total number of new openings for the year ending 30 September
2014 to 20.
Existing estate growth
Due to the rapid growth of the store portfolio the Group is expected to benefit from the full year effect of
sites opened within the last 12 months. This, combined with the ongoing integration of Philpotts, will
provide a firm base from which to drive growth within the existing estate. The Directors have identified a
range of future growth initiatives including broadening the Group’s routes to market by developing the online
delivery channel and investing in digital marketing. Costs will continue to be controlled as the Group will
look to take advantage of purchasing synergies and leveraging the existing production facilities.
Despite prices remaining unchanged for the last four years, the Group has grown during an economic
downturn and the Directors will consider conservative, steady, price increases on selected products to
enhance returns on the existing estate.
18
Summary financial information
The financial information set out below has been extracted without material adjustment from the historical
financial information on the Group for the three years ended 30 September 2011, 2012 and 2013 and the
unaudited six month interim financial information on the Group for the period ended 31 March 2014:
£m
Revenue
YoY growth
Gross profit
EBITDA
YoY growth
Margin
Operating profit
Audited
———————————————————
Year to
Year to
Year to
30 September 30 September 30 September
2011
2012
2013
40.5
31.0
8.0
19.8%
6.2
49.5
22.3%
38.3
9.6
20.3%
19.5%
7.5
Unaudited
————–
6 months to
31 March
2014
60.1
21.4%
47.0
12.0
25.0%
20.0%
9.6
35.7
26.1%
27.7
7.1
23.7%
19.8%
5.6
On a pro forma basis, including the acquisition of Philpotts, the Group generated revenue of £70 million and
EBITDA of £13.3 million (based on the Group results to 30 September 2013 and Philpotts results to 30 June
2013 which were prepared on a UK GAAP basis).
Current trading and prospects
Since 31 March 2014, the Group has traded in line with management’s expectations. In this time, the Group
has opened a further new store, under the Patisserie Valerie brand, in Shrewsbury. The Group has also either
agreed terms or is in negotiation with respect to a further 12 stores which are expected to be opened during
the current financial year and which would bring the total number of new openings for the year ending
30 September 2014 to 20.
AIM Sch 2(g)(i)
Directors
Brief biographies of the Directors are set out below. Paragraph 6 of Part VI of this document contains further
details of current and past directorships and certain other important information regarding the Directors.
Luke Oliver Johnson, aged 52 – Executive Chairman and Chairman of the Remuneration Committee
Luke has been the Executive Chairman and majority owner of the Group since 2006. He has been involved
in the hospitality industry for over 20 years: he was chairman of PizzaExpress Plc during the 1990s, was
co-founder and chairman of the Strada restaurant chain, and chairman of Giraffe restaurants for nine years
until 2013. He is currently chairman of Gail’s bakeries and Buffet Restaurants Limited.
Luke is also chairman of Neilson Active Holidays and a non-executive director of Metro Bank Plc.
Paul Edward May, aged 54 – Chief Executive Officer
Paul joined the Group as Chief Executive Officer in 2006 and since then has overseen its expansion from
eight to 138 stores. He has a highly successful entrepreneurial background which includes founding and
selling Cash a Cheque, having grown it from one to 60 stores in four years.
Paul has over 20 years of experience as a manager and owner of public and private companies and has made
investments across multiple industries, including the Greyhound Racing Association in the leisure sector.
Christopher David Marsh, aged 39 – Finance Director
Chris joined the Group as Finance Director in 2006. Chris has advised many companies over the past 15
years in both finance director and consultancy roles. His experience includes finance director roles at two
AIM quoted companies, namely Fishworks Plc and Healthy Living Centres Plc.
Chris qualified as a Chartered Accountant with Vantis Plc (formerly Morton Thornton) and also qualified as
a Chartered Tax Accountant with Ernst & Young.
19
Lee Dale Ginsberg, aged 56 – Non-executive Deputy Chairman, Senior Independent Director and
Chairman of the Audit Committee
Lee will join the Group as an independent Non-executive Director on Admission. He has been a nonexecutive director and chairman of the audit committee at Mothercare plc since 2012 and has also held the
same role at Trinity Mirror Plc since January 2014. Lee recently announced his retirement as Chief Financial
Officer of Domino’s Pizza Group plc where he held this role since joining the group in 2004. Prior to this,
Lee held the position of Group Finance Director at Health Group Holdings Limited, formerly Holmes Place
plc, where he also served as Deputy Chief Executive.
Lee has held senior positions in both the UK and South Africa and is a Chartered Accountant having
qualified with PricewaterhouseCoopers.
James Michael Alexander Horler, aged 49 – Non-executive Director
James joined the Group as a Non-executive Director in June 2013. James also currently serves as the Chief
Executive Officer of 3Sixty Restaurants Ltd and holds non-executive directorships at Cartwheel Recruitment
Ltd, Charterhouse Leisure Ltd, and La Sala Ltd.
James has extensive experience in the hospitality and leisure industry. In 1995, he joined City Centre
Restaurants Plc (now the Restaurant Group Plc) to set up Frankie & Benny’s. James’ tenure at Frankie &
Benny’s saw the chain grow to 65 trading restaurants. In 2001, James completed the management buy-in of
La Tasca restaurants (16 trading restaurants) for £28 million as Chief Executive Officer. The business was
floated on AIM in 2005 at a market capitalisation of £54m and a successful exit was achieved in 2007 for
£134m with 74 trading restaurants, both throughout the UK and North America.
Annex III:3.3
Reasons for the Placing and use of proceeds
The net proceeds of the Placing receivable by the Company are approximately £32.0 million which will be
applied to repay the Group’s outstanding indebtedness.
The Directors believe that Admission will be beneficial to the Group for the following reasons:
•
it will raise the profile of the Group;
•
it will provide the Group with a more appropriate capital structure and flexibility for further growth;
and
•
the Company will be able to issue new Ordinary Shares as consideration in connection with
acquisition opportunities.
Details of the Placing and Admission
The Company, the Directors, the Selling Shareholders and Canaccord Genuity have entered into the Placing
Agreement relating to the Placing pursuant to which, subject to certain conditions, Canaccord Genuity has
conditionally agreed to use its reasonable endeavours to procure subscribers for the New Ordinary Shares to
be issued by the Company and purchasers for the Sale Shares to be sold by the Selling Shareholders under
the Placing. The Placing has been fully underwritten. Following the issue of the New Ordinary Shares, the
Placing Shares will represent approximately 46.6 per cent. of the Enlarged Share Capital and the Existing
Ordinary Shares will represent approximately 80.7 per cent. of the Enlarged Share Capital.
The Placing will raise approximately £32.8 million (before expenses) for the Company.
The Placing Shares will be issued credited as fully paid and will, when issued, rank pari passu in all respects
with the Existing Ordinary Shares, including the right to receive all dividends and other distributions
declared paid or made after Admission.
The Placing Agreement is conditional, inter alia, upon Admission having become effective by not later than
8.00 a.m. on 19 May 2014 or such later time and date, being not later than 8.00 a.m. on 31 May 2014, as the
Company and Canaccord Genuity shall agree.
20
Annex III:4.1, 9.1
Further details of the Placing Agreement are set out in paragraph 11(a) of Part VI of this document and the
terms and conditions of the Placing are set out in Part VII of this document.
Lock-in arrangements and Relationship Agreement
AIM Sch 2(f)
Lock-in arrangements
Each of the Directors and the Selling Shareholders (together the “Covenantors”), holding, in aggregate,
91.3 per cent. of the Existing Ordinary Shares and 53.4 per cent. of the Enlarged Share Capital, has
undertaken to the Company and Canaccord Genuity (subject to certain limited exceptions including transfers
to connected persons (within the meaning of section 252 of the Act) or to trustees for their benefit and
disposals by way of acceptance of a recommended takeover offer of the entire issued share capital of the
Company) not to dispose of the Ordinary Shares held by each of them (and their connected persons) prior to
Admission (the “Restricted Shares”) following Admission or any other shares which may accrue to them
as a result of their holding of Ordinary Shares (or any interest in them or in respect of them) at any time prior
to the date 12 months from the date of this document (the “Lock-in Period”) without the prior written
consent of Canaccord Genuity.
Furthermore, each of the Covenantors has also undertaken to the Company and Canaccord Genuity not to
dispose of the Restricted Shares for the period of 12 months following the expiry of the Lock-in Period
otherwise than through Canaccord Genuity.
Further details of these arrangements are set out in paragraph 11(a) of Part VI of this document.
Relationship Agreement
In light of Luke Johnson’s aggregate shareholding in the Enlarged Share Capital immediately following
Admission, as set out in paragraph 7 of Part VI of this document, Luke Johnson has entered into the
Relationship Agreement in order to regulate the relationship between him and the Company.
Further details of these arrangements are set out in paragraph 11(d) of Part VI of this document.
Annex I:16.4
Corporate Governance
The Directors recognise the value and importance of high standards of corporate governance and intend,
given the Company’s size and the constitution of the Board, to comply with the principal provisions of the
UK Corporate Governance Code. The Company also proposes to follow the recommendations on corporate
governance of the Quoted Companies Alliance (“QCA”) for companies with shares traded on AIM.
On Admission, the Company will not fully comply with the UK Corporate Governance Code or adhere to
the recommendations of the QCA Guidelines as the Board will not have an independent chairman or a
nomination committee. Luke Johnson will be Executive Chairman and will be beneficially interested in 42.7
per cent. of the Enlarged Share Capital, and therefore is not considered to be independent. The Board
believes that Mr Johnson’s position as Executive Chairman and his knowledge of the hospitality sector is
strategically important to the future development of the Group. In addition, it is the Board’s intention to
appoint an additional independent non-executive director in due course.
With effect from Admission, the Board has established an audit committee (the “Audit Committee”) and a
remuneration committee (the “Remuneration Committee”).
The Audit Committee will be chaired by Lee Ginsberg. Its other members will be James Horler and Luke
Johnson. The Audit Committee will have primary responsibility for monitoring the quality of internal
controls and ensuring that the financial performance of the Company is properly measured and reported on.
It will receive and review reports from the Company’s management and auditors relating to the interim and
annual accounts and the accounting and internal control systems in use throughout the Group. The Audit
Committee will meet at least three times a year and will have unrestricted access to the Company’s auditors.
The Remuneration Committee will be chaired by Luke Johnson. Its other members will be Lee Ginsberg and
James Horler. The Remuneration Committee will review the performance of the Executive Directors and
make recommendations to the Board on matters relating to their remuneration and terms of employment. The
21
Remuneration Committee will also make recommendations to the Board on proposals for the granting of
share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in
operation from time to time. The remuneration and terms and conditions of appointment of the non-executive
directors of the Company will be set by the Board.
The Directors intend to comply, and procure compliance with, Rule 21 of the AIM Rules for Companies
relating to dealings by directors and other applicable employees in the Company’s securities and, to this end,
the Company has adopted an appropriate share dealing code.
Dividend policy
The Company intends to pursue a progressive dividend policy for Shareholders. It is currently anticipated
that a dividend will be declared by the Directors in respect of the financial year ending 30 September 2015.
Annex I:20.7
Share Option Schemes
The Directors believe that the success of the Group will depend to a significant degree on the future
performance of the Group’s senior management team. The Directors also recognise the importance of
ensuring that all employees are well motivated and identify closely with the success of the Group.
Accordingly, the Company has established the Long-Term Incentive Plan and intends to adopt the ESOS
shortly after Admission.
Further details of the Share Option Schemes are set out in paragraph 9 of Part VI of this document. Details
of awards granted to the Directors are set out in paragraph 7 of Part VI of this document.
Taxation
Information regarding taxation in relation to the Placing and Admission is set out in paragraph 10 in Part VI
of this document. If you are in any doubt as to your tax position you should consult your own independent
financial adviser immediately.
The City Code on Takeovers and Mergers
The Company is incorporated in the UK and its Ordinary Shares will be admitted to trading on AIM.
Accordingly, the City Code applies to the Company.
Under Rule 9 of the City Code (“Rule 9”), any person who acquires an interest in shares (as defined in the
City Code), whether by a series of transactions over a period of time or not, which (taken together with any
interest in shares held or acquired by persons acting in concert (as defined in the City Code) with him) in
aggregate, 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 on Takeovers and Mergers (the “Panel”) to make a general offer
to all of the remaining shareholders to acquire their shares.
Similarly, when any person, together with persons acting in concert with him, is interested in shares 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, a general offer will normally be required if any further
interests in shares are acquired by any such person which increases the percentage of shares carrying voting
rights in which he is interested.
An offer under Rule 9 must be in cash or be accompanied by a cash alternative and 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 who, pursuant to an agreement or understanding
(whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company
or to frustrate the successful outcome of an offer for a company. “Control” means holding, or aggregate
holdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether
the holding or holdings give de facto control.
22
The Panel considers Luke Johnson, Paul May, Ben Redmond (a partner and co-founder of RCP) and RCP as
persons acting in concert for the purposes of the City Code.
On Admission, the Concert Party will hold 50,219,780 Ordinary Shares, in aggregate, representing 50.2 per
cent. of the Enlarged Share Capital. Luke Johnson will personally hold 42,668,004 Ordinary Shares,
representing 42.7 per cent. of the Enlarged Share Capital.
Since, on Admission, the Concert Party will together hold more than 50 per cent. of the Enlarged Share
Capital, it will be free (subject as set out below and subject to Note 4 on Rule 9.1 and subject to Panel
consent) to increase its aggregate holding of Ordinary Shares without any obligation to make a general offer
for the Company under Rule 9.
Notwithstanding the above, however, Luke Johnson will not individually be able to acquire any additional
interests in Ordinary Shares without triggering an obligation under Rule 9 of the City Code or by obtaining
Panel consent.
Further details concerning the shareholdings of the Concert Party are set out in paragraph 7 of Part VI of this
document.
Admission, Settlement and Dealings
Application has been made to the London Stock Exchange for all of the Ordinary Shares, issued and to be
issued pursuant to the Placing, to be admitted to trading on AIM. It is expected that conditional dealings in
the Ordinary Shares (on a “when issued” basis) will commence on AIM on 14 May 2014. It is expected that
Admission will become effective and that unconditional dealings in the Ordinary Shares will commence on
the London Stock Exchange at 8.00 a.m. on 19 May 2014. Dealings on the London Stock Exchange before
Admission will only be settled if Admission takes place. All dealings before the commencement of
unconditional dealings will be of no effect if Admission does not take place and such dealings will be at the
sole risk of the parties concerned.
No temporary documents of title will be issued. All documents sent by or to a placee, or at his direction, will
be sent through the post at the placee’s risk. Pending the despatch of definitive share certificates, instruments
of transfer will be certified against the register of members of the Company.
The Company has applied for the Ordinary Shares to be admitted to CREST and it is expected that the
Ordinary Shares will be so admitted and accordingly enabled for settlement in CREST on the date of
Admission. Accordingly, settlement of transactions in Ordinary Shares following Admission may take place
within the CREST system if any individual Shareholder so wishes provided such person is a “system
member” (as defined in the CREST Regulations) in relation to CREST.
CREST is a paperless settlement system enabling securities to be evidenced otherwise than by certificate and
transferred otherwise than by written instrument in accordance with the CREST Regulations. The Articles
permit the holding of Ordinary Shares in uncertificated form in accordance with the CREST Regulations.
CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share
certificates will be able to do so.
Further information
Your attention is drawn to Part II of this document which contains certain risk factors relating to any
investment in the Company and to Parts III to VII of this document which contain further additional
information on the Group and the Placing.
23
PART II
Annex I: 4
RISK FACTORS
Any investment in the Ordinary Shares is subject to a number of risks. Before making an investment
decision with respect to the Ordinary Shares, prospective investors should carefully consider the risks
associated with an investment in the Company, the Group’s business and the industry in which the
Group operates, in addition to all of the other information set out in this document and, in particular,
those risks described below.
If any of the circumstances identified in the risk factors were to materialise, the Group’s business,
financial condition, results of operations and future prospects could be adversely affected and
investors may lose all or part of their investment. Certain risks of which the Directors are aware at the
date of this document and which they consider material to prospective investors are set out in the risk
factors below; however, further risks and uncertainties relating to the Group which are not currently
known to the Directors, or that the Directors do not currently deem material, may also have an
adverse effect on the Group’s business, financial condition, results of operations and future prospects.
If this occurs, the price of the Ordinary Shares may decline and investors may lose all or part of their
investment. An investment in the Group may not be suitable for all recipients of this document.
Potential investors are therefore strongly recommended to consult an independent financial adviser
authorised under the FSMA and who specialises in advising upon the acquisition of shares and other
securities before making a decision to invest.
Risks relating to the Group’s business
The Group’s market share and business position may be adversely affected by economic, political and
market factors beyond the Group’s control
Many factors affect the level of customer spending in the overall eating out market and the casual dining
market, including interest rates, currency exchange rates, recession, inflation, deflation, political uncertainty,
the availability of customer credit, taxation, stock market performance, unemployment and other matters that
influence customer confidence. While the Directors believe that a number of prevailing trends benefit the
Group’s business (including an increasingly wealthy population with greater disposable income and a greater
focus on the value of leisure time), the performance of the Group may decline during recessionary periods
or in other periods where one or more macro-economic factors, or potential macro-economic factors,
negatively affect the level of customer spending or the amount that customers spend on eating out.
The Group competes in the United Kingdom against other national and international café and restaurant
chains, as well as many regional and local businesses. The Group may experience increased competition
from existing or new companies in the casual dining segment, which might require the Group to grow its
business in order to maintain its market share. If the Group is unable to maintain its competitive position, it
could experience downward pressure on prices, lower demand for its products, reduced margins, an inability
to take advantage of new business opportunities and a loss of market share, all of which would have an
adverse impact on the Group’s business, financial and other conditions, profitability and results of
operations.
The Group also competes on a broader scale with casual dining and other international, national, regional
and local businesses. The overall eating out market, and the casual dining market in particular, are highly
competitive with respect to food quality, price, service, convenience and concept.
The Group also competes with other businesses for management, hourly employees and suitable real estate
sites. Difficulty in securing suitable management, hourly employees and sites for new stores would have an
adverse impact on the Group’s business, financial and other conditions, profitability and results of
operations.
24
Annex III: 2
The eating out market is affected by customer preferences and perceptions. Changes in these preferences and
perceptions may lessen the demand for the Group’s products, which could reduce the Group’s turnover and
harm its business.
Food service businesses are affected by changes in customer tastes, national, regional and local economic
conditions and demographic trends. The Group is primarily dependent on a limited selection of products. If
customer demand for patisserie products should decrease due to dietary preferences or for other reasons, this
could reduce the Group’s turnover and harm its business. While the premium patisserie offering on which
the Group depends has been consistently popular over a long period of time, there can be no assurance that
changes in customer preference will not affect its appeal in the future, which could reduce the Group’s
turnover and harm its business.
A failure to implement the Group’s strategy of growing its estate may have an adverse impact on its
business, financial and other conditions, profitability and results of operations
The Group intends to pursue further store openings on a selective basis in under-served areas which offer the
Group growth opportunities. However, there is no guarantee that the Group will be able to locate or secure
a sufficient number of appropriate sites to meet its growth and financial targets. It is possible each site may
take some time from its opening date to reach profitable operating levels due to inefficiencies typically
associated with new sites, including lack of awareness, competition, the need to hire and train sufficient staff
and other factors.
The Company cannot guarantee that the Group will be able to achieve its expansion goals or that the new
sites will be operated profitably. This may adversely impact on the Group’s ability to increase turnover and
operating profits and may also damage the Group’s brands. The success of the planned expansion will
depend on numerous factors, many of which are beyond the Company’s control, including the following:
•
the ability to identify and secure available and suitable sites on an economic basis;
•
the ability to secure all necessary operating approvals and licences in a timely manner and in a
satisfactory form;
•
the extent of the competition for sites and in markets in new locations generally;
•
the ability to conclude a lease on acceptable terms and costs associated with this;
•
the ability to fit out new sites at an economic cost;
•
delays in the timely development of all sites; and
•
general economic conditions.
In addition, the success of the Group is significantly influenced by location and there can be no assurance
that the Group will be able to identify sufficient sites in its target locations to fully implement its growth
strategy, or be able to identify and secure additional suitable locations as demographic and economic patterns
change.
Increasing labour, food and other costs could adversely affect the Group’s profitability
An increase in any of the Group’s operating costs may negatively affect the Group’s profitability. Factors
such as increased labour and employee benefit costs, food costs, petrol and delivery costs and inflation may
adversely affect the Group’s operating costs. Most of the factors affecting costs are beyond the Group’s
control and, in many cases, the Group may not be able to pass along these increased costs to its customers.
Most ingredients used in the Group’s cakes and patisserie products, including flour and sugar are
commodities and therefore subject to price fluctuations as a result of seasonality, weather, demand and other
factors. The Group has no control over fluctuations in the price and availability of ingredients or variations
in products caused by these factors. The Group typically does not rely on written contracts or long-term
arrangements with its suppliers, as is customary for the industry in which the Group operates. Although the
Group has not experienced significant problems with its suppliers in the past, its suppliers may implement
25
significant price increases or may not meet the Group’s requirements in a timely fashion, if at all, and
alternative supplies may not be available, or available on commercially acceptable terms.
In addition, the Group is dependent upon an available labour pool of employees, many of whom are hourly
employees whose pay is subject to the UK national minimum wage. Past increases in the minimum wage
have increased the Group’s labour costs. The main hourly minimum wage rate for workers aged 22 and over
increased from £6.19 to £6.31 on 1 October 2013, which increased the Group’s operating expenses. Under
the National Insurance Contributions and Statutory Payments Act 2004, employers must contribute to the
National Insurance payments on behalf of each employee earning above a designated threshold. An increase
in the wages or employers’ mandatory National Insurance Contributions will increase the amounts the Group
contributes on behalf of its employees. A shortage in the labour pool or other general inflationary pressures
or changes will also increase the Group’s labour costs. Any increases in food, labour and other costs could
have a material adverse effect on the Group’s business, financial and other conditions, profitability and
results of operations.
Key personnel
The Group depends on the services of its key management personnel and, in particular, on the services of
Luke Johnson, Paul May and Chris Marsh. The loss of the services of any of these persons could have a
material adverse effect on the Group’s business, financial condition or results of operations. In addition, as
the Group’s business expands, it may need to add new personnel to service the Group’s increased level of
business. The Group’s success is also highly dependent on its continuing ability to identify, hire, train,
motivate and retain key management. Competition for such personnel in the sector can be intense and the
Group’s personnel are frequently targeted by other companies for recruitment, and the Group cannot give
assurances that it will be able to attract or retain such personnel in the future. The Group’s inability to attract
and retain the necessary management may adversely affect its future growth and profitability.
It may also be necessary for the Group to increase the level of remuneration paid to existing or new
employees to such a degree that its operating expenses could be materially increased.
The Group’s stores are leased. Increases in rental payments or the early termination of any of the Group’s
leases, or the failure to renew or extend the terms of any of the Group’s leases or the default by licensees
or assignees, could adversely affect the Group’s profitability
The Group’s operating performance depends in part on its ability to secure leases in desired locations at rents
it believes to be reasonable. The Group currently leases almost all of its stores for a typical term of 15 years
or fewer.
The leases for the Group’s stores generally require that their annual rent be reviewed on an “upwards-only”
basis. If agreement on “open market” rent cannot be reached between the two parties, the matter is referred
to an independent surveyor, who determines the premises’ open-market rent. The annual rent for the
premises then becomes the greater of such open market rental value and the previous contractually agreed
rent. As a result, the Group is unable to predict or control the amount of any future increases in its rental
costs arising from the review of rents it pays for its stores and is unable to benefit from any decline in the
open market rental value of its stores. Any substantial increase in the rent paid by the Group on its stores
could adversely affect the Group’s business, financial and other conditions, profitability and results of
operations.
Each lease agreement also provides that the lessor may terminate the lease for a number of reasons, including
if the Group defaults in any payment of rent or taxes or if the Group breaches any covenant or agreement in
the lease. Termination of any of the Group’s leases could harm the results of the Group’s operations.
Although the Group believes that it will be able to renew its existing leases, it can offer no assurances that
it will succeed in obtaining extensions in the future, or that any such extensions will be at rental rates that
the Group believes to be reasonable.
At the expiry or termination of its leases, the Group may have to pay sums of money to its landlords in lieu
of carrying out works of repair and/or redecoration of the premises as required under the leases. This would
adversely affect the Group’s business, financial and other conditions, profitability and results of operations.
26
The Group’s failure to comply with existing or increased regulations, or the introduction of changes to
existing regulations, could adversely affect its business, financial and other conditions, profitability and
results of operations
The Group is subject to significant government regulation at a national and local level, including various
health, sanitation, planning permission, licensing, fire and safety standards. The Group is also subject to
various UK and EU regulations governing the Group’s relationship with employees, including such matters
as minimum wage requirements, the treatment of part-time workers, employers’ National Insurance
Contributions, overtime and other working conditions. A failure to comply with one or more regulations
could result in the imposition of sanctions, including the closing of facilities for an indeterminate period of
time or third party litigation, any of which could have a material adverse effect on the Group’s business,
financial and other conditions, profitability and results of operations.
Alcoholic beverage control regulations relate to numerous aspects of a store’s operations, including the hours
of operation, advertising, wholesale purchasing, inventory control and the handling, storage and dispensing
of alcoholic beverages. Each of the Group’s stores that sell alcoholic beverages is therefore subject to
licensing and regulation by a number of governmental authorities, including the Department for Culture,
Media and Sport, pursuant to the UK Licensing Act 2003 and related laws and regulations. Changes to
licensing and regulation could cause the Group to incur additional costs which the Group may not be able to
pass on to its customers or which may lead to higher prices being charged to customers making eating out
less attractive and leading to a decline in sales. The failure to obtain or renew licences for the sale of
alcoholic beverages could have an adverse effect on the Group’s business and financial performance.
Additionally, a change in the VAT or other tax regimes applicable to the Group’s business may result in
uncertainty, disruption to operations and/or implementation costs which the Group may not be able to pass
on to its customers or which may lead to higher prices being charged to customers, making eating out less
attractive and leading to a decline in sales.
The Group is dependent upon the timely delivery of fresh ingredients by its suppliers and distributors, the
failure of which could have an adverse effect on its business, financial and other conditions, profitability
and results of operations
The Group’s store operations are dependent on timely deliveries of fresh ingredients, including fresh produce
and dairy products. The Group depends substantially on third party distributors and suppliers for such
deliveries. While, historically, its suppliers have supplied the Group with an adequate volume of ingredients,
in the future they may be unable to provide the Group with a volume of ingredients sufficient for the Group
to meet customer demand for its products. If the quality of the Group’s suppliers’ ingredients declines, the
Group may not be able to obtain replacement quality ingredients on commercially agreeable terms in the
open market. If the Group’s food quality declines due to the lower quality of its ingredients or due to
interruptions in the flow of fresh ingredients and similar factors, customer traffic may decline and negatively
affect the Group’s results. In the event of a major disruption to the timely supply of quality, fresh ingredients,
alternative suppliers of food and/or distribution services (as the case may be) may only be available at higher
prices.
Negative publicity relating to one of the Group’s stores or to the Group’s merchandising activities could
reduce turnover at some or all of the Group’s other stores
The Group may, from time to time, receive negative publicity relating to food quality, store facilities, health
inspection scores, employee relationships, food contamination or other matters at one or more of its stores.
Adverse publicity may negatively affect the Group, regardless of whether the allegations are valid, whether
they are limited to just a single location or whether the Group is at fault. The negative impact of adverse
publicity relating to one restaurant may extend far beyond the restaurant involved to affect some or all of the
Group’s other stores.
27
Food-borne illness incidents could reduce the Group’s turnover or subject the Group to third party
litigation
The Group cannot guarantee that its internal controls and training will be fully effective in preventing all
food-borne illnesses. Furthermore, the Group relies on third party food processors, which introduces
additional requirements in monitoring food safety compliance and may increase the risk that food-borne
illness could affect multiple locations rather than single stores. Some food-borne illness incidents could be
caused by third party food suppliers and transporters outside of the Group’s control. New illnesses resistant
to the Group’s current precautions may develop in the future, or diseases with long incubation periods could
arise that could give rise to claims or allegations on a retroactive basis. One or more instances of food-borne
illness in one of the Group’s stores could negatively affect the Group’s turnover and conceivably have an
impact on all of its stores if highly publicised. If any person becomes ill, or alleges becoming ill, as a result
of eating food prepared by the Group, the Group may be liable for damages, or be subject to regulatory action
or adverse publicity (as described above). This risk exists even if it were later determined that the illness was
wrongly attributed to one of the Group’s stores.
Any prolonged disruption in the operations of any of the Group’s bakery and distribution centres could
harm the Group’s business, financial and other conditions, profitability and results of operations
The Group’s bakery facilities service all the Group’s stores. As a result, any prolonged disruption in the
operations of these facilities, whether due to technical or labour difficulties, destruction or damage to the
facility, real estate or other reasons, could result in increased costs and reduced turnover and the Group’s
profitability and prospects could be harmed. However, due to the hub and spoke model operated by the
Group, in the event that one of the Group’s bakery and distribution facilities is closed, the Group’s other
‘hubs’ have capacity to prepare products and to distribute them on the closed facility’s behalf.
The Group may not be able to protect its intellectual property adequately, which could harm the value of
its brands and branded products and adversely affect its business, financial and other conditions,
profitability and results of operations
The Group depends in large part on its brands and believes that they are very important to its business. The
Group relies on its trade marks to protect its brands. The success of the Group’s business depends, in part,
on its continued ability to use its existing trade marks in order to increase brand awareness. Although the
Group has registered for trade mark protection in the United Kingdom, the “Philpotts”, “Lusori”, “Spice
Bakery”, “Patisserie Valerie” and “Druckers” brand names, trade marks and logos that distinguish its
products, the actions taken by the Group may be inadequate to prevent imitation of the Group’s brands and
concepts by others or to prevent others from claiming violations of their trade marks and proprietary rights
by the Group. If the Group’s efforts to protect its intellectual property prove to be inadequate, the value of
the Group’s brands could be harmed, which could adversely affect the Group’s business, financial and other
conditions, profitability and results of operations.
The Group’s store sales are subject to seasonality, tourism and job market trends, terrorism and major
world events
The Group’s store sales volume experiences moderate seasonal fluctuations. Weather conditions can have an
influence on the Group’s business. Occupancy and other operating costs, which remain relatively constant,
have a disproportionately greater negative effect on operating results during periods with lower restaurant
turnover.
The Group’s stores located in central London are affected by various factors. Stores, particularly those in
tourist areas (for example, the West End), are affected by the number of tourists who visit London, which in
turn is affected by major world events, including war and terrorist attacks; and stores in retail centres are
affected by levels of retail activity. Accordingly, a decrease in the number of tourists who visit London, or
general retail activity, could negatively affect the Group’s business, financial and other conditions,
profitability and results of operations. The Group’s business could also be affected by other major world
events, such as the widespread outbreak of illness, which could reduce levels of tourism and other economic
activity.
28
The Group may experience a higher turnover rate for its restaurant managers, which could adversely
affect the Group’s business, financial and other conditions, profitability and results of operations
The individual success of each of the Group’s stores substantially depends on the Group’s ability to hire and
retain store managers and personnel. The Group incurs significant costs from the hiring and training of new
managers and other personnel and a high turnover rate for such personnel makes it difficult to ensure the
consistency of the Group’s food and customer service. Any significant increase in the turnover rate for its
store managers could increase the costs the Group incurs from hiring and training managers and diminish
the quality and consistency of the Group’s stores’ food and customer service. A substantial increase in the
costs of training store managers and personnel or a decrease in the quality and consistency of the Group’s
food and customer service could adversely affect the Group’s business, financial and other conditions,
profitability, and results of operations.
Data protection risk
Failure to comply with data protection legislation may leave the Group open to criminal and civil sanctions.
System failures and breaches of security
The successful operation of the Group’s business depends upon maintaining the integrity of the Group’s
computer, communication and information technology systems. However, these systems and operations are
vulnerable to damage, breakdown or interruption from events which are beyond the Group’s control, such as
fire, flood and other natural disasters; power loss or telecommunications or data network failures; improper
or negligent operation of the Group’s system by employees, or unauthorised physical or electronic access;
and interruptions to internet system integrity generally as a result of cyber attacks by computer hackers or
viruses or other types of security breaches. Any such damage or interruption could cause significant
disruption to the operations of the Group and its ability to trade. This could be harmful to the Group’s
business, financial condition and reputation and could deter current or potential customers from using its
services.
There can be no guarantee that the Group’s security measures in relation to its computer, communication and
information systems will protect it from all potential breaches of security, and any such breach of security
could have an adverse effect on the Group’s business, results of operations and/or financial condition.
Financial resources
In the opinion of the Directors, having made due and careful enquiry, taking into account the bank and other
facilities available to the Group and the net proceeds of the Placing, the working capital available to the
Group will be sufficient for its present requirements, that is for at least the next 12 months from the date of
Admission. The Group’s future capital requirements will, however, depend on many factors, including its
ability to expand its sales, cash flow and control of costs and the execution of its store roll-out programme
and any material acquisitions. In the future, the Group may require additional funds and may attempt to raise
additional funds through equity or debt financings or from other sources. Any additional equity financing
may be dilutive to holders of Ordinary Shares and any debt financing, if available, may require restrictions
to be placed on the Group’s future financing and operating activities. The Group may be unable to obtain
additional financing on acceptable terms or at all if market and economic conditions, the financial condition
or operating performance of the Group or investor sentiment (whether towards the Group in particular or
towards the market sector in which the Group operates) are unfavourable. The Group’s inability to raise
additional funding may hinder its ability to grow in the future or to maintain its existing levels of operation.
Risks relating to the Ordinary Shares
Investment in AIM securities
An investment in shares traded on AIM is perceived to involve a higher degree of risk and to be less liquid
than investment in companies whose shares are listed on the Official List and traded on the London Stock
Exchange’s main market for listed securities. An investment in Ordinary Shares may be difficult to realise.
Prospective investors should be aware that the value of Ordinary Shares may go down as well as up and that
29
the market price of the Ordinary Shares may not reflect the underlying value of the Group. Investors may,
therefore, realise less than, or lose all of, their investment.
Potentially volatile share price and liquidity
The share price of quoted emerging companies can be highly volatile and shareholdings illiquid. The price
at which the Ordinary Shares are quoted and the price which investors may realise for their Ordinary Shares
may be influenced by a significant number of factors, some specific to the Group and its operations and some
which affect quoted companies generally. These factors could include the performance of the Group, large
purchases or sales of Ordinary Shares, legislative changes and general, economic, political or regulatory
conditions.
Share price effect of sales of Ordinary Shares
The market price of Ordinary Shares could decline significantly as a result of any sales of Ordinary Shares
by certain Shareholders following the expiry of the relevant lock-in periods, details of which are set out in
Parts I and VI of this document, or the expectation or belief that sales of such Ordinary Shares may occur.
Interests of major Shareholders
On Admission, the Concert Party will hold, in aggregate, 50.2 per cent. of the Enlarged Share Capital. These
Shareholders will be able to exercise significant influence over the Company and the Group’s operations,
business strategy and those corporate actions that require the approval of the Shareholders. In order to
regulate the relationship between Luke Johnson and the Company, Luke Johnson has, however, entered into
the Relationship Agreement, details of which are set out in Parts I and VI of this document.
30
PART III
A. HISTORICAL FINANCIAL INFORMATION ON THE GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance expense
Profit before income tax
Income tax expense
7
3/4
8
Profit after tax and total comprehensive income
for the year attributable to equity holders
Earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
Year to
30 September
2011
£’000
40,483
(9,444)
––––––––
31,039
(24,846)
––––––––
6,193
(1,253)
––––––––
4,940
(1,492)
––––––––
Year to
30 September
2012
£’000
49,511
(11,192)
––––––––
38,319
(30,847)
––––––––
7,472
(1,232)
––––––––
6,240
(1,587)
––––––––
Year to
30 September
2013
£’000
60,112
(13,148)
––––––––
46,964
(37,379)
––––––––
9,585
(1,356)
––––––––
8,229
(1,427)
––––––––
––––––––
3,448
––––––––
4,653
––––––––
6,802
241.55
240.55
325.97
310.20
476.52
415.96
10
The notes on pages 35 to 57 are an integral part of the financial information.
31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes
30 September
2011
£’000
30 September
2012
£’000
30 September
2013
£’000
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
11
12
13,130
14,426
––––––––
27,556
13,130
17,973
––––––––
31,103
13,759
22,073
––––––––
35,832
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
13
14
15
3,549
1,413
–
––––––––
4,962
––––––––
32,518
4,022
1,942
109
––––––––
6,073
––––––––
37,176
5,453
2,684
130
––––––––
8,267
––––––––
44,099
20
1
499
51
––––––––
551
––––––––
1
499
4,704
––––––––
5,204
––––––––
1
499
11,506
––––––––
12,006
––––––––
17
18
23,506
842
––––––––
24,348
23,664
777
––––––––
24,441
24,530
988
––––––––
25,518
16
17
3,722
2,312
1,585
––––––––
7,619
––––––––
31,967
––––––––
32,518
3,445
2,641
1,445
––––––––
7,531
––––––––
31,972
––––––––
37,176
4,056
2,254
265
––––––––
6,575
––––––––
32,093
––––––––
44,099
Total assets
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to
the equity holders
Ordinary share capital
Share premium
Retained earnings
––––––––
Total equity
Non-current liabilities
Borrowings
Deferred tax
Current liabilities
Trade and other payables
Borrowings
Corporation tax
Total liabilities
Total equity and liabilities
––––––––
The notes on pages 35 to 57 are an integral part of the financial information.
32
––––––––
––––––––
––––––––
––––––––
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 1 October 2010
Profit and total comprehensive income
for the year
Transactions with owners
As at 30 September 2011
Result and total comprehensive profit
for the year
Transactions with owners
As at 30 September 2012
Result and total comprehensive profit
for the year
Transactions with owners
As at 30 September 2013
Share
capital
£’000
Share
premium
£’000
1
499
–
––––––––
–
–
––––––––
1
–
––––––––
–
–
––––––––
499
3,448
––––––––
3,448
–
––––––––
51
3,448
––––––––
3,448
–
––––––––
551
–
––––––––
–
–
––––––––
1
–
––––––––
–
–
––––––––
499
4,653
––––––––
4,653
–
––––––––
4,704
4,653
––––––––
4,653
–
––––––––
5,204
–
––––––––
–
–
––––––––
1
–
––––––––
–
–
––––––––
499
6,802
––––––––
6,802
–
––––––––
11,506
6,802
––––––––
6,802
–
––––––––
12,006
––––––––
––––––––
The notes on pages 35 to 57 are an integral part of the financial information.
33
Retained
earnings
£’000
(3,397)
––––––––
Total
£’000
(2,897)
––––––––
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes
Cash flows from operating activities
Profit before income tax
Adjusted by:
Depreciation
Net finance charges in the income statement
Impairment charge
Changes in working capital:
Inventory
Trade and other receivables
Trade and other payables
Cash generated from operations
Interest paid
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Acquisition of Flour Power City Ltd
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of finance lease capital
Repayment of borrowings
Net cash(used in)/generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning
of the year
Cash and cash equivalents at the end of the year
15
Year to
30 September
2011
£’000
Year to
30 September
2012
£’000
Year to
30 September
2013
£’000
4,940
6,240
8,229
1,684
1,253
130
2,032
1,232
130
2,459
1,356
–
(375)
(1,037)
103
––––––––
6,698
(804)
(559)
––––––––
5,335
––––––––
(528)
(473)
(276)
––––––––
8,357
(784)
(1,793)
––––––––
5,780
––––––––
(721)
(1,028)
186
––––––––
10,481
(907)
(2,395)
––––––––
7,179
––––––––
–
(4,188)
––––––––
(4,188)
––––––––
–
(5,708)
––––––––
(5,708)
––––––––
(1,070)
(6,145)
––––––––
(7,215)
––––––––
–
(2)
(1,418)
––––––––
(1,420)
––––––––
(273)
1,092
–
(291)
––––––––
801
––––––––
871
1,017
–
(2,022)
––––––––
(1,005)
––––––––
(1,041)
(681)
––––––––
(954)
(954)
––––––––
(83)
(83)
––––––––
(1,124)
––––––––
The notes on pages 35 to 57 are an integral part of the financial information.
34
––––––––
––––––––
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1.
General information
Patisserie Acquisition Limited (the “Company”) is a limited company incorporated and domiciled in
England and Wales. The registered office of the company is 146 – 158 Sarehole Road, Birmingham,
B28 8DT. The Company’s name was changed from Patisserie Holdings Limited on 25 April 2014. The
registered company number is 06070007. A list of the company’s subsidiaries is presented in Note 27.
The Group’s principal activity is that of restaurateurs.
The directors of Patisserie Holdings plc are responsible for the financial information and contents of the AIM
admission document in which it is included. This is the first financial information to be prepared by the
Group under International Financial Reporting Standards.
2.
Accounting policies
The principal accounting policies applied in the preparation of the consolidated financial information are set
out below. These policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The historical financial information has been prepared in accordance with the requirements of the AIM Rules
for Companies for the purposes of the AIM admission document dated 14 May 2014 and represents
consolidated historical financial information for the parent company and its subsidiaries for each of the three
years ended 30 September 2011, 30 September 2012 and 30 September 2013.
This basis of preparation describes how the historical consolidated financial information has been prepared
in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”).
This is the first financial information of the Group prepared in accordance with IFRS and the Group has
applied IFRS 1 ‘First time adoption of IFRS’ from the transition date of 1 October 2010. Please refer to
note 28 for the details of the adjustments required to present the accounts under IFRS including any
exemptions taken. The accounting policies used have been consistently applied from the transition balance
sheet and throughout all periods presented in this financial information.
The historical financial information does not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group’s statutory financial statements for the years ended 30 September 2013,
30 September 2012 and 30 September 2011 have been delivered to the Registrar of Companies. The auditor’s
report on those financial statements was unqualified and did not contain statements under section 498(2) or
section 498(3) of the Companies Act 2006.
The consolidated financial information has been prepared on a going concern basis and under the historical
cost convention. The consolidated financial information is presented in sterling and has been rounded to the
nearest thousand (£’000).
The Directors are responsible for the preparation of this historical financial information.
Standards, amendments and interpretations to existing standards
Standards, amendments and interpretations to existing standards that are not yet effective and have
not been early adopted by the Group in this financial information.
At the date of authorisation of the financial information, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective. The Group has not early
adopted any of these pronouncements. The new standards, amendments and interpretations that are expected
to be relevant to the Group’s financial statements in the future are as follows:
35
Applicable for
financial years
beginning on/after
Standard/interpretation
Content
IFRS 10
IAS 32 (Amendment)
IAS 27 (Revised)
IAS 28 (Revised)
IFRS 7 (Amendment)
Consolidated Financial Statements
Offsetting Financial Assets and Financial Liabilities
Separate financial statements
Investments in Associates and Joint Ventures
Disclosures – Offsetting Financial Assets and
Financial Liabilities
Fair Value Measurement
Recoverable amount Disclosure for Non-Finance Assets
Novation of derivatives and continuation of hedge accounting
IFRS 13
IAS 36 (Amendment)
IAS 39 (Amendment)
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2013
1 January 2013
1 January 2014
1 January 2014
The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations.
As the Group prepares its financial statements in accordance with IFRS as adopted by the European Union
(EU), the application of new standards and interpretations will be subject to their having been endorsed for
use in the EU via the EU endorsement mechanism.
The Directors do not expect the adoption of these standards and interpretations to have a material impact on
the consolidated financial information in the period of initial adoption.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary
undertakings. The financial statements of all group companies are adjusted, where necessary, to ensure the
use of consistent accounting policies. Acquisitions are accounted for under the acquisition method from the
date control passes to the Group. On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition
over the fair values of the identifiable net assets acquired is recognised as goodwill.
Intangible assets
Goodwill is recognised to the extent that it arises through a business combination. In respect of business
combinations that have occurred since 1 July 2005, goodwill represents the difference between the cost of
the acquisition and the fair value of net identifiable assets acquired. In respect of business combinations prior
to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under
previous GAAP. As permitted by IFRS 1 Goodwill arising on acquisitions prior to 1 July 2005 is stated in
accordance with UK GAAP and has not been remeasured on transition to IFRS.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to appropriate cash
generating units (those expected to benefit from the business combination) and is no longer amortised but is
tested annually for impairment or whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. Negative goodwill (bargain purchase) is written back to the income
statement in the period it is incurred.
Revenue
Revenue is the total amount receivable by the Group for goods supplied, excluding VAT and trade discounts.
Revenue arising from the sale of goods is recognised when significant risks and benefits of ownership of the
product has been transferred to the buyer at the point of sale, which is when cash is received.
Property, plant and equipment
Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to
the acquired item, less accumulated depreciation and impairment losses.
36
Depreciation is calculated on a straight line basis over the deemed useful life of an asset and is applied to the
cost less any residual value. The asset classes are depreciated over the following periods:
Freehold land and buildings
Leasehold property improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
–
–
–
–
–
20 years straight line
Over the life of the lease from the month of acquisition
15–25% straight line from the month of acquisition
10–20% reducing balance
25% straight line
As no finite useful life for land can be determined, related carrying amounts are not depreciated. The useful
life, the residual value and the depreciation method is assessed annually.
The carrying value of the property, plant and equipment is compared to the higher of value in use and the
fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the
costs to sell the asset then the asset is impaired and its value reduced by recognising an impairment in profit
or loss.
Impairment testing of intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for
impairment and some are tested at cash-generating unit level. Those intangible assets not yet available for
use and goodwill are tested for impairment at least annually. All other individual assets or cash-generating
units are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market
conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets
are subsequently reassessed for indications that an impairment loss previously recognised may no longer
exist.
Inventories
Inventory is carried at the lower of cost or net realisable value. The costs of raw materials, consumables,
work in progress and finished goods are measured by means of weighted average cost using standard costing
techniques. Cost of finished goods comprises direct production costs such as raw materials, consumables,
utilities and labour, and production overheads such as employee costs, depreciation, maintenance and
indirect factory costs. Standard costs are reviewed regularly in order to ensure relevant measures of
utilisation, production lead-time and appropriate levels of manufacturing expense are reflected in the
standards.
Net realisable value is calculated based on the revenue from sale in the normal course of business less any
costs to sell.
Leased assets
In accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the lessee if
the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related
asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the
present value of the minimum lease payments plus incidental payments, if any. A corresponding amount is
recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable
up-front at the date of inception of the lease. Leases of land and buildings are split into a land and a building
element, in accordance with the relative fair values of the leasehold interests at the date the asset is initially
recognised.
Subsequent accounting for assets held under finance lease agreements correspond to those applied to
comparable assets which are legally owned by the Group. The corresponding finance leasing liability is
reduced by lease payments less finance charges, which are expensed to finance costs. The interest element
37
of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the
income statement over the period of the lease.
All other leases are treated as operating leases. Payments on operating lease agreements are recognised as
an expense on a straight-line basis. Associated costs, such as maintenance and insurance, are expensed as
incurred. Lease incentives received are recognised in the consolidated statement of comprehensive income
on a straight-line basis over the lease term.
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using current rates, and any
adjustments to the tax payable in respect of previous years.
Deferred taxation is provided on all temporary differences between the carrying amount of the assets and
liabilities in the financial statements and the tax base. Deferred tax assets are recognised only to the extent
that it is probable that future taxable profits will be available against which the temporary difference can be
utilised. Deferred tax assets and liabilities are not discounted. Deferred tax is determined using the tax rates
that have been enacted or substantially enacted by the balance sheet date, and are expected to apply when
the deferred tax liability is settled or the deferred tax asset is realised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Tax is recognised in the income statement, except where it relates to items recognised directly in equity, in
which case it is recognised in equity.
Share based employee compensation
The Group operates equity settled share based compensation plans for remuneration of its employees. All
employee services received in exchange for the grant of any share-based compensation are measured at their
fair values. These are indirectly determined by reference to the share option awarded. Their value is
appraised at the grant date and excludes the impact of any non-market vesting conditions (such as
profitability or sales growth targets).
The Group’s share option schemes provide for an exercise price equal to the average middle market price of
the Group’s shares over the five dealing days prior to the date of grant or par value, whichever is higher. The
vesting period ranges from the date of grant up to five years. If options remain unexercised after a period of
five years from the date of grant, the options expire and are returned to the unused share option pool.
Furthermore, if an option holder leaves the Group on good terms before their options vest, the unexercised
and unvested options are forfeited up to six months after the date of their departure.
The Group has a current share option scheme under which options have been granted on various dates
between 12 January 2006 and 8 October 2010.
All share-based compensation is ultimately recognised as an expense in profit and loss with a corresponding
credit to a share based payment reserve, net of deferred tax where applicable. If vesting periods or other
vesting conditions apply, the expense is allocated over the vesting period, based on the best available
estimate of the number of shares options expected to vest. Non-market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable. Estimates are
subsequently revised, if there is any indication that the number of share options expected to vest differs from
previous estimates. No adjustment to expense recognised in prior periods is made if fewer share options
ultimately are exercised than originally estimated.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, up
to the nominal value of the shares issued are reallocated to share capital with any excess being recorded as
additional share premium.
38
Store pre-opening costs
All pre-opening costs are written off as incurred except those which qualify for capitalisation in accordance
with IAS 16 – Property, Plant and Equipment.
Segmental analysis
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (“CODM”). The CODM is the person or group that allocates resources to and
assess the performance of the operating segments of an entity. The Group has determined that its CODM is
the Board of Directors of the Group.
Financial instruments
Financial instruments are assigned to their different categories by management on initial recognition,
depending on the contractual arrangements.
Financial assets
The Group’s financial assets fall within the heading of ‘Loans and receivables’. Loans and receivables
comprise trade and certain other receivables as well as cash and cash equivalents.
Loan and receivables are recognised when the Group becomes a party to the contractual provisions of the
instrument and are recognised at fair value and subsequently measured at amortised cost using the effective
interest method less any provision for impairment, based on the receivable ageing, previous experience with
the debtor and known market intelligence. Any change in their value is recognised in the income statement.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire
or are transferred and substantially all of the risks and rewards of ownership have been transferred. An
assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective
evidence that a financial asset or a group of financial assets is impaired.
Financial liabilities
The Group’s financial liabilities comprise borrowings and trade and other payables.
Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs.
After initial recognition borrowings are measured at amortised cost using the effective interest method. All
interest-related charges are included in the income statement line item “finance expense”. Financial
liabilities are derecognised when the obligation to settle the amount is removed.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call, together with other short term
highly liquid investments which are not subject to significant changes in value and have original maturities
of less than three months.
Equity
Equity comprises the following:
•
Share capital: the nominal value of equity shares.
•
Share premium: includes any premium received on the sale of shares. Any transaction costs associated
with the issuing of shares are deducted from share premium, net of any income tax benefits.
•
Profit and loss account: retained profits.
Accounting estimates and judgements
The preparation of financial statements under IFRS requires the Group to make estimates and judgements
that effect the application of policies and reported amounts. Estimates and judgements are based on historical
39
experience and other factors including expectations of future events that are believed to be reasonable under
the circumstances. Actual results may differ from these estimates.
The estimates and judgements which have a significant risk of causing a material adjustment to the carrying
amount of assets and liabilities are discussed below:
•
Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting date. At the reporting date
management assesses that the useful lives represent the expected utility of the assets to the Group. Actual
results, however, may vary due to unforeseen events.
•
Impairment
An impairment loss is recognised for the amount by which the asset’s or cash generating unit’s carrying
amount exceeds its recoverable amount. To determine the recoverable amount, management estimates
expected future cash flows from each cash-generating unit and determines a suitable discount rate in order
to calculate the present value of those cash flows. In the process of measuring expected future cash flows
management makes assumptions about future operating results. These assumptions relate to future events
and circumstances. In most cases, determining the applicable discount rate involves estimating the
appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.
Employee benefits
The cost of pensions in respect of the Group’s defined contribution scheme is charged to profit or loss in the
period in which the related employee services were provided.
3.
Segmental information
Management has determined the operating segments based on the reports reviewed by the strategic decision
maker comprising the Board of Directors. The segmental information is split on the basis of those same profit
centres, however, management report only the contents of the income statement and therefore no balance
sheet information is provide on a segmental basis in the following tables:
Patisserie
Valerie
£’000
September 2013
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation and amortisation
Finance expense
Profit before income tax
Income tax expense
Profit for the financial year
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Druckers
£’000
Spice
Bakery
£’000
Total UK
Flour
GAAP
IFRS
Power Overhead reporting adjustment
£’000
£’000
£’000
£’000
Total
IFRS
£’000
42,394
12,342
3,807
1,158
411
60,112
–
60,112
(7,429)
(3,089)
(1046)
(263)
(1,321) (13,148)
–
(13,148)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
34,965
9,253
2,761
895
(910)
46,964
–
46,964
(25,529)
(8,142)
(1,800)
(696)
1,247
(34,920)
–
(34,920)
(1,953)
(292)
(78)
(42)
(888)
(3,253)
794
(2,459)
(175)
(10)
–
(9)
(713)
(907)
(449)
(1,356)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
7,308
809
883
148
(1,264)
7,884
345
8,229
–
–
–
–
(1,427)
(1,427)
–
(1,427)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
7,308
809
883
148
(2,691)
6,457
345
6,802
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
33,280
2,552
8,267
–
(25,518)
–
(6,575)
–
––––––– –––––––
9,454
2,552
Net assets
35,832
8,267
(25,518)
(6,575)
–––––––
12,006
––––––– ––––––– –––––––
––––––– ––––––– –––––––
Capital expenditure
6,559
All of the Group’s revenue from continuing operations has been generated from UK operations.
The Group does not have any customers whom account for more than 10% of external revenue.
40
–
6,559
Patisserie
Valerie
£’000
September 2012
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation and amortisation
Impairment
Finance expense
Profit before income tax
Income tax expense
Profit for the financial year
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Druckers
£’000
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
29,346
1,757
31,103
6,073
–
6,073
(21,714)
(2,727) (24,441)
(7,531)
–
(7,531)
––––––– ––––––– –––––––
6,174
(970)
5,204
––––––– ––––––– –––––––
––––––– ––––––– –––––––
Capital expenditure
Gross profit
Administrative expenses
Depreciation and amortisation
Impairment
Finance expense
Profit before income tax
Income tax expense
Profit for the financial year
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Total
IFRS
£’000
32,768
12,819
3,543
381
49,511
–
49,511
(6,313)
(2,665)
(973)
(1,241) (11,192)
–
(11,192)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
26,455
10,154
2,570
(860)
38,319
–
38,319
(19,195)
(8,975)
(1,758)
1,243
(28,685)
–
(28,685)
(1,687)
(289)
(91)
(759)
(2,826)
794
(2,032)
–
–
–
(130)
(130)
–
(130)
(49)
(39)
–
(695)
(783)
(449)
(1,232)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
5,524
851
721
(1,201)
5,895
345
6,240
–
–
–
(1,587)
(1,587)
–
(1,587)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
5,524
851
721
(2,788)
4,308
345
4,653
Net assets
September 2011
Revenue
Cost of sales
Total UK
Spice
GAAP
IFRS
Bakery Overhead reporting adjustment
£’000
£’000
£’000
£’000
5,708
–
5,708
24,267
12,889
3,278
49
40,483
–
40,483
(5,857)
(2,594)
(918)
(75)
(9,444)
–
(9,444)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
18,410
10,295
2,360
(26)
31,039
–
31,039
(12,321)
(9,145)
(1,640)
74
(23,032)
–
(23,032)
(1,392)
(225)
(103)
(758)
(2,478)
794
(1,684)
–
–
–
(130)
(130)
–
(130)
(81)
(2)
–
(721)
(804)
(449)
(1,253)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
4,616
923
617
(1,561)
4,595
345
4,940
–
–
–
(1,492)
(1,492)
–
(1,492)
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
4,616
923
617
(3,053)
3,103
345
3,448
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
26,593
963
27,556
4,962
–
4,962
(22,071)
(2,277) (24,348)
(7,619)
–
(7,619)
––––––– ––––––– –––––––
1,865
(1,314)
551
Net assets
––––––– ––––––– –––––––
––––––– ––––––– –––––––
Capital expenditure
4,189
41
–
4,189
4.
Profit before income tax
Profit before taxation has been arrived at after charging:
Depreciation of owned property, plant and equipment
Depreciation of assets held under finance lease
Impairment of fixed assets
Employee costs (Note 6)
Operating lease rentals
– Hire of plant and equipment
– Land and buildings
Audit and non-audit services:
Fees payable to the Company’s auditor for the audit of
the Group accounts
Fees payable to the Company’s auditor and its associates
for other services:
The audit of the Company’s subsidiaries pursuant to legislation
Tax services
Other services
5.
September
2011
£’000
September
2012
£’000
September
2013
£’000
1,678
6
130
14,982
2,032
–
130
18,704
2,459
–
–
22,323
10
5,401
–
6,287
–
7,856
10
7
8
37
7
15
30
10
–
37
10
10
––––––––
––––––––
––––––––
September
2011
£’000
September
2012
£’000
September
2013
£’000
237
––––––––
442
––––––––
Remuneration of key personnel
The Group consider that the Directors are the key personnel:
Salary, fees, bonuses and other short term emoluments
6.
––––––––
527
Employees
The average number of employees (including Directors) during the period was made up as follows:
Directors
Management
Production
Sales
September
2011
£’000
September
2012
£’000
September
2013
£’000
3
38
93
1,161
––––––––
1,295
4
52
110
1,392
––––––––
1,558
4
63
198
1,644
––––––––
1,909
––––––––
––––––––
––––––––
The cost of employees (including directors) during the period was made up as follows:
Wages and salaries
Social security costs
Pension costs
September
2011
£’000
September
2012
£’000
September
2013
£’000
14,068
906
8
––––––––
14,982
17,631
1,066
7
––––––––
18,704
20,977
1,339
7
––––––––
22,323
––––––––
42
––––––––
––––––––
7.
Finance expenses
Bank loans and overdrafts
Other loans
September
2011
£’000
September
2012
£’000
September
2013
£’000
804
449
–––––––––
1,253
783
449
–––––––––
1,232
907
449
–––––––––
1,356
September
2011
£’000
September
2012
£’000
September
2013
£’000
1,416
(46)
––––––––
1,370
1,651
21
––––––––
1,652
1,024
192
––––––––
1,216
122
––––––––
1,492
(65)
––––––––
1,587
211
––––––––
1,427
––––––––– ––––––––– –––––––––
8.
Income tax expense
Current tax:
UK corporation tax at rates: 2013 – 23.5%,
2012 – 25.0%,
2011 – 27.0%)
Prior period adjustment
Deferred tax: (Note 18)
Origination and reversal of timing differences
Tax for the period
––––––––
––––––––
––––––––
Factors affecting current tax charge:
The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK.
The differences are explained below:
Profit before income tax
Profit for the year multiplied by the standard rate of
corporation tax
Expenses not deductible for tax purposes
Differences between capital allowances and depreciation
Adjustment in respect of prior periods
Utilisation of tax losses
Income not deducted for tax purposes
Origination and reversal of timing differences
Other
September
2011
£’000
September
2012
£’000
September
2013
£’000
4,940
––––––––
6,240
––––––––
8,229
––––––––
1,334
433
(242)
(46)
(6)
(9)
122
(94)
––––––––
1,492
1,560
197
(29)
21
(77)
–
(65)
(20)
––––––––
1,587
1,934
(206)
–
192
–
–
211
(704)
––––––––
1,427
––––––––
9.
––––––––
––––––––
Loss attributable to members of the parent company
The parent company has taken advantage of section 408 of the Companies Act 2006 and not included its own
profit and loss account in these financial statements. The result shown in the accounts of the parent company
was:
Loss for the year
September
2011
£’000
September
2012
£’000
September
2013
£’000
721
––––––––
442
––––––––
––––––––
43
527
10.
Earnings per share
Basic and diluted
Profit for the year (£’000)
Weighted average number of shares in issue for
the year (number)
Basic earnings per share (pence)
Dilutive effect of share options (number)
Total weighted average including effects of
options (number)
Diluted earnings per share (pence)
11.
September
2011
September
2012
September
2013
3,448
4,653
6,802
1,427,428
241.55
5,965
1,427,428
325.97
72,572
1,427,428
476.52
207,825
1,427,428
240.55
1,427,428
310.20
1,427,428
415.96
––––––––
––––––––
––––––––
Intangible assets
Goodwill
£’000
Cost
As at 30 September 2011 and 2012
Addition at acquisition
13,130
629
––––––––
Net book value
As at 30 September 2013
13,759
––––––––
––––––––
As at 30 September 2012 and 2011
13,130
Impairment testing
The Group tests goodwill annually or, additionally, if there are indications that it may be impaired.
For the purposes of impairment testing the Directors consider each acquired business as separate cash
generating units (CGUs). The recoverable amount for each CGU was determined using a value in use
calculation based upon management forecasts for the trading results for those entities.
The discount rate has been calculated independently for each CGU based upon the individual economic
circumstances and appropriate risk factors. An appropriate discount has been calculated and used for each
CGU. The key assumptions utilised within the forecast models relate to the level of future sales, which have
been estimated based upon the Directors expectations, current trading and recent actual trading performance.
The value in use calculations indicate that the recoverable amount of the CGUs is in excess of the carrying
value of the assets allocated to them.
44
12.
Property, plant and equipment
Freehold
land and
buildings
£’000
Leasehold
property
improvements
£’000
Plant,
equipment,
fixtures and
fittings
£’000
1,798
–
––––––––
1,798
–
––––––––
1,798
–
–
––––––––
1,798
7,075
1,554
––––––––
8,629
1,324
––––––––
9,953
1,018
176
––––––––
11,147
17,311
2,634
––––––––
19,945
4,384
––––––––
24,329
5,127
237
––––––––
29,693
73
–
––––––––
73
–
––––––––
73
–
–
––––––––
73
26,257
4,188
––––––––
30,445
5,708
––––––––
36,153
6,145
413
––––––––
42,711
At 30 September 2013
158
19
–
––––––––
177
19
–
––––––––
196
17
––––––––
213
1,851
536
130
––––––––
2,517
564
130
––––––––
3,211
588
––––––––
3,799
12,147
1,119
–
––––––––
13,266
1,440
–
––––––––
14,707
1,850
––––––––
16,557
49
10
–
––––––––
59
9
–
––––––––
68
4
––––––––
72
14,205
1,684
130
––––––––
16,019
2,032
130
––––––––
18,180
2,459
––––––––
20,639
Net book values
At 30 September 2011
At 30 September 2012
At 30 September 2013
1,622
1,604
1,587
6,112
6,742
7,348
6,678
9,622
13,137
15
5
1
14,426
17,973
22,073
As at 1 October 2010
Additions
At 30 September 2011
Additions
At 30 September 2012
Additions
Assets acquired at acquisition
At 30 September 2013
As at 1 October 2010
Charge for the year
Impairment charge
At 30 September 2011
Charge for the year
Impairment charge
At 30 September 2012
Charge for the year
––––––––
Motor
vehicles
£’000
Total
£’000
–––––––– –––––––– –––––––– ––––––––
––––––––
–––––––– –––––––– –––––––– ––––––––
––––––––
–––––––– –––––––– –––––––– ––––––––
There were no assets held under finance leases during the period covered by this historical financial
information. The amount of depreciation expense charged to the income statement in respect of such assets
was nil in both 2012 and 2013 but amounted to £5,964 in 2011.
13.
Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
September
2011
£’000
September
2012
£’000
September
2013
£’000
129
409
3,011
––––––––
3,549
63
621
3,338
––––––––
4,022
668
340
4,445
––––––––
5,453
––––––––
––––––––
––––––––
There is no allowance account for impaired receivables as no counterparty is in default nor have any
impairments been identified. At year ends 2011 and 2012 there were no receivables past due. As at
30 September 2013 there were £128,000 of receivables past due by up to 30 days, £90,000 past due by over
30 days but less than 60 days and £18,000 past due by over 60 days. The remaining balances were not past
due. There is no material difference between the fair value and the varying value of these assets. The
maximum credit risk exposure at the reporting date equated to the fair value of trade receivables. Standard
payment terms are 30 days net.
45
14.
Inventories
Raw materials and consumables
Work in progress
Finished goods
September
2011
£’000
September
2012
£’000
September
2013
£’000
1,179
125
109
––––––––
1,413
1,684
152
106
––––––––
1,942
2,263
242
179
––––––––
2,684
––––––––
––––––––
––––––––
There were no inventory provisions in place in 2011, 2012 and 2013 as no inventory has been written off.
The amount of stock that went through cost of sales each year is as follows:
Inventory expense
15.
September
2011
£’000
September
2012
£’000
September
2013
£’000
1,037
––––––––
1,413
––––––––
1,942
––––––––
September
2011
£’000
September
2012
£’000
September
2013
£’000
–
(954)
––––––––
(954)
109
(192)
––––––––
(83)
130
(1,254)
––––––––
(1,124)
September
2011
£’000
September
2012
£’000
September
2013
£’000
3,183
398
141
–
––––––––
3,722
2,974
312
159
–
––––––––
3,445
3,235
565
109
147
––––––––
4,056
Cash and cash equivalents
Cash balances at the end of each year are as follows:
Cash and cash equivalents per statement of financial position
Overdrafts
Cash per statement of cash flows
16.
––––––––
––––––––
––––––––
Trade and other payables
Trade payables
Other payables
Accruals and deferred income
Invoice discounting
––––––––
––––––––
––––––––
Flour Power City Limited has an invoice discounting facility of £150,000 of which £147,164 was utilised at
the year end. The invoice discounting amounts are secured by a fixed charge over certain trade debtors.
46
17.
Borrowing
The Group uses bank overdrafts, bank and other loans to finance acquisitions; the following balances remain
outstanding as shown:
Non-current
Bank loans
Other loans
September
2011
£’000
September
2012
£’000
September
2013
£’000
14,992
8,514
––––––––
23,506
14,700
8,964
––––––––
23,664
14,100
10,430
––––––––
24,530
1,358
954
––––––––
2,312
2,449
192
––––––––
2,641
1,000
1,254
––––––––
2,254
––––––––
Current
Bank loans
Overdrafts
Bank loans and overdrafts
––––––––
––––––––
––––––––
––––––––
––––––––
Bank loans and overdrafts are secured by an all asset debenture in favour HSBC Bank Plc. Other loans are
secured by an asset debenture in favour of the loan providers.
18.
Deferred taxation
At 1 October
Charge/(credit) for the year
At 30 September
September
2012
£’000
September
2013
£’000
720
122
––––––––
842
842
(65)
––––––––
777
777
211
––––––––
988
––––––––
––––––––
Deferred taxation – accelerated capital allowances
19.
September
2011
£’000
842
––––––––
––––––––
777
––––––––
––––––––
988
Lease commitments
At the end of each period the Group had total minimum commitments under non-cancellable operating lease
agreements as set out below:
Land and buildings
Operating leases which expire:
Within one year
In two to five years
In over five years
September
2011
£’000
September
2012
£’000
September
2013
£’000
264
940
39,666
––––––––
40,870
220
597
42,803
––––––––
43,620
234
5,173
51,584
––––––––
56,991
––––––––
47
––––––––
––––––––
20.
Share capital
September 2011
Shares
£
Authorised:
A Ordinary shares of £0.001 each
B Ordinary shares of £0.001 each
Ordinary shares of £0.001 each
September 2012
Shares
£
September 2013
Shares
£
72,572
73
72,572
73
72,572
73
–
–
–
– 250,000
250
1,427,428
1,427 1,427,428
1,427 1,427,428
1,427
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
1,500,000
1,500 1,500,000
1,500 1,750,000
1,750
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Allotted, called up and fully paid:
A Ordinary shares of £0.001 each
Ordinary shares of £0.001 each
72,572
73
72,572
73
72,572
73
1,378,875
1,378 1,378,875
1,378 1,378,875
1,378
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
1,451,447
1,451 1,451,447
1,451 1,451,447
1,451
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
On 25 February 2013 the Company issued 250,000 B Ordinary shares at £0.001 each. The B Ordinary shares
carry voting rights and give rights to receive a cumulative dividend of LIBOR plus one percent of the par
value of each B Ordinary share which shall accrue and remain unpaid until a winding up or sale of the share
capital of the company. These shares are classified as financial liabilities and an amount of £228 has been
included within other payables.
21.
Share based payments
The Group has granted options to certain directors in respect of Ordinary shares of £0.001 under an
Enterprise Management Scheme (EMI).
Date of grant
Option type Expiry date
31 August 2011
EMI
31 August 2021
Price/
share
September
2011
Number of
options
September
2012
Number of
options
September
2013
Number of
options
27.50p
72,722
72,722
72,722
The fair value of options granted by the Company has been arrived at using the Black-Scholes model. The
assumptions inherent in the use of this model are as follows:
•
The option life is assumed to be at the end of the allowed period.
•
Historical staff turnover is taken into account when determining the proportion of granted options that
are likely to vest by the end of the period.
•
Where vesting is based on achievement of commercial and development objectives, including annual
revenue targets, management factors in the probability of the achievement of the commercial and
development objectives prior to the end of the vesting period.
•
Following the application of the vesting probability assumptions, there are no further vesting
conditions other than remaining in employment with the Company during the vesting period.
•
No variables change during the life of the option (e.g. dividend yield).
•
Volatility has been estimated as there is no history of the Group’s share price.
48
At the period end each year the Group had the following options at the weighted average exercise prices
(WAEP) shown:
WAEP
Expiry date
31 August 2022
Outstanding at year end
Exercisable at year end
Weighted average remaining
contractual life
September
2011
£’000
WAEP
September
2012
£’000
WAEP
September
2013
£’000
27.50
72,722
27.50
72,722
27.50
72,722
27.50
72,722
27.50
72,722
27.50
72,722
–
–
–
–
–
–
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
10 years
–
9 years
8 years
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
The options are generally exercisable in the event of either a listing or sale of the Company’s shares. In the
absence of such an exercise, the options will generally lapse on the 10th anniversary of their grant.
The Group recognised total expenses of £nil related to equity-settled share based payment transactions
during the period covered by this historical financial information.
No options were exercised during the period covered by this historical financial information.
22.
Capital commitments
The Group had the following capital commitments at each period end:
September
2011
£’000
September
2012
£’000
September
2013
£’000
477
––––––––
450
––––––––
Relating to the purchase of assets
23.
––––––––
600
Related party transactions
The total transactions involving related parties, including management charges, are as follows:
September
2011
£’000
September
2012
£’000
September
2013
£’000
449
––––––––
449
––––––––
Interest charges on shareholder’s loan
––––––––
449
Included within borrowings the following balances were loans made to the Group by certain shareholders:
September
2011
£’000
September
2012
£’000
September
2013
£’000
8,514
8,964
10,430
Other loans
––––––––
––––––––
––––––––
The Company has a cross company guarantee with the other group companies, namely Stonebeach Limited,
Hewmark Limited, Leonardo Limited, Patisserie Valerie Limited, Patisserie Valerie Holdings Limited, Spice
Bakery Limited, Flour Power City Limited and Patisserie Valerie Express Limited. This guarantees the
Patisserie Holdings Limited bank loan and if Patisserie Holdings Limited defaults on that loan the companies
will be required to make good the default. The Directors believe the financial condition of Patisserie
Holdings Limited is such that this guarantee will not be called upon.
For the details of the directors’ remuneration please see Note 5.
49
24.
Categories of financial instruments
Current financial assets
Loans and receivables
Loans and receivables – cash and cash equivalents
Total financial assets
Non financial assets
Total
September
2011
£’000
September
2012
£’000
September
2013
£’000
538
–
––––––––
538
3,011
––––––––
3,549
684
109
––––––––
793
3,338
––––––––
4,131
1,008
130
––––––––
1,138
4,445
––––––––
5,583
23,506
23,664
24,530
––––––––
––––––––
Non-current financial liabilities
At amortised cost – borrowings
Current financial liabilities
At amortised cost – borrowings
At amortised cost – payables
2,312
3,581
––––––––
5,893
141
––––––––
6,034
Total current financial liabilities
Non financial liabilities
Total current liabilities
––––––––
––––––––
––––––––
2,641
3,286
––––––––
5,927
159
––––––––
6,086
––––––––
––––––––
––––––––
2,401
3,800
––––––––
6,201
109
––––––––
6,310
––––––––
The shareholder loans have been made available at terms which are more favourable than market terms. The
difference between the fair value of these loans discounted at market rates and the values stated above is not
considered to be material.
25.
Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and
liquidity risk.
Market risk – Foreign exchange risk
The Directors consider that there is no foreign exchange risk as the Group derives all revenues from the UK.
Revenues and costs are transacted in Sterling.
50
Market risk – Interest rate risk
The Group carries significant borrowings used to finance acquisitions in the form of bank and other loans.
Interest rates are floating based on LIBOR from time to time or are fixed and the amounts outstanding at the
year ends are as follows:
Amount
£’000
Rate of
interest %
2011
Non-current borrowings
Bank loans – Facility A (repayable quarterly)
Bank loans – Facility B (repayable at maturity)
Bank loans – Facility C (repayable at maturity)
Bank loans – Facility D (repayable quarterly)
Other loans – Shareholders loan (repayable at maturity)
2,492
6,600
4,000
1,630
8,514
LIBOR + 2.00%
LIBOR + 2.50%
LIBOR + 2.75%
LIBOR +3.50%
Fixed 8%
September 2013
September 2014
September 2015
September 2014
December 2016
Current borrowings
Overdraft
Bank loans – Facility A (repayable quarterly)
954
1,358
LIBOR + 3.5%
LIBOR +2.00%
On demand
September 2012
2012
Non-current borrowings
Bank loans – Facility B (repayable at maturity)
Bank loans – Facility C (repayable at maturity)
Bank loans – Facility D (repayable quarterly)
Other loans – Shareholders loan (repayable at maturity)
6,600
4,000
4,100
8,964
LIBOR + 2.50%
LIBOR + 2.75%
LIBOR +3.50%
Fixed 8%
September 2014
September 2015
September 2014
December 2016
Current borrowings
Overdraft
Bank loans – Facility A (repayable quarterly)
192
2,449
LIBOR + 3.5%
LIBOR + 2.00%
On demand
September 2013
6,550
7,550
10,430
LIBOR + 2.0%
LIBOR + 2.5%
Fixed 8%
September 2016
September 2018
December 2016
1,254
1,000
LIBOR + 3.5%
LIBOR + 2.0%
On demand
September 2014
2013
Non-current borrowings
Bank loans – Facility A (repayable quarterly)
Bank loans – Facility B (repayable at maturity)
Other loans – Shareholders loan (repayable at maturity)
Current borrowings
Overdraft
Bank loans – Facility A (repayable quarterly)
Repayment
date
Since the year ended 30 September 2013 all bank loans with HSBC have been restructured such that Facility
A is repayable in quarterly instalments and attracts interest at 2.5% per annum above LIBOR with a final
repayment date of 30 September 2017. All other facilities are repayable at termination (ranging from
30 September 2017 to 30 September 2018) and attract interest between 2.5% and 3.5% above LIBOR per
annum. All borrowings are subject to a margin ratchet which increases applicable interest rates should net
leverage rise above 1.5 : 1.
Market risk – Price risk
The Group is not exposed to either commodity or equity securities price risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. In order to minimise this risk the Group endeavours only to deal with companies
which are demonstrably creditworthy. In addition, a significant proportion of revenue results from cash
transactions. The aggregate financial exposure is continuously monitored. The maximum exposure to credit
risk is the value of the outstanding amount of trade receivables. The management do not consider that there
is any concentration of risk within either trade or other receivables.
51
Liquidity risk
The Group currently holds cash balances to provide funding for normal trading activity. The Group also has
access to both short term and long term borrowings to finance individual projects. Trade and other payables
are monitored as part of normal management routine.
Borrowings and other liabilities mature according to the following schedule:
2013
Trade payables
Accruals
Other payables
Borrowings-other loans
Invoice discounting
Borrowings – bank loans
Borrowings (overdrafts)
2012
Trade payables
Accruals
Other payables
Borrowings-other loans
Borrowings – bank loans
Borrowings (overdrafts)
2011
Trade payables
Accruals
Other payables
Borrowings-other loans
Borrowings – bank loans
Borrowings (overdrafts)
Within
one year
£’000
One to
two years
£’000
Two to
five years
£’000
Over
five years
£’000
3,235
109
565
–
147
1,000
1,254
–
–
–
–
–
2,000
–
–
–
–
10,430
–
12,100
–
–
–
–
–
–
–
–
––––––––
––––––––
––––––––
––––––––
2,974
159
312
–
2,449
192
–
–
–
–
9,333
–
–
–
–
8,964
5,367
–
–
–
–
–
–
–
––––––––
––––––––
––––––––
––––––––
3,183
141
398
–
1,358
954
–
–
–
–
3,442
–
–
–
–
–
11,550
–
–
–
–
8,514
–
–
––––––––
––––––––
Capital risk management
The Group’s capital management objectives are:
•
•
to ensure the Group’s ability to continue as a going concern; and
to provide an adequate return to shareholders
by pricing products and services commensurate with the level of risk.
52
––––––––
––––––––
The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as
presented on the face of the statement of financial position.
Total equity
Cash and cash equivalents
Capital
September
2012
£’000
September
2013
£’000
551
–
––––––––
551
5,204
(109)
––––––––
5,095
12,006
(130)
––––––––
11,876
551
25,818
––––––––
26,369
5,204
26,305
––––––––
31,509
12,006
26,931
––––––––
38,937
––––––––
Total financing
Borrowings
Overall financing
––––––––
––––––––
Capital to overall financing ratio
26.
September
2011
£’000
2.1%
––––––––
––––––––
––––––––
16.2%
––––––––
––––––––
––––––––
30.5%
Events after the balance sheet date
Since the year end September 2013 all bank loans with HSBC have been restructured such that Facility A is
repayable in quarterly instalments and attracts interest at 2.5% per annum above LIBOR with a final
repayment date of 30 September 2017. All other facilities are repayable at termination (ranging from
30 September 2017 to 30 September 2018) and attract interest between 2.5% and 3.5% above LIBOR per
annum. All borrowings are subject to margin ratchet which increases applicable interest rates should net
leverage rise above 1.5 : 1.
On 28 February 2014, the Group acquired Philpotts, a sandwich and salad retailer with 23 shops in the UK.
The acquisition details are as follows:
£’000
Fair value of consideration transferred:
Consideration
6,334
––––––––
Recognised amounts of identifiable net assets:
Tangible fixed assets
Inventory
Trade receivables
Prepayments
Other assets
Liabilities
3,074
113
318
125
115
(1,515)
––––––––
2,230
4,104
––––––––
6,334
Identifiable net assets
Goodwill on acquisition
––––––––
In addition, acquisition expenses of £225,000 will be charged to the income statement.
At the time of publishing this financial information the directors are carrying out an exercise to fair value the
assets acquired in this acquisition. Full details of this will be published as soon as it is complete.
53
27.
Subsidiaries consolidated
The subsidiaries included in the consolidation of this Historical Financial Information are as follows:
Company
Country of
incorporation
Class of share
capital held
Patisserie Valerie Holdings Limited
Hewmark Limited
Stonebeach Limited
Patisserie Valerie Express Limited
Leonardo Limited
Patisserie Valerie Limited
Spice Bakery Limited
Flour Power City Limited
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Direct
%
Holding
Indirect
%
100
–
–
–
–
–
100
100
–
100
100
100
100
100
–
–
Flour Power City Limited was acquired on 22 May 2013 by Patisserie Valerie Holdings Limited. It is not
considered material to the Group as a whole and therefore details of the acquisition accounting applied have
not been disclosed.
28.
Transition to IFRS
From 1 October 2010 the Group has adopted International Financial Reporting Standards (IFRS) in the
preparation of its financial statements. IFRS 1 ‘First time adoption’ allows certain exemptions, of which the
following has been adopted:
•
Business combinations that occurred prior to the transition date have not been restated to comply with
IFRS 3 ‘Business Combinations’. Goodwill carried at the transition date is no longer amortised.
Negative goodwill (bargain purchase) is written to profit or loss in the period in which it is incurred.
The main items contributing to the change in financial information compared with that reported under
UK GAAP as at the transition date are shown below:
IFRS 1 – First time adoption of International Financial Reporting Standards
The reporting standard allows certain exemptions including the exemption with regard to business
combinations as detailed below.
IFRS 3 – Business combinations
Business combinations that occurred prior to the transition date have not been restated to comply with
IFRS 3 ‘Business Combinations’. Goodwill carried at the transition date is no longer amortised. Negative
goodwill (bargain purchase) is written to profit or loss in the period in which it is incurred.
Adjustment in respect of deferred interest
During the period of this financial information the Group elected that past and current interest due on loan
notes with a principal value of £5,620k, which had previously not been taken due to commercial reasons,
would be accrued for. The loan notes are subject to an 8% interest charge and the Board has elected that this
interest becomes due and payable. Under UK GAAP this was all charged in the year the decision to reinstate
the interest due was made, the year to 30 September 2013. Under IFRS this interest is charged to the years
it relates to.
54
Detailed reconciliations between UK GAAP and IFRS of both equity and profit are shown below:
Reconciliation of equity as at 1 October 2010 (transition date)
UK GAAP
£’000
Equity and liabilities
Capital and reserves
Issued capital
Share premium
Retained earnings
Total equity and liabilities
1
499
(1,738)
––––––––
(1,238)
––––––––
Reinstatement
of interest
deferred
£’000
–
–
(1,828)
––––––––
(1,828)
––––––––
IFRS 3
£’000
–
–
169
––––––––
169
––––––––
IFRS
£’000
1
499
(3,397)
––––––––
(2,897)
––––––––
Reconciliation of equity as at 30 September 2011
Goodwill
amortisation
reversed
£’000
IFRS
£’000
–
–
963
––––––––
963
1
499
51
––––––––
551
Goodwill
amortisation
reversed
£’000
IFRS
£’000
–
–
1,757
––––––––
1,757
1
499
4,704
––––––––
5,204
UK GAAP
£’000
Reinstatement
of interest
waived
£’000
Goodwill
amortisation
reversed
£’000
IFRS
£’000
1
499
8,954
––––––––
9,454
–
–
–
––––––––
–
–
–
2,552
––––––––
2,552
1
499
11,506
––––––––
12,006
UK GAAP
£’000
Equity and liabilities
Capital and reserves
Issued capital
Share premium
Retained earnings
Total equity and liabilities
1
499
1,366
––––––––
1,866
––––––––
Reinstatement
of interest
deferred
£’000
–
–
(2,278)
––––––––
(2,278)
––––––––
––––––––
––––––––
Reconciliation of equity as at 30 September 2012
UK GAAP
£’000
Equity and liabilities
Capital and reserves
Issued capital
Share premium
Retained earnings
Total equity and liabilities
1
499
5,673
––––––––
6,173
––––––––
Reinstatement
of interest
deferred
£’000
–
–
(2,726)
––––––––
(2,726)
––––––––
––––––––
––––––––
Reconciliation of equity as at 30 September 2013
Equity and liabilities
Capital and reserves
Issued capital
Share premium
Retained earnings
Total equity and liabilities
––––––––
55
––––––––
––––––––
––––––––
Reconciliation of total comprehensive income for the year ended 30 September 2011
UK GAAP
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation and amortisation
Impairment
Finance expense
Profit before tax
Taxation
Profit for the period/Total
comprehensive income
40,483
(9,444)
––––––––
31,039
(23,032)
(2,478)
(130)
(804)
––––––––
4,595
(1,492)
––––––––
3,103
––––––––
Reinstatement
of interest
deferred
£’000
Goodwill
amortisation
reversed
£’000
–
–
––––––––
–
–
–
–
(449)
––––––––
(449)
–
–
––––––––
–
–
794
–
–
––––––––
794
––––––––
––––––––
(449)
––––––––
794
––––––––
IFRS
£’000
40,483
(9,444)
––––––––
31,039
(23,032)
(1,684)
(130)
(1,253)
––––––––
4,940
(1,492)
––––––––
3,448
––––––––
Reconciliation of total comprehensive income for the year ended 30 September 2012
UK GAAP
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation and amortisation
Impairment
Finance expense
Profit before tax
Taxation
Profit for the period/Total
comprehensive income
49,511
(11,192)
––––––––
38,319
(28,685)
(2,826)
(130)
(783)
––––––––
5,895
(1,587)
––––––––
4,308
––––––––
56
Reinstatement
of interest
deferred
£’000
Goodwill
amortisation
reversed
£’000
–
–
––––––––
–
–
–
–
(449)
––––––––
(449)
–
–
––––––––
–
–
794
–
–
––––––––
794
––––––––
––––––––
(449)
––––––––
794
––––––––
IFRS
£’000
49,511
(11,192)
––––––––
38,319
(28,685)
(2,032)
(130)
(1,232)
––––––––
6,240
(1,587)
––––––––
4,653
––––––––
Reconciliation of total comprehensive income for the year ended 30 September 2013
UK GAAP
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation and amortisation
Finance expense
Profit before tax
Taxation
Profit for the period/Total
comprehensive income
60,112
(13,148)
––––––––
46,964
(34,920)
(3,253)
(4,084)
––––––––
4,707
(1,427)
––––––––
3,280
––––––––
Reinstatement
of interest
deferred
£’000
Goodwill
amortisation
reversed
£’000
–
–
––––––––
–
–
–
2,728
––––––––
2,728
–
––––––––
–
–
––––––––
–
–
794
–
––––––––
794
–
––––––––
2,728
––––––––
––––––––
794
IFRS
£’000
60,112
(13,148)
––––––––
46,964
(34,920)
(2,459)
(1,356)
––––––––
8,229
(1,427)
––––––––
6,802
––––––––
Cashflow
As a result of the transition to IFRS the following changes have resulted in the cashflow statement.
The definition of cash under UK GAAP is narrower than under IAS 17 ‘Cash flow statements’. Under IFRS
highly liquid investments, readily convertible to a known amount of cash and with an insignificant risk of a
change in value are regarded as cash equivalents.
Under UK GAAP payments to acquire property, plant and equipment were classified as part of ‘Capital
expenditure and financial investment’ whilst under IFRS such payments have been reclassified as part of
‘Investing activities’.
There are no other material differences between the cashflow statement presented under IFRS and that
presented under UK GAAP other than the presentational convention.
57
B. ACCOUNTANTS’ REPORT ON THE HISTORICAL FINANCIAL
INFORMATION ON THE GROUP
The Directors
Patisserie Holdings plc
146-158 Sarehole Road
Birmingham
B28 8DT
14 May 2014
Dear Sirs,
Patisserie Holdings plc
We report on the historical financial information on Patisserie Acquisition Limited (formerly Patisserie
Holdings Limited) for the three years ended 30 September 2013 set out in Section A of Part III of this
document. This historical financial information has been prepared for inclusion in the AIM admission
document dated 14 May 2014 of Patisserie Holdings plc (the “AIM Admission Document”) on the basis of
the accounting policies set out in Part III A of the AIM Admission Document.
This report is required by Paragraph (a) of Schedule Two of the AIM Rules for Companies and is given for
the purpose of complying with that paragraph and for no other purpose.
Responsibilities
Save for any responsibility arising under Paragraph (a) of Schedule Two of the AIM Rules for Companies to
any person as and to the extent there provided, 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, arising out of, or in connection with this report or our statement, required by and given
solely for the purposes of complying with Paragraph (a) of Schedule Two of the AIM Rules for Companies,
consenting to its inclusion in the AIM Admission Document.
The Directors of Patisserie Holdings plc are responsible for preparing the financial information in
accordance with International Financial Reporting Standards as adopted by the European Union. It is our
responsibility to form an opinion as to whether the financial information gives a true and fair view, for the
purposes of the AIM Admission Document and to report our opinion to you.
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 an assessment of evidence relevant to the
amounts and disclosures in the financial information. It also included an assessment of the significant
estimates and judgements made by those responsible for the preparation of the financial information and
whether the accounting policies are appropriate to the entity’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial information is free from material misstatement, whether caused by fraud or other irregularity or
error.
Opinion
In our opinion, the financial information gives, for the purposes of the AIM Admission Document, a true and
fair view of the state of affairs of Patisserie Acquisition Limited as at the specified dates and of its profits
and cash flows for the years ended 30 September 2011, 2012 and 2013 in accordance with International
Financial Reporting Standards adopted by the European Union.
58
Annex I: 20.1-20.6
Declaration
For the purposes of Paragraph (a) of Schedule Two of the AIM Rules for Companies we are responsible for
this report as part of the AIM Admission Document and declare that we have taken all reasonable care to
ensure that the information contained in this report is, to the best of our knowledge, in accordance with the
facts and contains no omission likely to affect its import. This declaration is included in the AIM Admission
Document in compliance with Schedule Two of the AIM Rules for Companies.
Yours faithfully,
GRANT THORNTON UK LLP
59
PART IV
UNAUDITED INTERIM FINANCIAL INFORMATION ON THE GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to
31 March
2013
£’000
28,351
(6,369)
––––––––
21,983
(16,258)
(1,273)
––––––––
4,451
(526)
––––––––
3,925
(981)
––––––––
2,944
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation
Operating profit
Finance expense
Profit before income tax
Income tax expense
Total comprehensive income for the period
––––––––
The notes to follow are an integral part of the financial information.
60
6 months to
31 March
2014
£’000
35,747
(8,094)
––––––––
27,653
(20,575)
(1,474)
––––––––
5,604
(541)
––––––––
5,063
(1,115)
––––––––
3,948
––––––––
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes
ASSETS
Non-current assets
Goodwill
Property, plant and equipment
1, 4
2
Current assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total assets
As at
31 March
2013
£’000
As at
31 March
2014
£’000
13,130
19,290
––––––––
32,420
17,863
27,552
––––––––
45,415
4,357
2,095
–
––––––––
6,452
––––––––
38,873
6,226
3,160
294
––––––––
9,680
––––––––
55,095
(1)
(499)
(7,647)
––––––––
(8,148)
(1)
(499)
(15,454)
––––––––
(15,954)
––––––––
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to the equity holders
Ordinary share capital
Share premium
Retained earnings
Total equity
Non-current liabilities
Borrowings
Deferred tax
Current liabilities
Trade and other payables
Borrowings
Corporation tax
Total liabilities
Total equity and liabilities
3
––––––––
––––––––
(22,753)
(777)
––––––––
(23,530)
(25,771)
(1,213)
––––––––
(26,984)
(3,520)
(2,754)
(921)
––––––––
(7,195)
––––––––
(30,725)
––––––––
(38,873)
(4,451)
(7,462)
(244)
––––––––
(12,157)
––––––––
(39,141)
––––––––
(55,095)
––––––––
The notes to follow are an integral part of the financial information.
61
––––––––
––––––––
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 1 October 2013
Result and total comprehensive income for the period
As at 31 March 2014
As at 1 October 2012
Result and total comprehensive income for the period
As at 31 March 2013
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
1
–
––––––––
1
––––––––
1
–
––––––––
1
499
–
––––––––
499
––––––––
499
–
––––––––
499
11,506
3,948
––––––––
15,454
––––––––
4,703
2,944
––––––––
7,647
––––––––
The notes to follow are an integral part of the financial information.
62
––––––––
––––––––
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Profit for the period before taxation
Adjusted by:
Depreciation
Net finance charges in the income statement
Changes in working capital:
Change in inventory
Trade and other receivables
Trade and other payables
6 months to
31 March
2013
£’000
6 months to
31 March
2014
£’000
3,925
5,063
1,273
526
1,474
541
(153)
(335)
75
––––––––
5,311
(301)
(1,505)
––––––––
3,505
––––––––
Cash generated by operations
Interest paid
Income tax paid
Net cash generated by operating activities
Cash flows from investing activities
Acquisition of Philpotts (Holdings) Limited
Cash proceeds from Philpotts (Holdings) Limited
Purchase of property, plant and equipment
–
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of finance lease capital
Repayment of borrowings
Net cash (used in)/generated by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The notes to follow are an integral part of the financial information.
63
(363)
(331)
(624)
––––––––
5,760
(276)
(1,396)
––––––––
4,088
––––––––
(2,590)
––––––––
(2,590)
––––––––
(6,334)
106
(3,879)
––––––––
(10,107)
––––––––
–
–
(995)
––––––––
(995)
––––––––
(81)
(83)
––––––––
(164)
7,850
–
(500)
––––––––
7,350
––––––––
1,331
(1,124)
––––––––
207
––––––––
––––––––
NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION
1.
Intangible assets
Goodwill
£’000
As at 31 March 2013
Addition at acquisition
13,130
629
––––––––
13,759
As at 30 September 2013
––––––––
Addition at acquisition
4,104
––––––––
17,863
As at 31 March 2014
2.
––––––––
Property, plant and equipment
Freehold
Leasehold
land and
property
buildings improvements
£’000
£’000
As at 1 October 2012
Additions
At 31 March 2013
Assets acquired at acquisition
Additions
At 30 September 2013
Additions
Assets acquired at acquisition
At 31 March 2014
As at 1 October 2012
Charge for the period
At 31 March 2013
Charge for the period
At 30 September 2013
Charge for the period
At 31 March 2014
Net book values
At 30 September 2012
At 31 March 2013
At 30 September 2013
At 31 March 2014
Plant,
equipment,
fixtures and
fittings
£’000
Motor
vehicles
£’000
Total
£’000
1,798
–
––––––––
1,798
–
–
––––––––
1,798
––––––––
–
–
––––––––
1,798
9,953
321
––––––––
10,274
176
697
––––––––
11,147
––––––––
1,717
3,074
––––––––
15,938
24,329
2,269
––––––––
26,598
237
2,858
––––––––
29,693
––––––––
2,162
–
––––––––
31,855
73
–
––––––––
73
–
–
––––––––
73
––––––––
–
–
––––––––
73
36,153
2,590
––––––––
38,743
413
3,555
––––––––
42,711
––––––––
3,879
3,074
––––––––
49,664
194
8
––––––––
202
9
––––––––
211
8
––––––––
219
3,211
288
––––––––
3,499
300
––––––––
3,799
365
––––––––
4,164
14,707
975
––––––––
15,682
875
––––––––
16,557
1,100
––––––––
17,657
68
2
––––––––
70
2
––––––––
72
–
––––––––
72
18,180
1,273
––––––––
19,453
1,186
––––––––
20,639
1,473
––––––––
22,112
1,604
1,596
1,587
1,579
6,742
6,775
7,348
11,774
9,622
10,916
13,136
14,198
5
3
1
1
17,973
19,290
22,072
27,552
–––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– ––––––––
64
3.
Share capital
31 March 2014
Shares
Authorised:
A Ordinary shares of £0.001 each
B Ordinary shares of £0.001 each
Ordinary shares of £0.001 each
73
250
1,427
––––––––
1,750
72,572
250,000
1,427,428
––––––––
1,750,000
73
250
1,427
––––––––
1,750
72,572
1,378,875
––––––––
1,451,447
73
1,378
––––––––
1,451
72,572
1,378,875
––––––––
1,451,447
73
1,378
––––––––
1,451
––––––––
4.
£
72,572
250,000
1,427,428
––––––––
1,750,000
––––––––
Allotted, called up and fully paid:
A Ordinary shares of £0.001 each
Ordinary shares of £0.001 each
£
31 March 2013
Shares
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Acquisition of Philpotts
On 28 February 2014, the Group acquired Philpotts, a sandwich and salad retailer with 23 shops in the UK.
The acquisition details are as follows:
£’000
Fair value of consideration transferred:
Amounts settled in cash
6,334
––––––––
Recognised amounts of identifiable net assets:
Tangible fixed assets
Inventory
Trade receivables
Prepayments
Other assets
Liabilities
3,074
113
318
125
115
(1,515)
––––––––
2,230
4,104
––––––––
6,334
Identifiable net assets
Goodwill on acquisition
––––––––
In addition, acquisition expenses of £225,000 have been charged to the income statement.
At the time of publishing this unaudited interim financial information the directors are carrying out an
exercise to fair value the assets acquired in this acquisition. Full details of this will be published as soon as
it is complete.
65
PART V
UNAUDITED PROFORMA FINANCIAL INFORMATION
PROFORMA STATEMENT OF COMPREHENSIVE INCOME
Patisserie
Acquisition
Limited
Year to
30 September
2013
IFRS
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation
Amortisation
Operating profit
Finance expense
Profit before income tax
Income tax expense
Total comprehensive income/(expense) for the year
60,112
(13,148)
––––––––
46,964
(34,920)
(2,459)
–
––––––––
9,585
(1,356)
––––––––
8,229
(1,427)
––––––––
6,802
––––––––
Philpotts
(Holdings)
Limited
Year to
30 June
2013
UK GAAP
£’000
Proforma
£’000
10,014
(8,585)
––––––––
1,429
(196)
(525)
(506)
––––––––
202
(47)
––––––––
155
(159)
––––––––
(4)
70,126
(21,733)
––––––––
(48,393)
(35,116)
(2,984)
(506)
––––––––
9,787
(1,403)
––––––––
8,384
(1,586)
––––––––
6,798
––––––––
––––––––
The proforma financial information has been prepared for illustrative purposes only and, because of its
nature, it addresses a hypothetical situation and therefore does not represent the Group’s actual financial
position or results.
Notes:
1.
Philpotts (Holdings) Limited’s results are extracted from the filed statutory accounts of the Company for the year ended 30 June
2013. Patisserie Acquisition Limited’s results are extracted from the Historical Financial Information presented in Section A of
Part III of this document.
2.
The Proforma column presents the results of an aggregation of the above financial information without any further adjustments
being made.
66
PROFORMA STATEMENT OF FINANCIAL POSITION
Patisserie
Acquisition
Limited
As at
31 March
2014
Unaudited
Adjustments
IFRS
(Note 2)
£’000
£’000
ASSETS
Non-current assets
Goodwill
17,863
–
Property, plant and equipment
27,552
–
––––––––
––––––––
45,415
–
Current assets
Trade and other receivables
6,226
–
Inventories
3,160
–
Cash and cash equivalents
294
–
––––––––
––––––––
9,680
–
––––––––
––––––––
Total assets
55,095
–
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to the
equity holders
Ordinary share capital
Share premium
Retained earnings
Total equity
Non-current liabilities
Borrowings
Deferred tax
Current liabilities
Trade and other payables
Borrowings
Corporation tax
Total liabilities
Total equity and liabilities
Adjustments
(Note 3)
£’000
Proforma
£’000
–
–
––––––––
–
17,863
27,552
––––––––
45,415
–
–
2,000
––––––––
2,000
––––––––
2,000
6,226
3,160
2,294
––––––––
11,680
––––––––
57,095
––––––––
––––––––
(1)
(499)
(15,454)
––––––––
(15,954)
–
–
234
––––––––
234
(1,000)
(32,967)
–
––––––––
(33,967)
(1,001)
(33,466)
(15,220)
––––––––
(49,687)
(25,771)
(1,213)
––––––––
(26,984)
–
–
––––––––
–
25,771
–
––––––––
25,771
–
(1,213)
––––––––
(1,213)
(4,451)
(7,462)
(244)
––––––––
(12,157)
––––––––
(39,141)
––––––––
(55,095)
–
(234)
–
––––––––
(234)
––––––––
(234)
––––––––
–
(1,500)
7,696
–
––––––––
6,196
––––––––
31,967
––––––––
(2,000)
(5,951)
–
(244)
––––––––
(6,195)
––––––––
(7,408)
––––––––
(57,095)
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
The proforma financial information has been prepared for illustrative purposes only and, because of its
nature, it addresses a hypothetical situation and therefore does not represent the Group's actual financial
position or results.
Notes:
1.
Patisserie Acquisition Limited's results are extracted from the Unaudited Interim Financial Information presented in Part IV of
this document
2.
Accrued interest between 31 March 2014 and Admission
3.
Adjustments relating to net proceeds from the Placing, repayment of debt and exercise of EMI options
67
PART VI
ADDITIONAL INFORMATION
1.
The Company
1.1
The Company was incorporated and registered as a private limited company in England and Wales
under the Act on 27 March 2014 with the name Oval (2274) Limited and with registered number
08969601. On 25 April 2014, the Company changed its name to Patisserie Holdings Limited. On
13 May 2014, the Company was re-registered as a public limited company with the name Patisserie
Holdings plc.
1.2
The Company is a public limited company and accordingly the liability of its members is limited. The
Company and its activities and operations, as well as the issue of the Placing Shares, are principally
regulated by the Act and the regulations made thereunder.
Annex I: 5.1.1,
5.1.2,
Annex I: 5.1.4
Annex III: 4.2
1.3
The Company is domiciled in England and Wales and its head and registered office is at 146-158
Sarehole Road, Birmingham, B28 8DT. The telephone number of the Company is +44 121 7777 000.
2.
Corporate reorganisation
2.1
In connection with Admission, the Group undertook a corporate reorganisation that resulted in the
Company becoming the ultimate holding company of the Group. The Corporate Reorganisation steps
comprised:
(i)
the issue of further ordinary shares of £1.00 each in the Company and the consequent
consolidation of such shares into one ordinary share (“Step 1”);
(ii)
the sale by the shareholders of PAL of their shares in PAL to the Company in consideration for
the issue of new A ordinary shares, B ordinary shares and ordinary shares in the Company
(“Step 2”);
(iii)
a reduction of capital by the Company of the nominal value of the A ordinary shares and the
ordinary shares in issue, in order to create additional distributable reserves in the Company
(“Step 3”);
(iv)
the purchase by the Company of the entire class of B ordinary shares issued in the Company
from the holders of those B ordinary shares (“Step 4”);
(v)
the exercise of options over ordinary shares, the sub-division of the A ordinary shares and the
ordinary shares issued in the Company and the subsequent re-designation of such shares to
Ordinary Shares and deferred shares in the Company (“Step 5”);
(vi)
the purchase by the Company of the entire class of deferred shares issued in the Company from
the holders of those issued deferred shares (“Step 6”); and
(vii) the re-registration of the Company as a public limited company (“Step 7”).
2.2
The Corporate Reorganisation did not affect the Group’s operations, which will continue to be carried
out through its operating subsidiaries.
68
3.
Share capital and loan capital
3.1
As at 27 March 2014 being the date of incorporation of the Company and the latest date to which
unaudited financial information has been prepared, the issued share capital of the Company, all of
which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary Shares of £1.00 each
3.2
1
3.3
1
3.4
1,378,875
72,572
227,500
1,378,875
72,572
227,500
1,378,875
72,572
80,733,361
4,620,103
£807,333.61
£46,201.03
As at 12 May 2014, being the date on which Step 6 was completed, the issued share capital of the
Company, all of which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary shares of £0.01 each
3.8
£772,170
£40,640.32
As at 12 May 2014, being the date on which Step 5 was completed, the issued share capital of the
Company, all of which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary shares of £0.01 each
Deferred shares of £0.01 each
3.7
£772,170
£40,640.32
£227.50
As at 12 May 2014, being the date on which Step 4 was completed, the issued share capital of the
Company, all of which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary shares of £0.56 each
A ordinary shares of £0.56 each
3.6
£104,794,500
£5,515,472
£227.50
As at 12 May 2014, being the date on which Step 3 was completed, the issued share capital of the
Company, all of which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary shares of £0.56 each
A ordinary shares of £0.56 each
B ordinary shares of £0.001 each
3.5
£76.00
As at 9 May 2014, being the date on which Step 2 was completed, the issued share capital of the
Company, all of which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary shares of £76 each
A ordinary shares of £76 each
B ordinary shares of £0.001 each
80,733,361
£807,333.61
As at 13 May 2014, being the date of completion of the Corporate Reorganisation and the date on which
Step 7 was completed, the issued share capital of the Company, all of which was paid up, was as follows:
Issued
Class of share
Ordinary shares of £0.01 each
69
21.1.1 (a), (b)
£1.00
As at 9 May 2014, being the date on which Step 1 was completed, the issued share capital of the
Company, all of which was fully paid up, was as follows:
Issued
Class of share
Number
Amount
Ordinary shares of £76 each
Annex I:
Number
Amount
80,733,361
£807,333.61
Annex I: 21.1.7
3.9
The issued share capital of the Company, all of which is fully paid up, as at the date of publication of
this document is as follows:
Issued
Class of share
Ordinary shares of £0.01 each
Number
Amount
80,733,361
£807,333.61
3.10 The issued share capital of the Company, all of which will be fully paid up on or before Admission,
as it is expected to be immediately following Admission is as follows:
Issued
Class of share
Ordinary shares of £0.01 each
Number
Amount
100,000,000
£1,000,000
3.11 Pursuant to the Act, with effect from 1 October 2009, the concept of authorised share capital was
abolished and accordingly there is no limit on the maximum number of shares that may be allotted by
the Company.
3.12 Pursuant to an ordinary resolution of the Company dated 13 May 2014, the Directors are generally
and unconditionally authorised pursuant to section 551 of the Act to allot shares and grant rights to
subscribe for or to convert any security into shares (such shares and rights to subscribe for or to
convert any security into shares being “relevant securities”) up to an aggregate nominal amount of
£522,666.39, such authority to be limited to the allotment of:
(a)
19,266,639 new Ordinary Shares pursuant to the Placing; and
(b)
relevant securities other than pursuant to sub-paragraph (a) above, having an aggregate nominal
value equal to £330,000,
Annex III: 4.6
such authority to expire upon the earlier of the conclusion of the next annual general meeting of the
Company and the date which is 18 months from the date of passing of the resolution, except that
the Directors can during such period make offers or arrangements which could or might require the
allotment of relevant securities after the expiry of such period.
3.13 Pursuant to a special resolution of the Company dated 13 May 2014, the Directors are empowered
pursuant to section 570(1) of the Act to allot equity securities (as defined in section 560(1) of the Act)
of the Company wholly for cash pursuant to the authority of the Directors under section 551 of the
Act conferred by paragraph 3.12 above, and/or by way of a sale of treasury shares by virtue of
section 573 of the Act, as if the provisions of section 561 of the Act did not apply to such allotment
provided that this power is limited to:
(a)
the allotment of equity securities which fall within sub-paragraph (a) of paragraph 3.12 above; and
(b)
the allotment of equity securities in connection with an invitation or offer of equity securities
to the Shareholders (excluding any shares held by the Company as treasury shares (as defined
in section 724(5) of the Act)) on a fixed record date in proportion (as nearly as practicable) to
their respective holdings of shares or in accordance with the rights attached to such shares (but
subject to such exclusions or other arrangements as the Directors may deem necessary or
expedient in relation to fractional entitlements or as a result of legal, regulatory or practical
problems arising under the laws of or the requirements of any overseas territory or by virtue of
shares being represented by depository receipts or the requirements of any regulatory body or
stock exchange or any other matter whatsoever); and
(c)
the allotment (other than pursuant to the power referred to in sub-paragraphs (a) and
(b) (inclusive) above) of equity securities up to an aggregate nominal value equal to £50,000,
such authority to expire upon the earlier of the conclusion of the next annual general meeting of the
Company and the date which is 18 months from the date of passing of the resolution, except that
the Directors can during such period make offers or arrangements which could or might require the
allotment of equity securities after the expiry of such period.
70
Annex III: 4.6
3.14 The provisions of section 561 of the Act (to the extent not disapplied pursuant to section 570 of the
Act) confer on Shareholders certain rights of pre-emption in respect of the allotment of equity
securities (as defined in section 560(1) of the Act) which are, or are to be, paid up in cash and apply
to the authorised but unissued equity share capital of the Company. These provisions have been
disapplied to the extent referred to in paragraph 3.8 above.
3.15 Save as set out in this paragraph 3:
Annex III: 4.5
(a)
no unissued share or loan capital of the Company or any of its subsidiaries is under option or
is agreed conditionally or unconditionally to be put under option;
(b)
there are no shares in the capital of the Company currently in issue with a fixed date on which
entitlement to a dividend arises and there are no arrangements in force whereby future
dividends are waived or agreed to be waived;
(c)
there are no outstanding convertible securities issued by the Company; and
(d)
no share capital or loan capital of the Company or any of its subsidiaries (other than intra-group
issues by wholly-owned subsidiaries) is in issue and no such issue is proposed.
3.16 None of the Ordinary Shares has been sold or made available to the public in conjunction with the
application for Admission.
3.17 Save as disclosed in this document, no commission, discounts, brokerages or other specific terms have
been granted by the Company in connection with the issue or sale of any of its share or loan capital.
3.18 The Ordinary Shares are in registered form and capable of being held in uncertificated form.
Application has been made to Euroclear for the Ordinary Shares to be enabled for dealings through
CREST as a participating security. No temporary documents of title will be issued. It is expected that
definitive share certificates will be posted to those Shareholders who have requested the issue of
Ordinary Shares in certificated form by 31 May 2014. The International Securities Identification
Number (ISIN) for the Ordinary Shares is GB00BM4NV504.
Annex III: 4.3
3.19 The Placing Price of 170 pence per Ordinary Share represents a premium of 169 pence over the nominal
value of one penny per Ordinary Share and is payable in full on Admission under the terms of the
Placing.
Annex III: 4.4
4.
Subsidiary undertakings
The Company is the holding company of the Group.
Annex I: 7.1
The Company currently has the following significant subsidiaries:
Annex I: 7.1, 7.2
Name
Registration
number
PAL
Philpotts1
Philpotts Limited2
La Boheme Limited
06070007
05838607
02001192
00736316
PVHL
Hewmark Limited4
Patisserie Valerie Limited
Stonebeach Limited
Patisserie Valerie Express Limited
05914839
01551688
02139436
04396961
04622279
Status
Active
Active
Active
In voluntary
liquidation3
Active
Active
Active
Active
Active
Place of
incorporation
Percentage
of voting
share capital
held (%)
England/Wales
England/Wales
England/Wales
England/Wales
100
100
100
n/a
England/Wales
England/Wales
England/Wales
England/Wales
England/Wales
100
100
100
100
100
Notes:
1
Philpotts, La Boheme Limited and PVHL each being a wholly owned subsidiary of PAL.
2
A wholly owned subsidiary of Philpotts.
3
There is not expected to be any deficit to creditors.
4
Hewmark Limited, Patisserie Valerie Limited, Stonebeach Limited and Patisserie Valerie Express Limited each being a wholly
owned subsidiary of PVHL.
71
5.
Summary of the Articles of Association of the Company
The Articles, which were adopted conditional on Admission by a special resolution of the Company passed
on 13 May 2014, contain, inter alia, provisions to the following effect:
(a)
Annex I: 21.2.1
and 21.2.2
Annex I: 21.2.1
Objects
Section 31 of the Act provides that the objects of a company are unrestricted unless any restrictions
are set out in its articles.
The Articles do not contain any restrictions on the objects of the Company.
(b)
Rights attaching to Ordinary Shares
Annex I: 21.2.3
(i)
Annex III: 4.5
Voting rights
Subject to the provisions of the Act and the Articles and to any rights or restrictions as to voting
attached to any class of shares, at any general meeting on a show of hands, every member who
(being an individual) is present in person has one vote. On a vote on a show of hands, a proxy
appointed by one member has one vote and a proxy appointed by more than one member has
one vote, if instructed to vote in the same way by all those members, and is entitled to one vote
for and one vote against, if instructed to vote in different ways by those members. On a poll,
every member present in person or by proxy or (being a corporation) by a duly authorised
representative has one vote for each share of which he is the holder. A member of the Company
shall not be entitled, in respect of any share held by him, to vote (either personally or by proxy)
at any general meeting of the Company unless all amounts payable by him in respect of that
share in the Company have been paid or credited as having been paid.
(ii)
Dividends
Subject to the provisions of the Act and of the Articles and to any special rights attaching to
any shares, the Company may, by ordinary resolution, declare that out of profits available for
distribution dividends be paid to members of the Company according to their respective rights
and interests in the profits of the Company. However, no such dividend shall exceed the amount
recommended by the Board. Interim dividends may be paid provided that they appear to the
Board to be justified by the profits available for distribution and the position of the Company.
Except as otherwise provided by the Articles or by the rights attached to shares, all dividends
shall be apportioned and paid pro rata according to the amounts paid up or credited as paid up
(otherwise than in advance of calls) on the shares during any portion or portions of the period
in respect of which the dividend is paid.
Unless otherwise provided by the rights attached to any share, no dividends payable by the
Company shall bear interest as against the Company.
The Company in general meeting may, on the recommendation of the Board, by ordinary
resolution direct that payment of any dividend declared may be satisfied wholly or partly by
the distribution of assets, and in particular, of fully paid shares or debentures of any other
company.
The Board may, with the prior authority of an ordinary resolution of the Company and provided
the Company has sufficient undistributed profits or reserves to give effect to it, offer the holders
of ordinary shares the right to elect to receive ordinary shares credited as fully paid in whole
or in part instead of cash in respect of the whole or some part of any dividend specified in the
resolution.
Any dividend unclaimed for a period of 12 years after having become due for payment shall
(if the Board so resolves) be forfeited and shall revert to the Company.
72
(iii)
Return of capital
On a winding-up of the Company, the surplus assets remaining after payment of all creditors
shall be divided among the members in proportion to the capital which, at the commencement
of the winding up, is paid up on their respective shares or the liquidator may, with the sanction
of a special resolution of the Company (and any other sanction required by law), divide
amongst the members in specie the whole or any part of the assets of the Company in such
manner as shall be determined by the liquidator.
(c)
Transfer of shares
Save in the case of shares which have become participating securities for the purposes of the CREST
Regulations, title to which may be transferred by means of a relevant system such as CREST without
a written instrument, all transfers of shares must be effected by an instrument of transfer in writing in
any usual form or in any other form approved by the Board. The instrument of transfer shall be
executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully
paid up) by or on behalf of the transferee. The Board may, in its absolute discretion, refuse to register
any transfer of certificated shares unless it is:
(i)
in respect of a share which is fully paid up;
(ii)
in respect of a share on which the Company has no lien;
(iii)
in respect of only one class of shares;
(iv)
in favour of a single transferee or not more than four joint transferees;
(v)
duly stamped (if so required); and
(vi)
delivered for registration to the registered office of the Company (or such other place as the
Board may from time to time determine) accompanied by the relevant share certificate(s) and
such other evidence as the Board may reasonably require to prove the title of the transferor and
the due execution by him of the transfer or, if the transfer is executed by some other person on
his behalf, the authority of that person to do so,
provided that the Board may not exercise such discretion in such a way as to prevent dealings in such
shares from taking place on an open and proper basis.
The Board shall register a transfer of title to any uncertificated share, except the Board may refuse
(subject to any relevant requirements of the London Stock Exchange) to register the transfer of an
uncertificated share which is in favour of more than four persons jointly or in any other circumstances
permitted by the CREST Regulations.
If the Board refuses to register a transfer of a share it must, within two months after the date on which
the transfer was lodged with the Company, send notice of the refusal to the transferee together with
its reasons for refusal.
There exist no provisions in the Articles that would delay, defer or prevent a change of control in the
Company.
(d)
Disclosure of interests in shares
Annex I: 21.2.7
The provisions of rule 5 of the Disclosure and Transparency Rules govern the circumstances in which
a person may be required to disclose his interests in the share capital of the Company. Inter alia, this
requires a person who is interested in three per cent. or more of the voting rights in respect of the
Company’s issued ordinary share capital to notify his interest to the Company (and above that level,
any change in such interest equal to one per cent. or more). In addition, the City Code contains further
provisions pursuant to which a person may be required to disclose his interests in the share capital of
the Company.
73
Pursuant to the Articles, if a member, or any other person appearing to be interested in shares held by
that member, has been issued with a notice pursuant to section 793 of the Act and has failed in relation
to any shares (the “default shares”) to give the Company the information thereby required within the
prescribed period from the date of the notice or, in purported compliance with such notice, has made
a statement which is false or inadequate in a material particular, then the Board may, at least 14 days
after service of the notice, serve on the holder of such default shares a notice (“disenfranchisement
notice”) pursuant to which the following sanctions shall apply:
(i)
the member shall not, with effect from the service of the disenfranchisement notice, be entitled
in respect of the default shares to be present or to vote (either in person or by proxy) at any
general meeting or at any separate meeting of the holders of any class of shares of the Company
or on any poll or to exercise any other right conferred by membership in relation to any such
meeting or poll; and
(ii)
where the default shares represent at least 0.25 per cent. in nominal value of their class:
(A)
any dividend or other money payable in respect of the shares shall be withheld by the
Company which shall not have any obligation to pay interest on it and the member shall
not be entitled to elect in the case of a scrip dividend to receive shares instead of that
dividend; and
(B)
subject, in the case of uncertificated shares to the CREST Regulations, no transfer, other
than an approved transfer, of any shares held by the member shall be registered unless:
–
the member is not himself in default as regards supplying the information
required; and
–
the member proves to the satisfaction of the Board that no person in default as
regards supplying such information is interested in any of the shares which are
the subject of the transfer.
The above sanctions shall also apply to any shares in the Company issued in respect of the default
shares (whether on capitalisation, a rights issue or otherwise) unless a separate notice is issued in
respect of such further shares.
(e)
Purchase of own shares
Subject to the provisions of the Act and to any rights for the time being attached to any shares, the
Company may with the sanction of a special resolution enter into any contract for the purchase of its
own shares.
(f)
Variation of rights
Annex I: 21.2.4
Subject to the provisions of the Act and of the Articles, if at any time the share capital of the Company
is divided into shares of different classes, any of the rights attached to any share or class of share in
the Company may (unless otherwise provided by the terms of issue of the shares of that class) be
varied or abrogated in such manner (if any) as may be provided by such rights or, in the absence of
any such provision, either with the consent in writing of the holders of not less than three quarters in
nominal value of the issued shares of the class or with the sanction of a special resolution passed at a
separate general meeting of the holders of the shares of the class duly convened and held as provided
in the Articles (but not otherwise) and may be so varied or abrogated whilst the Company is a going
concern or while the Company is or is about to be in liquidation.
The quorum for such separate general meeting of the holders of the shares of the class shall be not
less than two persons present holding or representing by proxy at least one-third in nominal value of
the issued shares of the class in question (excluding any shares of that class held as treasury shares).
74
(g)
General meetings
Annex I: 21.2.5
Subject to the provisions of the Act, annual general meetings shall be held at such time and place as
the Board may determine. The Board may convene any other general meeting whenever it thinks fit.
A general meeting shall also be convened by the Board on the requisition of members in accordance
with the Act.
A general meeting of the Company (other than an adjourned meeting) shall be called by notice of:
•
in the case of an annual general meeting, at least 21 clear days; and
•
in any other case, at least 14 clear days.
The accidental omission to give notice of general meeting or, in cases where it is intended that it be
sent out with the notice, an instrument of proxy, or to give notice of a resolution intended to be moved
at a general meeting to, or the non-receipt of any of them by, any person(s) entitled to receive the same
shall not invalidate the proceeding at that meeting and shall be disregarded for the purpose of
determining whether the notice of the meeting, instrument of proxy or resolution were duly given.
No business shall be transacted at any general meeting unless the requisite quorum is present when
the meeting proceeds to business but the absence of a quorum shall not preclude the choice or
appointment of a chairman which shall not be treated as part of the business of the meeting. Subject
to the provisions of the Articles, two persons entitled to attend and vote on the business to be
transacted, each being a member present in person or a proxy for a member, shall be a quorum.
With the consent of any general meeting at which a quorum is present the chairman may, and shall if
so directed by the meeting, adjourn the meeting from time to time (or indefinitely) and from place to
place as he shall determine. The chairman may, without consent of the meeting, interrupt or adjourn
any general meeting if he is of the opinion that it has become necessary to do so in order to secure the
proper and orderly conduct of the meeting or to give all persons entitled to do so a reasonable
opportunity of speaking and voting at the meeting or to ensure that the business of the meeting is
otherwise properly disposed of.
Notice of adjournment or of the business to be transacted at the adjourned meeting is not required
unless the meeting is adjourned for 14 days or more, in which case at least 7 clear days’ notice is
required. No business shall be dealt with at any adjourned meeting, the general nature of which was
not stated in the notice of the original meeting.
(h)
Board authorisation of conflicts
Subject to and in accordance with the Act and the provisions of the Articles, the Board may authorise
any matter or situation in which a Director has, or can have, a direct or indirect interest that conflicts,
or may possibly conflict, with the interests of the Company. Any such authorisation shall be effective
only if:
(i)
(i)
any requirement as to the quorum at any meeting of the Directors at which the matter is
considered is met without counting either the conflicted Director or any other interested
Director;
(ii)
the matter or situation was agreed to and any relevant resolution was passed without counting
the votes of the conflicted Director and without counting the votes of any other interested
Director; and
(iii)
the conflicted Director has disclosed in writing all material particulars of the matter, office,
employment or position which relates to the matter or situation which is the subject of the
conflict or possible conflict.
Directors’ interests
Provided permitted by any relevant legislation and provided that he has disclosed to the Board the
nature and extent of his interest in accordance with the Articles, a Director, notwithstanding his office:
75
(j)
(i)
may be party to or otherwise interested in any contract, arrangement, transaction or proposal
with the Company or in which the Company is otherwise interested;
(ii)
may hold any other office or position of profit under the Company (except that of auditor of the
Company or of any subsidiary of the Company) and may act by himself or through his firm in
a professional capacity for the Company;
(iii)
may be a member of or a director or other officer of, or employed by, or a party to any
transaction or arrangement with, or otherwise interested in, any body corporate promoted by or
promoting the Company or in which the Company is otherwise interested or as regards which
the Company has any powers of appointment; and
(iv)
shall not, by reason of his office, be liable to account to the Company for any dividend, profit,
remuneration, superannuation payment or other benefit which he derives from any such office,
employment, contract, arrangement, transaction or proposal or from any interest in any such
body corporate and no such contract, arrangement, transaction or proposal shall be avoided on
the grounds of any Director having any such interest or receiving any such dividend, profit,
remuneration, payment or benefit.
Directors’ ability to vote and count for quorum
A Director shall not vote on or be counted in the quorum in relation to, any resolution of the Board
or any committee of the Board concerning any transaction or arrangement with the Company in which
he has an interest which may reasonably be regarded as likely to give rise to a conflict of interest, save
that a Director shall be entitled to vote and be counted in the quorum in respect of any resolution at
such meeting if the resolution relates to one of the following matters:
(i)
the giving to him of any guarantee, security or indemnity in respect of money lent or
obligations incurred by him at the request of or for the benefit of the Company or any of its
subsidiary undertakings;
(ii)
the giving to a third party of any guarantee, security or indemnity in respect of a debt or
obligation of the Company or any of its subsidiary undertakings for which he himself has
assumed responsibility in whole or in part, either alone or jointly with others, under a guarantee
or indemnity or by the giving of security;
(iii)
where the Company or any of its subsidiary undertakings is offering securities in which offer
the Director is or may be entitled to participate as a holder of securities or in the underwriting
or sub-underwriting of which the Director is to participate;
(iv)
relating to another company in which he and any persons connected with him do not to his
knowledge hold an interest in shares representing one per cent. or more of either any class of
the equity share capital, or the voting rights, in such company;
(v)
relating to an arrangement for the benefit of the employees of the Company or any of its
subsidiary undertakings which does not award him any privilege or benefit not generally
awarded to the employees to whom such arrangement relates;
(vi)
concerning insurance which the Company proposes to maintain or purchase for the benefit of
Directors or for the benefit of persons including Directors;
(vii) the funding of expenditure by one or more Directors in defending proceedings against him or
them or doing anything to enable such Directors to avoid incurring such expenditure provided
that such funding is consistent with, or no more beneficial to him or them than the provisions
of the Articles and is permitted pursuant to the provisions of the relevant legislation; or
(viii) the giving of an indemnity or indemnities in favour of one or more Directors which is/are
consistent with, or no more beneficial to him or them than any such indemnities provided
76
pursuant to the Articles (and provided such indemnities are permitted pursuant to the relevant
legislation).
A Director may not vote or be counted in the quorum on any resolution of the Board or committee of
the Board concerning his own appointment as the holder of any office or position of profit with the
Company or any company in which the Company is interested (including fixing or varying the terms
of such appointment or its termination).
Where proposals are under consideration concerning the appointments (including fixing or varying
the terms of the appointment) of two or more Directors to offices or position of profit with the
Company or any company in which the Company is interested, such proposals may be divided and a
separate resolution considered in relation to each Director. In such case, each such Director (if not
otherwise debarred from voting) is entitled to vote (and be counted in the quorum) in respect of each
resolution except that resolution concerning his own appointment.
(k)
Directors
The Directors (other than alternate Directors) shall be entitled to receive by way of fees for their
services as Directors such sum as the Board may from time to time determine (not exceeding
£500,000 per annum in aggregate or such other sum as the Company in general meeting shall from
time to time determine). Such sum (unless otherwise directed by the resolution of the Company by
which it is voted) shall be divided among the Directors in such proportions and in such manner as the
Board may determine or, in default of such determination, equally (save where any Director has held
office for less than the whole of the relevant period in respect of which the fees are paid).
Each Director shall be entitled to be repaid all reasonable travelling, hotel and other expenses properly
incurred by them in or about the performance of his duties as Director. If by arrangement with the
Board any Director performs any special duties or services outside his ordinary duties as a Director
and not in his capacity as a holder of employment or executive office, he may be paid such reasonable
additional remuneration (whether by way of a lump sum or by way of salary, commission,
participation in profits or otherwise) as the Board may from time to time determine.
(l)
Pensions and benefits
The Board may exercise all the powers of the Company to provide pensions or other retirement or
superannuation benefits and to provide death or disability benefits or other allowances or gratuities
(whether by insurance or otherwise) for any person who is or who has at any time been a Director or
any director of a subsidiary company of the Company or allied to or associated with the Company or
such subsidiary or predecessor in business of the Company or any such subsidiary (and for any
member of his family including a spouse or former spouse or civil partner or former civil partner or
any person who is or was dependent on him). For this purpose the Board may, inter alia, establish,
maintain, subscribe and contribute to any scheme, institution, club, trust or fund and pay premiums.
(m)
Indemnification of Directors
Subject to, and to the fullest extent permitted by, law, every Director and every director of any
associated company, former Director, alternate Director secretary or other officer of the Company
(other than an auditor) may (at the discretion of the Board) be fully indemnified out of the assets of
the Company against all or any part of any costs, charges, losses, damages and liabilities incurred by
him in relation to anything done, omitted or alleged to have been done by him in the actual or
purported execution or discharge of his duties or exercise of his powers in relation to the Company or
in connection with the Company’s activities as trustee of any occupational pension scheme, subject to
the exclusions set out in the Articles.
(n)
Borrowing powers
Subject to the provisions of the Act and to the provisions set out in the Articles, the Board may
exercise all the powers of the Company to borrow money to guarantee, to indemnify and to mortgage
77
or charge its undertaking, property assets (present or future) and uncalled capital, or any part or parts
thereof, and to issue debentures and other securities whether outright or as collateral security for any
debt, liability or obligation of the Company or any third party.
The aggregate principal amount at any one time outstanding in respect of monies borrowed or secured
by the Company and its subsidiaries (exclusive of intra-group borrowings and after deducting cash
deposited) shall not at any time without the previous sanction of an ordinary resolution of the
Company, exceed the greater of £25 million and an amount equal to 3 times the aggregate of:
(i)
the amount paid up (or credited as or deemed to be paid up) on the issued share capital of the
Company; and
(ii)
the amount outstanding to the credit of the capital and revenue reserves of the Company and
its subsidiaries, whether or not distributable (including any share premium account, capital
redemption reserve fund or revaluation reserve and credit or debit balance on any other reserve)
after adding thereto or deducting therefrom any balance standing to the credit or debit of the
income statement of the Company and its subsidiaries,
all as shown in the relevant balance sheet of the Company and its subsidiaries but after any
adjustments, exclusions and deductions as set out in the Articles.
6.
Directors and employees
6.1
The Directors and each of their respective functions are set out in Part I of this document.
6.2
The business address of the Directors is 146-158 Sarehole Road, Birmingham, B28 8DT.
6.3
Details of the length of service of each of the Directors to date in their current office are set out below:
6.4
Name
Age
Commencement
date in office
Luke Oliver Johnson
Paul Edward May
Christopher David Marsh
Lee Ginsberg
James Michael Alexander Horler
52
54
39
56
49
27 March 2014
27 March 2014
27 March 2014
on Admission
30 April 2014
Details of any directorship that is or was in the last five years held by each of the Directors, and any
partnership of which each of the Directors is or was in the last five years a member in addition to their
directorships of the Company and its subsidiary undertakings are set out below:
Name
Chris David
Marsh
Current
directorships and partnerships
Previous
directorships and partnerships
AMI Associates Limited
Kensington Close Management
Company Limited
La Boheme Limited (in liquidation)
Hewmark Limited
Leonardo Limited
AMI Accountants Limited
M and N Management Limited
PVL
Stonebeach Limited
PVEL
Spice Bakery Limited
Creative Universal Designs Limited
Hemel Secretarial Services Ltd
(dissolved by voluntary liquidation)
Retail and Shop Fittings Limited
(dissolved)
78
Annex I: 16.1
AIM Sch 2 (g)(ii)
Paul Edward
May
GRA Limited
Bradden Properties Limited
La Boheme Limited (in liquidation)
Ambivent Limited
Apo Sport Limited
Christian Lewis Performance and
Classic Car Limited
Malpass Direct Limited
PVHL
Stonebeach Limited
Spice Bakery Limited
Venex Technical Developments
Limited
Venex Holdings Limited
Patienceform Limited
Hannah Training Services Limited
Venex (Sales) Limited
Fitness & Leisure Group (Holdings)
Ltd
Fitness & Leisure Group (Southern)
Limited
Healthy Living Centres Limited
Motorcise Limited
Bridge Highfield Estates Limited
(now dissolved)
Luke Oliver
Johnson
RCP
Playful Productions LLP
The Cobden Club Limited (in
liquidation)
Risk Capital Limited
Superbrands Limited
Cedar Pharma Limited
APT Controls Limited
Synarbor PLC
Risk Capital Partners II (GP) Limited
Risk Capital Partners II (Scotland)
Limited
Beak Street Films Limited
Theatre Investment Fund Limited
Feng Sushi Limited
Ego Restaurants Limited
Ego Group Limited
Ego Restaurants Holdings Limited
3Sixty Restaurants Limited
AKA Group Limited
Interquest (UK) Limited
Interquest Group PLC
Giraffe Concepts Limited
Clear Leisure plc
Seafood Property Holdings LLP
(dissolved by voluntary dissolution)
Bookshop Acquisitions Limited (in
liquidation)
Borders (UK) Limited (in liquidation)
Seafood Holdings Limited
Automotive Repair Solutions Limited
(in liquidation)
RSA Adelphi Enterprises Limited
RSA Academies
Flour Power City Limited
E2Exchange Limited
Phaidon Press Limited
Action on Addiction
Forestrox Limited
Contiga Capital Management LLP
79
Name
Luke Oliver
Johnson
(continued)
Current
directorships and partnerships
Fiery Dragons Ltd
Draft House Holding Limited
Metrodome Group Limited
Metro Bank PLC
Poseidon House Management Limited
Recruitment Capital Partners LLP
London 8 Limited
Cradley Brook Limited
History Today Limited
PAL
PVHL
Spice Bakery Limited
Bread Acquisitions Limited
Buffet Restaurants Limited
Startup Britain
The Bishopsgate Foundation
Institution of Cancer Research: Royal
Cancer Hospital (The)
Cruise.Co (Holdings) Limited
Majestic Bingo Limited
Hermitage Valley Limited
Halesend Estate Limited
RCP II Founder Partner LP
RCP Co-Investment Partnership LP
Bread Holdings Limited
ICR Enterprises Limited
Neilson Active Holidays (Holdings)
Limited
The Career Colleges Company (UK)
Limited
Centre for Entrepreneurs Limited
Chrysalis Vision Limited
The Curious Cook Limited
The Genuine Dining Co. Limited
Harbour & Jones Limited
Grand Union Company Limited
80
Previous
directorships and partnerships
6.5
Lee Dale
Ginsberg
D.P. Newcastle Limited
Oriole Restaurants Limited
Mothercare PLC
D A Hall Trading Limited
Daht Limited
Trinity Mirror Plc
The Bulb Man (UK) Limited
(dissolved)
Domino’s Pizza Group Plc
Domino’s Pizza UK & Ireland
Limited
DP Capital Limited
DP Group Developments Limited
DP Realty Limited
DP Peterborough Limited
DP Milton Keynes Limited
DPG Holdings Limited
Domino’s Leasing Limited
Domino’s Pizza Germany (Holdings)
Limited
Domino’s Pizza Germany Limited
Domino’s Pizza West Country Limited
MLS Ltd
American Pizza Company Limited
(dissolved)
Live Bait Limited (dissolved)
DP Beach A Limited
DP Beach B Limited
DP Shayban Limited
James Michael
Alexander
Horler
Cartwheel Recruitment Limited
Ego Group Limited
Ego Restaurants Holdings Limited
Ego Restaurants Limited
Charterhouse Leisure Limited
3Sixty Restaurants Limited
Rocket (Canary Wharf) Limited
Rocket Restaurants Limited
La Sala Limited
James Horler Limited (dissolved)
Directors’ confirmations
(a)
Paul May and Chris Marsh were directors of La Boheme Limited at the time that the company
entered administration on 12 January 2010. Liquidators were appointed on 22 September 2010
and the company is currently in liquidation. No deficit is expected to accrue to creditors.
(b)
Luke Johnson was a director of Just Tyres Holdings Limited when it was put into administrative
receivership 11 October 2001. The company was dissolved on 17 July 2007.
(c)
Luke Johnson was a director of the following companies in the 12 months prior to them being
put into administrative receivership:
Sunday Business Newspapers
Limited
The company entered administrative receivership on
22 July 1997 after Luke Johnson resigned as a director
on 11 March 1997. The company was dissolved on
30 August 2002.
Utility Cable PLC
The company entered administrative receivership on
14 September 1998 after Luke Johnson resigned as a
director on 22 May 1998. The company was dissolved on
2 August 2007.
81
(d)
6.6
6.7
Luke Johnson was a director of the following companies when they were put into liquidation:
Income Tax Professionals Limited
The company entered creditors’ voluntary liquidation on
2 June 1999 and the company was dissolved on
23 September 2003.
The Cobden Club Limited
The company entered members' voluntary liquidation on
17 July 2013 and is currently in liquidation.
(e)
Luke Johnson was a director of Automative Repair Solutions Limited in the 12 months prior to
it being put into liquidation. Luke Johnson resigned as a director on 4 October 2011 and the
company was wound up by the court on 3 September 2012.
(f)
Luke Johnson was a director of the following companies in the 12 months prior to them being
put into administration:
Bookshop Acquisitions Ltd
The company entered administration on 30 November
2009 after Luke Johnson resigned as a director on
16 July 2009. The company was dissolved on
22 February 2013.
Borders (UK) Limited
The company entered administration on 26 November
2009 after Luke Johnson resigned as a director on
16 July 2009. The company was dissolved on 27 August
2011.
Save as disclosed in paragraph 6.5 above, at the date of this document none of the Directors named
in this document:
(a)
has any unspent convictions in relation to indictable offences;
(b)
has been declared bankrupt or has entered into an individual voluntary arrangement;
(c)
was a director of any company at the time of or within the 12 months preceding any
receivership, compulsory liquidation, creditors’ voluntary liquidation, administration,
company voluntary arrangement or any composition or arrangement with its creditors generally
or any class of its creditors with which such company was concerned;
(d)
was a partner in a partnership at the time of or within the 12 months preceding a compulsory
liquidation, administration or partnership voluntary arrangement of such partnership;
(e)
has had his assets the subject of any receivership or was a partner in a partnership at the time
of or within the 12 months preceding any assets thereof being the subject of a receivership; or
(f)
has been the subject of any public criticisms by any statutory or regulatory authority (including
any recognised professional body) nor has ever been disqualified by a court from acting as a
director of a company or from acting in the management or conduct of the affairs of any
company.
Details of the number of the Group’s employees for the period covered by the financial information
set out in Part III are as follows:
Average number
of employees
Period
Financial year ended 30 September 2011
Financial year ended 30 September 2012
Financial year ended 30 September 2013
Six months ended 31 March 2014
1,295
1,558
1,909
1,992
82
AIM Sch 2
(g)(iii)-(viii)
Annex I: 17.1
6.8
As at 31 March 2014, the employees of the Group were employed as follows:
Directors
Management
Production
Sales
Annex I: 17.1
4
68
199
1,715
––––––––
1,986
Total
––––––––
7.
Directors’ and other interests
7.1
The interests of the Directors, their immediate families and any persons connected with them (within
the meaning of section 252 of the Act) (all of which, unless otherwise stated, are beneficial) in the
issued share capital of the Company as at the date of this document and as they are expected to be
prior to and immediately following Admission are/will be as follows:
Director
Luke Johnson
Paul May
Chris Marsh
James Horler
Lee Ginsberg
As at the date of
this document
Percentage
Number of
of issued
Ordinary
Ordinary
Shares
Shares
56,579,1241
8,014,0692
1,370,620
Nil
Nil
70.1
9.93
1.7
Nil
Nil
Immediately following
Admission
Percentage
Number of
of issued
Ordinary
Ordinary
Shares
Shares
42,668,004
5,060,000
516,052
294,116
58,823
42.7
5.1
0.5
0.3
0.1
Notes:
1
Includes 5,082,354 Ordinary Shares held by Liza Johnson. See also paragraph 7.3 below.
2
Includes 2,954,069 Ordinary Shares held by Katherine May. See also paragraph 7.3 below.
7.2
Save as disclosed above, none of the Directors nor any member of his immediate family nor any
person connected with him (within the meaning of section 252 of the Act) holds or is beneficially or
non-beneficially interested, directly or indirectly, in any shares or options to subscribe for, or
securities convertible into, shares of the Company or any of its subsidiary undertakings.
7.3
Each of Luke Johnson, Paul May, Ben Redmond and Mark Farrer-Brown are members of RCP and
therefore beneficially interested in the 6,992,937 Ordinary Shares held by RCP all of which are to be
sold on Admission pursuant to the Placing.
83
Annex I: 17.2
7.4
In addition to the interests of the Directors set out in paragraph 7.1 above, as at the date of this
document, insofar as is known to the Company, the following persons are, or will at Admission be,
interested in three per cent. or more of the issued share capital of the Company:
Name
Old Mutual Global Investors
(UK) Limited
Blackrock Investment Management
(UK) Limited
Ben Redmond1
Mark Farrer-Brown1
Victor Scalzo
RCP1
As at the date of
this document
Percentage
Number of
of issued
Ordinary
Ordinary
Shares
Shares
Annex I: 18.1
Immediately following
Admission
Percentage
Number of
of issued
Ordinary
Ordinary
Shares
Shares
Nil
Nil
8,233,529
8.2
Nil
2,563,424
2,563,424
2,649,763
6,992,937
Nil
3.18
3.18
3.28
8.66
7,462,881
2,491,776
2,088,421
529,953
Nil
7.5
2.5
2.1
0.5
Nil
Note: See also paragraph 7.3 above.
7.5
Save as disclosed above, there are no persons, so far as the Company is aware, who are or will be
immediately following Admission interested in three per cent. or more of the Company’s issued share
capital, nor, so far as the Company is aware, are there any persons who at the date of this document
or immediately following Admission, directly or indirectly, jointly or severally, exercise or could
exercise control over the Company.
Annex I 18.3
7.6
Save as disclosed in this document, there are no arrangements known to the Company, the operation of
which may at a subsequent date result in a change in control of the Company.
Annex I: 18.4
7.7
The Company’s share capital consists of one class of ordinary shares with equal voting rights (subject
to the Articles). No major Shareholder of the Company has any different voting rights from the other
Shareholders.
Annex I: 18.2
7.8
Save as disclosed in this document, no Director is or has been interested in any transactions which are
or were unusual in their nature or conditions or significant to the business of the Company or the
Group during the current or immediately preceding financial year or which were effected during any
earlier financial year and remain in any respect outstanding or unperformed.
7.9
There are no outstanding loans or guarantees provided by the Company or the Group or to or for the
benefit of any of the Directors.
7.10 Save as disclosed in paragraph 7.11 below, there have been no related party transactions of the kind
set out in the Standards adopted according to the Regulation (EC) No 1606/2002 that the Company
has entered into since 30 September 2013.
Annex I: 19
7.11 During the period 1 October 2013 to 13 May 2014 (being the latest practicable date prior to the
publication of this document), PAL paid Finance Investments Limited (trading as Excel Insurance),
of which Paul May is a minority shareholder, £12,250 in advisory fees.
7.12 No Director nor any member of his immediate family nor any person connected with him (within the
meaning of section 252 of the Act) has a Related Financial Product (as defined in the AIM Rules for
Companies) referenced to Ordinary Shares.
8.
Directors’ remuneration and service agreements
8.1
Pursuant to the terms of a letter of engagement with the Company dated 14 May 2014, Luke Johnson
has agreed to serve as Executive Chairman (and chairman of the remuneration committee) for an
annual fee of £60,000. This appointment is terminable by either party giving not less than one months’
84
AIM Sch 2(i)
notice in writing but, will terminate automatically if Mr Johnson is removed from office by resolution
of the Shareholders or is not re-elected to office.
8.2
Paul May is employed as Chief Executive Officer pursuant to the terms of a service agreement with
the Company dated 14 May 2014. The agreement is terminable by either party on not less than 12
months’ written notice. Mr May is paid a basic annual salary of £275,000 and may be entitled to
receive a discretionary bonus as the Remuneration Committee determines from time to time. His basic
salary is subject to annual review by the Remuneration Committee but there is no obligation to
increase Mr May’s basic salary. Mr May is also entitled to an annual car allowance of £7,500. Mr May
is subject to certain non-competition and non-solicitation covenants for a period of 12 months’
following the termination of his employment. The agreement is governed by English law.
8.3
Chris Marsh is employed as Finance Director pursuant to the terms of a service agreement with the
Company dated 14 May 2014. The agreement is terminable by either party on not less than 12 months’
written notice. Mr Marsh is paid a basic annual salary of £200,000 and may be entitled to receive a
discretionary bonus as the Remuneration Committee determines from time to time. His basic salary
is subject to annual review by the Remuneration Committee but there is no obligation to increase
Mr Marsh’s basic salary. Mr Marsh also receives an annual car allowance of £7,500. Mr Marsh is
subject to certain non-competition and non-solicitation covenants for a period of 12 months’
following the termination of his employment. The agreement is governed by English law.
8.4
Pursuant to the terms of a letter of engagement with the Company dated 14 May 2014, Lee Ginsberg
has agreed to serve as a Non-executive Director (Deputy Chairman, Senior Independent Director and
Chairman of the Audit Committee) for an annual fee of £50,000. This appointment is terminable by
either party giving not less than one months’ notice in writing, but will terminate automatically if Mr
Ginsberg is removed from office by a resolution of the Shareholders or is not re-elected to office.
8.5
Pursuant to the terms of a letter of engagement with the Company dated 30 April 2014, James Horler
has agreed to serve as a Non-executive Director for an annual fee of £30,000. This appointment is
terminable by either party giving not less than one months’ notice in writing, but will terminate
automatically if Mr Horler is removed from office by a resolution of the Shareholders or is not reelected to office.
8.6
Save as disclosed in this document there are no service agreements or agreements for the provision of
services existing or proposed between the Directors and the Company or the Group.
9.
The ESOS and the LTIP
Annex I: 17.3
The following is a summary of the rules of the ESOS to be adopted by the Company shortly after
Admission:
9.1
The ESOS
(a)
Eligibility
All employees and directors of the Group, required to devote substantially the whole of their
working time to the Group will be eligible to participate in the ESOS provided that at the date
of grant of an option and during the preceding 12 months they do not hold a material interest
in a Group company which is a close company.
(b)
Operation
The ESOS shall be administered by the Remuneration Committee.
(c)
Grant of options
Options may be granted by the Remuneration Committee during the period of 42 days from the
date of Admission and thereafter in a period of 42 days starting on the date of an announcement
of the Company’s interim or final results, or a date on which an admission document or
85
prospectus relating to the Company’s shares are issued. If the Remuneration Committee deems
that exceptional circumstances exist to justify it, options may be granted at other times.
The Remuneration Committee shall specify objective conditions or performance targets to be
satisfied before an option may be exercised. The Remuneration Committee may amend or
waive the conditions to ensure that they achieve their purpose, provided that the amended
conditions are not more difficult to achieve than those previously imposed.
No payment will be required for the grant of an option.
(d)
Exercise price
The exercise price of options shall not be less than the higher of the market value of the
underlying shares at the date of grant and their nominal value. Whilst the Company remains
quoted on AIM, the market value shall be the average closing middle market quotation of an
ordinary share over the five business days immediately prior to the date of grant.
(e)
Share capital limit
No option which is to be satisfied on exercise by the issue of new shares (or re-issue of treasury
shares), may be granted on any date if the number of shares to which it relates when aggregated
with the number of shares issued (or re-issued as treasury shares) or remaining capable of issue
(or re-issue) by virtue of options or other rights granted or made in the preceding ten years
under the ESOS and any other employees’ share scheme operated by the Company would
exceed 10% of the issued share capital of the Company at that time.
(f)
Individual limit
No option may be granted to an employee or director under the ESOS if it would at the date of
grant cause the market value of shares which that employee or director may acquire pursuant
to the ESOS, when aggregated with the market value of shares under outstanding options
granted to him under any other share option scheme pursuant to schedule 4, Income Tax
(Earnings and Pensions) Act 2003 operated by the Company, to exceed £30,000.
(g)
Exercise of options
Options will vest and may be exercised over a vesting period determined by the Committee
which shall not exceed five years. Phased vesting of shares over the period may be specified by
the Remuneration Committee at the time of grant Options.
If an option holder leaves the employment of the Group due to redundancy, retirement, injury,
disability, ill-health, or as a result of a subsidiary being transferred out of the Group, any vested
options may be exercised within six months after the date of cessation of employment within
the Group, together with such number of unvested options as the Remuneration Committee
shall determine (calculated on the basis of the proportion of the vesting period during which
the option holder was employed by the Group). The Remuneration Committee may adjust such
number of shares vesting to the extent that performance conditions have not have been satisfied
over the period to the date of cessation.
If an option holder dies, the option holders’ personal representatives may exercise the
participant’s vested options during the period of 12 months following death. A proportion of
unvested options may be exercised as determined by the Remuneration Committee on the basis
of the proportion of the vesting period during which the option holder was employed by the
Group. The Remuneration Committee may adjust such number of shares vesting, to the extent
that performance conditions have not been satisfied over the period to the date of death.
If an option holder leaves the employment of the Group for any other reason, any vested and
unvested options shall lapse at the date of cessation of employment, unless the Remuneration
Committee exercises its discretion (fairly and reasonably) to allow a number of unvested
86
options to vest based on the proportion of the vesting period during which the option holder
was employed by the Group and the achievement of performance conditions.
Early exercise of unvested options is permitted in the event of a takeover, amalgamation or
winding up of the Company over such number of shares as is specified by the Remuneration
Committee (based on the extent to which any performance conditions have been satisfied and
the extent to which the vesting period has elapsed at the date of the change of control). In some
circumstances options may be exchanged for equivalent options over shares in the acquiring
company.
A cashless exercise mechanism to permit option holders to fund the exercise price out of the
sale proceeds of shares or out of salary payments may also be offered by the Company.
(h)
Lapse of options
Unless the Remuneration Committee determines otherwise on the making of an Award, options
will lapse on the fifth anniversary of the date of grant or, if earlier, on the winding up of the
Company, bankruptcy of the option holder or at the end of any specified period for exercise on
cessation of employment within the Group or following a change of control.
(i)
Variations in share capital
The number of shares comprised in an option and/or the exercise price may be adjusted in such
manner as the Remuneration Committee considers fair and reasonable in the event of a
capitalisation issue, offer by way of rights (including an open offer) or on any sub-division,
reduction, consolidation or other variation of the Company’s share capital.
(j)
Rights attaching to shares
If shares are to be allotted and issued to an option holder on exercise of an option, the Company
shall apply for such shares to be admitted to AIM. Such shares will rank pari passu with all
other issued shares of the Company except for any rights determined by reference to a date
preceding the date on which the option is exercised.
(k)
Amendments
The ESOS may be amended at any time by the Remuneration Committee, provided that no
amendments may be made, to the benefit of participants, to the provisions relating to the
eligibility of participants, the share capital and individual participation limits, the basis for
determining a participant’s entitlement to shares and any adjustment thereof in event of a
variation in the Company’s share capital, without prior approval of the Company in general
meeting (except in relation to minor amendments to benefit the administration of the ESOS, to
take account of a change in legislation or to obtain or maintain favourable taxation, exchange
control or regulatory treatment).
No amendment may be made which would adversely affect the subsisting rights of a participant
unless a majority of participants consent to the making of that amendment.
(l)
General
The Company may terminate the ESOS at any time. Subject to such termination the ESOS will
terminate 10 years from the date of its adoption.
Holders of options under the ESOS are required to indemnify the Group for any income tax,
employee’s and employer’s national insurance contributions which arise on exercise of the
options granted pursuant to the ESOS, and to make such arrangements for satisfaction of those
liabilities as the Remuneration Committee agrees.
Benefits received under the ESOS shall not be pensionable.
87
9.2
The LTIP
The following is a summary of the rules of the LTIP:
(a)
Eligibility
All employees and directors of the Group will be eligible to participate in the LTIP.
(b)
Awards under the LTIP
Awards may be granted under the LTIP as conditional rights to acquire shares or options.
(c)
Grant of award
Awards may be granted by the Remuneration Committee during the period of 42 days from the
date of Admission and thereafter in a period of 42 days starting on the date of an announcement
of the Company’s interim or final results, or a date on which listing particulars relating to the
Company’s shares are issued, or within the 42 day period prior to the occurrence of an adverse
change to a Participant’s tax position. If the Committee deems that exceptional circumstances
exist to justify it, options may be granted at other times.
The Remuneration Committee shall specify objective conditions or performance targets to be
satisfied before an award vests. The Remuneration Committee may amend or waive the
conditions to ensure that they achieve their purpose, provided that the amended conditions are
not more difficult to achieve than those previously imposed.
No payment will be required for the grant of an award.
(d)
Share capital limit
No award which is to be satisfied on exercise by the issue of new shares (or re-issue of treasury
shares), may be granted on any date if the number of shares to which it relates when aggregated
with the number of shares issued (or re-issued as treasury shares) or remaining capable of issue
(or re-issue) by virtue of options or other rights granted or made in the preceding ten years
under the LTIP and any other employees’ share scheme operated by the Company would
exceed 10% of the issued share capital of the Company at that time.
(e)
Vesting of awards
Awards will vest over a vesting period determined by the Remuneration Committee which shall
not exceed five years. Phased vesting of shares over the period may be specified by the
Remuneration Committee at the time of grant.
A number of shares pursuant to unvested awards may vest in the event that a participant leaves
the employment of the Group due to redundancy, retirement, injury, disability, ill-health, or as
a result of a subsidiary being transferred out of the Group, or any other reason that the
Remuneration Committee may determine. The number of shares vesting shall be calculated at
the end of the vesting period based on the proportion of the vesting period during which the
participant was employed by the Group. The Remuneration Committee may adjust such
number of shares vesting where the performance conditions the subject of the award have not
been satisfied over the period to the date of cessation. Vested awards in the form of options will
remain capable of exercise during the period of six months from the date of cessation of
employment within the Group.
If a participant dies, the Remuneration Committee shall determine the number of shares the
subject of an unvested award which shall vest based on the proportion of the vesting period
during which the participant was employed by the Group. The Remuneration Committee may
adjust such number of shares vesting where the performance conditions the subject of the
award have not been satisfied over the period to the date of death. Vested awards in the form of
options will remain capable of exercise during the period of 12 months from the date of death.
88
Where participants give or receive notice to terminate any office or employment in
circumstances other than those mentioned above all awards shall lapse at the date such notice
of termination is given or received (whether or not vested).
In the event of a takeover, amalgamation or winding up of the Company, unvested awards may
vest over such number of shares as is specified by the Remuneration Committee. This will be
calculated on the basis of the proportion of the vesting period which has elapsed up to the date
of the change of control and the extent to which the performance conditions have been
satisfied, or on such other terms as the Remuneration Committee acting fairly and reasonably
may determine in its absolute discretion. In some circumstances awards may be exchanged for
equivalent awards over shares in the acquiring company.
(f)
Consequences of vesting
On vesting of a conditional award the Remuneration Committee shall issue or transfer the
relevant shares to the participant. Options shall become exercisable on vesting and for the
remainder of the period of five years from the date of grant, subject to the lapse provisions.
(g)
Dividend equivalent payments
The Remuneration Committee has a discretion prior to vesting of an award to make a payment
in cash or shares equal in value to the dividends that would have been paid on the vested shares
in respect of dividend record dates occurring during the vesting period, subject to deduction of
applicable taxes.
(h)
Lapse of awards
Unless the Remuneration Committee determines otherwise on the making of an Award,
Awards will lapse on the fifth anniversary of the date of grant or, if earlier, on the winding up
of the Company, bankruptcy of the participant, or at the end of any period specified on
cessation of employment or following a change of control.
(i)
Variations in share capital
The number of shares comprised in an award may be adjusted in such manner as the
Remuneration Committee considers fair and reasonable in the event of a capitalisation issue,
offer by way of rights (including an open offer) or on any sub-division, reduction, consolidation
or other variation of the Company’s share capital.
(j)
Rights attaching to shares
If shares are to be allotted and issued to a participant following vesting or exercise of an award,
the Company shall apply for such shares to be admitted to AIM. Such shares will rank pari
passu with all other issued shares of the Company except for any rights determined by
reference to a date preceding the date on which the award vests, or the date on which an option
is exercised.
(k)
Amendments
The LTIP may be amended at any time by the Remuneration Committee, provided that no
amendments may be made, to the benefit of participants, to the provisions relating to the
eligibility of participants, the share capital limits, the basis for determining a participant’s
entitlement to shares and any adjustment thereof in event of a variation in the Company’s share
capital without prior approval of the Company in general meeting (except in relation to minor
amendments to benefit the administration of the LTIP, to take account of a change in legislation
or to obtain or maintain favourable taxation, exchange control or regulatory treatment).
No amendment may be made which would adversely affect the subsisting rights of a participant
unless a majority of participants consent to the making of that amendment.
89
(l)
General
The Company may terminate the LTIP at any time. Subject to such termination the LTIP will
terminate 10 years from the date of its adoption.
Participants under the LTIP are required to indemnify the Group for any income tax,
employee’s and, to the extent notified by the Remuneration Committee to the participant at the
date of notification of the award, any employer’s national insurance contributions which arise
in respect of awards, and to make such arrangements for satisfaction of those liabilities as the
Remuneration Committee agrees.
Benefits received under the LTIP shall not be pensionable.
At the discretion of the Remuneration Committee, the LTIP may be extended to overseas
employees of the Group subject to such modifications as the directors shall consider
appropriate to take into account local tax, exchange control or securities laws.
10.
Annex III: 4.11
Taxation
The following statements are intended only as a general guide current as at 13 May 2014 (being the
latest practicable date prior to publication of this document) to United Kingdom tax legislation and to
the current practice of the HMRC and do not constitute tax advice. They may not apply to certain
categories of shareholder, such as dealers in securities. Levels and bases of taxation are subject to
change. Any person who is in any doubt as to their tax position or who is resident for tax purposes
outside the United Kingdom is strongly recommended to consult their professional advisers
immediately.
10.1 Stamp Duty and Stamp Duty Reserve Tax
The UK government has announced its intention to offer full relief from stamp duty and stamp duty
reserve tax (“SDRT”) on transactions in shares admitted to trading only on “recognised growth
markets”, including AIM, with effect from 28 April 2014. The legislation giving effect to this measure
(Finance Bill 2014) is not expected to receive Royal Assent until late July 2014. Transfers of shares
in the Company will qualify for this relief.
The UK has specific statutory procedures enabling tax laws to be changed with immediate effect on
a provisional basis pending passing of the relevant implementing legislation. Those procedures have
been invoked by the Government in order to give effect to the relief from SDRT, with the result that
as a matter of law SDRT is no longer chargeable in respect of qualifying agreements to transfer shares.
However, those procedures do not enable immediate effect to be given to the relief from stamp duty.
In consequence of this, stamp duty will technically remain payable on documents of transfer relating
to Ordinary Shares in the Company until Royal Assent of the Finance Bill 2014 notwithstanding the
announced policy.
On the assumption that the relevant provisions of the Finance Bill 2014 are enabled in their current
form, the relief from stamp duty will be backdated to 28 April 2014 and, if any stamp duty has been
paid after that date on a document transferring Ordinary Shares in the Company pursuant to an
agreement made after 28 April 2014, it will be refundable after Royal Assent. In the meantime it is
understood that HMRC does not intend to seek to levy stamp duty on documents of transfer of shares
admitted to trading on recognised growth markets.
If at any point prior to Royal Assent of the Finance Bill 2014 a document effecting a transfer of
Ordinary Shares attracting stamp duty is created, the purchaser will need to ensure that the document
is duly stamped before the transfer can be recorded on the Company’s register of members. Where
90
stamp duty would be due in the absence of the new relief, this will necessitate submitting the
document to HMRC for adjudication as exempt on a discretionary basis.
Where a transfer of Ordinary Shares is settled within CREST in the usual way, and therefore no
document effecting or acting as a memorandum of that transfer is created, no liability to stamp duty
will arise and the new relief from SDRT will be fully effective.
If the relevant provisions of the Finance Bill 2014 were not passed into law, the relief from SDRT on
transactions in shares admitted to trading on AIM would fall away with prospective (rather than
retrospective) effect. The position in relation to any stamp duty liabilities arising during the
intervening period would be unclear.
10.2 Dividends
The United Kingdom taxation implications relevant to the receipt of dividends on the new Ordinary
Shares are as follows:
There is no United Kingdom withholding tax on dividends. Individual holders of new Ordinary Shares
will be taxable on the total of the dividend and the related notional tax credit (“gross dividend”),
which will be regarded as the top slice of the individual’s income.
The notional tax credit on dividends is one-ninth of the dividend paid (or 10 per cent. of the aggregate
of the dividend and the tax credit). For individuals, the income tax rates on dividend income are such
that basic rate taxpayers will have no further tax liability on a dividend receipt. Individuals who pay
tax at the higher rate of 40 per cent. will pay tax on dividends at 32.5 per cent. such that a higher rate
taxpayer receiving a dividend of £90 will be treated as having gross income of £100 (the net dividend
of £90 plus a tax credit of £10) and after allowing for the tax credit of £10 will have a further
£22.50 liability. An individual who receives a dividend falling above the threshold for higher rate tax
will be subject to tax on the gross dividend exceeding the threshold at the rate of 37.5 per cent.
Generally, holders of new Ordinary Shares will not be entitled to reclaim the tax credit attaching to
any dividends paid.
A holder of new Ordinary Shares which is a company resident for tax purposes in the United Kingdom
will have to pay corporation tax in respect of any dividends it receives from another company resident
for tax purposes in the United Kingdom, unless the dividends fall within an exempt class and certain
other conditions are met. Whether an exempt class applies and whether the other conditions are met
will depend on the circumstances of the particular UK resident company shareholder, although it is
expected that the dividends paid would normally be exempt.
Shareholders resident for tax purposes outside the UK may be subject to foreign taxation on dividends
received on their new Ordinary Shares or in respect of other transactions relating to the shares under
the tax law of their country of residence. Such shareholders will not be subject to any further UK tax
on their dividends where they have no other sources of income from the UK and do not have a
UK representative or, in the case of trustees, where there are no UK resident beneficiaries of the trust.
Entitlement to claim repayment of any part of a tax credit, however, will depend, in general, on the
existence and terms of any double tax convention between the United Kingdom and the country in
which the holder is resident (however, given the rate of the tax credit on dividends, any such
repayment may not be significant). Non-UK resident shareholders should consult their own tax
advisers as soon as possible concerning their tax liability on dividends received; what relief, credit or
entitlement to a refund of any tax credit may be available in the jurisdiction in which they are resident
for tax purposes; or other taxation consequences arising from their ownership of the new Ordinary
Shares.
10.3 Disposal of shares acquired under the Placing
A Shareholder who is an individual resident or ordinarily resident for tax purposes in the UK who
sells or otherwise disposes of his Ordinary Shares may, depending on the circumstances, incur a
liability to UK tax on any capital gain realised. Capital gains tax is charged at a rate of 28 per cent.
91
where total income and gains exceed the threshold for higher rate tax, and 18 per cent. if income and
gains are below this level.
Corporate shareholders within the charge to UK corporation tax may be liable to corporation tax on
any chargeable gains realised on the disposal of Ordinary Shares but will generally be entitled to
indexation allowance in respect of these Ordinary Shares up until the date of disposal.
A Shareholder who is not resident or ordinarily resident for tax purposes in the UK will not normally
be liable for UK tax on capital gains realised on the disposal of his Ordinary Shares unless at the time
of the disposal such Shareholder carries on a trade (which for this purpose includes a profession or
vocation) in the UK through a permanent establishment and such Ordinary Shares are to have been
used, held or acquired for the purposes of such UK permanent establishment. A shareholder who is
an individual and who has, on or after 17 March 1998, ceased to be resident and ordinarily resident
for tax purposes in the UK for a period of less than five years of assessment and who disposes of
Ordinary Shares during that period may be or become liable to UK taxation of chargeable gains
(subject to any available exemption or relief).
10.4 Tax reliefs
Entrepreneurs’ Relief may be available to reduce the rate of capital gains tax on a disposal of Ordinary
Shares by a shareholder who is an officer or employee of the Company and who meets certain other
conditions, including holding at least 5 per cent. of the ordinary share capital and voting power of the
Company for a period of 12 months prior to any disposal. A holding in the shares of the Company
may qualify for other reliefs such as capital gains tax gift relief and inheritance tax business property
relief. However, individuals should seek confirmation as to whether any relief is available in their own
particular circumstances at the relevant time.
Persons who are not resident in the United Kingdom should consult their own tax advisers on
the possible application of such provisions and on what relief or credit may be claimed for any
such tax credit in the jurisdiction in which they are resident.
These comments are intended only as a general guide to the current tax position in the United
Kingdom as at the date of this document. The comments assume that Ordinary Shares are held
as an investment and not as an asset of a financial trade and that any dividends paid are not
foreign income dividends. If you are in any doubt as to your tax position, or are subject to tax
in a jurisdiction other than the United Kingdom, you should consult your professional adviser.
11.
Annex I: 22
Material contracts
The following contracts (not being contracts entered into in the ordinary course of business) have been
entered into by members of the Group (i) within the period of two years immediately preceding the date of
this document and which are, or may be, material or (ii) which contain any provision under which any
member of the Group has an obligation or entitlement to the Group as at the date of this document:
(a)
A placing agreement dated 14 May 2014 and made between (1) Canaccord Genuity (2) the Directors
(3) the Selling Shareholders and (4) the Company pursuant to which Canaccord Genuity has agreed,
subject to certain conditions, to act as agent for the Company and the Selling Shareholders and to use
its reasonable endeavours to procure placees to subscribe and purchase (as the case may be) for the
Placing Shares at the Placing Price, or failing which to subscribe and/or purchase itself, as principal,
for the Placing Shares at the Placing Price.
The Placing Agreement is conditional upon, inter alia, Admission occurring on or before 8.00 a.m. on
19 May 2014 (or such later date as the Company and Canaccord Genuity may agree, being not later
than 8.00 a.m. on 31 May 2014). The Placing Agreement contains warranties from the Company and
the Directors in favour of Canaccord Genuity in relation to, amongst other things, the accuracy of the
information in this document and other matters relating to the Group and its business. It also contains
warranties from the Selling Shareholders in favour of Canaccord Genuity in relation to, amongst other
things, title to the Sale Shares. In addition, the Company and the Selling Shareholders agreed to
92
indemnify Canaccord Genuity in respect of certain liabilities it may incur in respect of the Placing.
Canaccord Genuity has the right to terminate the Placing Agreement in certain circumstances prior to
Admission, in particular, in the event of a breach of the warranties or a force majeure event.
Pursuant to the Placing Agreement, each of the Directors and the Selling Shareholders has undertaken
to the Company and Canaccord Genuity (subject to certain limited exceptions including transfers to
connected persons or to trustees for their benefit and disposals by way of acceptance of a
recommended takeover offer for the entire issued share capital of the Company) not to dispose of the
Ordinary Shares held by each of them following Admission or any other shares which may accrue to
them as a result of their holding of Ordinary Shares at any time prior to the date 12 months from the
date of the Placing Agreement (the “Lock-in Period”) without the prior written consent of Canaccord
Genuity.
Furthermore, each of the Directors and the Selling Shareholders has also undertaken to the Company
and Canaccord Genuity not to dispose of their Ordinary Shares following the expiry of the Lock-in
Period otherwise than through Canaccord Genuity for the period of 12 months following the expiry
of the Lock-in Period.
The Placing Agreement is governed by English law and is subject to the exclusive jurisdiction of the
English courts.
(b)
A nominated adviser and broker agreement dated 14 May 2014 and made between (1) the Company
and (2) Canaccord Genuity pursuant to which the Company has appointed Canaccord Genuity to act
as nominated adviser and broker to the Company for the purposes of the AIM Rules for Companies.
The Company has agreed to pay Canaccord Genuity a fee of £60,000 plus VAT per annum for its
services as nominated adviser and broker under this agreement (to be reviewed on an annual basis).
The agreement contains certain undertakings, warranties and indemnities given by the Company to
Canaccord Genuity. The agreement is terminable upon not less than three months’ prior written notice
by either the Company or Canaccord Genuity.
(c)
A share exchange agreement dated 14 May 2014 made between (1) the Company (2) PAL and (3) the
shareholders of PAL pursuant to which the shareholders of PAL exchanged their shares in the capital
of PAL for shares in the capital of the Company prior to Admission.
(d)
A relationship agreement dated 14 May 2014 and made between (1) the Company and (2) Luke
Johnson to regulate the relationship between the Company and Luke Johnson after Admission. The
Relationship Agreement, which provides for the autonomous operation of the Company by the Board
independently of Luke Johnson, will take effect on Admission and will be binding on Luke Johnson
until he ceases, directly or indirectly, to exercise control over at least 30 per cent. of the voting rights
in respect of the entire issued share capital of the Company. Pursuant to the Relationship Agreement,
Luke Johnson also undertakes, amongst other things, that he will (and, in relation to his associates,
will procure that each of his associates will): (i) conduct all transactions, agreements, relationships
and arrangements with the Group on an arm’s length basis and on normal commercial
terms; (ii) ensure that no contract of arrangement between him and any member of the Group is
entered into or varied without the prior approval of a majority of independent Directors; and
(iii) exercise his voting rights to procure in so far as he is able that the Company is able at all times
to carry on its business independently of Luke Johnson. The Relationship Agreement is governed by
English law and is subject to the exclusive jurisdiction of the English courts.
(e)
A facility agreement dated 10 July 2007 and made between (amongst others), (1) PAL and (2) HSBC
Bank PLC (the “Lender”) (as amended and restated on 29 September 2010 and further amended on
7 September 2011 and 28 September 2012 and further amended and restated on 22 November 2013
and 28 February 2014 (the “Facility Agreement”) pursuant to which the Lender made available to
PAL and certain of its subsidiaries sterling term and revolving credit facilities of £23,200,000 (the
“Facilities”). The Facilities comprise (i) a £7,550,000 amortising term loan maturing on 30
September 2017 (“Facility A”), (ii) a £7,550,000 bullet term loan maturing on 30 September 2018
(“Facility B”), (iii) a £5,850,000 364 day bullet term loan maturing on 27 February 2015 (“Facility
93
C”), (iv) a £2,000,000 revolving credit facility maturing on 30 September 2018 (the “Capex
Facility”) and (v) a £250,000 revolving credit facility maturing on 30 September 2017 (the “RCF”).
Facility A and Facility B were made available for the purposes of refinancing certain existing
indebtedness of the Group to the Lender, Facility C was made available for the purpose of discharging
the consideration in respect of the acquisition of the entire issued share capital in Philpotts, the Capex
Facility is available towards capital expenditure relating to the roll out of new sites of the Group and
the RCF is available for the general corporate purposes of the Group. The rate of interest payable on
borrowings is the aggregate of the applicable margin (3 per cent. for Facility C and ranging from
2.50 per cent. to 4 per cent. for Facility A and the RCF and 3 per cent. to 4.50 per cent. for Facility B
and the Capex Facility depending on compliance with one of the financial covenants) and LIBOR. In
addition certain arrangement fees payable in respect of the Facilities on-going commitment and
monitoring fees are payable. The Facility Agreement contains certain customary representations,
undertakings and events of default and the Facilities are secured by cross guarantees and security
granted by certain members of the Group.
The Facilities will terminate shortly after Admission and be replaced by the New RCF described in
sub-paragraph (f) below.
(f)
Under the terms of a facility letter between HSBC Bank PLC (the “Bank”) and the Company dated
13 May 2014 (the ‘‘Facility Letter’’), the Bank made available to the Company a revolving credit
facility of £3,000,000 (the “New RCF”). The New RCF is for a term of two years and is available for
the working capital purposes of the Company. The rate of interest payable on the New RCF is 1.5 per
cent. per annum above LIBOR. The Facility Letter contains certain customary representations,
undertakings and events of default. The New RCF is guaranteed by certain members of the Group by
way of a cross company guarantee granted to the Bank.
(g)
A sale and purchase agreement dated 28 February 2014 for the acquisition of the entire issued share
capital in Philpotts was entered into between (1) Richard Tonks, Suzanna Tonks, Katherine Tonks,
Kevin Caven, Michael Kettle and Susan Ingleheart (the “Sellers”) and (2) PAL (the “Philpotts
SPA”). The consideration payable by PAL was £3,666,197.26, and is subject to adjustments in
relation to the net working capital value, such adjustments being secured by way of a retention amount
of £200,000. The maximum amount of consideration payable is therefore £3,866,197.26. In addition
to the consideration paid, PAL paid £2,203,802.74 to settle the existing debts of Philpotts to Hambros
Bank Limited at completion of the Philpotts SPA.
The Philpotts SPA contained a tax covenant which remains in force until 27 February 2021 and
warranties that remain force until 27 February 2016. The aggregate liability of PAL in respect of all
claims under the Philpotts SPA (including under the tax covenant) is limited to the purchase price.
The Philpotts SPA imposes restrictive covenants upon the Sellers, including but not limited to, within
a period of years from the completion date, restrictions on soliciting employees of the PAL group
having an annual salary in excess of £30,000 or doing or seeking to do anything which causes or may
cause any supplier who has supplied to the PAL group during the 12 month period immediately prior
to the completion date to cease or materially reduce its supplies to the PAL group.
The Philpotts SPA is governed by English law and is subject to the exclusive jurisdiction of the
English courts.
(h)
A sale and purchase agreement dated 22 May 2013 for the acquisition of Flour Power City Limited
was entered into between (1) Luke Johnson and Joseph Tager and (2) PVHL (the “FPCL SPA”).
The total consideration payable by PVHL was £1,070,000, which was satisfied by (i) the payment of
£53,532 in cash to Joseph Tager and (ii) the issue of £1,016,468 loan notes in PVHL to Luke Johnson,
constituted and issued pursuant to a loan note instrument dated 15 September 2006. The FPCL SPA
contains no restrictive covenants or warranties. The FPCL SPA is governed by the laws of England
and Wales and is subject to the exclusive jurisdiction of the English courts.
94
(i)
PVHL constituted two loan note instruments on 15 September 2006, (a) £4,493,050 8 per cent. secured
investor loan notes 2016 (“Investor Loan Notes”) (together, the “Loan Notes”) and (b) £1,123,950 8
per cent. secured managers’ loan notes 2016 (“Manager Loan Notes”). On 22 May 2013, the Company
and the Investor Loan Note holders entered into a deed of amendment pursuant to which they agreed to
increase the principal amount of the Investor Loan Notes from £4,493,050 to £5,509,518. The interest
rate payable on both the Investor Loan Notes (as amended) and the Manager Loan Notes is 8 per cent.
per annum, payable on redemption of the notes. The Investor Loan Notes and Manager Loan Notes
contain certain redemption conditions pursuant to which the Loan Notes become immediately
redeemable at par together with accrued interest on the occurrence of certain events including, amongst
other things, floatation of PVHL or a Group Company. The Loan Notes are governed by the laws of
England and Wales and are subject to the exclusive jurisdiction of the English courts.
The Investor Loan Notes and Manager Loan Notes will be redeemed on Admission and repaid from
the proceeds the of the Placing.
12.
AIM Sch 2(c)
Working capital
In the opinion of the Directors having made due and careful enquiry, taking into account the bank and other
facilities available to the Group and the net proceeds of the Placing, the working capital available to the
Group will be sufficient for its present requirements, that is for at least the next 12 months from the date of
Admission.
13.
Annex I: 20.8
Litigation
There are no governmental, legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the Company is aware) during a period covering at least the 12 months
preceding the date of this document which may have, or have had in the recent past, significant effects on
the Company’s and/or the Group’s financial position or profitability.
14.
Significant change
There has been no significant change in the financial or trading position of the Group since 31 March 2014,
being the end of the period to which the last unaudited interim financial information for the Group relates.
15.
Consents
15.1 Canaccord Genuity of 88 Wood Street, London, EC2V 7QR is authorised and regulated in the United
Kingdom by the FCA. Canaccord Genuity has given and has not withdrawn its written consent to the
issue of this document with the inclusion of its name and the references to it in the form and context
in which it appears.
Annex I: 20.9
15.2 Grant Thornton UK LLP, Chartered Accountants and registered auditors, of Colmore Plaza,
20 Colmore Circus, Birmingham, West Midlands, B4 6AT, has given and have not withdrawn their
written consent to the issue of this document with the inclusion of its name and its report in Part III B
of this document and the references to such report and its name, in the form and context in which they
appear.
16.
General
16.1 The net proceeds of the placing of the New Ordinary Shares are expected to be approximately
£32.0 million, and the net proceeds of the sale of the Sale Shares are expected to be approximately
£45.6 million. Expenses estimated at £1.5 million, excluding VAT, are payable by the Company (out
of the gross proceeds of the Placing and the Company’s existing resources) in connection with the
Placing.
Annex III: 8.1
16.2 Save as disclosed in this document, no person (excluding professional advisers otherwise disclosed in
this document and trade suppliers) has received, directly or indirectly, within the 12 months preceding
AIM Sch 2(h)
95
the date of this document or entered into contractual arrangements to receive, directly or indirectly, from the
Company on or after Admission:
(a)
fees totalling £10,000 or more;
(b)
securities where these have a value of £10,000 or more calculated by reference to the Placing
Price; or
(c)
any other benefit with a value of £10,000 or more at the date of Admission.
16.3 Information in this document which has been sourced from third parties has been accurately
reproduced and so far as the Company is able to ascertain from information published by that third
party, no facts have been omitted which would render the reproduced information inaccurate or
misleading.
Annex I: 23.2
Annex III: 10.4
16.4 Save as disclosed in this document, the Directors are unaware of any exceptional factors which have
influenced the Company’s activities.
16.5 Save as disclosed in this document, the Directors are unaware of any environmental issues that may
affect the Group’s utilisation of its tangible fixed assets.
Annex I: 8.2
16.6 Save as disclosed in this document, the Directors are unaware of any trends, uncertainties, demands,
commitments or events that are reasonably likely to have a material effect on the Company’s prospects
for the current financial year.
16.7 Save as disclosed in this document, there are no investments in progress and there are no future
investments on which the Directors have already made firm commitments which are significant to the
Group.
16.8 Save as disclosed in this document, the Directors believe that the Company is not dependent on
patents or licences, industrial, commercial or financial contracts or new manufacturing processes
which are material to the Company’s business or profitability.
16.9 The Company will be subject to the provisions of the City Code, including the rules regarding
mandatory takeover offers set out in the City Code. Under Rule 9 of the City Code, when (i) a person
acquires shares which, when taken together with shares already held by him or persons acting in
concert with him (as defined in the City Code), carry 30 per cent. or more of the voting rights of a
company subject to the City Code or (ii) any person who, together with persons acting in concert with
him, holds not less than 30 per cent. but not more than 50 per cent. of the voting rights of a company
subject to the City Code, and such person, or any person acting in concert with him, acquires
additional shares which increases his percentage of the voting rights in the company, then, in either
case, that person, together with the persons acting in concert with him, is normally required to make
a general offer in cash, at the highest price paid by him or any person acting in concert with him for
shares in the company within the preceding 12 months, for all of the remaining equity share capital
of the company.
16.10 The Ordinary Shares will also be subject to the compulsory acquisition procedures set out in sections
979 to 991 of the Act. Under section 979 of the Act, where an offeror makes a takeover offer and has,
by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire not less than
90 per cent. of the shares to which the offer relates and, in a case where the shares to which the offer
relates are voting shares, not less than 90 per cent. of the voting rights carried by those shares, that
offeror is entitled to compulsorily acquire the shares of any holder who has not acquired the offer on
the terms of the offer.
16.11 Since the date of incorporation of the Company, there has been no takeover offer (within the meaning
of Part 28 of the Act) for any Ordinary Shares.
16.12 The current accounting reference period of the Company will end on 30 September 2014.
96
Annex I: 5.2.2,
5.2.3
Annex I: 6.4
Annex III: 4.9
Annex III: 4.9
Annex III: 4.10
16.13 The financial information contained in Section A of Part III of this document does not constitute
statutory accounts within the meaning of section 434 of the Act. The auditors for the period covered
by the financial information set out in Section A of Part III of this document were Grant Thornton UK
LLP, Chartered Accountants and registered auditors, of 20 Colmore Circus, Birmingham, West
Midlands, B4 6AT. Grant Thornton UK LLP is a member firm of the Institute of Chartered
Accountants in England and Wales.
17.
Dealing arrangements
Application will be made to the London Stock Exchange for all of the Ordinary Shares to be admitted to
trading on AIM. It is expected that dealings in the Ordinary Shares will commence on a conditional basis on
the London Stock Exchange at 8.00 a.m. on 14 May 2014. The earliest date for settlement of such dealings
will be 19 May 2014. It is expected that Admission will become effective and that unconditional dealings in
the Ordinary Shares will commence on the London Stock Exchange at 8.00 a.m. on 19 May 2014. All
dealings in Ordinary Shares prior to the commencement of unconditional dealings will be on a “when issued
basis”, will be of no effect if Admission does not take place, and will be at the sole risk of the parties
concerned. The above-mentioned dates and times may be changed without further notice.
It is intended that, where applicable, definitive share certificates in respect of the Placing Shares will be
despatched on or before 31 May 2014 or as soon thereafter as is practicable. Temporary documents of title
will not be issued. Dealings in advance of crediting of the relevant CREST stock account(s) shall be at the
sole risk of the persons concerned.
18.
Selling Shareholders
The names of each of the Selling Shareholders are set out below, all of whose business address is at the
Company’s registered and head office:
Name
Number of Sale Shares
Luke Johnson
Liza Johnson
Ben Redmond
Mark Farrer-Brown
Katherine May
Chris Marsh
Victor Scalzo
RCP
19.
8,828,766
5,082,354
71,648
475,003
2,954,069
854,568
2,119,810
6,992,937
Availability of this document
A copy of this document is available at the Company’s website www.investors.patisserieholdings.co.uk.
Dated 14 May 2014
97
PART VII
TERMS AND CONDITIONS OF THE PLACING
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THESE
TERMS AND CONDITIONS ARE FOR INFORMATION PURPOSES ONLY AND ARE
DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC
AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE
FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED, “QUALIFIED
INVESTORS”) BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF
THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES
ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE
“PROSPECTUS DIRECTIVE”); (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS
WHO ARE PERSONS WHO (I) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES
AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”); (II)
FALL WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS, ETC) OF THE ORDER; OR (III) ARE PERSONS TO
WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THESE TERMS AND
CONDITIONS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT
RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE
TERMS AND CONDITIONS RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND
WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
1.
Introduction
These terms and conditions (“Terms and Conditions”) apply to persons making an offer to acquire Placing
Shares under the Placing. Each person to whom these conditions apply, as described above, who confirms
his agreement to Canaccord Genuity and the Company (whether orally or in writing) to acquire Placing
Shares under the Placing (an “Investor”) hereby agrees with Canaccord Genuity and the Company to be
bound by these terms and conditions as being the terms and conditions upon which Placing Shares will be
sold under the Placing. An Investor shall, without limitation, become so bound if Canaccord Genuity
confirms to such Investor: (i) the Placing Price; and (ii) its allocation of Placing Shares under the Placing.
Upon being notified of the Placing Price and its allocation of Placing Shares in the Placing, an Investor shall
be contractually committed to acquire the number of Placing Shares allocated to them at the Placing Price
and, to the fullest extent permitted by law, will be deemed to have agreed not to exercise any rights to rescind
or terminate or otherwise withdraw from such commitment. Dealing may not begin before any notification
is made.
Each Selling Shareholder has undertaken that the Placing Shares will be sold fully paid and with full title
guarantee.
2.
Agreement to acquire placing shares
Conditional upon (i) Admission occurring and becoming effective by 8.00 a.m. (London time) on 19 May
2014 (or such later time and/or date (being not later than 8.00 a.m. on 31 May 2014) as the Company and
Canaccord Genuity may agree) and on the Placing Agreement being otherwise unconditional in all respects
and not having been terminated in accordance with its terms on or before Admission; and (ii) the
confirmation mentioned under paragraph 1 above, an Investor agrees to become a member of the Company
and agrees to acquire Placing Shares at the Placing Price. The number of Placing Shares acquired by such
Investor under the Placing shall be in accordance with the arrangements described above.
98
3.
Payment for placing shares
Each Investor undertakes to pay the Placing Price for the Placing Shares acquired by such Investor in such
manner as shall be directed by Canaccord Genuity. In the event of any failure by an Investor to pay as so
directed by Canaccord Genuity, the relevant Investor shall be deemed hereby to have appointed Canaccord
Genuity or any nominee of Canaccord Genuity to sell (in one or more transactions) any or all of the Placing
Shares in respect of which payment shall not have been made as so directed and to have agreed to indemnify
on demand Canaccord Genuity in respect of any liability for stamp duty and/or stamp duty reserve tax arising
in respect of any such sale or sales.
4.
Representations and warranties
By receiving this document, each Investor and, to the extent applicable, any person confirming his agreement
to acquire Placing Shares on behalf of an Investor or authorising Canaccord Genuity to notify an Investor’s
name to the Registrar, is deemed to acknowledge, agree, undertake, represent and warrant to each of
Canaccord Genuity, the Registrar and the Company that:
4.1
the Investor has read this document in its entirety and acknowledges that its participation in the
Placing shall be made solely on the terms and subject to the conditions set out in these Terms
and Conditions, the Placing Agreement and the Articles. Such Investor agrees that these Terms
and Conditions and the contract note issued by Canaccord Genuity to such Investor represent
the whole and only agreement between the Investor, Canaccord Genuity and the Company in
relation to the Investor’s participation in the Placing and supersedes any previous agreement
between any of such parties in relation to such participation. Accordingly, all other terms,
conditions, representations, warranties and other statements which would otherwise be implied
(by law or otherwise) shall not form part of these Terms and Conditions. Such Investor agrees
that none of the Company, Canaccord Genuity nor any of their respective officers or directors
will have any liability for any such other information or representation and irrevocably and
unconditionally waives any rights it may have in respect of any such other information or
representation;
4.2
if the Investor is a natural person, such Investor is not under the age of majority (18 years of
age in the UK) on the date of such Investor’s agreement to acquire Placing Shares under the
Placing and will not be any such person on the date any such offer is accepted;
4.3
neither Canaccord Genuity nor any person affiliated with Canaccord Genuity or acting on its
behalf is responsible for or shall have any liability for any information, representation or
statement contained in this document or any supplementary admission document (as the case
may be) or any information previously published by or on behalf of the Company or any
member of the Group and will not be liable for any decision by an Investor to participate in the
Placing based on any information, representation or statement contained in this document or
otherwise;
4.4
the Investor has not relied on Canaccord Genuity or any person affiliated with Canaccord
Genuity in connection with any investigation of the accuracy of any information contained in
this document or their investment decision;
4.5
in agreeing to acquire Placing Shares under the Placing, the Investor is relying on this
document or any supplementary admission document (as the case may be) and not on any draft
thereof or other information or representation concerning the Group, the Placing or the Placing
Shares. Such Investor agrees that neither the Company nor Canaccord Genuity nor their
respective officers, directors or employees will have any liability for any such other information
or representation and irrevocably and unconditionally waives any rights it may have in respect
of any such other information or representation;
4.6
save in the event of fraud on its part (and to the extent permitted by the rules of the FCA),
neither Canaccord Genuity nor any of its directors or employees shall be liable to an Investor
for any matter arising out of the role of Canaccord Genuity as the Company’s nominated
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adviser and broker or otherwise, and that where any such liability nevertheless arises as a
matter of law each Investor will immediately waive any claim against Canaccord Genuity and
any of its directors and employees which an Investor may have in respect thereof;
4.7
the Investor has complied with all applicable laws and such Investor will not infringe any
applicable law as a result of such Investor’s agreement to acquire Placing Shares under the
Placing and/or acceptance thereof or any actions arising from such Investor’s rights and
obligations under the Investor’s agreement to acquire Placing Shares under the Placing and/or
acceptance thereof or under the Articles;
4.8
all actions, conditions and things required to be taken, fulfilled and done (including the
obtaining of necessary consents) in order (i) to enable the Investor lawfully to enter into, and
exercise its rights and perform and comply with its obligations to acquire the Placing Shares
under, the Placing and (ii) to ensure that those obligations are legally binding and enforceable,
have been taken, fulfilled and done. The Investor’s entry into, exercise of its rights and/or
performance under, or compliance with its obligations under this Placing, does not and will not
violate (i) its constitutive documents or (ii) any agreement to which the Investor is a party or
which is binding on the Investor or its assets;
4.9
that it understands that no action has been or will be taken in any jurisdiction by the Company
or Canaccord Genuity or any other person that would permit a public offering of the Placing
Shares, or possession or distribution of this document, in any country or jurisdiction where
action for that purpose is required; and that, if the Investor is in a member state of the European
Economic Area which has implemented the Prospectus Directive (“Relevant Member State”),
it is (i) a legal entity which is authorised or regulated to operate in the financial markets or, if
not so authorised or regulated, its corporate purpose is solely to invest in securities; (ii) a legal
entity which has two or more of (a) an average of at least 250 employees during the last
financial year; (b) a total balance sheet of more than €43,000,000; and (c) an annual net
turnover of more than €50,000,000, in each case as shown in its last annual or consolidated
accounts; (iii) otherwise permitted by law to be offered and sold Placing Shares in
circumstances which do not require the publication by the Company of a prospectus pursuant
to Article 3 of the Prospectus Directive or other applicable laws; or (iv) in the case of any
Placing Shares acquired by an Investor as a financial intermediary, as that term is used in
Article 3(2) of the Prospectus Directive, either:
4.9.1 the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor
have they been acquired with a view to their placing or resale to, persons in any Relevant
Member State other than qualified investors, as that term is defined in the Prospectus
Directive, or in circumstances in which the prior consent of Canaccord Genuity has been
given to the placing or resale; or
4.9.2 where Placing Shares have been acquired by it on behalf of persons in any Relevant
Member State other than qualified investors, the placing of those Placing Shares to it is
not treated under the Prospectus Directive as having been made to such persons;
4.10 to the fullest extent permitted by law, the Investor acknowledges and agrees to the disclaimers
contained in this document and acknowledges and agrees to comply with the selling restrictions
set out in this document;
4.11 the Ordinary Shares have not been and will not be registered under the US Securities Act,1933
as amended (the “US Securities Act”), or under the securities legislation of, or with any
securities regulatory authority of, any state or other jurisdiction of the United States or under
the applicable securities laws of Australia, Canada, Japan, the Republic of Ireland or the
Republic of South Africa or where to do so may contravene local securities laws or regulations;
4.12 the Investor is not a person located in the United States and is eligible to participate in an
“offshore transaction” as defined in and in accordance with Regulation S under the US
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Securities Act (“Regulation S”) and the Placing Shares were not offered to such Investor by
means of “directed selling efforts” as defined in Regulation S;
4.13 it is acquiring the Placing Shares for investment purposes only and not with a view to any
resale, distribution or other disposition of the Placing Shares in violation of the US Securities
Act or any other United States federal or applicable state securities laws;
4.14 the Company is not obliged to file any registration statement in respect of resales of the Placing
Shares in the United States with the US Securities and Exchange Commission or with any state
securities administrator;
4.15 the Company, and any registrar or transfer agent or other agent of the Company, will not be
required to accept the registration of transfer of any Placing Shares acquired by the Investor,
except upon presentation of evidence satisfactory to the Company that the foregoing
restrictions on transfer have been complied with;
4.16 the Investor invests in or purchases securities similar to the Placing Shares in the normal course
of its business and it has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the Placing Shares;
4.17 the Investor has conducted its own investigation with respect to the Company and the Placing
Shares and has had access to such financial and other information concerning the Company and
the Placing Shares as the Investor deemed necessary to evaluate the merits and risks of an
investment in the Placing Shares, and the Investor has concluded that an investment in the
Placing Shares is suitable for it or, where the Investor is not acting as principal, for any
beneficial owner of the Placing Shares, based upon each such person’s investment objectives
and financial requirements;
4.18 the Investor or, where the Investor is not acting as principal, any beneficial owner of the Placing
Shares, is able to bear the economic risk of an investment in the Placing Shares for an indefinite
period and the loss of its entire investment in the Placing Shares;
4.19 there may be adverse consequences to the Investor under United States and other tax laws
resulting from an investment in the Placing Shares and the Investor has made such investigation
and has consulted such tax and other advisors with respect thereto as it deems necessary or
appropriate;
4.20 the Investor is not a resident of Australia, Canada, Japan, the Republic of Ireland or the
Republic of South Africa and acknowledges that the Placing Shares have not been and will not
be registered nor will a prospectus be prepared in respect of the Placing Shares under the
securities legislation of Australia, Canada, Japan, the Republic of Ireland or the Republic of
South Africa and, subject to certain exceptions, the Placing Shares may not be offered or sold,
directly or indirectly, in or into those jurisdictions;
4.21 the Investor is liable for any capital duty, stamp duty and all other stamp, issue, securities,
transfer, registration, documentary or other duties or taxes (including any interest, fines or
penalties relating thereto) payable outside the UK by it or any other person on the acquisition
by it of any Placing Shares or the agreement by it to acquire any Placing Shares;
4.22 in the case of a person who confirms to Canaccord Genuity on behalf of an Investor an
agreement to acquire Placing Shares under the Placing and/or who authorises Canaccord
Genuity to notify such Investor’s name to the Registrars, that person represents and warrants
that he has authority to do so on behalf of the Investor;
4.23 the Investor has complied with its obligations in connection with money laundering and
terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the
Money Laundering Regulations 2007 and any other applicable law concerning the prevention
of money laundering and, if it is making payment on behalf of a third party, that satisfactory
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evidence has been obtained and recorded by it to verify the identity of the third party as
required by the Money Laundering Regulations 2007 and, in each case, agrees that pending
satisfaction of such obligations, definitive certificates (or allocation under the CREST system)
in respect of the Placing Shares comprising the Investor’s allocation may be retained at
Canaccord Genuity’s discretion;
4.24 the Investor agrees that, due to anti-money laundering and the countering of terrorist financing
requirements, Canaccord Genuity and/or the Company may require proof of identity of the
Investor and related parties and verification of the source of the payment before the application
can be processed and that, in the event of delay or failure by the Investor to produce any
information required for verification purposes, Canaccord Genuity and/or the Company may
refuse to accept the application and the subscription moneys relating thereto. It holds harmless
and will indemnify Canaccord Genuity and/or the Company against any liability, loss or cost
ensuing due to the failure to process this application, if such information as has been required
has not been provided by it or has not been provided on a timely basis;
4.25 the Investor is not, and is not applying as nominee or agent for, a person which is, or may be,
mentioned in any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depository receipts
and clearance services);
4.26 the Investor has complied with and will comply with all applicable provisions of the FSMA
with respect to anything done by the Investor in relation to the Placing in, from or otherwise
involving the UK;
4.27 if the Investor is in the UK, the Investor is a person (i) who has professional experience in
matters relating to investments falling within article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (as amended or replaced) (the “Order”)
or (ii) a high net worth entity falling within article 49(2)(a) to (d) of the Order, and in all cases
is capable of being categorised as a Professional Client or Eligible Counterparty for the
purposes of the FCA Conduct of Business Rules (all such persons together being referred to as
“relevant persons”);
4.28 if the Investor is in the European Economic Area (the “EEA”), the person is a “Professional
Client/Eligible Counterparty” within the meaning of Annex II/ Article 24 (2) of MiFID and is
not participating in the Placing on behalf of persons in the EEA other than Professional Clients
or persons in the UK and other member states (where equivalent legislation exists) for whom
the Investor has authority to make decisions on a wholly discretionary basis;
4.29 in the case of a person who confirms to Canaccord Genuity on behalf of an Investor an
agreement to acquire Placing Shares under the Placing and who is acting on behalf of a third
party, that the terms on which the Investor (or any person acting on its behalf) are engaged
enable it to make investment decisions in relation to securities on that third party’s behalf
without reference to that third party;
4.30 Canaccord Genuity is not making any recommendation to the Investor or advising the Investor
regarding the suitability or merits of participation in the Placing or any transaction the Investor
may enter into in connection with the Placing or otherwise. The Investor is not Canaccord
Genuity’s client in connection with the Placing and Canaccord Genuity will not be responsible
to any Investor for providing the protections afforded to Canaccord Genuity’s clients or
providing advice in relation to the Placing and Canaccord Genuity will not have any duties or
responsibilities to any Investor similar or comparable to “best execution” and “suitability”
imposed by the Conduct of Business Sourcebook contained in the rules of the FCA;
4.31 the exercise by Canaccord Genuity of any rights or discretions under the Placing Agreement
shall be within its absolute discretion and Canaccord Genuity need not have any reference to
any Investor and shall have no liability to any Investor whatsoever in connection with any
decision to exercise or not to exercise or to waive any such right and each Investor agrees that
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it shall have no rights against Canaccord Genuity or its directors or employees under the
Placing Agreement;
4.32 it irrevocably appoints any director of Canaccord Genuity as its agent for the purposes of
executing and delivering to the Company and/or its registrars any documents on its behalf
necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be
taken up by it under the Placing and otherwise to do all acts, matters and things as may be
necessary for, or incidental to, its acquisition of any Placing Shares in the event of its failure
so to do; and
4.33 it will indemnify and hold the Company and Canaccord Genuity and their respective affiliates
harmless from any and all costs, claims, liabilities and expenses (including legal fees and
expenses) arising out of or in connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in this Part VII and further agrees that the
provisions of this Part VII will survive after completion of the Placing. The Company and
Canaccord Genuity will rely upon the truth and accuracy of each of the foregoing
representations, warranties and undertakings.
5.
Supply and disclosure of information
If any of Canaccord Genuity, the Registrar or the Company or any of their respective agents request any
information about an Investor’s agreement to acquire Placing Shares, such Investor must promptly disclose
it to them.
6.
Miscellaneous
6.1
The rights and remedies of Canaccord Genuity, the Registrar and the Company under these
Terms and Conditions are in addition to any rights and remedies which would otherwise be
available to each of them and the exercise or partial exercise of one will not prevent the exercise
of others.
6.1
On application, each Investor may be asked to disclose, in writing or orally to Canaccord
Genuity:
(i)
if he is an individual, his nationality; or
(ii)
if he is a discretionary fund manager, the jurisdiction in which the funds are managed or
owned.
6.3
All documents will be sent at the Investor’s risk. They may be sent by post to such Investor at
an address notified to Canaccord Genuity. Each Investor agrees to be bound by the Articles (as
amended from time to time) once the Placing Shares which such Investor has agreed to acquire
have been acquired by such Investor. The provisions of this Part VII may be waived, varied or
modified as regards specific Investors or on a general basis by Canaccord Genuity. The contract
to acquire Placing Shares and the appointments and authorities mentioned herein will be
governed by, and construed in accordance with, the laws of England and Wales. For the
exclusive benefit of Canaccord Genuity, the Company and the Registrar, each Investor
irrevocably submits to the exclusive jurisdiction of the English courts in respect of these
matters. This does not prevent an action being taken against an Investor in any other
jurisdiction. In the case of a joint agreement to acquire Placing Shares, references to an
“Investor” in these terms and conditions are to each of such Investors and such joint Investors’
liability is joint and several. Canaccord Genuity and the Company each expressly reserve the
right to modify the Placing (including, without limitation, its timetable and settlement) at any
time before allocations of Placing Shares under the Placing are determined.
6.4
The Placing is subject to the satisfaction of the conditions contained in the Placing Agreement
and the Placing Agreement not having been terminated. Further details of the terms of the
Placing Agreement are contained in paragraph 11(a) of Part VI of this document.
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