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Ananda Developments (ANA) – Proposed 100% ownership of DJT Plants Limited

Proposed move to 100% ownership of DJT Plants Limited

The Directors of Ananda announce that non-binding Heads of Terms have been agreed for the proposed acquisition by Ananda of the 50% shareholding in DJT Plants Limited (“DJT Plants”) not currently owned by Ananda (the “Acquisition”).

Ananda intends to become a significant participant in the medicinal cannabis sector as a UK-based grower of consistent, high quality medicinal cannabis for domestic and international markets. The Directors believe that the Acquisition represents a major step towards fulfilling this objective.

HIGHLIGHTS

  • On 17 May 2021, DJT Plants was granted a licence to grow >0.2% THC cannabis for research purposes by the UK Government Home Office (the “Licence”)
  • DJT Plants is a wholly owned subsidiary of DJT Group Limited (“DJT Group”), which is owned 50/50 by Ananda’s wholly owned subsidiary, Tiamat Agriculture Limited, and Anglia Salads Limited (“Anglia Salads”)
  • Consideration for the Acquisition amounts to £7.3 million and will be satisfied by the issue of  790,538,866 ordinary shares of 0.2p each in Ananda (“Ordinary Shares”) to Anglia Salads (the “Vendor”)
  • The consideration values each partner’s shareholding in the licence equally.  It reflects the Directors’ belief that the Licence represents the majority of Ananda’s current market value and that DJT Plants has the potential to generate significant value and future revenues for the Company
  • On completion of the Acquisition, it is proposed that Stuart Piccaver and Simon Goddard, directors of both Anglia Salads and its parent company, JEPCO Limited (“JEPCO”), will join the Board of Ananda as Joint Chief Executive Officer and Chief Financial Officer, respectively

Reason for the Acquisition

The Directors and the Vendor believe that the Acquisition will be mutually beneficial. In particular, they believe that the Acquisition has the potential to deliver the following important advantages:

  • captures 100% of the potential commercial growing revenues in Ananda
  • ensures that knowhow and developed Intellectual Property is owned by Ananda
  • consolidates ownership, management and operation of the Licence and the business in a single entity
  • enables working capital requirements to be managed at the DJT Plants’ level
  • secures the services of two senior executives with 4 years’ direct experience growing medicinal cannabis in the UK, as well as 30 years of specialist horticultural experience and significant success in horticultural innovation
  • secures the growing and agronomic operations services of JEPCO (the 51% owner of Anglia Salads) on a cost-plus basis, meaning Ananda has the ability to execute its strategy on a ‘turn-key’ basis, rather than having to employ, train, manage and retain its own workforce
  • gives Ananda immediate access to formal quality systems and procedures which are vital for the cultivation of consistent and high-quality medicinal cannabis

Ananda CEO, Melissa Sturgess, commented:

“Our job now is to stabilise 65 strains of cannabis, conduct research field trials and ready ourselves for the proposed transition to commercial medicinal cannabis growing, subject to further licensing from the Home Office.  Stuart has built his agricultural business into the success it is today, as the second largest grower of specialist salad leaves in the UK.  He was also responsible for his company’s success growing medicinal cannabis for GW Pharmaceuticals.  I look forward to working with him to achieve our objective of being a grower of consistent and high-quality medicinal cannabis for domestic and international markets.”

Incoming Joint-CEO, Stuart Piccaver, commented:

“Following on from the success of obtaining the Home Office licence, it’s now time to turn our vision and plans into reality. I have led 4 significant end to end horticultural developments for blue chip companies in the last 8 years. The basis of these has been to provide solutions to supply chain issues and, as Melissa has commented, one of these was in cannabis. This has given us extensive knowledge on protected growing structures, growing mediums, crop/climate manipulation and the pure practicalities of commercialising various crops. I look forward to joining Melissa and the Ananda team to draw on that experience to ensure our success.”

 

Background

On 18 May 2021, Ananda announced its 50% owned subsidiary, DJT Plants, had been granted a licence to grow >0.2% THC cannabis for research purposes by the UK Government Home Office. The Licence allows DJT Plants to develop a broad range of cannabis genotypes (“strains”) through a genetic stabilisation and field trials programme, with the goal of growing these genotypes in the UK.

DJT Plants intends to produce a line of 65 stable strains through back crossing six generations from a varied portfolio of 13 seeds that exhibit a range of THC/CBD and other cannabinoid, terpene and flavonoid profiles. The focus will be on strains with metabolic profiles relevant to various health indications which have shown to be receptive to treatment with medical cannabis and for which NICE (the National Institute for Clinical Excellence) has called for further research.  They will also be filtered for agronomical traits such as yield and resistance to pathogens, moulds, etc.

The intent is to give DJT Plants a number of its own stable cannabis strains, suitable for growing in UK conditions, with metabolic profiles which have been identified as useful for treating certain medical conditions.

Information on the proposed Directors

On completion of the Acquisition, it is proposed that Stuart Piccaver and Simon Goddard, two highly experienced horticultural, and specifically cannabis cultivation, executives, will join the Board of Ananda.

Stuart Piccaver holds a BSc (Hons) and is a third-generation farmer and CEO of JEPCO and a director of Anglia Salads. With a background and interest in marketing and innovation, he has been the driving force for many of the leading agricultural initiatives and successes of JEPCO and its associated companies.

From a standing start in July 2014, he led the team that proved a concept to grow natural season cannabinoids in the UK, lowering the cost of production by 78%. The project grew 5 hectares under cover to fully assess and master the dynamics of UK production. The project proved its feasibility and created a growing blueprint for a highly scalable production technique.

Simon Goddard is a qualified accountant and has been CFO of  JEPCO and Anglia Salads for 19 years. He is responsible for all the strategic, financial and operational aspects of the companies and is also responsible for the Group’s CSR and technical quality standards.

During the initial build-out phase of the Company’s cannabis growing facility, salaries due to Stuart Piccaver and Simon Goddard will be accrued.

Terms of the Acquisition

Pursuant to the proposed terms of the Acquisition, Ananda will acquire the 50 ordinary shares of £1.00 each in DJT Group which it does not currently own, for consideration of £7.3 million, which will be satisfied by the issue of 790,538,866 Ordinary Shares (the “Consideration Shares”), at a deemed price of 0.925p per share (the closing price of Ordinary Shares on 7 June 2021).

The transaction is conditional, amongst other things, on:

  • The signing of a legally binding sale and purchase agreement to implement the Acquisition (which will include customary restrictive covenant and non-compete provisions)
  • Approval of the Acquisition by Ananda’s shareholders at a general meeting; and
  • The receipt of tax advice with respect to certain structural aspects of the transaction

If the Acquisition proceeds to completion on the terms outlined above and no additional Ordinary Shares are issued by the Company in the intervening period, the Vendor will be interested in 790,538,866 Consideration Shares, representing approximately 50% of the Company’s enlarged issued share capital.

Under Rule 9 of the City Code on Takeovers and Mergers (the “Code”), and based on the interest of the Vendor outlined above and on the current issued share capital of Ananda, the allotment of the Consideration Shares will be subject to the Takeover Panel granting the Vendor a waiver of the obligations which would otherwise oblige it to make a general offer to shareholders under Rule 9 of the Code (“Rule 9 Waiver” “Whitewash”); any such Rule 9 Waiver would be subject to the approval of independent shareholders in Ananda at a General Meeting.

There can be no guarantee that such shareholder approval will be obtained or that the Takeover Panel will grant the Rule 9 Waiver required to effect the Acquisition.

DJT Group owns a 100% interest in DJT Plants, which holds the Licence, and 100% of Aristaeus Elements Ltd, a company with certain knowhow about cannabis extraction.

Additional Information

As announced on 18 May 2021, the £300,000 raised by the Company in February 2021 has been allocated to DJT Plants to commence the build out of its research facility at the Licence location. An update on progress will be released in due course.

Ananda continues to hold 2% of the equity in cannabis conference platform and start up adviser iCAN-Israel Limited, and 15% of novel medicinal cannabis vaping technology company Liberty Herbal Technologies Limited.  An update on these investments will be released in due course.

General Meeting

A circular containing further information and convening a General Meeting to approve the Acquisition will be sent to Ananda shareholders as soon as possible.  A further announcement will be made at that time.

-Ends-

The Directors of the Company accept responsibility for the contents of this announcement.

ANANDA DEVELOPMENTS PLC
Chief Executive Officer
Melissa Sturgess

Investor Relations
Jeremy Sturgess-Smith

+44 (0)7463 686 497
ir@anandadevelopments.com
PETERHOUSE CAPITAL LIMITED
Corporate Finance
Mark Anwyl
Allie Feuerlein

Corporate Broking
Lucy Williams
Duncan Vasey

+44 (0)20 7469 0930

Ananda Developments #ANA – Issue of Equity and Directors’ Interests

As referred to in Ananda’s announcement of 18 May 2021, Charles Morgan (Chairman of the Company) and Melissa Sturgess (Chief Executive Officer of the Company) have each been issued with 100,000,000 ordinary shares of 0.2p each in the Company (“Ordinary Shares”; the “Contingent Consideration Shares”) following the successful grant of a > 0.2% THC Home Office Licence to grow cannabis for research activities.

Application will be made for the Ordinary Shares to be admitted to trading on the Access Segment of the AQSE Growth Market and admission is expected to become effective on 26 May 2021.

Directors’ Interests

Following the issue of the Contingent Consideration Shares, Charles Morgan and Melissa Sturgess are interested in Ordinary Shares as follows:

Current Holding of Ordinary Shares Issue of Contingent Consideration Shares New Holding of Ordinary Shares Percentage interest in Ordinary Shares
Charles Morgan 51,071,781 100,000,000 151,071,781 19.03%
Melissa Sturgess 77,724,170 100,000,000 177,724,170 22.39%

Total Voting Rights

Following this issue, the Company has 793,872,220 Ordinary Shares in issue, each share carrying the right to one vote.

This figure of 793,872,220 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.

Concert Party

Following the issue of the Contingent Consideration Shares, the members of the Concert Party will be interested, in aggregate, in 343,657,607 Ordinary Shares, representing 43.29 per cent of the Company’s enlarged issued share capital. The maximum potential interest of the Concert Party in the voting rights of the Company is set out in the table below:

Concert Party Member Current Holding of Ordinary Shares Holding of Warrants Exercise of Options Maximum interest in Ordinary Shares
following exercise of the  Warrants by the Concert Party and the exercise of Options
Maximum %age interest in voting rights
following exercise of the Warrants by the Concert Party and the exercise of Options
Charles Morgan* 151,071,781 5,530,115 156,601,896 19.03%
Melissa Sturgess* 177,724,170 8,070,282 185,794,452 22.57%
Jeremy Sturgess-Smith 1,700,000 10,451,389 12,151,389 1.48%
Peter Redmond 8,686,743 3,686,743 12,373,486 1.50%
Michael Langoulant 4,474,697 1,474,697 5,949,394 0.72%
URA 216 216 432
Total Concert Party Holding 343,657,607 362,419,660 372,871,049 372,871,049 45.30% 
Ordinary Shares in Issue 793,872,220 812,634,293 823,085,682 823,085,682

*In addition to the Ordinary Shares set out above, Charles Morgan and Melissa Sturgess have been granted options over 9,282,778 and 9,282,778 Ordinary Shares respectively, pursuant to the Company’s Incentive Scheme. Charles Morgan and Melissa Sturgess have undertaken not to exercise these options unless such exercise is permitted by the Takeover Code.

Words and expressions defined in the circular to shareholders in the Company dated 24 May 2019, which is available on the Company’s website at www.anandadevelopments.com, have the same meaning in this announcement.

Ananda Developments #ANA – Grant of Home Office Licence

The Directors of Ananda announce the following progress regarding Ananda’s vision to become a significant participant in the emerging medicinal cannabis sector:

HIGHLIGHTS

  • DJT Plants Limited (“DJT Plants”) has been granted a licence to grow >0.2% THC cannabis for research activities by the UK Government Home Office (the “Licence”).
  • The build out of DJT Plants’ research facility to breed and stabilise 65 strains of cannabis will commence immediately, utilising the funds raised by the Company in March 2021.
  • DJT Plants is a wholly owned subsidiary of DJT Group Limited (“DJT Group”), which is owned as to 50% by Ananda’s wholly owned subsidiary, Tiamat Agriculture Limited, and as to 50% by Anglia Salads Limited (“Anglia Salads”).

Background

On 14 October 2019, DJT Plants submitted its application for a licence to grow >0.2% THC cannabis for research purposes pursuant to the Misuse of Drugs Act 1971. Following submission of the application, DJT Plants and its advisers have been in a dialogue with the Home Office, local police and the MHRA, amongst others. The regulations around COVID-19 caused a year’s delay in Home Office representatives being able to visit the proposed site of the research activities. When regulations allowed, representatives of the Home Office made a visit to proposed locations on 17  March 2021. DJT Plants received its Licence on 17 May 2021.

Anglia Salads and DJT Plants both held UK Home Office licences to grow >0.2% THC cannabis between 2014 and 2017. They successfully grew up to five hectares of cannabis for GW Pharmaceuticals, in multi-chappelle structures in natural season without any artificial heat or light.

The October 2019 licence application included DJT Plants’ phased strategy to become a significant participant in the emerging medicinal cannabis sector. Phase One is the research phase for which the Licence has been granted.  Phase Two, which will be subject to further UK Home Office licensing, is to build out commercial growing and extraction facilities, for some 40 hectares, at the same location.

The Licence received on 17 May 2021 is to develop a broad range of cannabis genotypes through a genetic stabilisation and field trials programme, with the goal of growing these genotypes in the UK.

DJT Plants will produce a line of 65 stable genotypes through back crossing six generations from a varied portfolio of 13 seeds that exhibit a range of THC/CBD and other cannabinoid, terpene and flavonoid profiles. Those genotypes with metabolic profiles relevant to various health indications which have shown to be receptive to treatment with medical cannabis and for which NICE (the National Institute for Clinical Excellence) has called for further research, will also be filtered for agronomical traits such as yield and resistance to pathogens, moulds etc. This will give DJT Plants a number of stable genotypes with a range of metabolic profiles, containing high and low levels of THC and CBD, together with a varied range of other cannabinoids, terpenes and flavonoids.

With a focus on neuropathic pain, epilepsy, Parkinson’s Disease and systemic sclerosis and with reference to the scientific literature, DJT Plants will analyse the metabolic profiles of the stable genotypes (including reference to their non-stable origin – via plants grown from first generation hybrid) including analysis of minor cannabinoids, flavonoids and terpenes. This analysis will be carried out in Israel under procedures and techniques developed by Professor Dedi Meiri of the Technion Israel Institute of Technology.  Professor Meiri has established an approach for comprehensive metabolic profiling of phytochemicals in cannabis.

The understanding gained from the analysis and studies as described above, together with insight gained from the scientific literature, will assist in the selection of genotypes that could be grown in Phase 2, subject to further licensing from the Home Office, then manufactured under Good Manufacturing Practice (GMP) with a view to becoming available for prescription by doctors on the General Medical Council list of Specialists.

As part of DJT Plants’ research approach, it will also look to establish extraction, distillation and isolation facilities to manufacture “full spectrum” cannabis products and less than full spectrum products according to the specific combinations of cannabinoids, terpenes and flavonoids identified as being efficacious for particular indications.

Following the research phase, and conditional on UK Home Office licensing, the Directors believe a UK source of high quality consistent medicinal cannabis, such as DJT Plants intends to grow and produce, will be well received, given the growing market for medicinal cannabis and the concerns around consistency and quality expressed by prescribing doctors and patients.

Advantages of growing medicinal cannabis in the UK

Anglia Salads and DJT Plants successfully cultivated medicinal cannabis for GW Pharmaceuticals from 2014 to 2017 in UK natural light and heat conditions. Unlike the high capital and operating cost facilities built in some other jurisdictions, DJT Plants will grow cannabis in multi-chappelle structures with the required light, humidity and heat metrics via 100% natural means. By doing this for GW Pharmaceuticals, DJT Plants achieved one natural growth cycle per annum, with consistent quality and a yield of 700g/m2. DJT Plants’ direct experience growing medical cannabis is that one natural cycle per year achieves better economics and is more environmentally friendly and sustainable than ‘pushing’ the plants to achieve two to three crops per year with the associated high costs.

Build Out of Research Facility

On 15 February 2021, Ananda announced that it had raised £300,000 for the build out of its research facility at the Licence location. As reported to shareholders at the time, these funds were set aside for the build out. DJT Plants will therefore immediately commence the build out and commissioning of the research facility.

Issue of Contingent Consideration Shares

Pursuant to the agreement whereby Ananda acquired Tiamat Agriculture Limited, announced on 24 May 2019 and approved by Ananda’s shareholders on 10 June 2019, Melissa Sturgess and Charles Morgan, Chairman and Chief Executive Officer of the Company, are entitled to be issued 100 million ordinary shares of 0.2p each in Ananda when the Licence is granted. These shares will be issued as soon as practicable, and a further announcement will be made at that time.

Ananda CEO Melissa Sturgess said: “Ananda is extremely excited to achieve this important milestone which allows us to grow and stabilise 65 strains of cannabis and conduct field trials.  We also maintain our focus on the future when we hope to legally produce premium UK grown medicinal cannabis for patients who need it.”

-Ends-

The Directors of the Company accept responsibility for the contents of this announcement.

ANANDA DEVELOPMENTS PLC
Chief Executive Officer
Melissa SturgessInvestor Relations
Jeremy Sturgess-Smith
+44 (0)7463 686 497
ir@anandadevelopments.com
PETERHOUSE CAPITAL LIMITED
Corporate Finance
Mark Anwyl
Allie FeuerleinCorporate Broking
Lucy Williams
Duncan Vasey
+44 (0)20 7469 0930

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to constitute inside information. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

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