Acquisition

 

TIDMMOLE 
 
RNS Number : 1170H 
Baylon Holdings Limited 
15 February 2010 
 

                                        EMBARGOED FOR 7:30 A.M. 15 FEBRUARY 2010 
 
 
 
                            Baylon Holdings Limited 
                        (formerly Molectra Group Limited) 
                          ("Baylon" or "the Company") 
 
 
                  Approval of waiver of Rule 9 of the City Code 
                  Proposed change of name to Ila Group Limited 
              Admission of Enlarged Share Capital to trading on AIM 
                                      and 
                    Notice of Extraordinary General Meeting 
 
 
Baylon, the Aim-quoted company, today announces that terms have been agreed for 
the acquisition of the whole of the issued share capital of Ila and a change of 
name to Ila Group Limited, conditional on Shareholder approval at the Baylon 
EGM. The consideration for the Acquisition will be satisfied entirely by the 
issue of up to 763,308,454 Shares to the shareholders of Ila, made up of 
388,600,221 Initial Consideration Shares and up to 374,708,233 Contingent 
Consideration Shares (subject to adjustment). 
 
The Acquisition constitutes a reverse takeover under the AIM Rules and will 
therefore require Shareholder approval. In addition, following completion of the 
Acquisition, members of the Concert Party will between them be interested in 
more than 30 per cent. of the voting rights of the Company and the Acquisition 
is therefore subject to Shareholder approval of a waiver of the obligations 
under Rule 9 of the City Code. 
 
Trading of the Existing Shares on AIM is expected to be restored at 7.30 a.m. 
today and a copy of the Admission Document, today being posted to Baylon 
Shareholders, will shortly be available on Baylon's website at 
www.molectragroup.co.uk. 
 
 
Ila Security Limited 
 
·      Ila was incorporated in July 2008 to manufacture and market innovative, 
style-conscious personal security and other devices for women.  Ila was founded 
by Zag (a subsidiary of leading communications agencyBartle Bogle Hegarty), 
Simon McGivern and James Phillips each of whom, since 2003, have experience 
designing, manufacturing and distributing consumer products. Ila's products are 
aimed at the 'brand gap' in the female personal security market, in a society 
where personal safety is perceived as an increasing issue. 
 
·      Ila's first product was the Dusk, a pocket-sized alarm that emits a 120 
decibel female scream, to scare away a potential attacker and give women time to 
escape.  It is designed as an accessory to be worn on a key chain or handbag, 
with a range of styles to choose from. 
 
·      The Directors consider that a key to future growth of Ila is the pipeline 
of new products.  The development of five new Ila products (provisionally called 
Jogger, Hook, Wedge, Pebble and Leash) is at a relatively advanced stage.  The 
new products have received indications of early interest from existing retailers 
and offer potential new distribution opportunities for Ila as an extended 
product range facilitates approaches to prospective new distributors 
 
On Completion, Simon McGivern will become Chief Executive and James Phillips 
will become Sales Director. Paul Gazzard, the current Chief Executive of Baylon 
will become Chief Operating Officer. Neil Munn and Adam Arnold will become 
non-executive directors. 
 
Rodger Sargent, Chief Financial Officer of Baylon will stand down from the Board 
on completion but will remain with the Enlarged Group as Financial Controller. 
 
A notice of EGM to approve the Resolutions, including the change of name of the 
Company to Ila Group Limited, to be held at 10.00 a.m. on 4 March 2010 is today 
being posted to Baylon Shareholders together with the Admission Document. 
 
Completion of the Acquisition and Admission of the Initial Consideration Shares 
is expected to take place on 5 March 2010, and dealings are expected to commence 
in the Enlarged Share Capital on AIM with effect from 8.00 a.m. on that date. 
Application will be made for the Contingent Consideration Shares to be admitted 
to trading on AIM once it is confirmed whether, and if so how many, Contingent 
Consideration Shares will be issued. 
 
Paul Gazzard, Chief Executive Officer of Baylon, commented: "Baylon are 
delighted to be acquiring Ila at this time of its growth. Ila has created a 
brand with huge potential with limited capital and we hope the additional 
resources this deal provides will allow Ila to fulfill its potential and grow 
into an international brand." 
 
Simon McGivern, Chief Executive Officer of Ila, added:  "The acquisition is 
ideally timed to allow the expansion of Ila's existing relationships with major 
UK retailers as well as our international sales programme within the US, Canada 
and Europe. It also accelerates our research and development programme, which 
aims to produce a range of six Ila products by 2011" 
 
The above summary should be read in conjunction with the full text of this 
announcement set out below. 
 
 
Baylon Holdings Limited 
       [phone] 
Paul Gazzard, CEO 
Rodger Sargent, Chief Financial Officer 
 
Ila Security Limited 
           [phone] 
Simon McGivern, CEO 
 
Arbuthnot Securities Limited 
     [phone] 
Antonio Bossi 
Ed Groome 
 
 
This announcement does not constitute an offer to sell, or the solicitation of 
an offer to buy, shares in any jurisdiction in which such offer or solicitation 
is unlawful and, in particular, is not for distribution into the United States, 
Canada, Australia, the Republic of Ireland or Japan. None of the Existing 
Shares, the Consideration Shares, or the Arbuthnot Shares has been, nor will be, 
registered under the United States Securities Act of 1933, as amended, or under 
the applicable securities laws of any state of the United States, Canada, 
Australia, the Republic of Ireland or Japan. Accordingly, subject to certain 
exceptions, none of the Existing Shares, the Consideration Shares, or the 
Arbuthnot Shares may, directly or indirectly, be offered or sold within the 
United States, Canada, Australia, the Republic of Ireland or Japan or to or for 
the account or benefit of any national, resident or citizen of the United 
States, Canada, Australia, the Republic of Ireland or Japan. The distribution of 
the Admission Document in other jurisdictions may be restricted by law and 
therefore persons into whose possession the Admission Document comes should 
inform themselves about and observe any such restrictions. Any failure to comply 
with these restrictions may constitute a violation of the securities law of any 
such jurisdictions. 
 
Arbuthnot Securities Limited, which is regulated by the Financial Services 
Authority, is acting as Nominated Adviser and Broker to the Company and no-one 
else and will not be responsible to any person other than the Company for 
providing the protections afforded to customers of Arbuthnot Securities Limited 
or for advising any other person on the contents of this announcement or any 
transaction or arrangement referred to herein. The responsibilities of Arbuthnot 
Securities Limited as the Company's Nominated Adviser and Broker under the AIM 
Rules are owed solely to the London Stock Exchange. Arbuthnot Securities Limited 
is not making any representation or warranty, express or implied, as to the 
contents of this announcement (without limiting the statutory rights of any 
person to whom this announcement is issued). 
 
 
 
                    Proposed Acquisition of Ila Security Ltd 
                  Approval of waiver of Rule 9 of the City Code 
                  Proposed change of name to Ila Group Limited 
              Admission of Enlarged Share Capital to trading on AIM 
                                      and 
                    Notice of Extraordinary General Meeting 
On 22 January 2010, the Company announced that it had completed the disposal of 
the business and assets of its operating subsidiary, Molectra Australia and 
thereafter would be an investing company with a policy of acquiring a company or 
business in the consumer retail and/or manufacturing sector. On that date the 
Company's Shares were suspended as the Company reported that it was in 
discussions regarding a transaction which could constitute a reverse takeover. 
Further to that announcement, the Company announced today that it has 
conditionally agreed to acquire the entire issued share capital of Ila, a UK 
based company established to develop and market Ila branded personal security 
and other devices.  The consideration for the Acquisition will be satisfied 
entirely by the issue of up to 763,308,454 Shares to the shareholders of Ila, 
made up of 388,600,221 Initial Consideration Shares representing approximately 
71.9 per cent. of the Enlarged Share Capital and up to 374,708,233 Contingent 
Consideration Shares (subject to adjustment), together representing 
approximately 83.4 per cent. of the Contingent Enlarged Share Capital. 
The Acquisition, if implemented, will result in a fundamental change in the 
business, board and voting control of the Company and will also constitute a 
reverse takeover under the AIM Rules.  Accordingly, the Acquisition requires the 
approval of Existing Shareholders at the Baylon EGM. 
Following the recent disposal of the Molectra Australia business, the Company is 
treated as an investing company under the AIM Rules with an investing policy of 
acquiring a company or business in the consumer retail and/or manufacturing 
sectors.  With the Disposal in mind, the Company has for some time been 
considering potential acquisitions and a review of possible targets has been 
undertaken.  After considering a number of possible businesses and after due 
diligence, Ila was identified as a potential merger partner and the terms of the 
Acquisition were negotiated.  Ila was introduced to the Company by Rodger 
Sargent, an Existing Director and a shareholder in Ila.  The Existing Directors 
consider Ila to be a business with significant potential and, given its need for 
working capital to help fund its continued expansion, a good fit for the Company 
which has the benefit of an AIM quotation and cash on its balance sheet. 
Ila, which started business in 2008, manufactures and markets branded personal 
security and other devices designed, primarily, to appeal to women.  Ila was 
founded following an approach from Zag (a subsidiary of leading communications 
agency Bartle Bogle Hegarty) to Simon McGivern and James Phillips each of whom 
have experience designing, manufacturing (via outsourced manufacturers in China) 
and distributing alarms through another company, Locca Tech Limited, which was 
established in 2003. 
 
The Acquisition, if implemented, will provide the Ila business with additional 
resources to assist in exploiting the potential opportunities in the market and 
in building the awareness of the Ila brand.  In particular, the increased cash 
position provided by Baylon's cash reserves (which stood at approximately 
GBP650,000 as at 12 February 2010 - this figure has not been audited) and the 
appointment of the Proposed Directors are intended to enable the Enlarged Group 
to achieve some or all of the following objectives: 
·      the expansion of Ila's existing relationships with major retailers, 
including the roll out of merchandising programmes; 
·      the expansion of Ila's research and development programme with a view to 
increasing its range to six products within the next 12 months; 
·      to increase Ila's retail presence in the UK more generally to multiple 
nationwide retailers; and 
·      to increase Ila's international sales programme to the US and Canada and 
more widely across Europe.  This may include the appointment of sales 
representatives or distributors with whom Ila is currently in discussions. 
Further details of the history, current business and prospects of Ila are set 
out in Part II of the Admission Document. 
Financial information on Ila for the 15 month period to 30 September 2009 is set 
out in Part V of the Admission Document. 
Immediately following the completion of the Acquisition, the Board will consist 
of three executive directors and two non-executive directors.  It is the 
Directors' intention to appoint an independent non-executive director in due 
course.  Brief biographical details of all members of the Board and any key 
employees and their proposed roles are set out below. 
Board of the Company as enlarged by the Acquisition 
Simon McGivern, Chief Executive Officer (currently chief executive officer of 
Ila) Age 36 
Mr McGivern gained an MA (Hons) in Business and French from Edinburgh 
University.  He began his professional career at Panmure Gordon Investments in 
1997, where he trained in investment management.  His work there involved 
financial analysis, portfolio management and the sourcing of venture capital 
opportunities.  Mr McGivern left Panmure Gordon to start up Locca, a technology 
company headquartered in London whose primary business was designing and 
manufacturing a range of innovative electronic products for the retail and SME 
markets, in 2003.  As Managing Director at Locca, Mr McGivern was responsible 
for key projects such as raising seed capital, designing and developing 
products, creating and implementing the marketing plan and running the financial 
operations of the company. In 2008 Mr McGivern became one of the founding 
directors of Ila with overall responsibility for the financial, product 
development, manufacturing and legal aspects of the company. 
James Phillips, Sales Director (currently sales director of Ila) Age 36 
Mr Phillips gained an MA (Hons) in Geography from Edinburgh University.  He 
entered recruitment consultancy following university and then moved into 
corporate sales at Quintus Group.  While at Quintus Group, he was chosen to set 
up the company's Asian operations.  Following this, he left to set up his own 
corporate sponsorship company in Hong Kong.  Mr Phillips was a founding director 
of Locca and was responsible for originating and completing a number of national 
and international distribution deals.  In 2008, Mr Phillips became a founding 
director of Ila with responsibility for originating sales and growing retail and 
distribution partnerships. Mr Phillips has developed the majority of Ila's 
existing relationships with major national and international retailers. 
Paul Terence Gazzard, Chief Operating Officer (currently Chief Executive Officer 
of Baylon) Age 38 
Mr Gazzard graduated from London University in 1993 with a degree in 
Biochemistry and Human Physiology.  He worked in the City, including at Panmure 
Gordon, as a fund manager and investment analyst specialising in small cap 
technology stocks.  He left the City in 2002 to join Virotec International plc. 
Mr Gazzard was involved in the launch of The Greenhouse Fund Limited in January 
2006 and, as a principal of the strategic adviser to the fund, was involved in 
advising Greenhouse on its portfolio of investments.  When The Greenhouse Fund 
Limited acquired Molectra Australia in 2008 and concurrently changed its name to 
Molectra Group Limited, Mr Gazzard became Chief Executive Officer of the 
enlarged group.  It is proposed that on Completion of the Acquisition, Mr 
Gazzard will become Chief Operating Officer of the Enlarged Group. 
Neil Munn, Non-executive Director, Age 45 
Mr Munn spent 16 years at Unilever working with some of its most successful 
brands. Mr Munn's roles included 5 years in Asia helping Unilever establish its 
China business, in France as Brand Director of Unilever's beverages business 
with executive responsibility for strategy, innovation and communication and 
extensively in the UK market in both general management and brand development. 
His final role at Unilever was as Global Brand Director on Lynx.  In 2006 Mr 
Munn left Unilever to become CEO of Zag. 
Adam Arnold, Non-executive Director, Age 31 
Mr Arnold graduated from Cambridge University in 2000 with a first class MA 
degree in Geography. He joined Bartle Bogle Hegarty advertising agency as a 
graduate trainee in the same year. He spent eight years in the BBH account 
management department working for blue chip brands such as Audi, Warburtons and 
ITV and served as global business director for Vodafone. He was responsible for 
brand strategy and communications campaigns that ran across different media and 
multiple territories. In 2008, he joined Zag as General Manager. He oversees all 
of Zag's brand assets and leads the majority of its partnerships. 
Key Employees 
Rodger David Sargent, Financial Controller (currently Chief Financial Officer of 
Baylon) Age 38 
Mr Sargent qualified as a chartered accountant with PricewaterhouseCoopers, 
London in 1996. He was a founder and the finance director of Sports Resource 
Group Limited, Sports Internet Group plc and InTechnology plc.  Mr Sargent was 
involved in the launch of The Greenhouse Fund Limited in January 2006 and as a 
principal of the strategic adviser to the fund, was involved in advising The 
Greenhouse Fund Limited. When The Greenhouse Fund Limited acquired Molectra 
Australia in 2008 and concurrently changed its name to Molectra Group Limited, 
Mr Sargent became Chief Financial Officer of the enlarged group. 
Mr Sargent will retire from the Board immediately following Admission but will 
continue as an employee of the Company carrying on the role of financial 
controller. 
The Acquisition comprises the conditional purchase by the Company of the entire 
issued share capital of Ila from the Vendors in consideration for the allotment 
and issue, credited as fully paid, of up to 763,308,454 Consideration Shares. 
The Consideration Shares will be split into two tranches: 388,600,221 Initial 
Consideration Shares, which will be allotted to the Vendors on Completion; and 
up to 374,708,233 Contingent Consideration Shares, which will be allotted to the 
Vendors depending on whether or not Baylon receives a tax rebate from the 
Australian authorities, as described further below.  The Consideration Shares 
will rank pari passu in all respects with the Existing Shares in issue as at the 
date of the Acquisition Agreement. 
The Existing Directors understand that Molectra Australia, which remains a 
wholly owned subsidiary of Baylon, may receive a potentially material tax credit 
following Admission. There is no guarantee that any tax credit will be received 
or, if such a tax credit is received, what its value will be. As this tax credit 
could potentially be a material asset for Baylon, it was taken into account when 
the terms of the Acquisition were negotiated. If the full estimated value of the 
potential tax credit (GBP554,444) is received, then none of the Contingent 
Consideration Shares will be allotted to the Vendors. If no tax credit is 
received by the deadline of 31 December 2010 (subject to extension to 31 March 
2011), or if such a tax credit is received but it is less than the estimated 
value of GBP554,444, then some or all of the Contingent Consideration Shares 
will be allotted to the Vendors, depending on the value of the tax credit 
received. As the tax credit will be paid in Australian Dollars, the Company will 
be subject to the risk of exchange rate movements prior to the receipt of the 
tax credit, if any. The Acquisition Agreement has been entered into by the 
Company with certain shareholders of Ila, representing approximately 64 per 
cent. of the entire issued share capital of Ila.  Arrangements have been put in 
place for the remaining shareholders of Ila to execute a voluntary transfer of 
their shares in favour of Baylon, or failing which, for such shares to be 
acquired pursuant to a drag-along right in the articles of association of Ila. 
Completion of the Acquisition Agreement is conditional upon the effective 
transfer of these remaining shares to the Company.  This condition may be waived 
in whole or in part by the Company, but this announcement and the Admission 
Document assumes the acquisition of all of the shares in Ila by the Company. 
The Acquisition is conditional, inter alia, upon (i) the passing of the 
Resolutions numbered 1, 2 and 3 at the Baylon EGM, (ii) the Acquisition 
Agreement being unconditional except in respect of Admission, (iii) the Takeover 
Panel granting a waiver of the obligation of Ila to make a general offer for the 
Company under Rule 9 of the City Code, and (iv) Admission of the Enlarged Share 
Capital to trading on AIM. 
The Company has the ability to terminate the Acquisition Agreement prior to 
Completion if there shall have occurred a material breach of the Acquisition 
Agreement by certain of the key Vendors, including a material breach of any 
warranty or pre-completion undertaking, upon the occurrence of any event which 
would result in a material breach of any of the warranties upon their repetition 
at Completion, or upon the occurrence of certain other adverse events in respect 
of Ila, provided that any such event or events have or is likely to have a 
material adverse effect on Ila. 
Simon McGivern also has the ability to terminate the Acquisition Agreement on 
behalf of the relevant Vendors prior to Completion if there shall have occurred 
a material breach of the Acquisition Agreement by the Company, including a 
material breach of any warranty or pre-completion undertaking, upon the 
occurrence of any event which would result in a material breach of any of the 
warranties upon their repetition at Completion, or upon the occurrence of 
certain other adverse event in respect of the Company, provided that any such 
termination event has or is likely to have a material adverse effect on the 
Company. 
Subject to certain very limited circumstances, the Company has agreed to make a 
contribution to Ila's costs.  This contribution is classified as an inducement 
fee under the City Code and the maximum amount of such payment by the Company is 
GBP50,000. 
It is the intention of the Directors to retain cash generated through the 
operations of the Enlarged Group to finance expansion and investment 
opportunities.  Accordingly, the Directors do not believe that the Company will 
pay dividends for the foreseeable future. 
The City Code governs, amongst other things, transactions that may result in a 
change of control of a public company to which the City Code applies, including 
the Company.  Under Rule 9, where a person acquires an interest (as such term is 
defined in the City Code) in shares which, when taken together with any shares 
in which he is already interested and in which persons acting in concert with 
him are interested, carry 30 per cent. or more of the voting rights of a company 
that is subject to the City Code, such person or group is normally required to 
make a general offer to all the remaining shareholders to acquire their shares. 
Similarly, when any person together with persons acting in concert with him is 
interested in shares which, in the aggregate, carry not less than 30 per cent. 
of the voting rights of such a company but does not hold shares carrying more 
than 50 per cent. of such voting rights, a general offer will normally be 
required if any further interests in shares are acquired by any such person. 
An offer under Rule 9 must be in cash and at the highest price paid during the 
preceding 12 months for any interest in shares of the Company by the person 
required to make the offer or any person acting in concert with him. 
Persons acting in concert comprise persons who, pursuant to an agreement or 
understanding (whether formal or informal), actively co-operate to obtain or 
consolidate control of, or frustrate the successful outcome of an offer for, the 
Company. 
For the purposes of the City Code, all of the members of the Concert Party are 
deemed to be acting in concert, and their interests are to be aggregated. 
Further information about the Concert Party is set out in paragraph 7.6 of Part 
VII of the Admission Document. 
Assuming that (i) the Resolutions are duly passed, (ii) all of the Consideration 
Shares (i.e. the Initial Consideration Shares and the Contingent Consideration 
Shares) are issued under the terms of the Acquisition Agreement, (iii) the 
potential tax credit due to Molectra Australia is not received before 31 
December 2010, and (iv) no options or other rights to subscribe for Shares are 
exercised between the date of this document and Admission, the Concert Party 
will hold, in aggregate, 488,910,608 Shares, representing approximately 53.4 per 
cent. of the Company's issued ordinary share capital. Assuming exercise in full 
by the members of the Concert Party of the Rollover Options that will be held by 
members of the Concert Party following Admission (and assuming that no other 
person exercises any option or other right to subscribe for shares in the 
Company) the members of the Concert Party will between them own 531,296,260 
Shares representing approximately 55.8 per cent. of the Company's enlarged 
issued share capital. The Rollover Options will become exercisable on 31 March 
2010 subject to the terms of the Ila EMI Scheme. The relevant holdings of each 
Concert Party member, now and following implementation of the Acquisition and 
following the exercise of the Rollover Options on the basis set out above, are 
stated in paragraph 7.6 of Part VII of the Admission Document. 
At Admission, when the Initial Consideration Shares and the Arbuthnot Shares 
will be allotted, the members of the Concert Party will between them be issued 
with 248,904,318 Shares, representing approximately 46.0 per cent. of the 
Company's issued ordinary share capital. 
Following the issue of the Contingent Consideration Shares (and based on the 
above assumptions), the members of the Concert Party will between them be 
interested in 488,910,608 Shares, representing approximately 53.4 per cent. of 
the Company's issued ordinary share capital. This means that members of the 
Concert Party may acquire further Shares without limit without being required to 
make a general offer for the balance of the Shares not held by them. 
In the absence of a waiver granted by the Panel, Rule 9 would require the 
Concert Party to make a general offer for the balance of the Shares in issue 
immediately following the Acquisition.  The Panel has been consulted and has 
agreed, subject to the passing on a poll by Shareholders of the Whitewash 
Resolution, to waive the obligation on the Concert Party that would otherwise 
arise under Rule 9, as a result of the issue of the Consideration Shares 
pursuant to the Acquisition, for a general offer to be made by the Concert Party 
for the balance of the issued Shares not already held by the Concert Party. 
On 24 March 2009, the Company adopted a new share option scheme (the Share 
Option Scheme), under which the Company has authority to grant options to 
employees or directors of, and consultants to, the Company and any of its 
subsidiaries.  Options over 16,600,000 Shares have been granted under this 
scheme.  Under the terms of the scheme the number of Shares under option cannot 
exceed 10 per cent. of the Company's issued share capital as at the date of 
grant. 
The Company proposes to continue to use the Share Option Scheme to reward and 
incentivise directors and senior management and attract, retain and motivate 
individuals to ensure the long term success of the Company. 
Ila has granted options over its own shares under the Ila EMI Scheme to Simon 
McGivern, James Phillips and another employee, Nick Christie.  These options 
will be exchanged for new options over Shares on Completion (the Rollover 
Options) and remain subject to the rules of the Ila EMI Scheme.  Following 
Completion, the number of Shares that will be under option to these individuals 
will be 54,329,284.  The exercise price of the Rollover Options will be 0.078p 
per Share.  The total percentage of the diluted Contingent Enlarged Share 
Capital (i.e. assuming conversion of all outstanding options) under option 
immediately following Completion will be 7.4 per cent. 
As the number of Shares subject to the Rollover Options to be granted to Messrs 
McGivern, Phillips and Christie is based on the number of Consideration Shares 
issued to the Vendors as a whole (i.e. the total number of Initial Consideration 
Shares and Contingent Consideration Shares), the receipt of any tax credit by 
Molectra Australia that would lead to some or all of the Contingent 
Consideration Shares not being issued will require the concurrent cancellation 
of a proportion of the Rollover Options in respect of the relevant number of 
Shares.  This will be done on the same mathematical basis as the reduction in 
the number of Contingent Consideration Shares to be allotted under the 
Acquisition Agreement.  The maximum number of Shares in respect of which a 
proportion of the Rollover Options will be cancelled will be 26,670,255, and the 
Rollover Options will be cancelled in respect of the maximum number of Shares if 
a tax credit to the value of GBP554,444 or above is received prior to 31 
December 2010 (subject to extension to 31 March 2011).  If no tax credit is 
received by 31 December 2010 (subject to extension to 31 March 2011), or if it 
has a value of zero, no proportion of the Rollover Options will be cancelled. 
If a tax credit of between zero and GBP554,444 is received, the Rollover Options 
will be cancelled in respect of a proportionate number of Shares on a pro rata 
basis. 
Under the terms of the lock-in deeds, the Existing Directors, (including Rodger 
Sargent who will continue to be an Applicable Employee within the meaning of the 
AIM Rules, Simon McGivern, James Phillips and Zag, being Related Parties as 
defined by the AIM Rules, have agreed with Arbuthnot and the Company not to 
sell, transfer or otherwise dispose of any interest in any Shares held by them 
immediately following Admission, other than in certain limited circumstances, 
for a period of 12 months following Admission pursuant to Rule 7 of the AIM 
Rules. 
The Existing Directors (including Rodger Sargent) the Proposed Directors and Zag 
have also agreed that any sale or disposal of Shares will be effected through 
Arbuthnot for such time as it remains the Company's broker and/or nominated 
adviser under the AIM Rules and offers competitive terms for such sale or 
disposal. 
Assuming all of the Contingent Consideration Shares are issued during the 
lock-in period, the lock-in arrangements outlined above will apply in respect of 
466,601,208 Shares representing approximately 51.0 per cent. of the Enlarged 
Share Capital. 
In accordance with Rule 28 of the AIM Rules, the Admission Document does not 
contain historical financial information on Baylon which would otherwise be 
required under Section 20 of Annex I of the AIM Rules.  Audited financial 
statements of Baylon for the three years ended 31 December 2008 and unaudited 
interim financial accounts of Baylon for the six months to 30 June 2009 are 
available from the Company's website at www.molectra.com.au.  As at 12 February 
2010, Baylon had cash reserves of approximately GBP650,000. 
In the period from 1 October 2009 to 31 December 2009, Ila has continued to make 
satisfactory progress in relation to both its sales pipeline and new product 
development.  A number of trials of Ila's products are beginning with major new 
retailers, in particular in Canada and across Europe.  In the UK, Ila is 
currently discussing trials of its products with a number of further major 
retailers.  In addition, new channels are responding well to sales initiatives, 
in particular, television sales networks and catalogue chains.  Following a 
strong Christmas trading period, relationships with existing retailers are 
developing well, with Ila's largest customer requesting the presentation of 
three new Ila products for 2010.  New product development is providing further 
momentum, with prototypes being well received by existing and new customers. 
An Extraordinary General Meeting, notice of which is set out in the Admission 
Document will be held at the offices of Norton Rose LLP, 3 More London 
Riverside, London SE1 2AQ, on 4 March 2010 at 10.00 a.m. at which the 
Resolutions will be proposed to approve the waiver of Rule 9 of the City Code, 
the acquisition of Ila, an extension of the Company's authority to allot shares 
in the Company in order to effect the acquisition, and the Company's change of 
name to Ila Group Limited. 
The Resolutions are set out in full in the notice of Baylon EGM in the Admission 
Document. 
Application will be made to the London Stock Exchange for the Existing Shares to 
be re-admitted to trading on AIM and for the Initial Consideration Shares and 
the Arbuthnot Shares to be admitted to trading on AIM, conditional upon, inter 
alia, the approval of the Acquisition at the Baylon EGM.  Application will be 
made for the Contingent Consideration Shares to be admitted to trading on AIM 
once it is confirmed whether, and if so how many, Contingent Consideration 
Shares will be issued. 
It is expected that Admission will become effective and dealings will commence 
in the Enlarged Share Capital on 5 March 2010. No application has or will be 
made for the Enlarged Share Capital to be admitted to trading or to be listed on 
any other stock exchange. 
The Articles permit the Company to issue Shares in uncertificated form in 
accordance with the CREST Regulations. CREST is a paperless settlement system 
enabling title to securities to be evidenced otherwise than by certificate and 
transferred otherwise than by written instrument, in accordance with the CREST 
Regulations. 
Settlement of transactions in the Shares following Admission may take place 
within the CREST system if Shareholders so wish. CREST is a voluntary system and 
holders of Shares who wish to receive and retain share certificates will be able 
to do so. 
For more information concerning CREST, Shareholders should contact their brokers 
or Euroclear UK & Ireland Limited at 33 Cannon Street, London EC4M 5SB. Trading 
in the Company's Shares on AIM will require Shareholders to deal through a 
stockbroker or other intermediary who is a member of the London Stock Exchange. 
14. Admission Document 
The Company has published an Admission Document in connection with the above 
proposals which is being sent to Baylon Shareholders together with a notice of 
EGM and a Form of Proxy for use at the Baylon EGM.  A copy of the Admission 
Document is available from the Company's registered office and on its website at 
www.molectragroup.co.uk. 
 
 
 
EXPECTED TIMETABLE OF PRINCIPAL EVENTS 
 
+--------------------------------+------------------------------+ 
| Latest time and date for       |   10.00 a.m. on 2 March 2010 | 
| lodging forms of proxy for the |                              | 
| Baylon EGM                     |                              | 
|                                |                              | 
+--------------------------------+------------------------------+ 
| Baylon EGM                     |   10.00 a.m. on 4 March 2010 | 
|                                |                              | 
+--------------------------------+------------------------------+ 
| Completion of the Acquisition  |                 5 March 2010 | 
|                                |                              | 
+--------------------------------+------------------------------+ 
| Expected date of Admission and |    8.00 a.m. on 5 March 2010 | 
| commencement of dealings in    |                              | 
| the Enlarged Share Capital on  |                              | 
| AIM                            |                              | 
+--------------------------------+------------------------------+ 
 
                                  DEFINITIONS 
 
+----------------------------+----------------------------------+ 
| Acquisition                | the proposed acquisition by      | 
|                            | Baylon of the entire issued      | 
|                            | share capital of Ila;            | 
+----------------------------+----------------------------------+ 
| Acquisition Agreement      | the agreement relating to the    | 
|                            | Acquisition, made between Baylon | 
|                            | and certain of the Vendors, a    | 
|                            | summary of which is set out in   | 
|                            | paragraph 3 of Part VII of the   | 
|                            | Admission Document;              | 
+----------------------------+----------------------------------+ 
| Admission                  | admission of the Enlarged Share  | 
|                            | Capital to trading on AIM        | 
|                            | becoming effective in accordance | 
|                            | with Rule 6 of the AIM Rules;    | 
+----------------------------+----------------------------------+ 
| Admission Document         | the document which has been      | 
|                            | produced pursuant to the AIM     | 
|                            | Rules, disclosing information    | 
|                            | required for Admission, which    | 
|                            | has today been sent to Baylon    | 
|                            | Shareholders and made available  | 
|                            | on the Company's website at      | 
|                            | www.molectragroup.co.uk;         | 
+----------------------------+----------------------------------+ 
| AIM                        | the market of that name operated | 
|                            | by the London Stock Exchange;    | 
+----------------------------+----------------------------------+ 
| AIM Rules                  | the rules of the London Stock    | 
|                            | Exchange for AIM companies and   | 
|                            | their nominated advisers         | 
|                            | governing admission to and       | 
|                            | operation of AIM, as amended     | 
|                            | from time to time;               | 
+----------------------------+----------------------------------+ 
| Arbuthnot or Arbuthnot     | Arbuthnot Securities Limited,    | 
| Securities                 | the Company's nominated adviser  | 
|                            | and broker, authorised and       | 
|                            | regulated by the FSA and a       | 
|                            | member of the LSE;               | 
+----------------------------+----------------------------------+ 
| Arbuthnot Shares           | the 5,681,819 Shares to be       | 
|                            | allotted and issued to Arbuthnot | 
|                            | at Admission pursuant to the     | 
|                            | Introduction Agreement;          | 
+----------------------------+----------------------------------+ 
| Articles                   | Articles of Association of       | 
|                            | Baylon;                          | 
+----------------------------+----------------------------------+ 
| Austrlian Assets           | The assets of Molectra Australia | 
|                            | sold by Molectra Australia or    | 
|                            | Baylon, as appropriate, pursuant | 
|                            | to the Disposal Agreements;      | 
+----------------------------+----------------------------------+ 
| Baylon EGM                 | the Extraordinary General        | 
|                            | Meeting of Baylon Shareholders   | 
|                            | at which Baylon Shareholders     | 
|                            | will vote on the Resolutions,    | 
|                            | such Resolutions and a copy of   | 
|                            | the notice of extraordinary      | 
|                            | general meeting being in the     | 
|                            | Admission Document;              | 
+----------------------------+----------------------------------+ 
| Baylon Shareholders        | registered holders of Shares;    | 
+----------------------------+----------------------------------+ 
| BBH or Bartle Bogle        | Bartle Bogle Hegarty Limited;    | 
| Hegarty                    |                                  | 
+----------------------------+----------------------------------+ 
| City Code                  | the City Code on Takeovers and   | 
|                            | Mergers administered by the      | 
|                            | Panel;                           | 
+----------------------------+----------------------------------+ 
| Company or Baylon          | Baylon Holdings Limited;         | 
+----------------------------+----------------------------------+ 
| Completion                 | completion of the Acquisition in | 
|                            | accordance with the terms of the | 
|                            | Acquisition Agreement;           | 
+----------------------------+----------------------------------+ 
| Concert Party              | Simon McGivern, James Phillips,  | 
|                            | Brian McGivern, Vanessa          | 
|                            | McGivern, Timothy Phillips and   | 
|                            | Zag, (each of them being "a      | 
|                            | member of the Concert Party"),   | 
|                            | all of whom are regarded for the | 
|                            | purposes of the City Code as     | 
|                            | acting in concert (as defined in | 
|                            | the City Code) in relation to    | 
|                            | the Company and its share        | 
|                            | capital;                         | 
+----------------------------+----------------------------------+ 
| Consideration Shares       | the Initial Consideration Shares | 
|                            | and the Contingent Consideration | 
|                            | Shares;                          | 
+----------------------------+----------------------------------+ 
| Contingent Consideration   | the up to 374,708,233 Shares to  | 
| Shares                     | be allotted and issued to the    | 
|                            | Vendors following Completion     | 
|                            | pursuant to the Acquisition      | 
|                            | Agreement (or arrangements made  | 
|                            | pursuant thereto) depending on   | 
|                            | the value of any tax credit      | 
|                            | received by Molectra Australia,  | 
|                            | if any;                          | 
+----------------------------+----------------------------------+ 
| Contingent Enlarged Share  | the issued share capital of the  | 
| Capital                    | Enlarged Group assuming all of   | 
|                            | the Consideration Shares and the | 
|                            | Arbuthnot Shares are issued;     | 
+----------------------------+----------------------------------+ 
| CREST                      | the computerised settlement      | 
|                            | system to facilitate the         | 
|                            | transfer of title of shares in   | 
|                            | uncertificated form, operated by | 
|                            | CRESTCo Limited;                 | 
+----------------------------+----------------------------------+ 
| CREST Regulations          | the Uncertificated Securities    | 
|                            | Regulations 2001 (SI 2001/3755), | 
|                            | including modifications thereof  | 
|                            | or any regulations in            | 
|                            | substitution thereof made under  | 
|                            | section 207 of the Act for the   | 
|                            | time being in force and the      | 
|                            | Companies (Uncertificated        | 
|                            | Securities) (Jersey) Order 1999  | 
|                            | (and in the event of any         | 
|                            | inconsistency, the latter shall  | 
|                            | prevail);                        | 
+----------------------------+----------------------------------+ 
| Directors or Board         | the directors of Baylon          | 
|                            | immediately following Admission; | 
+----------------------------+----------------------------------+ 
| Disposal                   | the disposal of the Australian   | 
|                            | Assets on the terms of the       | 
|                            | Disposal Agreements;             | 
+----------------------------+----------------------------------+ 
| Disposal Agreements        | the agreements between, inter    | 
|                            | alia, Baylon, Molectra           | 
|                            | Australia, Molectra Holdings     | 
|                            | Limited and Molectra             | 
|                            | Technologies Pty Limited         | 
|                            | relating to the sale by Baylon   | 
|                            | and Molectra Australia of the    | 
|                            | Australian Assets;               | 
+----------------------------+----------------------------------+ 
| Enlarged Group             | the Group as enlarged by the     | 
|                            | Acquisition;                     | 
+----------------------------+----------------------------------+ 
| Enlarged Share Capital     | the issued share capital of the  | 
|                            | Enlarged Group immediately       | 
|                            | following Admission including    | 
|                            | the Existing Shares, the Initial | 
|                            | Consideration Shares and the     | 
|                            | Arbuthnot Shares;                | 
+----------------------------+----------------------------------+ 
| Existing Directors         | the directors of Baylon at the   | 
|                            | date of this announcement, whose | 
|                            | names appear on page 4 of the    | 
|                            | Admission Document;              | 
+----------------------------+----------------------------------+ 
| Existing Shares            | the Shares in issue as at the    | 
|                            | date of this announcement;       | 
+----------------------------+----------------------------------+ 
| Existing Share Capital     | the issued share capital of      | 
|                            | Baylon as at the date of this    | 
|                            | announcement;                    | 
+----------------------------+----------------------------------+ 
| Existing Shareholders      | holders of Existing Shares;      | 
+----------------------------+----------------------------------+ 
| Form of Proxy              | the form of proxy which          | 
|                            | accompanies the Admission        | 
|                            | Document for use by Existing     | 
|                            | Shareholders in connection with  | 
|                            | the Baylon EGM;                  | 
+----------------------------+----------------------------------+ 
| FSA                        | The Financial Services Authority | 
|                            | of the United Kingdom;           | 
+----------------------------+----------------------------------+ 
| Group                      | Baylon Holdings Limited and its  | 
|                            | subsidiaries;                    | 
+----------------------------+----------------------------------+ 
| Ila EMI Scheme             | the Ila Security Limited         | 
|                            | Enterprise Management Incentive  | 
|                            | Share Scheme;                    | 
+----------------------------+----------------------------------+ 
| Ila                        | Ila Security Limited, a company  | 
|                            | incorporated on 2 July 2008      | 
|                            | under the laws of England and    | 
|                            | Wales with company no. 06635706; | 
+----------------------------+----------------------------------+ 
| Introduction Agreement     | The conditional agreement dated  | 
|                            | 15 February 2010 between         | 
|                            | Arbuthnot, Baylon, Paul Gazzard  | 
|                            | and the Proposed Directors       | 
|                            | relating to the Admission,       | 
|                            | further details of which are set | 
|                            | out in paragraph 11.6 of Part    | 
|                            | VII of the Admission Document;   | 
+----------------------------+----------------------------------+ 
| Jersey                     | the Bailiwick of Jersey;         | 
+----------------------------+----------------------------------+ 
| Law or Jersey Law          | The Companies (Jersey) Law 1991, | 
|                            | as amended;                      | 
+----------------------------+----------------------------------+ 
| Locca                      | Locca Tech Limited, a company    | 
|                            | incorporated on 4 August 2003    | 
|                            | under the laws of England and    | 
|                            | Wales with company no. 04854785; | 
+----------------------------+----------------------------------+ 
| London Stock Exchange      | London Stock Exchange plc;       | 
+----------------------------+----------------------------------+ 
| Molectra Australia         | Molectra Australia Pty Limited,  | 
|                            | a company incorporated on 6      | 
|                            | March 2006 in Queensland,        | 
|                            | Australia with company no.       | 
|                            | 118664430;                       | 
+----------------------------+----------------------------------+ 
| Ordinary Resolution        | a resolution proposed and passed | 
|                            | as such by a simple majority of  | 
|                            | the total number of votes cast   | 
|                            | for an against such resolution;  | 
+----------------------------+----------------------------------+ 
| Panel                      | The Panel on Takeovers and       | 
|                            | Mergers;                         | 
+----------------------------+----------------------------------+ 
| Proposed Directors         | the proposed directors of Baylon | 
|                            | whose names appear on page 4 of  | 
|                            | the Admission Document;          | 
+----------------------------+----------------------------------+ 
| QCA Guidelines             | the guidelines for corporate     | 
|                            | governance of AIM companies      | 
|                            | published by the Quoted          | 
|                            | Companies Alliance;              | 
+----------------------------+----------------------------------+ 
| Resolutions                | the resolutions described in the | 
|                            | notice of extraordinary general  | 
|                            | meeting set out at page 73 of    | 
|                            | the Admission Document;          | 
+----------------------------+----------------------------------+ 
| Rollover Options           | the options over Baylon Shares   | 
|                            | to be issued at Completion to    | 
|                            | the current holders of options   | 
|                            | over Ila shares in exchange for  | 
|                            | the cancellation of those        | 
|                            | options;                         | 
+----------------------------+----------------------------------+ 
| Share Option Scheme        | the Baylon Holdings Limited      | 
|                            | Share Option Scheme;             | 
+----------------------------+----------------------------------+ 
| Shares                     | ordinary shares of no par value  | 
|                            | in the capital of Baylon;        | 
+----------------------------+----------------------------------+ 
| Shareholders or Baylon     | persons who are registered       | 
| Shareholders               | holders of Shares;               | 
+----------------------------+----------------------------------+ 
| UK or United Kingdom       | the United Kingdom of Great      | 
|                            | Britain and Northern Ireland;    | 
+----------------------------+----------------------------------+ 
| US or United States        | the United States of America     | 
|                            | (including states of the United  | 
|                            | States and District of           | 
|                            | Columbia), its possessions and   | 
|                            | territories and all other areas  | 
|                            | subject to its jurisdiction;     | 
+----------------------------+----------------------------------+ 
| Vendors                    | the current shareholders of Ila, | 
|                            | who will be selling their shares | 
|                            | in Ila to the Company pursuant   | 
|                            | to the Acquisition Agreement and | 
|                            | the other agreements or          | 
|                            | mechanisms described in the      | 
|                            | Admission Document;              | 
+----------------------------+----------------------------------+ 
| Whitewash                  | waiver of the obligations that   | 
|                            | would otherwise arise under Rule | 
|                            | 9 of the City Code for the       | 
|                            | Concert Party to make a general  | 
|                            | cash offer for the whole of the  | 
|                            | Company's Existing Share         | 
|                            | Capital;                         | 
+----------------------------+----------------------------------+ 
| Whitewash Resolution       | the Ordinary Resolution          | 
|                            | concerning the Whitewash to be   | 
|                            | proposed on a poll at the Baylon | 
|                            | EGM and set out in the notice of | 
|                            | EGM as Resolution 1;             | 
+----------------------------+----------------------------------+ 
| Zag                        | Zag Limited, a company           | 
|                            | registered in England with       | 
|                            | company number 05589757 and      | 
|                            | whose registered office address  | 
|                            | is at 60 Kingly Street, London   | 
|                            | W1B 5DS; and                     | 
+----------------------------+----------------------------------+ 
| GBP or Sterling            | the lawful currency of the       | 
|                            | United Kingdom.                  | 
+----------------------------+----------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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