REG - Intuitive Invests.Gp - Investment & Appointment of Non-Executive Chair

Intuitive InvestmentsAnnouncement

25/02/2022 12:15

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RNS Number : 8892C  Intuitive Investments Group plc  25 February 2022

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Intuitive Investments Group plc

 

Appointment of Julian Baines as Non-Executive Chairman and David Evans to
chair the Investment Committee

Investment in Touchless Innovation Limited,

acquisition of the business and assets of Sanoserv International Franchising
Limited by Touchless Innovation Limited and

proposed subscription to raise £607,000

 

Intuitive Investments Group plc (AIM: IIG) ("IIG" or the "Company"), a
closed-end investment company focussed on the life sciences sector, announces
the appointment of Julian Baines as Non-Executive Chairman with David Evans
becoming chair of the Company's Investment Committee.

 

IIG also announces it has acquired Touchless Innovation Limited ("Touchless
Innovation") a provider of disinfection and hygiene services (the
"Investment"). Touchless Innovation has acquired the business and assets of
Sanoserv International Franchising Limited ("Sanoserv").

 

IIG now proposes to undertake a subscription of new ordinary shares of 1 penny
each ("Ordinary Shares") to raise £607,000 at a price of 22 pence per
Ordinary Share (the "Subscription") (the "Subscription Price").

 

Appointments of Non-Executive Chairman and Chairman of the Investment
Committee

Julian Baines, MBE, currently a member of IIG's Advisory Panel, will become
the Company's Non-Executive Chairman and member of the Remuneration Committee
with immediate effect.

David Evans, the current Executive Chairman of IIG, will step down as a
director of IIG and will become chair of the Company's Investment Committee,
which also comprises Robert Naylor (the Company's Chief Executive Officer) and
Dr Stewart White (Chair of the Advisory Panel).

Julian is Non-Executive Chairman of Verici DX plc, Trellus Health plc and
Deputy Non-Executive Chairman of EKF Diagnostics Holdings plc ("EKF"). Julian
was previously Chief Executive Officer of EKF and Chairman of Renalytix plc.
During his tenure at EKF, Julian successfully completed multiple fundraisings,
spinouts and the acquisition and subsequent integration of eight businesses in
seven countries, building revenue from zero to over £70 million. Julian
oversaw the successful spinouts from EKF of Trellus Health plc and Renalytix
plc. Verici DX plc was in turn a spin out from Renalytix plc.

Prior to joining EKF, Julian was Group Chief Executive Officer of BBI Holdings
plc, where he undertook a management buyout in 2000, its AIM flotation in 2004
and was responsible for selling the business to Alere, Inc. (now part of
Abbott Laboratories) in 2008 for approximately £85 million.

In 2016, Julian was awarded an MBE (Member of the British Empire) for his
services to the Life Science industry.

Investment in Touchless Innovation

IIG has acquired the entire issued share capital of Touchless Innovation in
exchange for the issue of 28,863,636 new Ordinary Shares (the "Consideration
Shares") and £1 million in cash, which comprised a £550,000 subscription for
new ordinary shares in Touchless Innovation prior to the acquisition and a
cash payment of £450,000 for existing ordinary shares in Touchless
Innovation.

 

The Consideration Shares will be issued in two tranches. The first tranche of
22,589,352 Consideration Shares (the "First Tranche Consideration Shares")
were allotted to the selling shareholders of Touchless Innovation on 24
February 2022. The second tranche of 6,274,284 Consideration Shares (the
"Second Tranche Consideration Shares") will be issued subject to IIG's
shareholders approving a certain resolution at a forthcoming General Meeting.
Further information regarding the resolution is set out below.

 

Touchless Innovation was incorporated in October 2015, by its current Chief
Executive Officer Mr Stuart White (no relation to Dr Stewart White). Touchless
Innovations wholly owns Touch-Less Hygiene UK Limited (together the "Touchless
Group") which was incorporated in April 2005 also by Stuart White. The
Touchless Group is an established franchise business providing specialist
disinfection and hygiene services, primarily through its core technology of
spraying and fogging. The Touchless Group's decontamination service is based
around a patented hydrogen peroxide formula stabilised with silver ions, which
is administered as a dry vapour disinfection treatment which can be quickly
and safely applied to a range of surfaces, including electrical equipment,
stainless steel, soft furnishings, food preparation surfaces and the air
itself. The Touchless Group's disinfection formula has proven efficacy against
enveloped viruses, such as coronaviruses, non-enveloped viruses, such as
norovirus, and gram-positive and gram-negative bacteria such as MRSA.

 

The Touchless Group has entered into a master franchise for the UK with
Sanoserv, a Maltese company. The Touchless Group in turn has entered into
regional franchise agreements with a number of franchisees. Both directly and
through its franchisees, the Touchless Group operates in a wide range of
sectors such as life sciences, marine and oil and gas and customers include
the NHS and Network Rail.

 

Per its unaudited management accounts for the year ended 31 May 2021, the
Touchless Group had revenue of £3.5 million, pre-tax profits of £1.12
million and, as at 31 May 2021, net assets of £1.0 million, including £1.0
million of cash. Per its unaudited management accounts for the seven months to
31 December 2021, the Touchless Group had revenue of £2.0 million, pre-tax
profits of £628,000 and, as at 31 December 2021, net assets of £1.54
million, including £1.37 million of cash.

 

Acquisition by Touchless Innovation of the business and assets of Sanoserv

IIG's £550,000 subscription for new ordinary shares in Touchless Innovation,
together with cash in Touchless Innovation, has been used for the initial cash
consideration for the acquisition of the business and assets of Sanoserv.
These assets include various items of equipment, master franchise agreements
in various country territories, intellectual property, including brands and
trademarks, and the entire share capital of two US entities.

 

The full consideration for the acquisition by Touchless Innovation of the
business and assets of Sanoserv is:

·    £2 million in cash and 5% of the issued share capital of Touchless
Innovation, paid on completion ("Completion");

·    £900,000 of deferred consideration payable six months from
Completion; and

·    an earn out of 30% of US profits for the three years from Completion.

 

For the eleven months to 30 November 2021, Sanoserv's unaudited accounts
showed revenue of €183,000, gross profits of €131,000 and EBITDA of
€74,000.

 

Proposed Whitewash under Rule 9 of the UK Takeover Code (the "City Code")

It is proposed the Consideration Shares will be issued in two tranches. As
part of the issue of the First Tranche Consideration Shares, Stuart White, the
largest Vendor Shareholder, will receive 19,591,170 new Ordinary Shares
representing an interest in IIG's enlarged share capital of 29.8%, and will
retain a minority interest of 18.8% in the share capital of in Touchless
Innovation.

 

The issue of the second tranche of Consideration Shares to Stuart White gives
rise to certain considerations under the City Code and will be conditional on
the Company having made an application and received approval from The Panel on
Takeovers and Mergers (the "Panel") for a waiver of the obligation for Stuart
White under Rule 9 of the City Code ("Rule 9") to make a mandatory offer for
the Company, subject to the approval of independent shareholders in accordance
with Appendix 1 of the City Code (the "Waiver").

 

In the event the Waiver is not granted, Stuart White has been granted an
option to require IIG to purchase his remaining holding in Touchless
Innovation for cash on the same terms as the initial purchase.

 

Rule 9 of the City Code

Rule 9 is designed to prevent the acquisition of control of a company to which
the City Code applies without a general cash offer being made to all
shareholders of that company.

 

The number of Ordinary Shares held by Stuart White immediately following the
allotment and issue of the second tranche of Conversion Shares will exceed 30%
of the enlarged issued Ordinary Share capital of IIG.

 

Under Rule 9, when:

·    any person acquires, whether by a series of transactions over a
period of time or not, an interest in shares which (together with shares in
which persons acting in concert with him are interested) carry 30% or more of
the voting rights of a company; or

·    a person, together with persons acting in concert with him, is
interested in shares which in aggregate carry not less than 30% but does not
hold shares carrying more than 50% of the voting rights of a company and such
person, or persons acting in concert with him, acquires an interest in other
shares which increases the percentage of shares carrying voting rights in
which he is interested;

then, in either case, that person is normally obliged to make a general offer
to all classes of shareholders at not less than the highest price paid by him,
or persons acting in concert with him, for shares of that class within the
preceding 12 months.

 

As stated above, following the issue of the second tranche of Conversion
Shares, Stuart White will hold more than 30% of the enlarged issued Ordinary
Share capital of IIG. This would normally give rise to an obligation on Stuart
White to make a general offer to all IIG shareholders. However, the Company
intends to make an application to the Panel for the Waiver, which will also be
subject to the approval of IIG's independent shareholders.

 

Further information regarding Stuart White and the Company's application for
the Waiver will be announced in due course.

 

Application for Admission of the Consideration Shares

Application will be made for the 22,589,352 First Tranche Consideration
Shares, which will rank equally with the existing Ordinary Shares of the
Company, to be admitted to trading on AIM. It is expected that admission will
become effective and dealings in the First Tranche Consideration Shares will
commence at 8:00 a.m. on or around 4 March 2022.

 

Accounting treatment of the Investment

The Board of Directors, in consultation with its advisers, has assessed IIG as
meeting the definition of an investment entity as per IFRS 10 Consolidated
Financial Statements requirements. Therefore, Touchless Innovation will be
held at fair value on IIG's balance sheet and any revaluation will be shown
through its profit or loss in accordance with IFRS 9 Financial Instruments.
Touchless Innovation will not be consolidated as a subsidiary of IIG.

 

The Subscription

The Subscription will be conducted at the Subscription Price and will comprise
the issue of new Ordinary Shares (the "Subscription Shares") to raise
£607,000, representing 4.2% of the issued ordinary share capital of the
Company as enlarged by the Subscription and 3.8% of the issued ordinary share
capital of the Company as enlarged by the Subscription and the Consideration
Shares. The net proceeds of the Subscription will be invested in accordance
with IIG's Investing Policy.

 

The Subscription Price represents a premium of 33.3% to the closing mid-market
price of 16.5 pence per Ordinary Share on 24 February 2022.

 

The Subscription includes the participation of certain of IIG's Directors and
David Evans, the outgoing Executive Chairman, who intend to subscribe in
aggregate for 1,963,635 Subscription Shares, raising £432,000 of the
£607,000 gross proceeds of the Subscription as summarised below. IIG reserves
the right to increase the size of the Subscription. The Subscription is not
being underwritten.

 

 Participating Director(*)                  Number of Existing Ordinary Shares  Amount subscribed in the Subscription  Number of Subscription Shares subscribed for  Number of Ordinary Shares following the Subscription  Percentage of IIG's share capital enlarged by the Subscription and
                                                                                                                                                                                                                           Consideration Shares*
 Julian Baines (Non- Executive Chairman)    22,624                              £50,000                                227,272                                       249,896                                               0.35%
 David Evans (outgoing Executive Chairman)  5,000,000                           £132,000                               600,000                                       5,600,000                                             7.77%
 Robert Naylor (CEO)                        1,250,000                           £250,000                               1,136,363                                     2,386,363                                             3.31%

 

*assuming all of the Subscription Shares are subscribed in the Subscription
and all the Consideration Shares are issued.

 

IIG will provide a further update regarding the application for the admission
of the Subscription Shares to trading on AIM, in due course.

 

Related Party Transaction

The participation of the above Directors, and David Evans as Director in the
previous 12 months, in the Subscription constitutes related party transactions
under Rule 13 of the AIM Rules. The independent Directors of the Company,
being Malcolm Gillies, Cormac Kilty and Colin Willis, consider, having
consulted with the Company's nominated adviser, that the terms of the
participations of the Directors in the Subscription are fair and reasonable
insofar as the Company's Shareholders are concerned.

 

David Evans, outgoing Chairman of IIG, commented:

"The investment into Touchless Innovation is the culmination of many months
work and represents a transformational opportunity for IIG. It also represents
what I would call the end of the first stage of IIG's journey as an AIM
publicly traded investment vehicle with 17 investments having been made
(consisting of nine private companies and eight in public companies).

With that as a backcloth myself and others have committed to investing further
into IIG as part of the Subscription to raise £607,000 at 22 pence per share,
a premium of 33.3% to the prevailing share price, to ensure we have sufficient
ballast to support our existing investments.

It is my intention as part of the next stage of IIG's journey to commit to
supporting our existing portfolio to help crystallise value over the medium
term. This will necessitate me standing down as Chairman of the Company
(whilst remaining chairman of IIG's Investment Committee). I am pleased Julian
Baines has agreed to be my successor who will ensure that the Company is more
outwardly focused both with its current Shareholders and potential future
investors as we seek to grow the Company beyond its existing base.

The only constant in life is change and today we have announced a change of
considerable significance and one that I believe will be the catalyst for
value creation."

AIM Disclosures

The following information regarding the appointment of Julian Huw Baines
(aged 57) is required to be disclosed under Schedule 2(g) of the AIM Rules for
Companies:

 Current Directorships                                              Previous Directorships within the last five years
 Trellus Health plc (previously Trellus Health Limited) (12743489)  Renalytix plc (previously Renalytix AI plc) (11257655)

 Verici Dx plc (12567827)                                           Lexington Corporate Advisors Limited (09727774)

 EKF Diagnostics Holdings plc (04347937)                            EKF Diagnostics Limited (04260136)

 J & K (Cardiff) Limited (07015226)                                 EKF Molecular Diagnostics Limited (08290122)

                                                                    Quotient Diagnostics Limited (04610861)

                                                                    360 Genomics Limited (06321451)

 

Julian Baines was a director of BB Electronics Limited, which went into
liquidation in 1991 with a creditor shortfall of approximately £400,000. He
was also a director of Calibre Communications Limited, which went into
liquidation in 1991 with a creditor shortfall of approximately £20,000.
Julian Baines was not the subject of public criticism by the liquidator in
connection with the liquidations.

There are no further disclosures to be made under Schedule 2g of the AIM Rules
for Companies.

 

For further information, please contact:

 

 Intuitive Investments Group plc                       www.iigplc.com (http://www.iigplc.com/)
 Julian Baines, Non-Executive Chairman                 Via Walbrook PR

 Robert Naylor, CEO

 SP Angel Corporate Finance LLP - Nominated Adviser    +44 (0) 20 3470 0470
 Jeff Keating / David Hignell / Kasia Brzozowska

 Turner Pope Investments (TPI) Ltd - Broker            +44 (0) 20 3657 0050
 Andrew Thacker / James Pope

 Walbrook PR Limited - Media & Investor Relations      +44 (0)20 7933 8780 or intuitive@walbrookpr.com
                                                       (mailto:intuitive@walbrookpr.com)
 Paul McManus/ Sam Allen                               +44 (0) 7980 541 893 / +44 (0) 7502 558 258

 

About Intuitive Investments Group plc

The Company is an investment company seeking to provide investors with
exposure to a portfolio concentrating on fast growing and/or high potential
Life Sciences businesses operating predominantly in the UK, continental Europe
and the US, utilising the Board's experience and in particular that of the
Chairman, David Evans, to seek to generate capital growth over the long term
for shareholders.

 

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