Recommended Merger with InnovaDerma Plc

RNS Number : 6812G

Brand Architekts Group PLC

31 March 2022

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT IS DEEMED BY BRAND ARCHITEKTS AND INNOVADERMA TO CONTAIN INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION NO 596/2014 (INCORPORATED INTO UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

FOR IMMEDIATE RELEASE

31 March 2022

Recommended Merger

of

InnovaDerma plc ("InnovaDerma") with Brand Architekts Group plc ("Brand Architekts")

to be effected by way of a scheme of arrangement
under Part 26 of the Companies Act 2006

Summary

· The Boards of Brand Architekts and InnovaDerma are pleased to announce that they have reached agreement on the terms of a recommended cash and shares Merger pursuant to which Brand Architekts will acquire the entire issued and to be issued ordinary share capital of InnovaDerma (the "Merger") (together, the " Combined Group "). The Merger is to be effected by means of a Court-sanctioned scheme of arrangement between InnovaDerma and InnovaDerma Scheme Shareholders under Part 26 of the Companies Act 2006 (the "Scheme").

· Under the terms of the Merger, InnovaDerma Shareholders will be entitled to receive:

for each InnovaDerma Share held	7 pence in cash and 0. 3818 New Brand Architekts Shares
(together, the "Merger Consideration")

· Based on the Closing Price of 106.5 pence per Brand Architekts Share on 30 March 2022 (being the Latest Practicable Date), the Merger values each InnovaDerma Share at 47.7 pence and InnovaDerma's issued and to be issued ordinary share capital at approximately £13.6 million on a fully diluted basis. This represents a premium of approximately:

o  70.4 per cent. to the Closing Price of 28 pence per InnovaDerma Share on the Latest Practicable Date;

o  34.4 per cent. to the volume weighted average share price per InnovaDerma Share of 35.5 pence in the 3 months to the Latest Practicable Date; and

o  29.3 per cent. to the volume weighted average share price per InnovaDerma Share of 36.9 pence in the 12 months to the Latest Practicable Date.

· The implied headline offer price represents an EV/sales multiple for InnovaDerma of 1.3 times on a historic EV/sales basis.

· Following Completion, InnovaDerma Shareholders will own approximately 38.7 per cent. and Brand Architekts Shareholders will own approximately 61.3 per cent. of the enlarged issued ordinary share capital of Brand Architekts.

· The Brand Architekts Directors believe that bringing together the two companies creates a stronger scaled business which has the ability to accelerate delivery of its strategic objectives, with an opportunity for both sets of shareholders to share in the benefits accruing to the Combined Group via the expected realisation of cost and revenue synergies.

Background to and reasons for the Merger

Brand Architekts has long admired InnovaDerma's reputation and experience as a direct to consumer ("DTC") beauty and skincare retailer. Brand Architekts and InnovaDerma have common cultures and shared values with both companies focused on building sustainable brands with a digital first mindset.

The Boards of Brand Architekts and InnovaDerma believe there is compelling strategic and financial rationale for the Merger including:

Strategic benefits

· Enabling the Combined Group to offer a wider range of products to its combined commercial customer base. The Combined Group will have a broad portfolio of 18 challenger brands including three core brands; Super Facialist, Skinny Tan and Dirty Works. The ability to offer a broader product proposition to an enlarged customer base, and the greater scale of the Combined Group, is expected to strengthen the growth prospects of Combined Group;

· Accelerating both companies' standalone growth strategies. The Merger accelerates delivery of Brand Architekts's ambitious growth plan whilst supporting InnovaDerma's strategy of increasing organic growth. InnovaDerma has a strong focus on digital customer acquisition and DTC sales through its online store, utilising a variety of digital marketing strategies to market the Skinny Tan brand across the UK and further afield. When implemented across the Combined Group's brands these strategies are expected to help drive customer engagement and accelerate DTC sales. Brand Architekts's retailer sales channels are also expected to drive strong growth in InnovaDerma's brands;

· Accelerating growth via Brand Architekts's recently launched marketplace. Brand Architekts's Unexpekted Store was launched in September 2021 to drive multiple channel expansion. The opportunity to market Skinny Tan through this platform and The Unexpekted Store to the Skinny Tan digital customer database is expected to be a significant contributor to the growth of the Combined Group; 

· Establishing a Combined Group of greater scale, whilst retaining a strong balance sheet, to leverage growth opportunities including further complementary M&A, investment in digital marketing, brand and product development; and

· Increasing international expansion. Brand Architekts's brands and products are sold in 34 countries with listings in various key international retailers. InnovaDerma's products and brands are focused on UK sales and there is an opportunity to leverage Brand Architekts's relationships to expand the InnovaDerma offering internationally, particularly with Skinny Tan.

Financial benefits

· Value creation for both sets of shareholders, underpinned by cost and revenue synergies. The Merger is expected to result in recurring run-rate pre-tax cost synergies of c. £1.5 million - £1.75 million per annum, primarily driven by:

o  the harmonisation of the Combined Group's supply chain and DTC business relationships;

o  a reduction in staff costs across the Combined Group; and

o  a reduction in duplicated public quoted company costs and certain operational costs and overheads.

In addition, the Merger is expected to deliver significant revenue synergies, driven by:

o  the Combined Group's ability to increase both the physical and digital presence of its product portfolio. InnovaDerma's digital client base will help Brand Architekts expand its presence online while Brand Architekts's strong relationships with bricks and mortar retailers will enable expanded distribution of InnovaDerma's products in the UK and internationally;

o  the complementary nature of the Combined Group's brand portfolio enabling strong cross-selling opportunities to be realised;

o  collaboration between the Combined Group's brands in new product development;

o  international expansion of key brands into markets such as Australia and the US; and

o  utilising InnovaDerma's digital marketing expertise to bolster awareness of and engagement with the Combined Group's brands;

It is anticipated that all cost synergies would be delivered within 12 months of the Completion of the Merger.

· Anticipated to be earnings accretive to shareholders of Brand Architekts and InnovaDerma. The Merger is anticipated to be double-digit earnings accretive for both InnovaDerma and Brand Architekts shareholders¹ in the first full financial year post completion (including expected recurring run-rate cost synergies). The financial effects stated exclude potential further upside that could be realised from revenue synergies or if there were to be a re-rating of Brand Architekts shares following the Merger.

¹   Excluding any one-off transaction costs

The Combined Group

· The Boards of Brand Architekts and InnovaDerma have agreed a unified management team to lead the Combined Group.

· It is anticipated that Quentin Higham will lead the Combined Group as Group Chief Executive Officer with Tom Carter as Chief Financial Officer. Roger McDowell will be non-executive Chair of the Combined Group.

· It is anticipated that the Non-executive Directors of the Combined Group will be Chris How, Edward Beale, Amy Nelson-Bennett and Simon Pyper.

· It is intended that all of the executive directors of InnovaDerma will step down from their roles upon the Merger becoming Effective.

· It is intended that Ross Andrews and Mark Ward, currently Non-Executive Chairman and Non-Executive Director of InnovaDerma respectively, will resign upon the Merger becoming effective.

· Given the proposed size of the Board of the Combined Group, relative to the size of the business, it is intended that Edward Beale will resign as a non-executive director following the announcement of the Combined Group's preliminary results in September 2022.

· Upon the Merger becoming Effective, the Combined Group will continue to be called "Brand Architekts", with its head office in 8 Waldegrave Road, Teddington, London, and its shares admitted to trading on AIM.

Further detail on the structure of the Board of the Combined Group and its governance is provided in paragraph 9 of this Announcement.

Recommendations

InnovaDerma

The InnovaDerma Directors, who have been so advised by finnCap Ltd ("finnCap") as to the financial terms of the Merger, unanimously consider the terms of the Merger to be fair and reasonable. In providing advice to the InnovaDerma Directors, finnCap has taken into account the commercial assessments of the InnovaDerma Directors.

finnCap is providing independent financial advice to the InnovaDerma Directors for the purposes of Rule 3 of the Takeover Code. Accordingly, the InnovaDerma Directors intend to recommend unanimously that InnovaDerma Shareholders vote in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting.

Brand Architekts

In order to implement the Merger, Brand Architekts will require the approval of the Brand Architekts Shareholders to allot the New Brand Architekts Shares at the Brand Architekts General Meeting. The Merger is accordingly conditional on such approval being obtained.

The Brand Architekts Directors have received financial advice from Singer Capital Markets Advisory LLP ("Singer Capital Markets") in relation to the Merger. In providing its advice to the Brand Architekts Directors, Singer Capital Markets has taken into account the Brand Architekts Directors' commercial assessment of the Merger. Singer Capital Markets is also acting as Nominated Adviser and Corporate Broker to Brand Architekts.

Roger McDowell has abstained himself from the Brand Architekts Board recommendation given his respective shareholdings in both Brand Architekts and InnovaDerma, as set out below. Accordingly, the Brand Architekts Directors, with the exception of Roger McDowell, consider the Merger to be in the best interests of Brand Architekts Shareholders as a whole and intend to recommend unanimously that Brand Architekts Shareholders vote in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting.

Roger McDowell, the Chairman of Brand Architekts, has an interest in 899,105 Brand Architekts Shares (representing approximately 5.2 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date). In addition, Roger McDowell has an interest in 883,671 InnovaDerma Shares (representing approximately 3.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date). Roger McDowell intends to vote in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting in respect of his holding of Brand Architekts Shares; and in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting, in each case in respect of his holding of InnovaDerma Shares.

Irrevocable undertakings and letters of support in respect of the Merger

In respect of the InnovaDerma Shareholder Meetings

The InnovaDerma Directors who are interested in InnovaDerma Shares have irrevocably undertaken to vote (or procure votes) in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting, in respect of their own beneficial holdings (or the holdings of certain persons connected with them) of 5,596,302 InnovaDerma Shares representing, in aggregate, approximately 19.9 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

In addition, Brand Architekts has received irrevocable undertakings from an InnovaDerma Shareholder to vote in favour of the Scheme at the InnovaDerma Court Meeting and to vote in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting, in respect of a total of 883,671 InnovaDerma Shares representing, in aggregate, approximately 3.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts has therefore received irrevocable undertakings in respect of a total number of 6,479,973 InnovaDerma Shares representing, in aggregate, approximately 23.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

The Brand Architekts Directors have given irrevocable undertakings to vote (or procure votes) in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting in respect of their own beneficial holdings (or the holdings of certain persons connected with them) of 1,155,025 Brand Architekts Shares representing, in aggregate, approximately 6.7 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts has also received a non-binding letter of support from a Brand Architekts Shareholder to vote in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting, in respect of 1,979,400 Brand Architekts Shares representing, in aggregate, approximately 11.5 per cent. Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts has therefore received irrevocable undertakings and letters of support to vote in favour of the Brand Architekts Resolution in respect of a total of 3,134,425 Brand Architekts Shares representing, in aggregate, approximately 18.2 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Further details of these irrevocable undertakings and letters of support (and the circumstances in which the irrevocable undertakings will cease to be binding) are set out in Appendix 3.

General

The Merger is expected to be effected by means of a Court-sanctioned scheme of arrangement between InnovaDerma and InnovaDerma Scheme Shareholders under Part 26 of the Companies Act 2006, further details of which are contained in the full text of this Announcement (and will be included in the Scheme Document). Brand Architekts also reserves the right to implement the Merger by way of a Takeover Offer, subject to the Panel's consent.

The Merger will also be subject to the conditions and further terms set out in Appendix 1 to this Announcement and to be set out in the Scheme Document. The Conditions include:

(i) the approval by the requisite majorities of, respectively, the InnovaDerma Scheme Shareholders and InnovaDerma Shareholders of (A) the Scheme at the Court Meeting and (B) the InnovaDerma Resolution at the InnovaDerma General Meeting;

(ii) the sanction of the Scheme by the Court;

(iii)   an ordinary resolution granting the Brand Architekts Directors' authority to issue the new Brand Architekts shares to be issued in connection with the Merger being proposed at the Brand Architekts General Meeting and passed (without amendment); and

(iv) The L ondon Stock Exchange having acknowledged to Brand Architekts or its agent (and such acknowledgement not having been withdrawn) that the New Brand Architekts Shares will be admitted to trading on AIM;

Further details relating to these conditions are set out in paragraph 11 of this Announcement.

It is expected that the Scheme Document (including notices of the InnovaDerma Shareholder Meetings) together with the relevant InnovaDerma Forms of Proxy will be sent to InnovaDerma Shareholders within 28 days of the date of this Announcement (or on such later date as may be agreed by Brand Architekts and InnovaDerma with the consent of the Panel).

It is expected that the Brand Architekts Circular, which will contain a notice of the Brand Architekts General Meeting, will be published and mailed to Brand Architekts Shareholders at or around the same time as the Scheme Document is posted to InnovaDerma Shareholders.

The Scheme Document and the Brand Architekts Circular will each be made available by Brand Architekts on its website at www.brandarchitektsplc.com and by InnovaDerma on its website at www.innovaderma.com.

The Scheme Document and Brand Architekts Circular will contain details of the dates, times and locations of the InnovaDerma Shareholder Meetings and Brand Architekts General Meeting. The Scheme is expected to be Effective in May / early June 2022, subject to satisfaction or (where applicable) waiver of the Conditions and certain further terms set out in Appendix 1 to this Announcement.

Commenting on the Merger, Roger McDowell, Non-Executive Chairman of Brand Architekts, said:

"The Merger makes strong strategic sense for both parties, delivering an improved portfolio of core brands that we can scale, as well as cost synergies. The structure of the deal means that the enlarged group will retain a very strong balance sheet. We look forward to welcoming our new shareholders to the register in due course. ."

Commenting on the Merger, Quentin Higham, Chief Executive Officer of Brand Architekts, said:

" InnovaDerma complements our existing range and the addition of Skinny Tan will give us a third core brand of size and scale. It shares many similar attributes to Super Facialist and with appropriate levels of investment, we believe there is a significant opportunity for profitable growth. InnovaDerma has a strong digital first proposition which is a key focus for Brand Architekts going forward. Brand Architekts has built a solid platform for growth, including its investment in The Unexpekted Store, and I'm excited to start working with the new team upon completion. "

Commenting on the Merger, Ross Andrews, Non-Executive Chairman of InnovaDerma, said:

"The Board of InnovaDerma believes that the Merger will deliver compelling strategic and financial benefits, as well as generating significant synergies for the two businesses. The implied premium of 70.4 per cent for InnovaDerma's Shareholders is a reflection of the attractiveness of our digitally focused business and we strongly believe that the Merger will accelerate growth and secure the earlier delivery of our brand's long-term value potential. InnovaDerma's Shareholders will continue to own approximately 38.7 per cent of the enlarged group and the Board is unanimously recommending the Merger to InnovaDerma's Shareholders." 

Commenting on the Merger, Blake Hughes, Chief Executive Officer of InnovaDerma, said:

"The Merger has a compelling strategic rationale and I believe the combined assets and strengths of both businesses will create sustainable shareholder value. Skinny Tan will benefit from being the Combined Group's largest revenue generator as it looks to accelerate growth, and InnovaDerma's digital marketing and e-commerce expertise will help drive faster online growth across the whole group. I am confident the merged businesses have a bright future ahead ."

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Merger will be subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix 2 contains the bases and sources of certain information used in this summary and this Announcement. Appendix 3 contains details of the irrevocable undertakings and letters of support received in relation to the Merger and the resolution to be proposed at the Brand Architekts General Meeting respectively and which are referred to in this Announcement. Appendix 4 contains details of and bases of calculation of the quantified financial benefits of the Merger. Appendix 5 contains definitions of certain terms used in this summary and this Announcement.

For the purposes of Rule 28 of the Takeover Code, quantified financial benefits statements contained in this Announcement are the responsibility of Brand Architekts and the Brand Architekts Directors. Appendix 4 sets out the quantified financial benefits statements relating to cost savings and synergies arising out of the Merger and provides underlying information and bases of belief. Appendix 4 also includes reports from Brand Architekts's reporting accountant, Francis Clark LLP ("PKF Francis Clark"), and Brand Architekts's financial adviser, Singer Capital Markets, in connection with quantified financial benefits statements, as required pursuant to Rule 28.1(a) of the Takeover Code, and provides underlying information and bases for the reporting accountant's and financial adviser's respective reports. Each of PKF Francis Clark and Singer Capital Markets has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.

This Announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation. For such purposes, the person responsible for this Announcement on behalf of Brand Architekts is Tom Carter, Brand Architekts Chief Financial Officer. The person responsible for this Announcement on behalf of InnovaDerma is Andrew Dunderdale, InnovaDerma Group Finance Director.

Enquiries :

Brand Architekts plc Quentin Higham, Chief Executive Officer Tom Carter, Chief Financial Officer	[phone]
Singer Capital Markets Advisory LLP (Financial Adviser, Nominated Adviser and Corporate Broker to Brand Architekts) Jen Boorer / Shaun Dobson / Dan Dearden-Williams	[phone]
Alma PR (Financial PR Adviser to Brand Architekts) Josh Royston / Sam Modlin	[phone]
InnovaDerma plc Blake Hughes, Chief Executive Officer Andrew Dunderdale, Group Finance Director	c/o TB Cardew [e-mail]
finnCap Ltd (Financial Adviser, Rule 3 Adviser and Corporate Broker to InnovaDerma) Geoff Nash / Henrik Persson / Kate Bannatyne	[phone]
TB Cardew (Financial PR Adviser to InnovaDerma) Shan Willenbrock / Olivia Rosser	+ 44 (0) 7775 848547

Addleshaw Goddard LLP and Ashfords LLP are retained as legal advisers for Brand Architekts. Fieldfisher LLP is retained as legal adviser for InnovaDerma.

Important notices relating to financial advisers

Singer Capital Markets Advisory LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Brand Architekts and no one else in connection with the matters set out in this Announcement and will not be responsible to anyone other than Brand Architekts for providing the protections offered to clients of Singer Capital Markets or for providing advice in relation to the contents of this Announcement or any matters referred to in this Announcement.

finnCap Ltd, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for InnovaDerma and for no one else in connection with the subject matter of this Announcement and will not be responsible to anyone other than InnovaDerma for providing the protections afforded to clients of finnCap or for providing advice in relation to the contents of this Announcement or any matters referred to in this Announcement.

Further information

This Announcement is for information purposes only. It is not intended to and does not constitute, or form part of, any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Merger or otherwise, nor shall there be any sale, issuance or transfer of securities of InnovaDerma pursuant to the Merger or otherwise in any jurisdiction in contravention of applicable law. The Merger will be implemented solely by means of the Scheme Document (or, in the event that the Merger is to be implemented by means of a Takeover Offer, the offer document) which will contain the full terms and conditions of the Merger, including details of how to vote in respect of the Merger (or, in the case of a Takeover Offer, to accept the offer).

InnovaDerma will prepare the Scheme Document to be distributed to InnovaDerma Shareholders. InnovaDerma and Brand Architekts urge InnovaDerma Shareholders to read the Scheme Document carefully as it will contain important information relating to the Merger, the New Brand Architekts Shares and the Combined Group. Any decision to vote in respect of resolutions to be proposed at the InnovaDerma Shareholder Meetings to approve the Merger, the Scheme or related matters, should be made only on the basis of the information contained in the Scheme Document.

It is expected that the Scheme Document (including notices of the InnovaDerma Shareholder Meetings) together with the relevant InnovaDerma Forms of Proxy will be sent to InnovaDerma Shareholders within 28 days of the date of this Announcement (or on such later date as may be agreed by Brand Architekts and InnovaDerma with the consent of the Panel) .

Brand Architekts will prepare the Brand Architekts Circular to be distributed to Brand Architekts Shareholders and which will be available on Brand Architekts's website at www.brandarchitektsplc.com and InnovaDerma's website at www.innovaderma.com. Brand Architekts urges Brand Architekts Shareholders to read the Brand Architekts Circular when it becomes available. Any decision to vote in respect of the Brand Architekts Resolution should be made only on the basis of the information in the Brand Architekts Circular. It is expected that the Brand Architekts Circular (including the notice of the Brand Architekts General Meeting) together with the Brand Architekts Form of Proxy, will be posted to Brand Architekts Shareholders as soon as is reasonably practicable and in any event within 28 days of this Announcement, unless otherwise agreed with the Panel.

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them.

This Announcement does not constitute a prospectus or prospectus equivalent document. The New Brand Architekts Shares to be issued pursuant to the Merger are not being offered to the public by means of this Announcement. The Merger will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange, the Listing Rules and the FCA.

Please be aware that addresses, electronic addresses and certain other information provided by InnovaDerma Shareholders, persons with information rights and other relevant persons for the receipt of communication by InnovaDerma may be provided to Brand Architekts during the Offer Period as required by section 4 of Appendix 4 to the Takeover Code.

Overseas Shareholders

This Announcement has been prepared for the purpose of complying with English law, the Takeover Code, the Market Abuse Regulation, the AIM Rules, the Listing Rules and the Disclosure Guidance and Transparency Rules and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside of the United Kingdom.

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by law and/or regulation. Persons who are not resident in the United Kingdom, or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to participate in the Merger or to vote their InnovaDerma Shares in respect of the Scheme at the InnovaDerma Court Meeting, or to execute and deliver InnovaDerma Forms of Proxy appointing another to vote at the InnovaDerma Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Merger disclaim any responsibility or liability for the violation of such restrictions by any person.

Unless otherwise determined by Brand Architekts or required by the Takeover Code and permitted by applicable law and regulation, participation in the Merger will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Merger by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documentation relating to the Merger are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Merger (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported vote in respect of the Merger.

If the Merger is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made, directly or indirectly, in or into or by use of the mails or a ny other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

The availability of the New Brand Architekts Shares under the Merger to InnovaDerma Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident or to which they are subject. Persons who are not resident in the United Kingdom or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable legal or regulatory requirements.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Forward looking statements

This Announcement (including information incorporated by reference into this Announcement), any oral statements made by Brand Architekts or InnovaDerma in relation to the Merger and other information published by Brand Architekts or InnovaDerma may contain statements about Brand Architekts, InnovaDerma and the Combined Group that are or may be forward looking statements. All statements other than statements of historical fact included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "goals", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects", hopes", "continues", "would", "could", "should" or words or terms of similar substance or the negative of them, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; and (ii) business and management strategies and the expansion and growth of Brand Architekts's, InnovaDerma's or the Combined Group's operations and potential synergies resulting from the Merger.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and/or the operations of Brand Architekts, InnovaDerma or the Combined Group and are based on certain assumptions and assessments made by Brand Architekts and InnovaDerma in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. Except as expressly provided in this Announcement, they have not been reviewed by the auditors of Brand Architekts or InnovaDerma. Although it is believed that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place reliance on these forward looking statements which speak only as at the date of this Announcement. Neither InnovaDerma nor Brand Architekts, nor any of their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them assumes any obligation to update or correct the information contained in this Announcement (whether as a result of new information, future events or otherwise) except as required by applicable law (including as required by the Takeover Code, the Listing Rules, the AIM Rules, the Market Abuse Regulation and the Disclosure Guidance and Transparency Rules).

There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business acquisitions or disposals. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

No member of the Brand Architekts Group or the InnovaDerma Group, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

Quantified Financial Benefits Statement

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Neither the Quantified Financial Benefits Statement nor any other statement in this Announcement should be construed as a profit forecast or interpreted to mean that the Combined Group's earnings in the financial year ending 30 June 2023, being the envisaged first full financial year following Completion, or in any subsequent period, would necessarily match or be greater than or be less than those of Brand Architekts or InnovaDerma for the relevant preceding financial period or any other period. For the purposes of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of Brand Architekts and the Brand Architekts Directors.

Profit forecasts and estimates

No statement in this Announcement is intended to constitute a profit forecast or profit estimate and no statement in this Announcement should be interpreted to mean that the earnings or future earnings per share of or dividends or future dividends per share of Brand Architekts or InnovaDerma for current or future financial years will necessarily match or exceed the historical or published earnings or dividends per share of Brand Architekts or InnovaDerma, as appropriate.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the Announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company; and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Takeover Code applies must be made by no later than 3.30 pm on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company; and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Takeover Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Takeover Code applies must be made by no later than 3.30 pm on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Takeover Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with either of them (see Rules 8.1, 8.2 and 8.4 of the Takeover Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk , including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on [phone] if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 Disclosure

In accordance with Rule 2.9 of the Takeover Code, InnovaDerma announces that, as at close of business on the Latest Practicable Date, it has 28,057,825   InnovaDerma Shares in issue and admitted to trading on the London Stock Exchange. InnovaDerma has no shares held in treasury. The International Securities Identification Number (ISIN) of the InnovaDerma Shares is GB00BT9PTW34.

In accordance with Rule 2.9 of the Takeover Code, Brand Architekts announces that as at close of business on the Latest Practicable Date, it has 17,230,702   Brand Architekts Shares in issue and admitted to trading on AIM. Brand Architekts has no shares held in treasury. The ISIN of the Brand Architekts Shares is GB0008667304.

Requesting Hard Copy Documents

Pursuant to Rule 30.3 of the Takeover Code, a person so entitled may request a copy of this Announcement and any information incorporated into it by reference to another source in hard copy form. A person may also request that all future documents, announcements and information to be sent to that person in relation to the Merger should be in hard copy form.

Brand Architekts Shareholders may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement) by writing to Computershare Investor Services plc, of The Pavilions, Bridgwater Road, Bristol, BS13 8AE or by calling Computershare on [phone]. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 am - 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. It is important that you note that unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Merger should be in hard copy form.

InnovaDerma Shareholders may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement) by writing to, SLC Registrars, P.O. Box 5222, Lancing, BN99 9FG or by calling SLC Registrars on [phone]. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 am - 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. It is important that you note that unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Merger should be in hard copy form.

Publication on website

A copy of this Announcement will be made available, free of charge subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Brand Architekts's website at www.brandarchitektsplc.com   and on InnovaDerma's website at www.innovaderma.com   by no later than 12 noon on the Business Day following the date of this Announcement.

Neither the content of the websites referred to in this Announcement nor the content of any website accessible from hyperlinks on Brand Architekts's website or InnovaDerma's website (or any other website) is incorporated into, or forms part of, this Announcement.

The Merger is subject to the provisions of the Takeover Code.

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT IS DEEMED BY BRAND ARCHITEKTS AND INNOVADERMA TO CONTAIN INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION NO 596/2014 (INCORPORATED INTO UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

FOR IMMEDIATE RELEASE
31 March 2022

Recommended Merger

of

InnovaDerma plc with Brand Architekts Group plc

to be effected by way of a scheme of arrangement
under Part 26 of the Companies Act 2006

1.   Introduction

The Boards of Brand Architekts and InnovaDerma are pleased to announce that they have reached agreement on the terms of a recommended cash and share Merger pursuant to which Brand Architekts will acquire the entire issued and to be issued ordinary share capital of InnovaDerma (together, the "Combined Group"). The Merger is to be effected by means of a Court-sanctioned scheme of arrangement between InnovaDerma and InnovaDerma Scheme Shareholders under Part 26 of the Companies Act 2006.

2.  The Merger

Under the terms of the Merger, InnovaDerma Shareholders will be entitled to receive:

for each InnovaDerma Share held	7 pence in cash (the "Cash Consideration") and 0.3818 New Brand Architekts Shares
(together, the "Merger Consideration")

Based on the Closing Price of 106.5 pence per Brand Architekts Share on 30 March 2022 (being the Latest Practicable Date), the Merger values each InnovaDerma Share at 47.7 pence and InnovaDerma's issued and to be issued ordinary share capital at approximately £13.6 million on a fully diluted basis. This represents a premium of approximately:

· 70.4 per cent. to the Closing Price of 28 pence per InnovaDerma Share on the Latest Practicable Date;

· 34.4 per cent. to the volume weighted average share price per InnovaDerma Share of 35.5 pence in the 3 months to the Latest Practicable Date; and

· 29.3 per cent. to the volume weighted average share price per InnovaDerma Share of 36.9 pence in the 12 months to the Latest Practicable Date. 

The implied headline offer price represents an EV/sales multiple of 1.3 times on a historic basis.

Following Completion, InnovaDerma Shareholders will own approximately 38.7 per cent. and Brand Architekts Shareholders will own approximately 61.3 per cent. of the enlarged issued ordinary share capital of Brand Architekts.

The New Brand Architekts Shares will be issued credited as fully paid and will rank pari passu in all respects with the Brand Architekts Shares in issue at the time the New Brand Architekts Shares are issued pursuant to the Merger, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date. Application will be made to the London Stock Exchange for the New Brand Architekts Shares to be admitted to trading on AIM.

In the event that the Merger is to be implemented instead by way of a Takeover Offer, the InnovaDerma Shares will be acquired pursuant to such Merger fully paid and free from all liens, charges, equitable interests, encumbrances and rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching to them.

3.  Background to and reasons for the Merger

Brand Architekts is a beauty brand specialist, with a portfolio of skincare, haircare and bodycare brands and focused on innovating new and exciting products. Brands range from female beauty to male grooming, with both mass market appeal and everyday value propositions. The brands are retailed to a variety of DTC and business to business (B2B) channels; through its online platform, The Unexpekted Store and through the Group's strong relationships with retailers across the UK and internationally.

Brand Architekts has a stated strategy to seek earnings-enhancing acquisition opportunities that are complementary to its brand portfolio and longer term strategy.

Brand Architekts has long admired InnovaDerma's reputation and experience as a DTC beauty and skincare retailer. Brand Architekts and InnovaDerma have common cultures and shared values, with both companies focused on building sustainable brands with a digital first mindset.

The Brand Architekts Directors believe that through a Merger with InnovaDerma there is an opportunity to leverage Brand Architekts's omni-channel approach to drive sales through The Unexpekted Store and through relationships with bricks and mortar stores, whilst also acquiring a strong customer database, thereby promoting cross-sell opportunities with brands and products within the Group's existing portfolio.

The Boards of Brand Architekts and InnovaDerma believe there is compelling strategic and financial logic to the Merger including:

Strategic benefits

· Enabling the Group to offer a wider range of products to its combined commercial customer base. The Combined Group will have a broad portfolio of 18 focused, challenger brands including three core brands: Super Facialist, Skinny Tan and Dirty Works. The ability to offer a broader product proposition to an enlarged customer base, and the greater scale of the Combined Group, is expected to strengthen the growth prospects of Combined Group;

· Accelerating both companies' standalone growth strategies. The Merger accelerates delivery of Brand Architekts's ambitious growth plan whilst supporting InnovaDerma's strategy of increasing organic growth. InnovaDerma has a strong focus on digital customer acquisition and DTC sales through its online store, utilising a variety of digital marketing strategies to market the Skinny Tan brand across the UK and further afield. When implemented across the Combined Group's brands, these strategies are expected to help drive customer engagement and accelerate DTC sales. Brand Architekts's retailer sales channels are also expected to drive strong growth in InnovaDerma's brands;

· Accelerating growth via Brand Architekts's recently launched marketplace. Brand Architekts's The Unexpekted Store was launched in September 2021 to drive multiple channel expansion. The opportunity to market Skinny Tan through this platform and The Unexpekted Store to the Skinny Tan digital customer database is expected to be a significant contributor to the growth of the Combined Group; 

· Establishing a Combined Group of greater scale, whilst retaining a strong balance sheet, to leverage growth opportunities including further complementary M&A, investment in digital marketing, brand and product development; and

· Increasing international expansion. Brand Architekts's brands and products are sold in 34 countries with listings in various key international retailers. InnovaDerma's products and brands are focused on UK sales and there is an opportunity to leverage Brand Architekts's relationships to expand the offering internationally, particularly with Skinny Tan.

Financial benefits

· Value creation for both sets of shareholders, underpinned by cost and revenue synergies. The Merger is expected to result in recurring run-rate pre-tax cost synergies of c. £1.5 million - £1.75 million per annum, primarily driven by:

o  the harmonisation of the Combined Group's supply chain and direct to consumer business relationships;

o  a reduction in staff costs across the Combined Group; and

o  a reduction in duplicated public quoted company costs and certain operational costs and overheads.

In addition, the Merger is expected to deliver significant revenue synergies driven by:

o  the Combined Group's ability to increase both the physical and digital presence of its product portfolio. InnovaDerma's digital client base will help Brand Architekts expand its presence online while Brand Architekts's relationships with bricks and mortar retailers will enable expanded distribution of InnovaDerma's products in the UK and internationally;

o  the complementary nature of the Combined Group's brand portfolio enabling strong cross-selling opportunities to be realised;

o  collaboration between the Combined Group's brands in new product development;

o  international expansion of key brands into markets such as Australia and the US; and

o  utilising InnovaDerma's digital marketing expertise to bolster awareness of and engagement with the Combined Group's brands.

It is anticipated that all cost synergies would be delivered within 12 months of Completion of the Merger.

· Anticipated to be earnings accretive to shareholders of Brand Architekts and InnovaDerma. The Merger is anticipated to be double-digit earnings accretive for both InnovaDerma and Brand Architekts shareholders¹ in the first full financial year post completion (including expected recurring run-rate cost synergies). The financial effects stated exclude potential further upside that could be realised from revenue synergies or if there were to be a re-rating of Brand Architekts shares following the Merger.

4.  Recommendations

InnovaDerma

The InnovaDerma Directors, who have been so advised by finnCap Ltd as to the financial terms of the Merger, unanimously consider the terms of the Merger to be fair and reasonable. In providing its advice to the InnovaDerma Directors, finnCaphas taken into account the commercial assessments of the InnovaDerma Directors. finnCapis providing independent financial advice to the InnovaDerma Directors for the purposes of Rule 3 of the Takeover Code.

Accordingly, the InnovaDerma Directors intend unanimously to recommend that InnovaDerma Shareholders vote in favour of the Scheme at the InnovaDerma Court Meeting, and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting as those InnovaDerma Directors who are interested in InnovaDerma Shares have irrevocably undertaken to do in respect of their own beneficial holdings (or have undertaken to procure the vote in respect of the InnovaDerma Shares in which certain of their connected persons are interested) of 5,596,302 InnovaDerma Shares representing, in aggregate, approximately 19.9 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts

In order to implement the Merger, Brand Architekts will require the approval of the Brand Architekts Shareholders to allot the New Brand Architekts Shares at the Brand Architekts General Meeting. The Merger is accordingly conditional on such approval being obtained.

The Brand Architekts Directors have received financial advice from Singer Capital Markets in relation to the Merger. In providing its advice to the Brand Architekts Directors, Singer Capital Markets has taken into account the Brand Architekts Directors' commercial assessment of the Merger. 

Roger McDowell has abstained himself from the Brand Architekts Board recommendation given his respective shareholdings in both Brand Architekts and InnovaDerma. Accordingly, the Brand Architekts Directors, with the exception of Roger McDowell, consider the Merger to be in the best interests of Brand Architekts Shareholders as a whole and intend unanimously to recommend that Brand Architekts Shareholders vote in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting, as those Brand Architekts Directors who are interested in Brand Architekts Shares have irrevocably undertaken to do in respect of their own beneficial holdings (or have undertaken to procure the vote in respect of the Brand Architekts Shares in which certain of their connected persons are interested) of 983,580 Brand Architekts Shares representing, in aggregate, approximately 5.7 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Roger McDowell, the Chairman of Brand Architekts, has an interest in 899,105 Brand Architekts Shares (representing approximately 5.2 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date). In addition Roger McDowell has an interest in 883,671 InnovaDerma Shares (representing approximately 3.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date). Roger McDowell intends to vote in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting in respect of his holding of Brand Architekts Shares; and in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting, in each case in respect of his holding of InnovaDerma Shares. 

5.  Background to and reasons for the recommendation of the InnovaDerma Board

Following a largely wholescale board change in 2021, InnovaDerma raised £4.5m at a price of 35 pence per share in April 2021, to provide funding to allow then newly appointed CEO Blake Hughes and the wider management team to execute on a revised business transformation strategy (as described in paragraph 7).

The transformation has reached across InnovaDerma's operations and performance and as reported in the Company's interim financial statements, is delivering pleasing improvements in the Company's financial performance. The speed of the transformation has been impacted by the much reduced consumer consumption and retail momentum in the tanning industry, InnovaDerma's key market, as a result of COVID-19. This included the effects of the Omicron variant and the associated reduction in social contact in December 2021 and early 2022.

The InnovaDerma Directors are confident in the Company's prospects but cautious that an unusually high level of global uncertainty remains that can have an impact on underlying consumer confidence and spending. Furthermore, in order to accelerate profitable growth, as an independent company, further investment and resources are required.

It is against this background that the InnovaDerma Directors share the commercial and strategic attractions of the Merger presented by the Brand Architekts Board in paragraph 3.

In particular, it is apparent that InnovaDerma growth can be further accelerated by incremental resources and investment, particularly in key brands Skinny Tan and Charles + Lee. The InnovaDerma Directors believe that the Merger offers both the opportunity and resources for to accelerate a return to profitability, balanced with financial resilience in the case of any future downturn.

The InnovaDerma Directors also believe that there is an opportunity for the two companies to benefit from each other's sales channels. In particular, InnovaDerma has a strong presence in pharmacies such as Boots and Superdrug whereas Brand Architekts has strengths in the grocery channel and there is an opportunity to leverage these relationships to drive sales growth in the respective products. In addition to this, Brand Architekts has broader sales presence globally with an international sales team. The InnovaDerma Board believe that these channels could be used to further drive sales growth, especially in Skinny Tan.

The InnovaDerma Directors believe that the financial terms of the Merger, insofar as the premium to the prevailing share price of an InnovaDerma Share and the resultant relative participation of InnovaDerma Shareholders in the performance of the Combined Group, are attractive to InnovaDerma Shareholders and that the Cash Consideration represents a meaningful partial return to reward InnovaDerma Shareholders for their support. The InnovaDerma Directors believe that greater scale will not only bring operational benefits, but potentially also enhance trading liquidity of the Combined Group's shares and greater appeal to a wider range of investors.

Therefore, after careful consideration, the InnovaDerma Directors have concluded that the terms of the Merger are in the best interests of InnovaDerma Shareholders and InnovaDerma as a whole. As such, the InnovaDerma Directors unanimously intend to recommend that InnovaDerma Shareholders vote in favour of the Merger.

6.  Information on Brand Architekts

Brand Architekts is a public limited company incorporated in England and Wales whose shares are admitted to the AIM market of the London Stock Exchange.

Brand Architekts is a beauty brand specialist, with a portfolio of skincare, haircare and bodycare brands and focused on innovating new and exciting products. Brands range from female beauty to male grooming, with both mass market appeal and everyday value propositions. Among its 13 core growth brands are Super Facialist, Dirty Works, Kind Natured and Dr Salts. The brands are retailed to a variety of DTC and B2B channels; through its online platform, The Unexpekted Store and through the Group's relationships with retailers across the UK and internationally.

The recent creation of a new marketplace called theunexpektedstore.com is expected to strengthen consumer reach and engagement and drive multi-channel expansion. Brand Architekts's strategic focus is to maximise the potential of its brands and significant opportunities exist in the targeting of new international markets and building relationships with appropriate distribution and retail partners.

Brand Architekts has a stated strategy to seek earnings-enhancing acquisition opportunities that are complementary to its brand portfolio and longer term strategy.

Brand Architekts had, as at the last Practicable Date, a market capitalisation of approximately £18.4 million. In the year ended 30 June 2021, Brand Architekts generated revenue of £15.9 million (2020: £16.3 million), giving an underlying operating loss of £0.3 million (2020: £0.1 million) and loss before tax of £1.9 million (2020: £(4.3) million), and had net assets on its balance sheet as at 30 June 2021 of £23.7 million (2020: £23.1 million). As at 28 February 2022 Brand Architekts had a headcount of 37 employees.

Further information regarding the interim results for Brand Architekts for the six months to December 2021 can be found in paragraph 8 below.

The table below shows illustrative historical pro forma financial information for the Combined Group:

Latest financial year (ended 30 June 2021)	Brand Architekts (£'m)	InnovaDerma (£'m)	Pro forma (£'m)
Revenue	15.9	10.2	26.1
Adjusted EBITDA	(0.2)	(1.5)	(1.7)
Underlying operating profit margin	(1.4)%	(14.2)%	(6.4)%
Depreciation and amortisation	(0.3)	(0.2)	(0.5)
Net finance revenue / (costs)	(0.2)	(0.0)	(0.2)
Other exceptional items	(1.1)	(0.3)	(1.4)
Loss before tax	1.9	1.9	3.8

1.  The pro forma financials have been based on audited information obtained from (i) Brand Architekts's annual report for the financial year ended 30 June 2021 and (ii) InnovaDerma's annual report for the financial year ended 30 June 2021.

7.  Information on InnovaDerma

InnovaDerma is a public limited company incorporated in England and Wales whose shares are admitted to the standard listing segment of the Official List and to trading on Euronext Paris.

InnovaDerma focuses on the research, manufacture and marketing of beauty and personal care products and has a presence in the UK, Europe, US, Australasia, Asia and Africa. InnovaDerma's products extend over a range of applications and include the brands Skinny Tan, Roots, Charles + Lee and Nuthing and InnovaDerma also has a minority stake in the Prolong brand. InnovaDerma's products are retailed to a variety of DTC channels; through its website, Amazon and through its relationships with retailers across the UK and internationally.

Skinny Tan, InnovaDerma's self-tanning range, is its largest and highest priority product and accounts for approximately 84 per cent. of its revenue. In addition to being sold through a variety of channels as described above, Skinny Tan is also retailed through its own website and the InnovaDerma Board has focused on the marketing of Skinny Tan, in particular through social media. Most notably, in October 2021, InnovaDerma appointed Love Island's Liberty Poole as a Skinny Tan ambassador to market the brand to her c. 1.5 million Instagram followers.

InnovaDerma has changed substantially over the last 18 months focusing on its digital, commercial and beauty sector expertise to drive profitable and sustainable growth. In this period, InnovaDerma has strategically repositioned its business to move away from certain loss leading sales, increased its sales through Amazon (which is now its third largest retailer) and implemented gross margin improvements and operational cost reductions.

The company has implemented a programme of significant change across the organisation, ensuring that it is focused on the areas that will drive both immediate and substantive performance improvements whilst building the foundations for future growth.

InnovaDerma had, as at the last Practicable Date, a market capitalisation of approximately £7.9 million. In the year ended 30 June 2021, InnovaDerma generated revenue of £10.2 million (2020: £13.2 million), giving an underlying operating loss of £2.3 million (2020: £(4.6) million) and loss before tax of £1.9 million (2020: £(5.0) million), and had net assets on its balance sheet as at 30 June 2021 of £3.4 million (2020: £1.7 million). As at 28 February 2022 InnovaDerma had a headcount of 35 employees.

8.  Current trading

Current trading of Brand Architekts

Earlier today, Brand Architekts announced its unaudited interim results for the 6 month period ended 31 December 2021 (the "Brand Architekts Interim Results Announcement").

In particular, in the Brand Architekts Interim Results Announcement, the Company reported the following:

"The trading environment throughout the last six months has continued to be challenging, with the impact of COVID and the well publicised supply chain issues effecting retailers' buying patterns, freight costs and therefore margin. We have focused on implementing our four strategic pillars, so that we can position ourselves to take advantage of future opportunities. Despite these headwinds, I am pleased with the operational progress that has been made in the first half of the year. We will be focusing on securing omnichannel distribution gains and implementing a digital mindset, so that we can ultimately deliver our Project 50 goal.

Key achievements include:

· Relaunched seven brands in September & October 2021 (Dr Salts; Root Perfect; Argan +; SenSpa; Kind Natured; Happy Naturals; Beautopia). The benefits of the relaunch (new designs, formulations and environmentally friendly packaging) will be seen in H2 and beyond.

· The successful relaunch of Root Perfect resulted in strong distribution gains in 300+ Normal stores across Europe and Morrisons.

· Continued distribution gains for Super Facialist (Morrisons; Look Fantastic) and Dirty Works Internationally. After a successful trial period Super Facialist will be launching 14 products into 200+ Tesco stores in June 2022.

· Launched our own marketplace www.theunexpektedstore.com at the end of September 2021.

Performance review

Net sales for the period were £7.4m, a decrease of 19% on the prior year (H1FY 2021: £9.0m). This decline was as a result of two factors; firstly key retailers delaying the implementation of our brand relaunches, caused by the COVID pandemic and secondly planned rationalisation of our product ranges by 25% to optimise our productivity. With many of our brands needing to be relaunched and product ranges rationalised to reflect consumer demand and improve productivity, this delay meant that sales for the first three months were affected, as stocks of the previous ranges were run down. The impact of these delays was felt across both the high street and grocer retailers, which remain our dominant revenue generators.

International sales increased, with Root Perfect rolling out to 300+ Normal stores in Europe and Dirty Works launching in Peru. We also increased both our e-commerce (Amazon and Look Fantastic) and international sales but not significantly enough to counter the high street impact.

Gross margin in the period was significantly impacted and declined to 32.5% versus 36.3% in the prior year period (on an adjusted basis). This reflects a wide range of cost pressures felt throughout our supply chain, that we could not pass onto retailers due to previously agreed pricing commitments. The main impact was the significant increase in shipping container costs for goods from overseas (principally Christmas Gift Sets and bath salts), which at the time of shipping were 500% higher than historical prices. Alongside this we have had to contend with other significant cost increases throughout the supply chain, notably in raw materials, componentry and energy. As we enter the second half and as we approach Christmas 2022 planning, we plan to offset the majority of these costs.

The Company experienced a first half loss before tax of £1.1m (H1FY 2021: profit of £0.4m).

Net cash decreased by £1.7m, as a result of a £1.0m contribution to the defined benefit pension scheme and the factors detailed above. The Company still enjoys a very strong net cash position of £17.3m (H1 2021: £19.0m) which positions it well for future growth."

Current trading of InnovaDerma

Earlier today, InnovaDerma announced its unaudited interim results for the 6 month period ended 31 December 2021 (the "InnovaDerma Interim Results Announcement") in which it outlines trading for the period and its outlook on the 12 months ended 30 June 2022.

9.   Employees, management and locations

Strategic plans for the Combined Group

Brand Architekts intends to implement a strategy which recognises the importance of InnovaDerma's brands and the established network of suppliers and customers, to facilitate future growth and profitability for the business. The Combined Group will have a broader product offering, a larger combined customer base and an omni-channel sales approach and opportunities exist to cross-sell opportunities amongst this portfolio.

The Combined Group, upon Completion will initiate a more detailed review of the operations of both businesses to harmonise, and define the most efficient, operating structure for the Combined Group. This is expected to involve the harmonisation of the Combined Group's supply chain and direct to consumer business relationships, a reduction in headcount across the Combined Group and a reduction in duplicated public quoted company costs and certain operational costs and overheads.

The integration plan is then expected to take approximately 12 months following Completion, and will be designed to minimise disruption to customers and employees whilst aiming to deliver the anticipated opportunities and benefits of the Merger for the Combined Group's stakeholders.

The Merger is expected to result in recurring run-rate pre-tax cost synergies of c. £1.5 million - £1.75 million per annum.

Governance

It is anticipated that the Board of the Combined Group will be made up of seven directors with appropriate skills and relevant experience. The members of the Board of the Combined Group are expected to be as follows:

Executive directors: Quentin Higham, Group Chief Executive Officer and Tom Carter Group Chief Financial Officer;

Non-executive directors: Roger McDowell, Chair of the Combined Group; Chris How, Non-executive Director; Edward Beale, Non-executive Director; Amy Nelson-Bennett, Non-executive Director and Simon Pyper, Non-executive Director.

It is intended that Ross Andrews, Blake Hughes and Andrew Dunderdale, currently non-executive chair, chief executive officer and group finance director of InnovaDerma, will resign as directors of the Board of InnovaDerma upon the Merger becoming Effective, on terms to be agreed. It is also intended that Mark Ward, currently a non-executive director of InnovaDerma, will step down as a director with effect from Completion.

Given the proposed size of the Board of the Combined Group, relative to the size of the business, it is intended that Edward Beale will resign as a non-executive director following the announcement of the Combined Group's preliminary results in September 2022.

Management and employees

The Combined Group will aim to retain the best talent of Brand Architekts and InnovaDerma to deliver the strategic and financial benefits of the Merger.

Following the Merger becoming Effective, the Board of Brand Architekts does not propose to make any changes to the terms and conditions of employment of InnovaDerma employees for at least the first 12 months post Completion. Brand Architekts confirms that it intends to safeguard fully the existing statutory and contractual employment and pension rights of Brand Architekts and InnovaDerma employees and management.

The Boards of Brand Architekts and InnovaDerma recognise that to achieve the expected benefits of the Merger, restructuring of the internal functions of the Combined Group will be required following Completion of the Merger. The initial synergy work carried out to date, as part of preparation of the Quantified Financial Benefits Statement, has assumed cost savings from the removal of duplication and rationalisation of roles as part of the integration process, across corporate, sales and support functions and Board level positions.

Subject to the outcome of the detailed review of the integration options, it is likely there will be a reduction of approximately 35 per cent. in the Combined Group's projected headcount. The current assumption is that the cost savings will predominantly be delivered 12 months post-Completion. Any proposals relating to a reduction in headcount would be subject to consultation with Brand Architekts and InnovaDerma employees as appropriate. Any affected employees will be treated in a fair and transparent manner and in accordance with their employment rights and applicable law.

At the time of this Announcement, Brand Architekts has not entered into, nor had any discussions about proposals to enter into, management incentivisation arrangements with members of the management of InnovaDerma, nor does it expect to have any such discussions until after Completion. As noted above, it is the intention that Simon Pyper, a non-executive director of InnovaDerma, joins the Board of the Combined Group as a non-executive director. Brand Architekts proposes to enter into a letter of appointment with this individual with effect from the Merger becoming Effective on terms of appointment consistent with Brand Architekts's existing non-executive directors.

Locations and Research and Development

The Board of Brand Architekts considers that it is in the best interests of the Combined Group for the head offices and corporate functions of Brand Architekts and InnovaDerma to be combined. Following the Merger becoming Effective, it is intended that the Combined Group and its corporate functions will be headquartered at Brand Architekts's existing headquarters in 8 Waldegrave Road, Teddington, London, TW11 8GT and the lease in respect of InnovaDerma's current registered office, 27 Old Gloucester Street, London WC1N 3AX will be immediately terminated. Brand Architekts and InnovaDerma have supported flexible working remotely and following Completion it is intended to continue to support such working practices. Following Completion, it is intended that the Combined Group will review InnovaDerma's flexible overseas offices in Australia and the Philippines, as part of the detailed review referred to above, which may result in the rationalisation of its corporate footprint. As part of this review, the Board of Brand Architekts is considering all options in respect of the DTC trading operations of the Combined Group which includes outsourcing all existing overseas infrastructure. However, these plans have not yet been fully determined ahead of the detailed review and taking account of the commercial and legal considerations.

Beyond the potential changes identified above, there are no further plans to redeploy the fixed assets of the Combined Group.

InnovaDerma does not currently have a research and development function and therefore no changes are intended in this regard.

Pensions

Following Completion, the Combined Group does not intend to make any changes with regard to the agreed employer contributions into InnovaDerma's existing pension scheme(s) or the accrual of benefits to existing members or the admission of new members to such pension schemes.

Trading Facilities

InnovaDerma is currently listed on the Official List and Euronext Paris. As further described below, prior to the Scheme becoming Effective, it is intended that an application will be made to the London Stock Exchange for the cancellation of trading in the InnovaDerma Shares on the Main Market of the London Stock Exchange, and to the FCA for the cancellation of the listing of the InnovaDerma Shares on the Official List, in each case with effect from or shortly after the Effective Date. In addition, prior to the Scheme becoming Effective, it is intended that an application will be made to Euronext Paris for the delisting of InnovaDerma Shares from Euronext Paris with effect from or shortly after the Effective Date. Any delisting of InnovaDerma Shares from Euronext Paris is subject to the approval of Euronext Paris.

It is also intended that, following the Effective Date, InnovaDerma will be re-registered as a private company under the relevant provisions of the Companies Act.

Prior to the Effective Date, an application will be made by Brand Architekts to the London Stock Exchange for the New Brand Architekts Shares to be admitted to AIM.

Views of the InnovaDerma Board

The InnovaDerma Directors believe that there are compelling strategic and financial rationale to the Merger and welcome Brand Architekts's recognition of the importance of InnovaDerma's brands and suppliers and customers, in facilitating the future growth and profitability of the Combined Group. The InnovaDerma Directors also welcome that Brand Architekts recognise the importance of InnovaDerma's employees and the intention to retain the best talent across the Combined Group. The InnovaDerma Directors acknowledge that combining head offices is a pragmatic step in integrating the businesses.

It is with regret that the InnovaDerma Directors note the potential for headcount reductions across the Combined Group as a result of the Merger but understand their potential necessity to achieve the expected benefits of the Merger in this competitive landscape. The InnovaDerma Directors welcome the assurance that any headcount reductions will follow careful review as to the manner of such cost saving proposals being pursued, as set out above.

In this light, it is reassuring that Brand Architekts has also confirmed that all existing employment rights and pensions of InnovaDerma's employees, including as to pension rights, will be fully safeguarded and that no material changes are expected in the terms and conditions of employment or in the redeployment of InnovaDerma's fixed assets.

10.   Irrevocable undertakings and Letters of Support in respect of the Merger

In respect of the InnovaDerma Shareholder Meetings

The InnovaDerma Directors who are interested in InnovaDerma Shares have irrevocably undertaken to vote (or procure votes) in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting, in respect of their own beneficial holdings (or the holdings of certain persons connected with them) of 5,596,302 InnovaDerma Shares representing, in aggregate, approximately 19.9 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

In addition, Brand Architekts has received irrevocable undertakings from an InnovaDerma Shareholder to vote in favour of the Scheme at the InnovaDerma Court Meeting and to vote in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting, in respect of a total of 883,671 InnovaDerma Shares representing, in aggregate, approximately 3.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts has therefore received irrevocable undertakings in respect of a total number of 6,479,973 InnovaDerma Shares representing, in aggregate, approximately 23.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date.

In addition, the Brand Architekts Directors have given irrevocable undertakings to vote (or procure votes) in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting in respect of their own beneficial holdings (or have undertaken to procure the vote in respect of the Brand Architekts Shares in which certain of their connected persons are interested) of 1,155,025 Brand Architekts Shares representing, in aggregate, approximately 6.7 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts has also received a non-binding letter of support from a Brand Architekts Shareholders to vote in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting, in respect of 1,979,400 Brand Architekts Shares representing, in aggregate, approximately 11.5 per cent. Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Brand Architekts has therefore received irrevocable undertakings and letters of intent to vote in favour of the Brand Architekts Resolution in respect of a total of 3,134,425 Brand Architekts Shares representing, in aggregate, approximately 18.2 per cent. of Brand Architekts's issued ordinary share capital as at the close of business on the Latest Practicable Date.

Further details of these irrevocable undertakings (and the circumstances in which the irrevocable undertakings will cease to be binding) are set out in Appendix 3.

11.  Scheme of Arrangement and Conditions

Scheme of Arrangement

It is intended that the Merger will be effected by means of a Court-sanctioned scheme of arrangement between InnovaDerma and InnovaDerma Scheme Shareholders under Part 26 of the Companies Act. The procedure involves, among other things, an application by InnovaDerma to the Court to sanction the Scheme, in consideration for which InnovaDerma Scheme Shareholders, who are on the register of members at the Scheme Record Time, will receive the Merger Consideration on the basis set out in paragraph 2 of this Announcement. The purpose of the Scheme is to provide for Brand Architekts to become the owner of the entire issued and to be issued ordinary share capital of InnovaDerma.

The New Brand Architekts Shares will be issued in registered form and will be capable of being held in both certificated and uncertificated form. The New Brand Architekts Shares will be issued by Brand Architekts to InnovaDerma Shareholders no later than 14 days after the Effective Date. Fractions of New Brand Architekts Shares will not be allotted or issued pursuant to the Merger, but entitlements of InnovaDerma Shareholders will be rounded down to the nearest whole number of New Brand Architekts Shares and all fractions of New Brand Architekts Shares will be aggregated and sold in the market as soon as practicable after the Effective Date. The net proceeds of such sale (after deduction of all expenses and commissions incurred in connection with the sale) will be distributed in due proportions to InnovaDerma Shareholders who would otherwise have been entitled to such fractions (rounded down to the nearest penny), save that individual entitlements to amounts of less than £5.00 will be retained for the benefit of the Combined Group.

Conditions

Implementation of the Scheme

The implementation of the Scheme will be subject to the Conditions and further terms which are set out in Appendix 1 of this Announcement and the further terms and conditions to be set out in the Scheme Document (and the related InnovaDerma Forms of Proxy when issued) including, among other things:

1.  the Scheme becoming Effective by 11:59 p.m. on the Long Stop Date, failing which the Scheme will lapse and the Merger will not take place (unless the Panel otherwise consents);

2.  the approval of the Scheme by a majority in number of the InnovaDerma Scheme Shareholders, representing not less than 75 per cent. in value of the InnovaDerma Scheme Shares held by those InnovaDerma Scheme Shareholders, present and voting, either in person or by proxy, at the InnovaDerma Court Meeting or at any adjournment of it, such meeting to be held on or before the 22nd day after the expected date of the InnovaDerma Court Meeting (or such later date as may be agreed between Brand Architekts and InnovaDerma and the Court may allow);

3.  the passing of the InnovaDerma Resolution by the requisite majority at the InnovaDerma General Meeting or at any adjournment of it, such meeting to be held on or before the 22nd day after the expected date of the InnovaDerma General Meeting (or such later date as may be agreed between Brand Architekts and InnovaDerma and the Court may allow);

4.  the passing of the Brand Architekts Resolution by the requisite majority at the Brand Architekts General Meeting;

5.  the sanction by the Court of the Scheme at the Court Hearing, such hearing to be held on or before the 22nd day after the expected date of the Court Hearing (or such later date as may be agreed between Brand Architekts and InnovaDerma and the Court may allow);

6.  delivery to the Registrar of Companies in England and Wales of the Court Order sanctioning the Scheme for registration; and

7.  the London Stock Exchange having acknowledged to Brand Architekts or its agent (and such acknowledgement not having been withdrawn) that the New Brand Architekts Shares will be admitted to trading on AIM.

Scheme becoming Effective

Once the necessary approvals from InnovaDerma Shareholders have been obtained and the other Conditions have been satisfied, or (where applicable) waived, to become Effective the Scheme must be sanctioned by the Court. The Scheme will become Effective in accordance with its terms upon a copy of the Court Order being delivered to the Registrar of Companies for registration. Upon the Scheme becoming Effective, it will be binding on all InnovaDerma Shareholders, irrespective of whether or not they attended or voted at the InnovaDerma Court Meeting or the InnovaDerma General Meeting (and if they attended and voted, whether or not they voted in favour).

The Merger is subject to the terms and Conditions in Appendix 1 to this Announcement and on the further terms and conditions that will be set out in the Scheme Document.

12.  Indicative Timing

Further details of the Scheme, including an indicative timetable for its implementation, will be set out in the Scheme Document, which is expected to be despatched to InnovaDerma Shareholders as soon as reasonably practicable and, in any event, within 28 days of the date of this Announcement (unless otherwise agreed with the Panel). The timing of events which relate to the implementation of the Merger is, however, subject to the approval of the Court and is therefore subject to change.

It is currently expected that the Merger will have an Effective Date in May / early June 2022.

13.  Election to switch

Subject to obtaining the consent of the Panel, Brand Architekts reserves the right to elect to implement the Merger by way of a Takeover Offer as an alternative to the Scheme. In any such event, a Takeover Offer would be implemented on the same terms, so far as applicable, as those which apply to the Scheme. Further details relating to this right are set out in the terms and Conditions in Appendix 1 to this Announcement. If Brand Architekts does elect to implement the Merger by way of a Takeover Offer, and if sufficient acceptances of such Takeover Offer are received and/or sufficient InnovaDerma Shares are otherwise acquired, it is the intention of Brand Architekts to apply the provisions of sections 979 to 982 (inclusive) of the Companies Act to acquire compulsorily any remaining InnovaDerma Shares to which such Takeover Offer relates.

14.  Financing

The Cash Consideration payable in consideration for the Merger, being in the aggregate amount of approximately £1.99 million, will be financed from the on-balance sheet existing cash resources of Brand Architekts. 

Singer Capital Markets, as financial adviser to Brand Architekts, is satisfied that sufficient resources are available to Brand Architekts to enable it to satisfy in full the Cash Consideration payable to InnovaDerma Shareholders under the terms of the Merger.

15.  Offer-related arrangements

Confidentiality Agreement

Brand Architekts and InnovaDerma have entered into a mutual confidentiality agreement dated 25 January 2022 pursuant to which each of Brand Architekts and InnovaDerma has undertaken, among other things, to keep certain information relating to the Merger and the other party confidential and not to disclose it to third parties (other than to permitted parties) unless required by law or regulation.

The confidentiality obligations of each party under the Confidentiality Agreement in respect of the relevant information disclosed from one party to another will continue until such time as the information disclosed ceases to be confidential in nature.

Cost Coverage Agreement

Brand Architekts and InnovaDerma have entered into an agreement dated 28 March 2022 pursuant to which Brand Architekts has undertaken to pay InnovaDerma for reasonably and properly incurred legal costs incurred in respect of the Merger up to a maximum amount of £200,000 (inclusive of VAT and disbursements) in the event that the Merger does not proceed to Completion before the Long Stop Date ("Cost Compensation Payment").

The Cost Compensation Payment will not be payable in the event that, among other things, the InnovaDerma Directors withdraw, remove or adversely qualify their unconditional and unanimous recommendation of the Merger and/or InnovaDerma Shareholders holding the requisite number of InnovaDerma Shares fail to approve the resolutions to be approved at the InnovaDerma Shareholder Meetings and/or if a competing offer is made for InnovaDerma which becomes effective or becomes or is declared unconditional in all respects.

16.  Brand Architekts Shareholder approval to issue New Brand Architekts Shares

The Merger involves the issue of New Brand Architekts Shares to InnovaDerma Shareholders. Accordingly, Brand Architekts will be required to seek the approval of Brand Architekts Shareholders for the allotment and issue of New Brand Architekts Shares at the Brand Architekts General Meeting. The Merger will be conditional on, among other things, the Brand Architekts Resolution being passed by the requisite majority of Brand Architekts Shareholders at the Brand Architekts General Meeting.

Brand Architekts will prepare the Brand Architekts Circular which will contain a notice convening the Brand Architekts General Meeting. It is expected that the Brand Architekts Circular will be published and posted to Brand Architekts Shareholders at the same time as the Scheme Document is posted to InnovaDerma Shareholders. The Brand Architekts Circular will be made available by Brand Architekts on its website at www.brandarchitektsplc.com and by InnovaDerma on its website at www.innovaderma.com.

17.  Admission of New Brand Architekts Shares

Prior to the Effective Date, an application will be made to the London Stock Exchange for the New Brand Architekts Shares to be admitted to AIM. It is expected that Admission will become effective and that unconditional dealings in the New Brand Architekts Shares will commence at 8.00 a.m. on the first Business Day following the Effective Date. The New Brand Architekts Shares will not be listed on any stock exchange other than AIM, and have not been, and will not be, registered under the US Securities Act or under any laws of any state or other jurisdiction of the United States.

18.  Cancellation of admission to trading on the London Stock Exchange of InnovaDerma Shares, proposed cancellation of trading on Euronext Paris and re registration

Prior to the Scheme becoming Effective, it is intended that an application will be made to the London Stock Exchange for the cancellation of the trading of the InnovaDerma Shares on the Main Market of the London Stock Exchange, and to the FCA for the cancellation of the listing of the InnovaDerma Shares on the Official List, in each case with effect from or shortly after the Effective Date. The last day of dealings in InnovaDerma Shares on the London Stock Exchange is expected to be the date of the Court Hearing and no transfers will be registered after 6.00 p.m. on that date.

In addition, prior to the Scheme becoming Effective, it is intended that an application will be made to Euronext Paris for the delisting of InnovaDerma Shares from Euronext Paris with effect from or shortly after the Effective Date. Any delisting of InnovaDerma Shares from Euronext Paris is subject to the approval of Euronext Paris.

On the Effective Date, InnovaDerma will become a subsidiary of Brand Architekts and share certificates in respect of InnovaDerma Shares will cease to be valid and should be destroyed. In addition, entitlements to InnovaDerma Shares held within the CREST system will be cancelled on the Effective Date.

Upon the Scheme becoming Effective, Brand Architekts will acquire the InnovaDerma Shares fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them including the right to receive and retain all dividends and distributions (if any) declared, made or paid by reference to a record date on or after the date of this Announcement.

It is also intended that, following the Effective Date, InnovaDerma will be re-registered as a private company under the relevant provisions of the Companies Act.

19.  Overseas Shareholders

The distribution of this Announcement to, and the availability of the New Brand Architekts Shares to be issued pursuant to the Merger to, persons who are not resident in the United Kingdom may be affected by the laws of their relevant jurisdiction. Such persons should inform themselves of and observe any applicable legal or regulatory requirements of their jurisdiction. Further details in relation to Overseas Shareholders of InnovaDerma will be found in the Scheme Document.

This Announcement is provided for information purposes only. This Announcement is not intended to, and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of any securities, nor is it a solicitation of any vote or approval in any jurisdiction, nor will there be any purchase or transfer of the securities referred to in this Announcement in any jurisdiction in contravention of applicable law or regulation.

The New Brand Architekts Shares to be issued under the terms of the Merger have not been and will not be registered under the US Securities Act or under any laws or with any securities regulatory authority of any state or other jurisdiction of the United States. Accordingly, unless an exemption under relevant securities laws is available, including the exemption from the registration requirements of the US Securities Act provided by section 3(a)(10) of that Act, the New Brand Architekts Shares are not being, and may not be, offered, sold, resold, delivered or distributed, directly or indirectly, in, into or from the United States. Neither the US Securities and Exchange Commission nor any US state securities commission has approved or disapproved of the New Brand Architekts Shares, or determined if this Announcement is accurate or complete. Any representation to the contrary is a criminal offence.

20.  InnovaDerma Share Plan and InnovaDerma Warrants

InnovaDerma Share Plan

The Merger will affect participants in the InnovaDerma Share Plan. In summary, Brand Architekts and InnovaDerma have agreed that Brand Architekts will make appropriate proposals to the holders of options and awards under the InnovaDerma Share Plan in accordance with, and as required by, Rule 15 of the Takeover Code. Further details of these arrangements will be communicated to participants in the InnovaDerma Share Plan in due course, in the Scheme Document and in separate proposal documentation.

Awards and options which vest and are exercised prior to the Scheme Record Time will be satisfied by the allotment, issue or transfer of InnovaDerma Shares prior to the Scheme Record Time and those InnovaDerma Shares will be subject to the Scheme.

InnovaDerma Warrants

The Merger will affect the holder of the InnovaDerma Warrants. In summary, Brand Architekts and InnovaDerma have agreed that Brand Architekts will make appropriate proposals to the holder of the InnovaDerma Warrants in accordance with, and as required by, Rule 15 of the Takeover Code. Further details of these arrangements will be communicated to holders of the InnovaDerma Warrants in due course, in the Scheme Document and in separate proposal documentation.

InnovaDerma Warrants which are exercised prior to the Scheme Record Time will be satisfied by the allotment, issue or transfer of InnovaDerma Shares prior to the Scheme Record Time and those InnovaDerma Shares will be subject to the Scheme.

21.  Disclosure of interests

Save in respect of (a) the holding of Roger McDowell, the Chairman of Brand Architekts, in 883,671 InnovaDerma Shares (representing approximately 3.1 per cent. of InnovaDerma's issued ordinary share capital as at the close of business on the Latest Practicable Date) and (b) the irrevocable undertakings referred to in paragraph 10 above, as at the close of business on the Latest Practicable Date neither Brand Architekts, nor any of its directors, nor, so far as Brand Architekts is aware, any person acting in concert (within the meaning of the Takeover Code) with it:

· had any interest in or right to subscribe for any relevant securities of InnovaDerma;

· had any short positions in respect of relevant securities of InnovaDerma (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery;

· had borrowed or lent any relevant securities of InnovaDerma (including, for these purposes, any financial collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code) save for any borrowed shares which have been either on-lent or resold; or

· was a party to any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Takeover Code.

22.  Opening position disclosures

Each of InnovaDerma and Brand Architekts confirm that it will make an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8 of the Takeover Code, by no later than 12 noon on 14 April 2022.

23.  Documents available on website

Copies of the following documents will be made available on Brand Architekts's and InnovaDerma's websites at www.brandarchitektsplc.com and www.innovaderma.com respectively, by no later than 12 noon on the Business Day following the date of this Announcement until the end of the Offer Period:

· this Announcement;

· the Confidentiality Agreement;

· the Cost Coverage Agreement;

· the irrevocable undertakings and the letter of support referred to in paragraph 10 above and summarised in Appendix 3 to this Announcement;

· the consent letters referred to in paragraph 25 and Appendix 4 below; and

· the investor presentation prepared by Brand Architekts in connection with the Brand Architekt's Interim Results Announcement and Merger.

None of the contents of InnovaDerma's website, the contents of Brand Architekts's website, or the content of any other website accessible from hyperlinks on either such website, is incorporated into or forms part of, this Announcement.

25.  General

The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the FCA.

The bases and sources for certain financial information contained in this Announcement are set out in Appendix 2. Details of the irrevocable undertakings received in relation to the Merger which are referred to in this Announcement are set out in Appendix 3. Information relating to the quantified financial benefits of the Merger is set out in Appendix 4. Certain definitions and terms used in this Announcement are set out in Appendix 5.

For the purposes of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement is the responsibility of Brand Architekts and the Brand Architekts Directors. Appendix 4 sets out the Quantified Financial Benefits Statement relating to cost synergies expected to arise as a direct result of the Merger and provides underlying information and bases of belief. Appendix 4 also includes reports from Brand Architekts's reporting accountant, PKF Francis Clark, and its financial adviser, Singer Capital Markets, in connection with the Quantified Financial Benefits Statement, as required pursuant to Rule 28.1(a) of the Takeover Code, and provides underlying information and bases for the accountant's and financial adviser's respective reports.

Each of Singer Capital Markets, PKF Francis Clark and finnCap has given and not withdrawn its consent to the publication of this Announcement with the inclusion in it of the references to their opinions and names (as applicable) in the form and context in which they are included.

This Announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation. For such purposes, the person responsible for this Announcement on behalf of Brand Architekts is Tom Carter, Brand Architekts Chief Financial Officer. The person responsible for this Announcement on behalf of InnovaDerma is Andrew Dunderdale, InnovaDerma Group Finance Director.

Enquiries:

Brand Architekts plc Quentin Higham, Chief Executive Officer Tom Carter, Chief Financial Officer [phone] Singer Capital Markets Advisory LLP (Financial Adviser, Nominated Adviser and Corporate Broker to Brand Architekts) Jen Boorer / Shaun Dobson / Dan Dearden-Williams [phone] Alma PR(Financial PR Adviser to Brand Architekts) Josh Royston / Sam Modlin [phone] InnovaDerma plc Blake Hughes, Chief Executive Officer Andrew Dunderdale, Group Finance Director c/o TB Cardew [e-mail] finnCap Ltd (Financial Adviser, Rule 3 Adviser and Corporate Broker to InnovaDerma) Geoff Nash / Henrik Persson / Kate Bannatyne [phone] TB Cardew(Financial PR Adviser to InnovaDerma) Shan Willenbrock / Olivia Rosser + 44 (0)7775 848537

Addleshaw Goddard LLP and Ashfords LLP are retained as legal advisers for Brand Architekts. Fieldfisher LLP is retained as legal adviser for InnovaDerma.

Important notices relating to financial advisers

Singer Capital Markets Advisory LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Brand Architekts and no one else in connection with the matters set out in this Announcement and will not be responsible to anyone other than Brand Architekts for providing the protections offered to clients of Singer Capital Markets or for providing advice in relation to the contents of this Announcement or any matters referred to in this Announcement.

finnCap Ltd, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for InnovaDerma and for no one else in connection with the subject matter of this Announcement and will not be responsible to anyone other than InnovaDerma for providing the protections afforded to clients of finnCap or for providing advice in relation to the contents of this Announcement or any matters referred to in this Announcement.

Further information

This Announcement is for information purposes only. It is not intended to and does not constitute, or form part of, any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Merger or otherwise, nor shall there be any sale, issuance or transfer of securities of InnovaDerma pursuant to the Merger or otherwise in any jurisdiction in contravention of applicable law. The Merger will be implemented solely by means of the Scheme Document (or, in the event that the Merger is to be implemented by means of a Takeover Offer, the offer document) which will contain the full terms and conditions of the Merger, including details of how to vote in respect of the Merger (or, in the case of a Takeover Offer, to accept the offer).

InnovaDerma will prepare the Scheme Document to be distributed to InnovaDerma Shareholders. InnovaDerma and Brand Architekts urge InnovaDerma Shareholders to read the Scheme Document carefully as it will contain important information relating to the Merger, the New Brand Architekts Shares and the Combined Group. Any vote in respect of resolutions to be proposed at the InnovaDerma Shareholder Meetings to approve the Merger, the Scheme or related matters, should be made only on the basis of the information contained in the Scheme Document.

It is expected that the Scheme Document (including notices of the InnovaDerma Shareholder Meetings) together with the relevant InnovaDerma Forms of Proxy will be sent to InnovaDerma Shareholders within 28 days of the date of this Announcement (or on such later date as may be agreed by Brand Architekts and InnovaDerma with the consent of the Panel).

Brand Architekts will prepare the Brand Architekts Circular to be distributed to Brand Architekts Shareholders and which will be available on Brand Architekts's website at www.brandarchitektsplc.com and InnovaDerma's website at www.innovaderma.com. Brand Architekts urges Brand Architekts Shareholders to read the Brand Architekts Circular when it becomes available. Any decision to vote in respect of the Brand Architekts Resolution should be made only on the basis of the information in the Brand Architekts Circular. It is expected that the Brand Architekts Circular (including the notice of the Brand Architekts General Meeting) together with the Brand Architekts Form of Proxy, will be posted to Brand Architekts Shareholders as soon as is reasonably practicable and in any event within 28 days of this Announcement, unless otherwise agreed with the Panel.

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them.

This Announcement does not constitute a prospectus or prospectus equivalent document. The New Brand Architekts Shares to be issued pursuant to the Merger are not being offered to the public by means of this Announcement. The Merger will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the FCA.

Please be aware that addresses, electronic addresses and certain other information provided by InnovaDerma Shareholders, persons with information rights and other relevant persons for the receipt of communication by InnovaDerma may be provided to Brand Architekts during the Offer Period as required by section 4 of Appendix 4 to the Takeover Code.

Overseas Shareholders

This Announcement has been prepared for the purpose of complying with English law, the Takeover Code, the Market Abuse Regulation, the Listing Rules, the AIM Rules and the Disclosure Guidance and Transparency Rules and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside of the United Kingdom.

The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom may be restricted by law and/or regulation. Persons who are not resident in the United Kingdom, or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable legal or regulatory requirements. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to participate in the Merger or to vote their InnovaDerma Shares in respect of the Scheme at the InnovaDerma Court Meeting, or to execute and deliver InnovaDerma Forms of Proxy appointing another to vote at the InnovaDerma Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Merger disclaim any responsibility or liability for the violation of such restrictions by any person.

Unless otherwise determined by Brand Architekts or required by the Takeover Code and permitted by applicable law and regulation, participation in the Merger will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Merger by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and all documentation relating to the Merger are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Merger (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported vote in respect of the Merger.

If the Merger is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation), the Takeover Offer may not be made, directly or indirectly, in or into or by use of the mails or any other means or instrumentality (including, without limitation, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within any Restricted Jurisdiction.

The availability of the New Brand Architekts Shares under the Merger to InnovaDerma Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident or to which they are subject. Persons who are not resident in the United Kingdom or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable legal or regulatory requirements.

Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

Forward looking statements

This Announcement (including information incorporated by reference into this Announcement), any oral statements made by Brand Architekts or InnovaDerma in relation to the Merger and other information published by Brand Architekts or InnovaDerma may contain statements about Brand Architekts, InnovaDerma and the Combined Group that are or may be forward looking statements. All statements other than statements of historical fact included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "goals", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects", hopes", "continues", "would", "could", "should" or words or terms of similar substance or the negative of them, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; and (ii) business and management strategies and the expansion and growth of Brand Architekts's or InnovaDerma's or the Combined Group's operations and potential synergies resulting from the Merger.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and/or the operations of Brand Architekts, InnovaDerma or the Combined Group and are based on certain assumptions and assessments made by Brand Architekts and InnovaDerma in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. Except as expressly provided in this Announcement, they have not been reviewed by the auditors of Brand Architekts or InnovaDerma. Although it is believed that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place reliance on these forward looking statements which speak only as at the date of this Announcement. Neither InnovaDerma nor Brand Architekts, nor any of their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them assumes any obligation to update or correct the information contained in this Announcement (whether as a result of new information, future events or otherwise) except as required by applicable law (including as required by the Takeover Code, the Listing Rules, the AIM Rules, the Market Abuse Regulation and the Disclosure Guidance and Transparency Rules).

There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business acquisitions or disposals. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

No member of the Brand Architekts Group or the InnovaDerma Group, nor any of their respective associates, directors, officers, employees or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

Quantified Financial Benefits Statement

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Neither the Quantified Financial Benefits Statement nor any other statement in this Announcement should be construed as a profit forecast or interpreted to mean that the Combined Group's earnings in the financial year ending 30 June 2023, being the envisaged first full year following Completion, or in any subsequent period, would necessarily match or be greater than or be less than those of Brand Architekts or InnovaDerma for the relevant preceding financial period or any other period. For the purposes of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of Brand Architekts and the Brand Architekts Directors.

Profit forecasts and estimates

No statement in this Announcement is intended to constitute a profit forecast or profit estimate and no statement in this Announcement should be interpreted to mean that the earnings or future earnings per share of or dividends or future dividends per share of Brand Architekts and/or InnovaDerma for current or future financial years will necessarily match or exceed the historical or published earnings or dividends per share of Brand Architekts or InnovaDerma, as appropriate.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the Announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company; and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Takeover Code applies must be made by no later than 3.30 p.m. on the 10th Business Day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 p.m. on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company; and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Takeover Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Takeover Code applies must be made by no later than 3.30 p.m. on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Takeover Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with either of them (see Rules 8.1, 8.2 and 8.4 of the Takeover Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on [phone] if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 Disclosure

In accordance with Rule 2.9 of the Takeover Code, InnovaDerma announces that, as at close of business on the Latest Practicable Date, it has 28,057,825 InnovaDerma Shares in issue and admitted to trading on the London Stock Exchange. InnovaDerma has no InnovaDerma Shares held in treasury. The International Securities Identification Number (ISIN) of the InnovaDerma Shares is GB00BT9PTW34.

In accordance with Rule 2.9 of the Takeover Code, Brand Architekts announces that as at close of business on the Latest Practicable Date, it has 17,230,702 Brand Architekts Shares in issue and admitted to trading on AIM. Brand Architekts has no Brand Architekts Shares held in treasury. The ISIN of the Brand Architekts Shares is GB0008667304.

Requesting Hard Copy Documents

Pursuant to Rule 30.3 of the Takeover Code, a person so entitled may request a copy of this Announcement and any information incorporated into it by reference to another source in hard copy form. A person may also request that all future documents, announcements and information to be sent to that person in relation to the Merger should be in hard copy form.

Brand Architekts Shareholders may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement) by writing to Computershare Investor Services plc, of The Pavilions, Bridgwater Road, Bristol, BS13 8AE or by calling Computershare on [phone]. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 am - 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. It is important that you note that unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Merger should be in hard copy form.

InnovaDerma Shareholders may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement) by writing to SLC Registrars, P.O. Box 5222, Lancing, BN99 9FG or by calling SLC Registrars on [phone]. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 am - 5.30 pm, Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes. It is important that you note that unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Merger should be in hard copy form.

Publication on website

A copy of this Announcement will be made available, free of charge subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Brand Architekts's website at www.brandarchitektsplc.com and on InnovaDerma's website at www.innovaderma.com by no later than 12 noon on the Business Day following the date of this Announcement.

Neither the content of the websites referred to in this Announcement nor the content of any website accessible from hyperlinks on Brand Architekts's or InnovaDerma's website (or any other website) is incorporated into, or forms part of, this Announcement.

The Merger is subject to the provisions of the Takeover Code.

 

APPENDIX 1

Conditions to and Further Terms of the Merger

Part A: The Conditions

1.  The Merger will be conditional upon the Scheme becoming unconditional and becoming Effective, subject to the Takeover Code, by not later than 11.59 p.m. on the Long Stop Date.

  Scheme conditions

2.  In addition, subject to Part B of this Appendix 1 and to the requirements of the Panel, the Scheme will be conditional upon:

(a) 

(i)  the approval of the Scheme by a majority in number of InnovaDerma Scheme Shareholders representing not less than 75 per cent. of the voting rights attaching to the InnovaDerma Scheme Shares held by such InnovaDerma Scheme Shareholders (or the relevant class or classes thereof) who are on the register of members of InnovaDerma at the Voting Record Time, present and voting, either in person or by proxy, at the InnovaDerma Court Meeting and at any separate class meeting which may be required by the Court or at any adjournment of any such meetings;

(ii)  the InnovaDerma Court Meeting and any separate class meeting which may be required by the Court or any adjournment of any such meeting being held on or before the 22nd day after the expected date of the InnovaDerma Court Meeting, to be set out in the Scheme Document in due course (or such later date, if any, as may be agreed by Brand Architekts and InnovaDerma in writing and, if required, the Court may allow);

(b) 

(i)  all resolutions necessary to approve and implement the Scheme being duly passed by the requisite majority or majorities at the InnovaDerma General Meeting, or at any adjournment of that meeting;

(ii)  the InnovaDerma General Meeting or any adjournment of that meeting being held on or before the 22nd day after the expected date of the InnovaDerma General Meeting, to be set out in the Scheme Document in due course (or such later date, if any, as may be agreed by Brand Architekts and InnovaDerma in writing and, if required, the Court may allow);

(c) 

(i)  the sanction of the Scheme by the Court with or without modification (but subject to any such modification being acceptable to Brand Architekts and InnovaDerma) and the delivery of the Court Order to the Registrar of Companies; and

(ii)  the Court Hearing being held on or before the 22nd day after the expected date of the Court Hearing to be set out in the Scheme Document in due course (or such later date, if any, as Brand Architekts and InnovaDerma may agree and, if required, the Court may allow);

  Other conditions

3.  In addition, subject to Part B of this Appendix 1 and to the requirements of the Panel, the Merger will be conditional upon the following conditions and, accordingly, the necessary actions to make the Scheme Effective will only be taken on the satisfaction or, where relevant, waiver of the following conditions:

Brand Architekts General Meeting

(a)  the passing at the Brand Architekts General Meeting of any resolution required to approve and implement the Merger and to authorise the allotment and issue of the New Brand Architekts Shares to InnovaDerma Scheme Shareholders pursuant to the Merger;

Admission to trading on AIM

(b)  the London Stock Exchange having acknowledged to Brand Architekts or its agent (and such acknowledgement not having been withdrawn) that the New Brand Architekts Shares will be admitted to trading on AIM;

General Third Party official authorisations and regulatory clearances

(c)  no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and, in each case, not having withdrawn the same), or having enacted, made or proposed any statute, regulation, decision or order, or change to published practice or having taken any other steps, and there not continuing to be outstanding any statute, regulation, decision or order, which in each case would or might reasonably be expected to:

(i)  require, prevent or delay the divestiture, or materially alter the terms envisaged for any proposed divestiture by any member of the Wider Brand Architekts Group or any member of the Wider InnovaDerma Group of all or any portion of their respective businesses, assets or property or impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any part thereof which, in any such case, is material in the context of the Wider Brand Architekts Group or the Wider InnovaDerma Group in either case taken as a whole;

(ii)  require, prevent or delay the divestiture by any member of the Wider Brand Architekts Group of any shares or other securities in InnovaDerma;

(iii)  impose any material limitation on, or result in a delay in, the ability of any member of the Wider Brand Architekts Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider InnovaDerma Group or the Wider Brand Architekts Group or to exercise voting or management control over any such member;

(iv)  otherwise adversely affect the business, assets, profits or prospects of any member of the Wider Brand Architekts Group or of any member of the Wider InnovaDerma Group to an extent which is material in the context of the Wider Brand Architekts Group or the Wider InnovaDerma Group in either case taken as a whole;

(v)  make the Merger or its implementation or the offer or proposed offer by Brand Architekts or any member of the Wider Brand Architekts Group of any shares or other securities in, or control of InnovaDerma void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise interfere with the same, or impose additional conditions or obligations with respect thereto;

(vi)  except pursuant to the implementation of the Merger or, if applicable, sections 974 to 991 of the Companies Act, require any member of the Wider Brand Architekts Group or the Wider InnovaDerma Group to offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider InnovaDerma Group or the Wider Brand Architekts Group owned by any third party;

(vii)  impose any limitation on the ability of any member of the Wider InnovaDerma Group to co-ordinate its business, or any part of it, with the businesses of any other members which is adverse to and material in the context of the Wider InnovaDerma Group taken as a whole or in the context of the Merger; or

(viii) result in any member of the Wider InnovaDerma Group ceasing to be able to carry on business under any name under which it presently does so, and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Merger or proposed offer for any InnovaDerma Shares having expired, lapsed or been terminated;

(d)  the waiver (or non-exercise within any applicable time limits) by any Third Party of any termination right, right of pre-emption, first refusal or similar right (which is material in the context of the Wider InnovaDerma Group taken as a whole) arising as a result of or in connection with the Merger including, without limitation, its implementation and financing or the proposed direct or indirect offer for any shares or other securities in, or control or management of, InnovaDerma by Brand Architekts or any member of the Wider Brand Architekts Group;

(e)  all necessary filings or applications having been made in connection with the Merger and all statutory or regulatory obligations in any jurisdiction having been complied with in connection with the Merger or the offer by any member of the Wider Brand Architekts Group for any shares or other securities in, or control of, InnovaDerma and all authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals reasonably deemed necessary or appropriate by Brand Architekts or any member of the Wider Brand Architekts Group for or in respect of the Merger including without limitation, its implementation and financing or the proposed direct or indirect offer for any shares or other securities in, or control of, InnovaDerma or any member of the Wider InnovaDerma Group by any member of the Wider Brand Architekts Group having been obtained in terms and in a form satisfactory to Brand Architekts from all appropriate Third Parties or persons with whom any member of the Wider InnovaDerma Group has entered into contractual arrangements and all such material authorisations, orders, grants, recognitions, determinations, confirmations, consents, licences, clearances, permissions, exemptions and approvals necessary or appropriate to carry on the business of any member of the Wider InnovaDerma Group which is material in the context of the Brand Architekts Group or the InnovaDerma Group as a whole or of the financing of the Merger remaining in full force and effect and all filings necessary for such purpose having been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Merger becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;

Certain matters arising as a result of any arrangement, agreement etc.

(f)  save as Disclosed, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider InnovaDerma Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, or any circumstance which in consequence of the Merger or the proposed offer for any shares or other securities (or equivalent) in InnovaDerma or because of a change in the control or management of InnovaDerma or otherwise, could or might result in any of the following to an extent which is material and adverse in the context of the Wider InnovaDerma Group, or the Wider Brand Architekts Group, in either case taken as a whole, or in the context of the Merger:

(i)  any monies borrowed by or any other indebtedness or liabilities (actual or contingent) of, or grant available to any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii)  any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or adversely modified or affected or any obligation or liability arising or any action being taken or arising thereunder;

(iii)  any asset or interest of any such member being or failing to be disposed of or charged or ceasing to be available to any such member or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any such member otherwise than in the ordinary course of business;

(iv)  the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property, assets or interest of any such member;

(v)  the rights, liabilities, obligations or interests of any such member, or the business of any such member with, any person, firm, company or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

(vi)  the value of any such member or its financial or trading position or prospects being prejudiced or adversely affected;

(vii)  any such member ceasing to be able to carry on business under any name under which it presently does so; or

(viii)  the creation or acceleration of any liability, actual or contingent, by any such member (including any material tax liability or any obligation to obtain or acquire any material Authorisation, notice, waiver, concession, agreement or exemption from any Third Party or any person) other than trade creditors or other liabilities incurred in the ordinary course of business or in connection with the Merger,

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider InnovaDerma Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would or might reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this Condition;

Certain events occurring since Last Accounts Date

(g)  save as Disclosed, no member of the Wider InnovaDerma Group having, since the Last Accounts Date:

(i)  save as between InnovaDerma and wholly-owned subsidiaries of InnovaDerma or for InnovaDerma Shares issued under or pursuant to the exercise of options and vesting of awards granted under the InnovaDerma Share Schemes, issued or agreed to issue, authorised or proposed the issue of additional shares of any class;

(ii)  save as between InnovaDerma and wholly-owned subsidiaries of InnovaDerma or for the grant of options and awards and other rights under the InnovaDerma Share Schemes, issued or agreed to issue, authorised or proposed the issue of securities convertible into shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;

(iii)  other than to another member of the InnovaDerma Group, prior to completion of the Merger, recommended, declared, paid or made any dividend or other distribution payable in cash or otherwise or made any bonus issue;

(iv)  save for intra-InnovaDerma Group transactions, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business and, in each case, to the extent which is material in the context of the Wider InnovaDerma Group taken as a whole;

(v)  save for intra-InnovaDerma Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital in each case, to the extent which is material in the context of the Wider InnovaDerma Group taken as a whole;

(vi)  issued, authorised or proposed the issue of, or made any change in or to, any debentures or (save for intra-InnovaDerma Group transactions), save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability;

(vii)  purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraphs (i) or (ii) above, made any other change to any part of its share capital in each case, to the extent which is material in the context of the Wider InnovaDerma Group taken as a whole;

(viii) save for intra-InnovaDerma Group transactions, implemented, or authorised, proposed or announced its intention to implement, any reconstruction, merger, demerger, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business;

(ix)  entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which involves or could involve an obligation of such a nature or magnitude other than in the ordinary course of business, in each case, to the extent which is material in the context of the Wider InnovaDerma Group taken as a whole;

(x)  (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or steps or had any legal proceedings started or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, manager, trustee or similar officer of all or any part of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed, in each case, to the extent which is material in the context of the Wider InnovaDerma Group taken as a whole;

(xi)  entered into any contract, transaction or arrangement which would be restrictive on the business of any member of the Wider InnovaDerma Group or the Wider Brand Architekts Group other than of a nature and extent which is normal in the context of the business concerned;

(xii)  waived or compromised any claim otherwise than in the ordinary course of business which is material in the context of the Wider InnovaDerma Group taken as a whole;

(xiii) made any material alteration to its memorandum or articles of association or other incorporation documents;

(xiv)  been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xv)  entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or proposed to, effect any of the transactions, matters or events referred to in this Condition 3(g);

(xvi)  made or agreed or consented to any change to:

(A)  the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider InnovaDerma Group for its directors, employees or their dependents;

(B)  the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;

(C)  the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(D)  the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made, in each case, to the extent which is material in the context of the Wider InnovaDerma Group taken as a whole;

(xvii) proposed, agreed to provide or modified the terms of any of the InnovaDerma Share Schemes or other benefit constituting a material change relating to the employment or termination of employment of a material category of persons employed by the Wider InnovaDerma Group or which constitutes a material change to the terms or conditions of employment of any senior employee of the Wider InnovaDerma Group, save as agreed by the Panel (if required) and by Brand Architekts, or entered into or changed the terms of any contract with any director or senior executive;

(xviii)  taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of InnovaDerma Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Code;

(xix)  entered into or varied in a material way the terms of, any contracts, agreement or arrangement with any of the directors or senior executives of any members of the Wider InnovaDerma Group; or

(xx)  waived or compromised any claim which is material in the context of the Wider InnovaDerma Group taken as a whole, otherwise than in the ordinary course;

No adverse change, litigation, regulatory enquiry or similar

(h)  except as Disclosed, since the date of the Last Accounts Date:

(i)  no adverse change or deterioration having occurred in the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider InnovaDerma Group which, in any such case, is material in the context of the Wider InnovaDerma Group taken as a whole and no circumstances have arisen which would or might reasonably be expected to result in such adverse change or deterioration;

(ii)  no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider InnovaDerma Group is or may become a party (whether as a plaintiff, defendant or otherwise) and no enquiry, review or investigation by, or complaint or reference to, any Third Party or other investigative body against or in respect of any member of the Wider InnovaDerma Group having been instituted, announced, implemented or threatened by or against or remaining outstanding in respect of any member of the Wider InnovaDerma Group which in any such case has had or might reasonably be expected to have a material adverse effect on the Wider InnovaDerma Group taken as a whole or in the context of the Merger;

(iii)  no contingent or other liability of any member of the Wider InnovaDerma Group having arisen or become apparent to Brand Architekts or increased which has had or might reasonably be expected to have a material adverse effect on the Wider InnovaDerma Group taken as a whole or in the context of the Merger;

(iv)  no enquiry or investigation by, or complaint or reference to, any Third Party having been threatened, announced, implemented, instituted by or remaining outstanding against or in respect of any member by or the Wider InnovaDerma Group which in any case is material in the context of the Wider InnovaDerma Group taken as a whole;

(v)  no member of the Wider InnovaDerma Group having conducted its business in breach of any applicable laws and regulations and which is material in the context of the Wider InnovaDerma Group as a whole or material in the context of the Merger; and

(vi)  no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence or permit held by any member of the Wider InnovaDerma Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which has had, or would reasonably be expected to have, a material adverse effect on the Wider InnovaDerma Group taken as a whole;

No discovery of certain matters

(i)  save as Disclosed, Brand Architekts not having discovered:

(i)  that any financial or business or other information concerning the Wider InnovaDerma Group disclosed at any time by or on behalf of any member of the Wider InnovaDerma Group, whether publicly, to any member of the Wider Brand Architekts Group or otherwise, is materially misleading or contains any material misrepresentation of fact or omits to state a fact necessary to many any information contained therein not misleading, in each case to an extent which is material in the context of the Wider InnovaDerma Group taken as a whole; or

(ii)  that any member of the Wider InnovaDerma Group is subject to any liability (actual or contingent) which is material in the context of the Wider InnovaDerma Group taken as a whole; or

(iii)  any information which affects the import of any information disclosed at any time by or on behalf of any member of the Wider InnovaDerma Group and which is material in the context of the Wider InnovaDerma Group taken as a whole;

Environmental

(j)  save as Disclosed, Brand Architekts not having discovered:

(i)  any past or present member of the Wider InnovaDerma Group has not complied in all material respects with all applicable legislation or regulations of any jurisdiction relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of any person, or that there has otherwise been any such use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission (whether or not this constituted a non-compliance by any person with any legislation or regulations and wherever the same may have taken place), which non-compliance would be likely to give rise to any material liability including any penalty for non-compliance (whether actual or contingent) or cost on the part of any member of the Wider InnovaDerma Group, which in any case is material in the context of the Wider InnovaDerma Group as a whole; or

(ii)  there is, or is likely to be, for any reason whatsoever, any liability (actual or contingent) of any past or present member of the Wider InnovaDerma Group to make good, remediate, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider InnovaDerma Group (or on its behalf) or by any person for which a member of the Wider InnovaDerma Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, regulation, notice, circular or order of any Third Party and which is material in the context of the Wider InnovaDerma Group taken as a whole or the Merger; or

(iii)  circumstances exist (whether as a result of the making of the Merger or otherwise) which would be reasonably likely to lead to any Third Party instituting, or whereby any member of the Wider Brand Architekts Group or any present or past member of the Wider InnovaDerma Group would be likely to be required to institute, an environmental audit or take any other steps which would in any such case be reasonably likely to result in any liability (whether actual or contingent) to improve, modify existing or install new plant, machinery or equipment or carry out changes in the processes currently carried out or make good, remediate, repair, re-instate or clean up any land or other asset currently or previously owned, occupied or made use of by any past or present member of the Wider InnovaDerma Group (or on its behalf) or by any person for which a member of the Wider InnovaDerma Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest which is material in the context of the Wider InnovaDerma Group taken as a whole or the Merger; or

(iv)  circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture or materials used therein currently or previously manufactured, sold or carried out by any past or present member of the Wider InnovaDerma Group which claim or claims would be likely, materially and adversely, to affect any member of the Wider InnovaDerma Group and which is material in the context of the Wider InnovaDerma Group taken as a whole or the Merger;

Anti-corruption, economic sanctions, criminal property and money laundering

(k)  save as Disclosed, Brand Architekts not having discovered:

(i)  (A) any past or present member, director, officer or employee of the Wider InnovaDerma Group is or has at any time engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption or anti-bribery law, rule or regulation or any other applicable law, rule, or regulation concerning improper payments or kickbacks or (B) any person that performs or has performed services for or on behalf of the Wider InnovaDerma Group is or has at any time engaged in any activity, practice or conduct in connection with the performance of such services which would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption or anti-bribery law, rule or regulation or any other applicable law, rule, or regulation concerning improper payments or kickbacks; or

(ii)  any asset of any member of the Wider InnovaDerma Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition) or proceeds of crime under any other applicable law, rule, or regulation concerning money laundering or proceeds of crime or any member of the Wider InnovaDerma Group is found to have engaged in activities constituting money laundering under any applicable law, rule, or regulation concerning money laundering; or

(iii)  any past or present member, director, officer or employee of the Wider InnovaDerma Group, or any other person for whom any such person may be liable or responsible, is or has engaged in any business with, made any investments in, made any funds or assets available to or received any funds or assets from:

(A)  any government, entity or individual in respect of which US, UK or European Union persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by US, UK or European Union laws or regulations, including the economic sanctions administered by the United States Office of Foreign Assets Control, or HMRC; or

(B)  any government, entity or individual targeted by any of the economic sanctions of the United Nations, the United States, the United Kingdom, the European Union or any of its member states, save that this shall not apply if and to the extent that it is or would be unenforceable by reason of breach of any applicable Blocking Law; or

(iv)  any past or present member, director, officer or employee of the Wider InnovaDerma Group, or any other person for whom any such person may be liable or responsible:

(A)  has engaged in conduct which would violate any relevant anti-terrorism laws, rules, or regulations, including but not limited to the U.S. Anti-Terrorism Act; or

(B)  has engaged in conduct which would violate any relevant anti-boycott law, rule, or regulation or any applicable export controls, including but not limited to the Export Administration Regulations administered and enforced by the U.S. Department of Commerce or the International Traffic in Arms Regulations administered and enforced by the U.S. Department of State; or

(C)  has engaged in conduct which would violate any relevant laws, rules, or regulations concerning human rights, including but not limited to any law, rule, or regulation concerning false imprisonment, torture or other cruel and unusual punishment, or child labour; or

(D)  is debarred or otherwise rendered ineligible to bid for or to perform contracts for or with any government, governmental instrumentality, or international organization or found to have violated any applicable law, rule, or regulation concerning government contracting or public procurement; or

(E)  any member of the Wider InnovaDerma Group is or has been engaged in any transaction which would cause Brand Architekts to be in breach of any law or regulation in connection with the Merger, including but not limited to the economic sanctions of the United States Office of Foreign Assets Control, or HMRC, or any other relevant government authority; and

Intellectual Property

(l)  save as Disclosed, no circumstance having arisen or event having occurred in relation to any intellectual property owned or used by any member of the Wider InnovaDerma Group which would have a material adverse effect on the Wider InnovaDerma Group taken as a whole or is otherwise material in the context of the Merger, including:

(i)  any member of the Wider InnovaDerma Group losing its title to any intellectual property, or any intellectual property owned by the Wider InnovaDerma Group being revoked, cancelled or declared invalid; or

(ii)  any claim being asserted in writing or threatened in writing by any person challenging the ownership of any member of the Wider InnovaDerma Group to, or the validity or effectiveness of, any of its intellectual property; or

(iii)  any agreement regarding the use of any intellectual property licensed to or by any member of the Wider InnovaDerma Group being terminated or varied.

For the purpose of these Conditions:

1.  "Third Party" means any central bank, government, government department or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, authority, court, trade agency, association, institution or professional or environmental body in any relevant jurisdiction, including, for the avoidance of doubt, the Panel; and

2.  a Third Party shall be regarded as having "intervened" if it has given notice to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or made, proposed or enacted any statute, regulation, decision or order or taken any measures or other steps or required any action to be taken or information to be provided or otherwise having done anything and "intervene" shall be construed accordingly.

 

Part B: Further terms of the Merger and the Scheme

Waiver and Invocation of Conditions

1.  Subject to the requirements of the Panel, Brand Architekts reserves the right in its sole discretion to waive in whole or in part, all or any of the Conditions set out in Part A above, except Conditions 2(a)(i), 2(b)(i), 2(c)(i), 3(a) and 3(b) which cannot be waived. If any of the Conditions 2(a)(ii), 2(b)(ii) or 2(c)(ii) is not satisfied by the relevant deadline specified in the relevant Condition, Brand Architekts shall make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked the relevant Condition, waived the relevant deadlines or agreed with InnovaDerma to extend the relevant deadline.

2.  Conditions 2(a)(i), 2(b)(i) and 3(a) to 3(l) (inclusive) in Part A above must each be fulfilled by, or (if capable of waiver) be waived by, Brand Architekts or InnovaDerma (as the case may be) by no later than 11.59 p.m. on the date immediately preceding the date of the Court Hearing (or such later date as Brand Architekts, InnovaDerma, the Panel and, if required, the Court may allow) failing which the Scheme will lapse.

3.  Under Rule 13.5(a) of the Code, Brand Architekts may not invoke a Condition that is subject to Rule 13.5(a) of the Code so as to cause the Scheme not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to Brand Architekts in the context of the Merger. Brand Architekts may only invoke a Condition that is subject to Rule 13.5(a) of the Code with the consent of the Panel and any Condition that is subject to Rule 13.5(a) of the Code may be waived by Brand Architekts. Conditions 1, 2(a)(i), 2(b)(i) and 2(c)(i), 3(a) and 3(b) in Part A above and, if applicable, any acceptance condition (if the Merger is implemented by means of a Takeover Offer), are not subject to Rule 13.5(a) of the Code.

4.  Brand Architekts shall not be under any obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of the Conditions by a date earlier than the latest date of the fulfilment of that Condition notwithstanding that the other Conditions to the Merger may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such conditions may not be capable of fulfilment.

Implementation by way of Takeover Offer

5.  Subject to obtaining the consent of the Panel, Brand Architekts reserves the right to elect to implement the Merger by way of a Takeover Offer as an alternative to the Scheme.

6.  In such event, such Takeover Offer will be implemented on the same terms and conditions and conditions so far as applicable, as those which would apply to the Scheme (subject to appropriate amendments, including an acceptance condition set at up to 90 per cent. of the InnovaDerma Shares to which the Takeover Offer relates (or such lower percentage as the Panel may agree provided that if the Takeover Offer became or was declared unconditional in all respects, it would result in Brand Architekts holding InnovaDerma Shares carrying greater than 50 per cent. of the voting rights in InnovaDerma)).

Rights attaching to InnovaDerma Shares and Dividends

7.  InnovaDerma Shares will be acquired by Brand Architekts fully paid and free from all liens, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights attaching to them, including the right to receive and retain all dividends and distributions (if any) declared, made or paid on or after the date of this Announcement.

8.  The New Brand Architekts Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing Brand Architekts Shares. Application will be made to the London Stock Exchange for the New Brand Architekts Shares to be admitted to trading on the AIM Market of the London Stock Exchange.

9.  Fractions of the New Brand Architekts Shares will not be allotted or issued pursuant to the Merger, but entitlements of InnovaDerma Shareholders will be rounded down to the nearest whole number of New Brand Architekts Shares and all fractions of New Brand Architekts Shares will be aggregated and sold in the market as soon as practicable after the Merger becomes Effective. The net proceeds of such sale (after deduction of all expenses and commissions incurred in connection with the sale) will be distributed in due proportions to InnovaDerma Shareholders who would otherwise have been entitled to such fractions (rounded down to the nearest penny), save that individual entitlements to amounts of less than £5.00 will be retained for the benefit of the Combined Group.

10.  If, on or after the date of this Announcement, and prior to the Merger becoming Effective, any dividend, distribution or return of capital or value is declared, made or paid or becomes payable in respect of InnovaDerma Shares with a record date on or before the Effective Date (an "InnovaDerma Dividend"), Brand Architekts reserves the right (without prejudice to any right of Brand Architekts, with the consent of the Panel, to invoke the Condition set out in paragraph 3(g)(iii) of Part A of this Appendix 1) to reduce Merger Consideration accordingly so as to reflect the aggregate value attributable to any such InnovaDerma Dividend. Any exercise by Brand Architekts of its rights to reduce the Merger Consideration in the circumstances described above shall be the subject of an announcement but, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Merger. For the avoidance of doubt, to the extent that a dividend, distribution or other return of value in respect of InnovaDerma Shares has been declared, paid, made or is payable, and is or shall be: (i) transferred pursuant to the Merger on a basis which entitles Brand Architekts to receive the dividend, distribution or other return of value and to retain it; or (ii) cancelled before the Effective Date, the Merger Consideration payable and the terms of the Merger shall not be subject to change and shall not be reduced in accordance with the above.

Other terms of the Merger

11.  If Brand Architekts is required by the Panel to make an offer for InnovaDerma Shares under the provisions of Rule 9 of the Code, Brand Architekts may make such alterations to the Conditions and certain further terms of the Merger as are necessary to comply with the provisions of that Rule.

12.  The availability of the Merger to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom or who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements. Further details in relation to Overseas Shareholders will be contained in the Scheme Document.

13.  The Merger will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of, any Restricted Jurisdiction and it will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

14.  The New Brand Architekts Shares to be issued pursuant to the Merger have not been and will not be registered under the US Securities Act or under any laws or with any securities regulatory authority of any state or other jurisdiction of the United States nor under any of the relevant securities laws of any Restricted Jurisdiction. Accordingly, the New Brand Architekts Shares may not be offered, sold or delivered, directly or indirectly, into the United States, or any other Restricted Jurisdiction, except pursuant to exemptions from applicable requirements of any such jurisdiction.

15.  The Merger will be subject, inter alia, to the Conditions and certain further terms which are set out in this Appendix 1 and to the full terms and conditions which will be set out in the Scheme Document and such further terms as may be required to comply with the Listing Rules and the provisions of the Code.

16.  This announcement and any rights or liabilities arising hereunder are, and the Merger, the Scheme, and any proxies will be, governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange, the FCA and the Listing Rules.

17.  Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

 

APPENDIX 2

Sources of Information and Bases of Calculation

In this Announcement, unless otherwise stated or the context otherwise requires, the following bases and sources have been used.

1.  All Closing Prices for InnovaDerma Shares and Brand Architekts Shares have been derived from the Daily Official List and the AIM Appendix to the Daily Official List, respectively, and represent the Closing Price of the relevant shares on the relevant date.

2.  The fully diluted share capital of InnovaDerma (being 28,492,610 InnovaDerma Shares) is based upon:

i.  the 28,057,825 InnovaDerma Shares in issue as at the close of business on the Latest Practicable Date;

ii.  220,500 InnovaDerma Shares which may be issued on or after the date of this Announcement on the exercise of options or vesting of awards granted or agreed to be granted under the InnovaDerma Share Plan; and

iii. 214,285 InnovaDerma Shares which may be issued on or after the date of this Announcement on the exercise of the InnovaDerma Warrants.

The Merger value of £13.6 million attributed to the issued and to be issued ordinary share capital of InnovaDerma is based upon the fully diluted share capital of InnovaDerma referred to in paragraph 2 above and by multiplying that fully diluted share capital by the implied headline offer price calculated in accordance with paragraph 3 below.

3.  The implied headline offer price of 47.7 pence per InnovaDerma Share is calculated with reference to:

i.  the exchange ratio of 0.3818 New Brand Architekts Shares per InnovaDerma Share; and

ii.  the Closing Price of a Brand Architekts Share of 106.5 pence on the Latest Practicable Date, and

iii.  then adding 7 pence, being the Cash Consideration per InnovaDerma Share.

4.  The EV/sales multiple is calculated with reference to:

i.  the Merger value of £13.6 million;

ii.  InnovaDerma's cash balances as at 31 December 2021 of £1.3 million;

iii.  InnovaDerma's borrowings as at 31 December 2021 of £1.2 million; and

iv.  InnovaDerma's revenue for the financial year ended 31 June 2021 of £10.2 million.

5.  The existing share capital of Brand Architekts (being 17,230,702 Brand Architekts Shares) is based upon the 17,230,702 Brand Architekts Shares in issue as at the close of business on the Latest Practicable Date.

6.  The fully diluted share capital of the Combined Group and the percentage of the share capital that Brand Architekts Shareholders and InnovaDerma Shareholders will own on a fully diluted basis upon Completion is based upon:

i.  the fully diluted share capital of Brand Architekts referred to in paragraph 6 above; and

ii.  the 10,618,156 New Brand Architekts Shares that InnovaDerma Shareholders will receive as part of the Merger Consideration under the terms of the Merger, based on the fully diluted share capital of InnovaDerma referred to in paragraph 2 above.

8.  Unless otherwise stated, the financial information relating to InnovaDerma is extracted (without adjustment) from the audited financial statements of the InnovaDerma Group for the 12 months ended 30 June 2021 and the unaudited interim results of the InnovaDerma Group for the 6 months ended 31 December 2021.

9.  Unless otherwise stated, the financial information relating to Brand Architekts is extracted (without adjustment) from the audited financial statements of the Brand Architekts Group for the 12 months ended 30 June 2021 and the unaudited interim results of the Brand Architekts Group for the 6 months ended 31 December 2021.

10.  Certain figures in this Announcement have been subject to rounding adjustments.

11.  The synergy numbers are unaudited. Further information underlying the Quantified Financial Benefits Statement contained in this Announcement is provided in Appendix 4.

12.  The volume-weighted average price of an InnovaDerma Share and of a Brand Architekts Share is derived from data provided by Bloomberg.

13.  Statements about the pro forma financials of the Merger have been based on audited information obtained from (i) Brand Architekts's annual report for the financial year ended 30 June 2021 and (ii) InnovaDerma's annual report for the financial year ended 30 June 2021.

14.  The reference to the Combined Group's expected strong balance sheet is based on unaudited information obtained from (i) Brand Architekts's interim results for the period ended 31 December 2021 and (ii) InnovaDerma's interim results for the period ended 31 December 2021, less the one-off costs to realise the synergies set out in Appendix 4 and expected transaction costs.

 

APPENDIX 3

Details of Irrevocable Undertakings and Letter of Support

Irrevocable Undertakings in connection with the InnovaDerma Shareholder Meetings

PART A - Irrevocable undertakings in respect of InnovaDerma Shares from InnovaDerma Directors

The following InnovaDerma Directors have given irrevocable undertakings in respect of their entire beneficial holdings of InnovaDerma Shares (and in respect of the InnovaDerma Shares in which certain of their connected persons are interested) to vote, or procure votes, in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting (or in the event that the Merger is implemented by way of a Takeover Offer, accept or procure the acceptance of the Takeover Offer), in relation to 5,596,302 InnovaDerma Shares, representing, in aggregate, approximately 19.9 per cent. of InnovaDerma's existing issued ordinary share capital as at the Latest Practicable Date:

Name of InnovaDerma Director	Number of InnovaDerma Shares	Percentage of issued ordinary share capital of InnovaDerma as at the Latest Practicable Date
Mark Ward	5,049,076	18.0%
Ross Andrews	322,290	1.1%
Blake Hughes	128,571	0.5%
Simon Pyper	71,428	0.3%
Andrew Dunderdale	24,937	0.1%

These irrevocable undertakings will continue to be binding in the event that a higher competing offer is made for InnovaDerma.

Each of these irrevocable undertakings will lapse, among other things:

· if Brand Architekts announces, with the consent of the Panel, that it does not intend to proceed with the Merger;

· if any competing offer for InnovaDerma becomes or is declared unconditional in all respects or otherwise becoming effective; or

· on and from the earlier of (a) the Long Stop Date or (b) the time and date on which the Merger is withdrawn, lapses or otherwise terminates in accordance with its terms (provided that the reason is not because Brand Architekts has elected to proceed by way of a Takeover Offer rather than by way of a Scheme or vice versa).

PART B - Irrevocable undertakings in respect of InnovaDerma Shares from other InnovaDerma Shareholders

The following InnovaDerma Shareholder (other than InnovaDerma Directors) has given irrevocable undertakings in respect of the InnovaDerma Shares in which they are interested to vote, or procure votes, in favour of the Scheme at the InnovaDerma Court Meeting and in favour of the InnovaDerma Resolution to be proposed at the InnovaDerma General Meeting (or in the event that the Merger is implemented by way of a Takeover Offer, accept or procure the acceptance of the Takeover Offer), in relation to 883,671 InnovaDerma Shares, representing, in aggregate, approximately 3.1 per cent. of InnovaDerma's existing issued ordinary share capital as at the Latest Practicable Date:

Name of InnovaDerma Shareholder	Number of InnovaDerma Shares	Percentage of issued ordinary share capital of InnovaDerma as at the Latest Practicable Date
Roger McDowell	883,671	3.1%

These irrevocable undertakings will continue to be binding in the event that a higher competing offer is made for InnovaDerma.

Each of these irrevocable undertakings will lapse, among other things:

· if Brand Architekts announces, with the consent of the Panel, that it does not intend to proceed with the Merger;

· if any competing offer for InnovaDerma becomes or is declared unconditional in all respects or otherwise becoming effective; or

· on and from the earlier of (a) the Long Stop Date or (b) the time and date on which the Merger is withdrawn, lapses or otherwise terminates in accordance with its terms (provided that the reason is not because Brand Architekts has elected to proceed by way of a Takeover Offer rather than by way of a Scheme or vice versa).

Irrevocable Undertakings and Letter of Support in connection with the Brand Architekts Shareholder Meeting

PART C - Irrevocable undertakings in respect of Brand Architekts Shares from Brand Architekts Directors

The following Brand Architekts Directors have given irrevocable undertakings in respect of their entire beneficial holdings of Brand Architekts Shares (and in respect of the Brand Architekts Shares in which certain of their connected persons are interested) to vote, or procure votes, in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting, amounting to 1,155,025 Brand Architekts Shares, representing, in aggregate, approximately 6.7 per cent. of Brand Architekts's existing issued ordinary share capital as at close of business on the Latest Practicable Date:

Name of Brand Architekts Director	Number of Brand Architekts Shares	Percentage of issued ordinary share capital of Brand Architekts as at the Latest Practicable Date
Roger McDowell	899,105	5.2%
Quentin Higham	37,037	0.2%
Tom Carter	32,197	0.2%
Chris How	196,686	1.1%

Each of these irrevocable undertakings will lapse if Admission does not occur before the Long Stop Date, or such later date as Brand Architekts and Singer Capital Markets may agree.

PART D - Letter of support in respect of Brand Architekts Shares from other Brand Architekts Shareholders

The following Brand Architekts Shareholder (other than Brand Architekts Directors) has given a non-binding letter of support indicating their intention to vote, or procure votes, in favour of the Brand Architekts Resolution to be proposed at the Brand Architekts General Meeting, in relation to 1,979,400 Brand Architekts' Shares, representing, in aggregate, approximately 11.5 per cent. of Brand Architekts' existing issued ordinary share capital as at close of business on the Latest Practicable Date:

Name of Brand Architekts Shareholder	Number of Brand Architekts Shares	Percentage of issued share capital of Brand Architekts as at the Latest Practicable Date
Octopus Investments	1,979,400	11.5%

APPENDIX 4

Quantified Financial Benefits Statement

PART A - QUANTIFIED FINANCIAL BENEFITS STATEMENT:

Paragraph 3 of this Announcement contains statements of estimated cost savings and synergies expected to arise from the Merger (together, the "Quantified Financial Benefits Statement").

A copy of the Quantified Financial Benefits Statement is set out below:

The Brand Architekts directors, having reviewed and analysed the potential synergies of the Merger, and having commenced discussions with InnovaDerma management to refine this analysis, are confident that as a direct result of the Merger, the Combined Group can realise significant pre-tax cost synergies delivering attractive value for both sets of shareholders. Brand Architekts has, to date, identified pre-tax cost synergies of between £1.75 million and £2 million which net of certain dis-benefits expected to arise, are expected to reach a run-rate of between £1.5 million and £1.75 million, within the first 12 months following completion of the Merger.

These anticipated cost synergies will accrue as a direct result of the Merger and would not be achieved on a standalone basis.

The potential sources of quantified cost synergies include:

· approximately 70 per cent. from a consolidation of all group functions and associated headcount reduction which is expected to lead to a reduction of approximately 35 per cent of the Combined Group's projected headcount. This includes the consolidation and rationalisation of the Combined Group's Board and executive leadership teams, and the combination of all other group functions;

· approximately 30 per cent. from the removal of duplicate public company and compliance costs, rationalisation of the combined office footprint, harmonisation of the Combined Group's supply chain and DTC business relationships and a reduction in IT and other duplicate operational costs; and

· a cost of c. £0.25 million in respect of outsourcing all existing overseas infrastructure in respect of the Combined Group's DTC trading operations.

It is expected that the realisation of these identified synergies will require one-off costs of up to approximately £1.4 million, within the first year following completion of the Merger.

The synergies and dis-synergies referred to above are expected to be recurring and are expected to arise as a direct result of the Merger and could not be achieved independently of the Merger.

Further information on the bases of belief supporting the Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.

Further information on the bases of belief supporting the Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below:

Bases of belief

The Brand Architekts synergy assessment was led by senior Brand Architekts personnel. The Brand Architekts team worked with key members of InnovaDerma senior management on the development of the cost synergy plan and identifying areas of potential savings. This included identification of integration initiatives and estimation of the timing and quantum of cost savings available.

In preparing the Quantified Financial Benefits Statement, both Brand Architekts and InnovaDerma have shared certain operating and financial information to facilitate a detailed analysis in support of evaluating the potential synergies available from the Merger. In circumstances where data has been limited for commercial or other reasons, the Brand Architekts team has made estimates and assumptions to aid its development of individual synergy initiatives.

In arriving at the Quantified Financial Benefits Statement, the Brand Architekts Directors have assumed:

· there will be no material change in macroeconomic, political, legal or regulatory conditions in the markets and regions in which Brand Architekts and InnovaDerma operate;

· there will be no material change in accounting standards;

· there will be no material change in foreign exchange rates;

· there will be no significant impact on the underlying operations of either business from the Merger; and

· there will be no material divestments from either the Brand Architekts or InnovaDerma existing businesses.

The baselines used for the quantified cost synergies were:

· For Brand Architekts:

o  full year expected operating expenses for the 12 months ended 30 June 2021. 

· For InnovaDerma:

o  full year expected operating expenses for the 12 months ended 30 June 2021 and with consideration given to the current run rate of operational costs.

The majority of cost saving synergies are substantially within the influence of the Brand Architekts Directors.

In general, the synergy assumptions have in turn been risk adjusted, with the Brand Architekts Directors exercising a degree of prudence in the calculation of the estimated synergy benefits described in this announcement above.

Reports

As required by Rule 28.1(a) of the Takeover Code, PKF Francis Clark, as reporting accountants to Brand Architekts, have provided a report stating that, in their opinion, the Quantified Financial Benefits Statement has been properly compiled on the basis stated. In addition, Singer Capital Markets, as sole financial adviser to Brand Architekts, has provided a report stating that, in its view, the Quantified Financial Benefits Statement has been prepared with due care and consideration.

Each of PKF Francis Clark and Singer Capital Markets have given and not withdrawn their consent to the publication of their reports in this Announcement in the form and context in which they are included.

Notes

These statements are not intended as a profit forecast and should not be interpreted as such. These statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies and which may in some circumstances be subject to consultation with employees or their representatives. As a result, the cost savings and synergies referred to may not be achieved, or may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Neither these statements nor any other statement in this Announcement should be construed as a profit forecast or interpreted to mean that the Combined Group's earnings in the first full year following implementation of the Merger, or in any subsequent period, would necessarily match or be greater than or be less than those of Brand Architekts or InnovaDerma for the relevant preceding financial period or any other period. Due to the scale of the Combined Group, there may be additional changes to the Combined Group's operations. As a result, and given the fact that the changes relate to the future, the resulting cost savings may be materially greater or less than those estimated.

PART B - REPORT FROM PKF FRANCIS CLARK

Published report on quantified financial benefits Statement

The Directors

Brand Architekts plc

8 Waldegrave Road

Teddington

London

TW11 8GT

Singer Capital Markets

One Bartholomew Lane

London

EC2N 2AX

31 March 2022

Dear Ladies and Gentleman

We report on the quantified financial benefits statement (the "Statement") made by the directors of Brand Architekts plc (the "Directors") in the Announcement dated 31 March 2022 (the "Announcement") to the effect that:

The Brand Architekts directors, having reviewed and analysed the potential synergies of the Merger, and having commenced discussions with InnovaDerma management to refine this analysis, are confident that as a direct result of the Merger, the Combined Group can realise significant pre-tax cost synergies delivering attractive value for both sets of shareholders. Brand Architekts has, to date, identified pre-tax cost synergies of between £1.75 million and £2 million which net of certain dis-benefits expected to arise, are expected to reach a run-rate of between £1.5 million and £1.75 million, within the first 12 months following completion of the Merger.

The potential sources of quantified cost synergies include:

· approximately 70 per cent. from a consolidation of all group functions and associated headcount reduction which is expected to lead to a reduction of approximately 35 per cent of the Combined Group's projected headcount. This includes the consolidation and rationalisation of the Combined Group's Board and executive leadership teams, and the combination of all other group functions;

· approximately 30 per cent. from the removal of duplicate public company and compliance costs, rationalisation of the combined office footprint, harmonisation of the Combined Group's supply chain and DTC business relationships and a reduction in IT and other duplicate operational costs; and

· a cost of c. £0.25 million in respect of outsourcing all existing overseas infrastructure in respect of the Combined Group's DTC trading operations.

It is expected that the realisation of these identified synergies will require one-off costs of up to approximately £1.4 million, within the first year following completion of the Merger.

The synergies and dis-synergies referred to above are expected to be recurring and are expected to arise as a direct result of the Merger and could not be achieved independently of the Merger.

Opinion

In our opinion, the Statement has been properly compiled on the basis stated.

The Statement has been made in the context of the disclosures in the Announcement setting out, inter alia, the basis of the Directors' belief (including the principal assumptions and sources of information) supporting the Statement and their analysis and explanation of the underlying constituent elements.

This report is required by Rule 28.1(a) of the City Code on Takeovers and Mergers (the "City Code") and is given for the purpose of complying with that requirement and for no other purpose.

Responsibilities

It is the responsibility of the Directors to prepare the Statement in accordance with the requirements of Rule 28 of the City Code.

It is our responsibility to form an opinion, as required by Rule 28.1(a) of the City Code as to whether the Statement has been properly compiled on the basis stated and to report that opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.2 of the City Code, consenting to its inclusion in the Announcement.

Basis of preparation of the Statement

The Statement has been prepared on the basis stated in Part A of Appendix 1 to the Announcement.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the Financial Reporting Council in the United Kingdom (the "FRC"). We are independent, and have fulfilled our other ethical responsibilities, in accordance with the relevant ethical requirements of the FRC's Ethical Standard as applied to Investment Circular Reporting Engagements.

We have discussed the Statement, together with the underlying plans, with the Directors and Singer Capital Markets Advisory LLP. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Statement has been properly compiled on the basis stated.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the United States of America and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

We do not express any opinion as to the achievability of the benefits identified by the Directors in the Statement. Since the Statement and the assumptions on which it is based relates to the future and may therefore be affected by unforeseen events, we express no opinion as to whether the actual benefits achieved will correspond to those anticipated in the Statement and the differences may be material.

Yours faithfully

Francis Clark LLP

Chartered Accountants

T: [phone]

Francis Clark LLP is a limited liability partnership registered in England and Wales with registered number OC349116. The registered office is: Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF.

PART C - REPORT FROM SINGER CAPITAL MARKETS

The Directors

Brand Architekts PLC

8 Waldegrave Road

Teddington

London

TW11 8GT

  31 March 2022

Dear Directors

Quantified Financial Benefits Statement by Brand Architekts PLC ("Brand Architekts") in relation to the recommended all-share merger of Brand Architekts and InnovaDerma PLC (the "Proposed Merger ")

We refer to the Quantified Financial Benefits Statement, the bases of belief thereof and the notes thereto (together, the "Statement") as set out in Part A of Appendix 4 of the announcement to be released on 31 March 2022 pursuant to Rule 2.7 of the City Code on Takeovers and Mergers (the "Code") (the "Announcement"), for which the board of directors of Brand Architekts (the "Directors") are solely responsible under Rule 28.1(a)(ii) of the Code.

We have discussed the Statement (including the assumptions and sources of information referred to therein), with the Directors and those officers and employees of Brand Architekts who developed the underlying plans as well as with PKF Francis Clark. The Statement is subject to uncertainty as described in the Announcement and our work did not involve an independent examination of any of the financial or other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and other information provided to us by or on behalf of Brand Architekts, or otherwise discussed with or reviewed by us, and we have assumed such accuracy and completeness for the purposes of providing this letter.

We do not express any view as to the achievability of the quantified financial benefits and disbenefits identified by the Directors.

We have also reviewed the work carried out by PKF Francis Clark and have discussed with them the opinion set out in the Announcement addressed to you and us on this matter.

This letter is provided to you solely in connection with Rule 28.1(a)(ii) of the Code and for no other purpose. We accept no responsibility to Brand Architekts or its shareholders or any person other than the Directors in respect of the contents of this letter; no person other than the Directors can rely on the contents of this letter. We are acting exclusively as financial advisers to Brand Architekts and no one else in connection with the Proposed Merger and it was for the purpose of complying with Rule 28.1(a)(ii) of the Code that Brand Architekts requested Singer Capital Markets to prepare this report on the Statement. No person other than the Directors can rely on the contents of this letter, and to the fullest extent permitted by law, we exclude all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents or the work undertaken in connection with this letter or any of the results that can be derived from this letter or any written or oral information provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law.

On the basis of the foregoing we consider that the Statement, for which you as the Directors are solely responsible, has been prepared with due care and consideration.

Yours faithfully,

Singer Capital Markets Advisory LLP

 

APPENDIX 5

Definitions

The following definitions apply throughout this Announcement unless the context requires otherwise:

Admission means admission of the New Brand Architekts Shares to trading on AIM;

AIM means the market of that name, operated by the London Stock Exchange;

AIM Rules means the rules of AIM as set out in the publication entitled 'AIM Rules for Companies' published by the London Stock Exchange from time to time;

Announcement means this announcement made pursuant to Rule 2.7 of the Takeover Code, including its Appendices;

Appendices means the appendices to this Announcement and Appendix has a corresponding meaning;

Authorisations means authorisations, orders, grants, recognitions, determinations, certificates, confirmations, consents, licences, clearances, provisions, permissions and approvals;

B2B means business to business;

Blocking Law means Council Regulation EC No 2271/1996 of 22 November 1996 ("Blocking Regulation") or any law or regulation implementing the Blocking Regulation in any member state of the European Union or the United Kingdom;

Board means board of directors;

Board of the Combined Group means the proposed board of directors of the Combined Group;

Brand Architekts means Brand Architekts Group plc, a public limited company incorporated under the laws of England and Wales with registration number 01975376;

Brand Architekts Board or the Board of Brand Architekts means the board of directors of Brand Architekts as at the date of this Announcement;

Brand Architekts Circular means the circular to be published by Brand Architekts and to be sent to Brand Architekts Shareholders including the notice convening the Brand Architekts General Meeting to approve the issue of New Brand Architekts Shares in connection with the Merger;

Brand Architekts Directors means the directors of Brand Architekts as at the date of this Announcement;

Brand Architekts Form of Proxy means the form of proxy which will accompany the Brand Architekts Circular;

Brand Architekts General Meeting means the general meeting of Brand Architekts (including any adjournment thereof) to be convened to consider and, if thought fit, approve the Brand Architekts Resolution (and amendments thereto), and expected to be held on the same day as the InnovaDerma Shareholder Meetings;

Brand Architekts Group means Brand Architekts and its subsidiary undertakings and, where the context permits, each of them;

Brand Architekts Resolution means the resolution to be proposed to Brand Architekts Shareholders at the Brand Architekts General Meeting to approve the allotment of the New Brand Architekts Shares to be issued in connection with the Merger;

Brand Architekts Shareholders means the holders of Brand Architekts Shares;

Brand Architekts Shares means the ordinary shares of 5 pence each in the capital of Brand Architekts;

Business Day means a day, (other than a Saturday, Sunday, public or bank holiday) on which commercial banks are generally open for business in London;

Cash Consideration means the cash consideration referred to in paragraph 2 of this Announcement, being part of the Merger Consideration;

Closing Price means the closing middle market quotation of a share derived from (in the case of InnovaDerma Shares) the Daily Official List of the London Stock Exchange or (in the case of Brand Architekts Shares) the AIM Appendix to the Daily Official List of the London Stock Exchange, as relevant;

Combined Group means Brand Architekts and its subsidiaries, including InnovaDerma and its subsidiaries, following Completion;

Companies Act means the Companies Act 2006, as amended;

Completion means completion of the Merger by virtue of the Merger becoming Effective;

Computershare means Computershare Investor Services plc, of The Pavilions, Bridgwater Road, Bristol, BS13 8AE, the registrars to Brand Architekts;

Conditions means the conditions to the Merger set out in Part A of Appendix 1;

Confidentiality Agreement means the confidentiality agreement dated 31 January 2022 between (1) Brand Architekts and (2) InnovaDerma;

Cost Coverage Agreement means the cost coverage agreement dated 28 March 2022 between (1) Brand Architekts and (2) InnovaDerma

Cost Compensation Payment means a maximum amount of £200,000 payable by Brand Architekts to InnovaDerma in accordance with the terms of the Cost Coverage Agreement

Court means the High Court of Justice in England and Wales;

Court Hearing means the hearing by the Court of the application to sanction the Scheme;

Court Order means the order of the Court sanctioning the Scheme under section 899 of the Companies Act;

CREST means the computerised settlement system (as defined in the CREST Regulations) operated by Euroclear UK & International Limited which facilitates the transfer of title to shares in uncertificated form;

CREST Regulations means the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended;

Daily Official List means the daily official list of the London Stock Exchange;

Dealing Disclosure means an announcement pursuant to Rule 8 of the Takeover Code containing details of dealings in the relevant securities of a party to an offer;

Disclosed means the information fairly disclosed by or on behalf of InnovaDerma: (i) in the annual report and accounts of InnovaDerma for the financial year ended 30 June 2021 and the interim results for the period ended 31 December 2021; (ii) in any other public announcement made by InnovaDerma on a Regulatory Information Service before the date of the Announcement; (iii) in this Announcement; (iv) in the information made available to Brand Architekts in the data room established by InnovaDerma (or InnovaDerma's advisers) for the purposes of the Merger on or before 6.30 p.m. on 30 March 2022; or (v) as otherwise fairly disclosed by or on behalf of InnovaDerma to Brand Architekts (or its officers, employees, agents or advisers) before the date of this Announcement;

Disclosure Guidance and Transparency Rules means the disclosure rules and transparency rules made by the FCA pursuant to section 73A of FSMA;

DTC means direct to consumer;

Effective means:

(a)  if the Merger is implemented by way of the Scheme, the Scheme having become effective pursuant to its terms; or

(b)  if the Merger is implemented by way of a Takeover Offer, the Takeover Offer having been declared or become unconditional in all respects in accordance with the requirements of the Takeover Code;

Effective Date means the date on which the Merger becomes Effective;

Euronext Paris means the Euronext Paris market operated by Euronext Paris S.A.;

EV means enterprise value;

FCA means the UK Financial Conduct Authority, or its successor from time to time;

finnCap means finnCap Ltd, financial adviser to InnovaDerma;

FSMA means the Financial Services and Markets Act 2000 (as amended from time to time);

InnovaDerma means InnovaDerma plc, a public limited company incorporated under the laws of England and Wales with registration number 09226823;

InnovaDerma Board or Board of InnovaDerma means the board of directors of InnovaDerma as at the date of this Announcement;

InnovaDerma Court Meeting means the meeting of the InnovaDerma Scheme Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act, for the purpose of approving the Scheme, including any adjournment of it, notice of which shall be contained in the Scheme Document;

InnovaDerma Directors means the directors of InnovaDerma as at the date of this Announcement;

InnovaDerma Forms of Proxy means the forms of proxy for voting at the InnovaDerma Shareholder Meetings which will accompany the Scheme Document;

InnovaDerma General Meeting means the general meeting of the InnovaDerma to be convened in connection with the Scheme, including any adjournment of it, and expected to be held immediately following the InnovaDerma Court Meeting and notice of which shall be contained in the Scheme Document;

InnovaDerma Group means InnovaDerma and its subsidiary undertakings and, where the context permits, each of them;

InnovaDerma Resolution means the special resolution to be proposed at the InnovaDerma General Meeting authorising the InnovaDerma Directors to take all required action in relation to the Scheme and amending InnovaDerma's articles of association and such other matters as may be necessary to implement the Scheme;

InnovaDerma Scheme Shareholders means the holders of InnovaDerma Scheme Shares from time to time;

InnovaDerma Scheme Shares means the InnovaDerma Shares:

(a)  in issue at the date of the Scheme Document;

(b)  (if any) issued after the date of the Scheme Document and before the Voting Record Time; and

(c)  (if any) issued at or after the Voting Record Time but at or before the Scheme Record Time, either on terms that the original or any subsequent holders of such shares are to be bound by the Scheme or in respect of which their holders are, or shall by such time have agreed in writing to be, bound by the Scheme,

and, in each case, remaining in issue at the Scheme Record Time but excluding any InnovaDerma Scheme Shares held as treasury shares at any relevant date or time and any InnovaDerma Scheme Shares registered in the name of, or beneficially owned by, Brand Architekts or its nominees or any other member of the Brand Architekts Group at any relevant date or time;

InnovaDerma Share Plan means the InnovaDerma December 2021 EMI Scheme;

InnovaDerma Shareholder Meetings means, together, the InnovaDerma Court Meeting and the InnovaDerma General Meeting;

InnovaDerma Shareholders means the holders of InnovaDerma Shares from time to time;

InnovaDerma Shares means the ordinary shares of 0.1 euros each in the capital of InnovaDerma;

InnovaDerma Warrants means the warrants constituted by InnovaDerma pursuant to a warrant agreement dated 9 April 2021 between (1) InnovaDerma and (2) finnCap;

Last Accounts Date means 30 June 2021, being the date to which the last audited financial statements of InnovaDerma were published;

Latest Practicable Date means 30 March 2022, being the latest practicable date before the date of this Announcement;

Listing Rules means the rules and regulations made by the FCA under Part VI of FSMA and contained in the FCA's publication of the same name (as amended from time to time);

London Stock Exchange means London Stock Exchange plc;

Long Stop Date means 4 July 2022 or such later date as may be agreed in writing by Brand Architekts and InnovaDerma (with the Panel's consent and as the Court may approve (if such approval(s) are required));

Market Abuse Regulation means the Market Abuse Regulation (EU) (No 596/2014) inincorporated into UK law by virtue of the European Union (Withdrawal) Act 2018 as amended by virtue of the Market Abuse (Amendment)(EU Exit) Regulations 2019);

Merger means the proposed acquisition by Brand Architekts of the entire issued and to be issued ordinary share capital of InnovaDerma (other than any InnovaDerma Shares already held by the Brand Architekts Group) to be implemented by way of the Scheme as described in this Announcement or (should Brand Architekts so elect, subject to the consent of the Panel (where necessary)) by way of a Takeover Offer;

Merger Consideration means the consideration payable by Brand Architekts to InnovaDerma Scheme Shareholders in consideration for the Merger, as further referred to in paragraph 2 of this Announcement;

New Brand Architekts Shares means the Brand Architekts Shares to be issued credited as fully paid to the InnovaDerma Scheme Shareholders pursuant to the Scheme (and any other InnovaDerma Shareholders whose InnovaDerma Shares are issued after the Scheme becomes Effective);

Offer Period means the period commencing on the date of this Announcement and ending on (i) the earlier of the date on which the Scheme becomes Effective and/or the date on which the Scheme lapses or is withdrawn (or such other date as the Panel may decide) or (ii) the earlier of the date on which the Takeover Offer has become or has been declared unconditional as to acceptances and/or the date on which the Takeover Offer lapses or is withdrawn (or such other date as the Panel may decide), in each case other than where such lapsing or withdrawal is a result of Brand Architekts exercising its right to implement the Merger by way of a Takeover Offer;

Official List means the Official List of the London Stock Exchange plc;

Opening Position Disclosure means an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the Merger if the person concerned has such a position, as defined in Rule 8 of the Takeover Code;

Overseas Shareholders means InnovaDerma Shareholders who have a registered address in, or are citizens, residents or nationals of, a jurisdiction outside the UK;

Panel means the UK Panel on Takeovers and Mergers;

PKF Francis Clark means Francis Clark LLP, reporting accountant to Brand Architekts

Quantified Financial Benefits Statement means the statement described as such and set out in Appendix 4;

Registrar of Companies means the Registrar of Companies in England and Wales;

Regulatory Information Service means a regulatory information service as defined in the FCA's Handbook of rules and guidance as amended from time to time;

Restricted Jurisdiction means any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Brand Architekts regards as unduly onerous;

Scheme means the proposed scheme of arrangement under Part 26 of the Companies Act between InnovaDerma and the InnovaDerma Scheme Shareholders the terms of which are to be set out in the Scheme Document;

Scheme Document means the document to be dispatched to (among others) InnovaDerma Shareholders including, among other things, the Scheme and the notices convening the InnovaDerma Court Meeting and the InnovaDerma General Meeting;

Scheme Record Time means the time and date to be specified in the Scheme Document by reference to which the entitlements of InnovaDerma Shareholders under the Scheme will be determined, expected to be 6.00 p.m. on the Business Day before the Scheme becomes Effective;

Significant Interest means, in relation to an undertaking, a direct or indirect interest of 20 per cent. or more of: (i) the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking or (ii) the relevant partnership interest;

Singer Capital Markets means Singer Capital Markets Advisory LLP, financial adviser to Brand Architekts;

SLC Registrars means SLC Registrars Limited, 42-50 Hersham Road, Walton-on-Thames, Surrey, KT12 1RZ, the registrars to InnovaDerma;

Takeover Code means the City Code on Takeovers and Mergers;

Takeover Offer means, should the Merger be implemented by way of a takeover offer as defined in section 974 of the Companies Act, the takeover offer to be made by or on behalf of Brand Architekts to acquire the entire issued and to be issued ordinary share capital of InnovaDerma and, where the context requires, any subsequent revision, variation, extension or renewal of such takeover offer;

Third Party means any government, government department or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body or association, institution or agency (including, without limitation, any trade agency) or authority (including, without limitation, any anti-trust or merger control authority), any court or professional or environmental body or any other person or body whatsoever in any relevant jurisdiction;

UK or United Kingdom means the United Kingdom of Great Britain and Northern Ireland;

US or the United States means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all areas subject to its jurisdiction;

US Securities Act means the United States Securities Act of 1993;

Voting Record Time means the time and date specified in the Scheme Document by reference to which entitlement to vote at the InnovaDerma Court Meeting will be determined, expected to be 6.00 p.m. on the day two days prior to the InnovaDerma Court Meeting or any adjournment of it (as the case may be);

Wider Brand Architekts Group means Brand Architekts and its subsidiary undertakings and associated undertakings and any other body corporate partnership, joint venture or person in which Brand Architekts and all such undertakings (aggregating their interests) have a Significant Interest (other than any member of the Wider InnovaDerma Group); and

Wider InnovaDerma Group means InnovaDerma and its subsidiaries, subsidiary undertakings, associated undertakings and any other body corporate, partnership, joint venture or person in which InnovaDerma and all such undertakings (aggregating their interests) have a Significant Interest.

For the purposes of this Announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given by the Companies Act.

All references to "GBP", "pence", "Sterling", "Pounds sterling", "p" or "£" are to the lawful currency of the United Kingdom.

All references to statutory provision or law or to any order or regulation shall be construed as a reference to that provision, law, order or regulation as extended, amended, replaced or re-enacted from time to time and all statutory instruments, regulations and orders from time to time made under them or deriving validity from them.

All the times referred to in this Announcement are London times unless otherwise stated.

References to the singular include the plural and vice versa.

 

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