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28 September 2023

Let's Explore Group plc

("Let's Explore", the "Company" or the "Group")

Proposed acquisition of Huddled Group Limited, Authority to issue Consideration Shares, Proposed Off-Market Buy Back, Substantial Property Transaction, Rule 9 Waiver, Change of Name and Notice of General Meeting

Let's Explore Group plc is pleased to announce it has entered into a conditional sale and purchase agreement, for the acquisition of the entire issued share capital of Huddled Group Limited, and its wholly-owned Subsidiaries for a total consideration of £3,950,000 (the "Proposed Transaction"). The Company will pay an initial payment of £3,450,000 and a deferred payment, subject to adjustment as provided in the Acquisition Agreement, of £500,000 due and payable around 30 April 2025. Both payments will be satisfied by the allotment and issue of the Consideration Shares for the entire share capital of Huddled and its Subsidiaries.

Highlights

Further details of the Proposed Transaction are set out below.

Background to Acquisition

Following the sale of the Location Based Entertainment VR business ("LBE"), and the conclusion of the Tender Offer, the Company had, at 30 June 2023, approximately £6.8m of cash on hand along with further cash of $1.25m receivable via a loan note issued by the buyer of LBE, which is due for repayment in February 2024. 

With a strong balance sheet, and the Home Based Entertainment ("HBE") business, the Company set about looking for acquisition opportunities. Whilst there were discussions with several potential targets, these have not been consummated for a variety of reasons, including timing, valuation or alternative options available to counterparties.

At the same time, Huddled, a company in which the executive team of the Company already have an investment, was showing exciting growth potential and was proposed to the Independent Directors as a potential acquisition target.

Following a review and due diligence exercise, supported by the Company's advisers, the Independent Directors concluded that this business has significant growth potential and that the Company has the cash resources, as well as the e-commerce and other management skills and experience, to accelerate its growth. Accordingly, the Company has agreed, subject to various shareholder approvals, to acquire the business.

Pursuant to the Acquisition Agreement, the Company will pay an initial payment of £3,450,000 and a deferred payment of £500,000, subject to adjustment, payable within 5 business days of on the date of filing of the consolidated financial statements of the Group for the financial year ending on 31 December 2024. Both payments will be satisfied by the allotment and issue of the Consideration Shares for the entire share capital of Huddled and its Subsidiaries. The Completion Consideration Shares will be subject to a 12-month firm lock-in and 12-month orderly market provisions thereafter. The Withheld Consideration Shares will be subject to a 6-month orderly market lock in.

As part of the transaction, the Company will discharge loans and accrued interest which amounted, as at 31 July 2023, to £612,500.

Huddled, founded in 2020, is focused on building a portfolio of e-commerce brands. It has built a solid track record in digital marketing and e-commerce. It is dedicated to delivering value and great service, in the growing world of e-commerce.

In August 2022, Huddled acquired the business and assets of an e-commerce retailer and rebranded it as "Discount Dragon". This has become Huddled's sole trading business and for the time being has incorporated the BeerMonster business. 

Discount Dragon is a direct-to-consumer e-commerce business, which focuses pre-dominantly on the sale of branded FMCG, predominantly dry and tinned groceries and beverages.  Its particular focus is selling surplus, end of line, mispackaged, and items close to best before dates at significant discounts versus full retail prices, via the website https://discountdragon.co.uk/.

In terms of marketing, the business engages regularly by email with its growing database of customers with regular offers to stimulate sales and operates an affiliate marketing programme, through a network of websites. It has also run successful test campaigns on both paid Google and Facebook marketing and will look to use these and other channels as a means of scaling the customer base. The cash held by the Group will allow for rapid scaling of the marketing activity, along with deepening the product offering, and the warehouse investment which will be needed in time.

Discount Dragon has seen significant growth in unaudited revenue from a modest £75,000 in August 2022, the month of acquisition of the related assets by Huddled, to over £450,000 in August 2023. For the year ended 31 May 2022, Huddled recorded a loss before tax of £160k on revenue of £465k. In the year to 31 July 2023, Discount Dragon's unaudited results showed an EBITDA loss of £0.7m on revenue of £3.3m. Net current liabilities of Huddled, as at 31 July 2023, were circa £335,000 (after the shareholder loans and accrued interest of £612,500).

During the past 12 months, Huddled has invested heavily in Discount Dragon including a complete rebrand and new warehouse management system. It has also invested in developing the product range and strengthening supplier relationships, along with providing all the working capital needed to support the business.

This investment has allowed the business to begin to scale, forming the foundations for future growth. The website has been featured in numerous publications including exclusive features in The Sun and The Daily Mirror. The business has also featured on ITV's 'This Morning' -

https://www.itv.com/thismorning/articles/our-coupon-queens-weekly-deals.

Discount Dragon operates out of a third party owned warehouse in Leigh, near Manchester.  It takes all orders through its website, which runs on a proven e-commerce platform. All orders are picked and fulfilled in-house.  It has 35 employees, split between 6 executive management and finance and 29 across all warehouse functions.  The directors believe that the current warehouse and fixed cost operating structure in Leigh is scalable and can support north of 1,000 orders per day.

Between 1 January and 31 August 2023, Discount Dragon's website had circa 3m visits with 3.6% making a purchase, generating £2.9m in revenue from 107,000 orders at an average basket value of over £27. Discount Dragon has over 20,000 Trustpilot reviews, being rated 'Excellent' by its customers.  Average order value has continued to improve with August 2023 reporting an average order value of £32.46. Unaudited Revenue for the month was £454,843.

The business currently has an active database of circa 72,000 users who have been active within the last 120 days.  Of those, 12% have purchased within the last 30 days, 20% in last 60 days, and 27% in last 90 days. In August 2023, it added 3,588 new customers with very limited marketing expenditure.

On 8 September 2023, Huddled entered into agreements with Motatos UK to acquire the entirety of its stock and for Motatos to promote Discount Dragon to its database. Motatos was previously Discount Dragon's main direct competitor.

To enable Huddled to move rapidly on the Motatos opportunity and to provide additional working capital for the Discount Dragon business, a further shareholder loan facility has been agreed of up to £300k. This facility (to the extent drawn) and associated interest will also be repaid at or around completion of the acquisition of Huddled by the Company.

With the benefit of the Motatos stock, Discount Dragon will, subject to ongoing sales, have aggregate stock at original bought-in cost in excess of £1m, leaving it well invested for growth. To date, there has been encouraging conversion of Motatos customers making purchases at Discount Dragon.

The Directors believe that Discount Dragon has a very large addressable market and is well placed with an attractive proposition for consumers, and that there is an opportunity to scale the business rapidly. 

It is the intention of the Company to begin looking for a new warehouse facility during the early part of 2024 allowing it to scale further and to operate more efficiently on a 24/7 basis.

The market for discounters has, over the last few years, been expanding significantly - Mintel research shows that 95% of all consumers now shop, to some degree, at a discount retailer. According to Nielsen, the market share of discounters in the UK has increased more than fourfold in the last 15 years, from 4.6% in 2008 compared to 19.6% in 2022.

The Board has discussed the proposals with a number of its major institutional investors who are supportive. Accordingly, it has received irrevocable undertakings to vote in favour of the proposals from Shareholders in respect of 67,533,832 Ordinary Shares (35.39% of the Voting Share Capital) who can vote on Resolutions 1-7 and 33,305,257 Ordinary Shares (17.45% of the Voting Share Capital) who can vote on Resolution 8.

A brief summary of the key terms of the Acquisition Agreement is set out in paragraph 8 of Part V of the Circular.

Rule 9 Waiver

Under presumption 10 of the definition of "acting in concert" of the Takeover Code shareholders in a private company who sell their shares for the issue of new shares in a company to which the Takeover Code applies are considered to be "acting in concert" and therefore constitute a concert party unless clear evidence has been presented to the Takeover Panel to "break up" the concert party.

The Existing Concert Party (which includes Martin Higginson, Daniel Wortley, David Marks, and Megafone (UK) Limited Retirement Benefit Scheme (being Martin Higginson's pension scheme)) have an interest equating to, in aggregate, 19.75% of the Voting Share Capital.

The Company has agreed with the Takeover Panel that the Existing Concert Party shall be joined with the Huddled Concert Party as a consequence of common participants. The Concert Party, upon Completion of the Acquisition, will have an interest in 53.45% of the Enlarged Share Capital. Further details of the Panel Waiver are contained in paragraph 5 of the Circular.

Therefore, the Company is seeking approval of the Allotment Resolution and the Rule 9 Waiver Resolution which will allow it to proceed with the Acquisition without the Existing Concert Party having to make a mandatory offer pursuant to Rule 9 of the Takeover Code.

The Acquisition is also deemed a related party transaction under AIM Rule 13 - see paragraph 7 of the Circular.

The Company will today post a circular to Shareholders regarding the Proposed Transaction, which sets out a Notice of General Meeting (the "Circular"), and a Form of Proxy for the proposed resolutions. These documents will also be available on the Company's website.

Business and prospects of the Company

Shareholders are referred to a separate announcement today in which, the Company published its interim results for the six months ended 30 June 2023.

On 28 February 2023, the Company completed the sale of its core Location Based Entertainment ("LBE") business. The majority of the sale proceeds were returned to Shareholders and the balance retained to pursue acquisition opportunities.

Since the sale of the LBE business, and prior to any acquisitions, the Group's only remaining trading activity has been its Home Based Entertainment ("HBE") business, which is comprised of the Let's Explore themed 'Immersive Learning' products, as well as the 'Vodiac' VR headset, an affordable smartphone-powered VR headset and companion app which provides the user with 75 different virtual reality experiences to try across seven channels. These products retail to consumers via a variety on channels including QVC, Amazon as well as direct to consumer offering via Facebook and other social media channels.

HBE is predominantly a Q4 focused business, with the first half of the year being about investment into the development and planning of new products.

During H1 the Group has developed three new Let's Explore products to be launched in Q4 of this year: a revamped 'Let's Explore Oceans' offering, as well as 'Let's Explore Space' and 'Let's Explore Wildlife' which are two completely new products.

Each pack is focused on delivering immersive learning, coming complete with the new and improved smartphone-powered VR headset, a range of VR experiences, a holographic cube which unlocks a selection of in-app augmented reality experiences, a full-colour hardback fact book, a sticker book, a giant poster, and an interactive model.

The Company has produced an initial run of 7,500 units of each offering (22,500 units in total) in conjunction with a respected publisher on a profit-sharing basis. The recommended retail price of each pack will be £99, or $125. Sales will be focused around the busy Q4 period and will, as in previous years, be offered via either a direct sale, or through Amazon both in the UK and USA.

Following a successful TV airing in August 2023 on QVC USA, some 4,000 Vodiac headsets were sold. In addition, the Group has received additional orders for circa 26,000 Vodiac units to be sold predominantly through QVC USA, and UK, as well as two tests on QVC Canada, and Australia, and a select number of retailers, all to be fulfilled in Q4.

If the Acquisition is approved, the Directors believe the Company will be well positioned to further develop and grow Discount Dragon, as well as the Company's own Let's Explore and Vodiac product ranges.

Related Party Transaction

Martin Higginson, Daniel Wortley, M Capital Investment Properties Limited (a company controlled by Martin Higginson) and Lanton Investments Limited (a company controlled by the family of David Marks) as directors of the Company, and in the case of M Capital Investment Properties Limited and Lanton Investments Limited an associate of a director of the Company, are considered to be related parties pursuant to Rule 13 of the AIM Rules as they are also shareholders and Sellers in Huddled.

The participation in this Acquisition by Martin Higginson, Lanton Investments Limited and Daniel Wortley is considered to result in a related party transaction under AIM Rule 13 of the AIM Rules due to these individuals being directors or associates of directors of the Company. The Independent Directors of the Company, having consulted with Cavendish Securities PLC, the Company's Nominated Adviser, consider that the terms of the Acquisition are fair and reasonable insofar as the Company's Shareholders are concerned.

In addition, as a result of the interests held by Martin Higginson and the MH Connected Persons (being approximately 21.63%) in the Huddled Sale Shares, the Acquisition constitutes a substantial property transaction for the purpose of section 190 of the Act and, accordingly is also subject to shareholder approval at the General Meeting.

The Company is therefore seeking approval of the SPT Resolution at the General Meeting which will allow it to proceed with the Acquisition.

The Proposals are being voted on by Shareholders at the forthcoming General Meeting.

Change of Name

The Directors feel it makes sense to change the name of the plc to Huddled Group plc to reflect its focus in building a group of e-commerce brands.

The name change will therefore be put to shareholders at the General Meeting on 16 October 2023.

Recommendation

The Independent Directors, who have been so advised by Cavendish, consider that the Acquisition and the issue of the Consideration Shares are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, Cavendish has taken into account the Independent Directors' commercial assessments.

The Independent Directors unanimously recommend that Shareholders vote in favour of the Rule 9 Waiver Resolution, as they have undertaken to do in respect of their own beneficial Holdings of 219,360 Ordinary Shares, representing approximately 0.11 per cent. in aggregate of the Voting Share Capital. Martin Higginson, David Marks and Daniel Wortley, who are members of the Concert Party, are not deemed to be independent for the purpose of this recommendation.

The Directors believe that the Resolutions (excluding the Rule 9 Waiver Resolution) to be considered at the General Meeting are in the best interests of the Company and its shareholders as a whole and unanimously recommend that Shareholders vote in favour of each of the Resolutions, as the Directors who are Shareholders intend to do in respect of their beneficial shareholders representing, in aggregate, over 12.07 per cent. of the current issued share capital of the Company.

Commenting, Martin Higginson, CEO of Let's Explore, said:

"We believe the acquisition of Huddled will be transformational for the Group and further strengthens our e-commerce position. The growth in Discount Dragon, over the last 12 months has been exciting and we can see with additional capital, the opportunity to drive growth quickly and a clear route to profitably.

"The market for discounted groceries has never been more relevant and we're excited as to what the future holds and are confident that we can drive value for shareholders."

Enquiries:

For further information please visit www.LetsExploreGroup.com, or contact:

Introduction

After the conclusion of the Tender Offer, the Company announced on 29 June 2023 that it had entered preliminary due diligence on a possible target. The Board is pleased to report that the initial discussions have progressed and that the Company has entered into a conditional sale and purchase agreement, for the acquisition of the entire issued share capital of Huddled Group Limited, and its wholly-owned Subsidiaries.

The proposed Acquisition requires certain approvals from Shareholders which are dealt with in the Proposals.

The purpose of the Circular is to provide you with information about the Proposals and to explain why the Board considers the Proposals to be in the best interests of the Company and its Shareholders as a whole. The Board is making no recommendation to Shareholders in respect of the Proposals but the Independent Directors unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting. Shareholders should note that, unless the Resolutions are approved at the General Meeting, the Consideration Shares Issue, the Acquisition, the Off-Market Buy Backs, the Panel Waiver, the Substantial Property Transaction and the Change of Name will not take place.

The General Meeting that will be held at the offices of Cavendish at 1 Bartholomew Close, London EC1A 7BL at 2 p.m. on 16 October 2023 to consider the Resolutions that will be put to Shareholders to approve them.

Part II of the Circular contains definitions of words and terms that have been used throughout it. Please refer to Part II as you review the Circular.

Background to the Acquisition and the Panel Waiver

Following the sale of the Location Based Entertainment VR business ("LBE"), and the conclusion of the Tender Offer, the Company had, as at 30 June 2023, approximately £6.8m of cash on hand along with further cash of $1.25m receivable via a loan note issued by the buyer of LBE, which is due for repayment in February 2024. 

With a strong balance sheet, and the Home Based Entertainment ("HBE") business, the Company set about looking for acquisition opportunities. Whilst there were discussions with several potential targets, these have not been consummated for a variety of reasons, including timing, valuation or alternative options available to counterparties.

At the same time, a company in which the executive team of the Company already have an investment, Huddled, was showing exciting growth potential and was proposed to the Independent Directors as a potential acquisition target.

Following a review and due diligence exercise, supported by the Company's advisers, the Independent Directors concluded that this business has significant growth potential and that the Company has the cash resources, as well as the e-commerce and other management skills and experience, to accelerate its growth. Accordingly, the Company has agreed, subject to various shareholder approvals, to acquire the business.

Pursuant to the Acquisition Agreement, the Company will pay an initial payment of £3,450,000 and a deferred payment of £500,000 subject to adjustment, payable within 5 business days of the date of filing of the consolidated financial statements of the Group for the financial year ending on 31 December 2024. Both payments will be satisfied by the allotment and issue of the Consideration Shares for the entire share capital of Huddled and its Subsidiaries. The Completion Consideration Shares will be subject to a 12-month firm lock-in and 12-month orderly market provisions thereafter. The Withheld Consideration Shares will be subject to a 6-month orderly market lock in.

As part of the transaction, the Company will discharge loans and accrued interest which amounted, as at 31 July 2023, to £612,500.

Huddled, founded in 2020, is focused on building a portfolio of e-commerce brands. It has built a solid track record in digital marketing and e-commerce. It is dedicated to delivering value and great service, in the growing world of e-commerce.

In August 2022, Huddled acquired the business and assets of an e-commerce retailer and rebranded it as "Discount Dragon". This has become Huddled's sole trading business and for the time being has incorporated the BeerMonster business. 

Discount Dragon is a direct-to-consumer e-commerce business, which focuses pre-dominantly on the sale of branded FMCG, predominantly dry and tinned groceries and beverages.  Its particular focus is selling surplus, end of line, mispackaged, and items close to best before dates at significant discounts versus full retail prices, via the website https://discountdragon.co.uk/.

In terms of marketing, the business engages regularly by email with its growing database of customers with regular offers to stimulate sales and operates an affiliate marketing programme, through a network of websites. It has also run successful test campaigns on both paid Google and Facebook marketing and will look to use these and other channels as a means of scaling the customer base. The cash held by the Group will allow for rapid scaling of the marketing activity, along with deepening the product offering, and the warehouse investment which will be needed in time.

Discount Dragon has seen significant growth in unaudited revenue from a modest £75,000 in August 2022, the month of acquisition of the related assets by Huddled, to over £450,000 in August 2023. For the year ended 31 May 2022, Huddled recorded a loss before tax of £160k on revenue of £465k. In the year to 31 July 2023, Discount Dragon's unaudited results showed an EBITDA loss of £0.7m on revenue of £3.3m. Net current liabilities of Huddled, as at 31 July 2023, were circa £335,000 (after the shareholder loans and accrued interest of £612,500).

During the past 12 months, Huddled has invested heavily in Discount Dragon including a complete rebrand and new warehouse management system. It has also invested in developing the product range and strengthening supplier relationships, along with providing all the working capital needed to support the business.

This investment has allowed the business to begin to scale, forming the foundations for future growth. The website has been featured in numerous publications including exclusive features in The Sun and The Daily Mirror. The business has also featured on ITV's 'This Morning' -

https://www.itv.com/thismorning/articles/our-coupon-queens-weekly-deals.

Discount Dragon operates out of a third party owned warehouse in Leigh, near Manchester.  It takes all orders through its website, which runs on a proven e-commerce platform. All orders are picked and fulfilled in-house.  It has 35 employees, split between 6 executive management and finance and 29 across all warehouse functions.  The directors believe that the current warehouse and fixed cost operating structure in Leigh is scalable and can support north of 1,000 orders per day.

Between 1 January and 31 August 2023, Discount Dragon's website had circa 3m visits with 3.6% making a purchase, generating £2.9m in revenue from 107,000 orders at an average basket value of over £27. Discount Dragon has over 20,000 Trustpilot reviews, being rated 'Excellent' by its customers.  Average order value has continued to improve with August 2023 reporting an average order value of £32.46. Unaudited Revenue for the month was £454,843.

The business currently has an active database of circa 72,000 users who have been active within the last 120 days.  Of those, 12% have purchased within the last 30 days, 20% in last 60 days, and 27% in last 90 days. In August 2023, it added 3,588 new customers with very limited marketing expenditure.

On 8 September 2023, Huddled entered into agreements with Motatos UK to acquire the entirety of its stock and for Motatos to promote Discount Dragon to its database. Motatos was previously Discount Dragon's main direct competitor.

To enable Huddled to move rapidly on the Motatos opportunity and to provide additional working capital for the Discount Dragon business a further shareholder loan facility has been agreed of up to £300k. This facility (to the extent drawn) and associated interest will also be repaid at or around completion of the acquisition of Huddled by the Company. The total amount to be repaid under the initial loan and the additional working capital loan will not exceed £936,500 including repayment of principal, interest and arrangement fees.

With the benefit of the Motatos stock, Discount Dragon will, subject to ongoing sales, have aggregate stock at original bought-in cost in excess of £1m, leaving it well invested for growth. To date, there has been encouraging conversion of Motatos customers making purchases at Discount Dragon.

The Directors believe that Discount Dragon has a very large addressable market and is well placed with an attractive proposition for consumers, and that there is an opportunity to scale the business rapidly. 

It is the intention of the Company to begin looking for a new warehouse facility during the early part of 2024 allowing it to scale further and to operate more efficiently on a 24/7 basis.

The market for discounters has, over the last few years, been expanding significantly - Mintel research shows that 95% of all consumers now shop, to some degree, at a discount retailer. According to Nielsen, the market share of discounters in the UK has increased more than fourfold in the last 15 years, from 4.6% in 2008 compared to 19.6% in 2022.

The Board has discussed the proposals with a number of its major institutional investors who are supportive. Accordingly, it has received irrevocable undertakings to vote in favour of the proposals from Shareholders in respect of 67,533,832 Ordinary Shares (35.39% of the Voting Share Capital) who can vote on Resolutions 1-7 and 33,305,257 Ordinary Shares (17.45% of the Voting Share Capital) who can vote on Resolution 8.

A brief summary of the key terms of the Acquisition Agreement is set out in paragraph 8 of Part V of the Circular.

Under presumption 10 of the definition of "acting in concert" of the Takeover Code shareholders in a private company who sell their shares for the issue of new shares in a company to which the Takeover Code applies are considered to be "acting in concert" and therefore constitute a concert party unless clear evidence has been presented to the Takeover Panel to "break up" the concert party.

The Existing Concert Party (which includes Martin Higginson, Daniel Wortley, David Marks, and Megafone (UK) Limited Retirement Benefit Scheme (being Martin Higginson's pension scheme)) have an interest equating to, in aggregate, 19.75% of the Voting Share Capital.

The Company has agreed with the Takeover Panel that the Existing Concert Party shall be joined with the Huddled Concert Party as a consequence of common participants. The Concert Party, upon Completion of the Acquisition, will have an interest in 53.45% of the Enlarged Share Capital. Further details of the Panel Waiver are contained in paragraph 4 of this Part III.

Therefore, the Company is seeking approval of the Allotment Resolution and the Rule 9 Waiver Resolution which will allow it to proceed with the Acquisition without the Existing Concert Party having to make a mandatory offer pursuant to Rule 9 of the Takeover Code.

The Acquisition is also deemed a related party transaction under AIM Rule 13 - see paragraph 6 of this Part V of the Circular.

Business and prospects of the Company

The Company published its interim results for the 6-months ended 30 June 2023 on 28 September 2023.

On 28 February 2023, the Company completed the sale of its core Location Based Entertainment ("LBE") business. The majority of the sale proceeds were returned to Shareholders and the balance retained to pursue acquisition opportunities.

Since the sale of the LBE business, and prior to any acquisitions, the Group's only remaining trading activity has been its Home Based Entertainment ("HBE") business, which is comprised of the Let's Explore themed 'Immersive Learning' products, as well as the 'Vodiac' VR headset, an affordable smartphone-powered VR headset and companion app which provides the user with 75 different virtual reality experiences to try across seven channels. These products retail to consumers via a variety on channels including QVC, Amazon as well as direct to consumer offering via Facebook and other social media channels.

The HBE business is predominantly a Q4 focused business, with the first half of the year being

about investment into the development and planning of new products.

During H1 the Group has developed three new Let's Explore products to be launched in Q4 of this year: a revamped 'Let's Explore Oceans' offering, as well as 'Let's Explore Space' and 'Let's Explore Wildlife' which are two completely new products.

Each pack is focused on delivering immersive learning, coming complete with the new and improved smartphone-powered VR headset, a range of VR experiences, a holographic cube which unlocks a selection of in-app augmented reality experiences, a full-colour hardback fact book, a sticker book, a giant poster, and an interactive model.

The Company has produced an initial run of 7,500 units of each offering (22,500 units in total) in conjunction with a respected publisher on a profit-sharing basis. The recommended retail price of each pack will be £99, or $125. Sales will be focused around the busy Q4 period and will, as in previous years, be offered via either a direct sale, or through Amazon both in the UK and USA.

Following a successful TV airing in August 2023 on QVC USA, some 4,000 Vodiac headsets were sold.  In addition, the Group has received additional orders for circa 26,000 Vodiac units to be sold predominantly through QVC USA, and UK, as well as two tests on QVC Canada, and Australia, and a select number of retailers, all to be fulfilled in Q4.

If the Acquisition is approved, the Directors believe the Company will be well positioned to further develop and grow Discount Dragon, as well as the Company's own Let's Explore and Vodiac product ranges.

The Concert Party and Takeover Code

As set out in paragraph 2 of Part I of the Circular, the Acquisition gives rise to certain considerations under the Takeover Code. The Takeover Code applies to the Company. Under Rule 9 of the Code, any person who acquires an interest in shares which, taken together with shares in which that person or any person acting in concert with that person is interested, carry 30% or more of the voting rights of a company which is subject to the Code is normally required to make an offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with that person, is interested in shares which in the aggregate carry not less than 30% of the voting rights of such a company but does not hold shares carrying more than 50% of the voting rights of the company, an offer will normally be required if such person or any person acting in concert with that person acquires a further interest in shares which increases the percentage of shares carrying voting rights in which that person is interested. An offer under Rule 9 must be made in cash at the highest price paid by the person required to make the offer, or any person acting in concert with such person, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Should the Acquisition complete, each of the individuals and entities listed in the table below are together considered to be acting in concert for the purposes of the Takeover Code (together the "Concert Party"). Their interests at Admission and assuming all of the Withheld Consideration Shares are allotted and issued are set out in the table below:

≠ assumes all of the Withheld Consideration Shares are issued at Withheld Consideration Shares Admission

Assuming the Acquisition and Off-Market Buy Backs completes, the maximum potential controlling position that the Concert Party will have will be 180,272,193 Ordinary Shares, representing 53.45% of the Enlarged Share Capital.

Following the Acquisition, the members of the Concert Party will hold shares carrying more than 50% of the voting rights of the Company and (for so long as they continue to be acting in concert) may accordingly increase their aggregate interests in shares without incurring any obligation to make an offer under Rule 9, although individual members of the concert party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.

In order to enable the Company to effect the Acquisition without triggering the risk of a mandatory offer obligation for the Concert Party, the Company has consulted with the Takeover Panel and the Takeover Panel has agreed to waive the requirement for the Concert Party to make a general offer to all Shareholders under Rule 9 of the Takeover Code in circumstances where, following the completion of the Acquisition, the aggregate percentage holding of the Concert Party increases above 30% or more of the voting rights in the Company (the "Panel Waiver"). This Panel Waiver is subject to the approval by a vote of Independent Shareholders of the Company on a poll at the General Meeting. The Rule 9 Waiver Resolution seeks this approval. Accordingly, should Independent Shareholders approve the Rule 9 Waiver Resolution, they will be waiving the requirement for the Concert Party to make a mandatory general offer under Rule 9 of the Takeover Code as a result of the Acquisition and the members of the Concert Party may acquire further interests in Ordinary Shares without incurring any further obligation under Rule 9 of the Takeover Code.

Further information on the Concert Party is set out in Part V of the Circular.

Intentions of the Concert Party

The Concert Party has no intention of making an offer for the Company but, if it chooses to, it will not be restricted from making an offer.

The individual members of the Concert Party have each confirmed to the Company that they are not proposing, following any increase in their percentage interests in the Voting Share Capital as a result of the Tender Offer, to make any change in the general nature of the Company's business. The Concert Party has further confirmed that it has no intention to change the Company's plans with respect to: (i) the composition of the Board, nor the Company's plans with respect to the continued employment of employees and management of the Company and its subsidiaries (including any material change in conditions of employment) or any material change to the balance of skills and functions of the employees and management; (ii) the Company's future business and its strategic, research and development plans; (iii) the location of the Company's headquarters or headquarter functions or the location of the Company's place of business; (iv) employer contributions into any of the Company's pension schemes, the accrual of benefits for existing members, nor the admission of new members; (v) redeployment of the Company's fixed assets; or (vi) the continuation of the Ordinary Shares being admitted to trading on AIM.

The Independent Directors approve of the above statements of intention.

Your attention is drawn to Part V of the Circular which sets out certain further information and financial information respectively that is required to be disclosed in the Circular pursuant to the rules contained in the Takeover Code.

In accordance with the requirements of the Takeover Code, members of the Existing Concert Party are not permitted to vote on the Rule 9 Waiver Resolution in respect of their aggregate holding of 37,688,269 Ordinary Shares.

Related Parties Transaction

Martin Higginson, Daniel Wortley, M Capital Investment Properties Limited (a company controlled by Martin Higginson) and Lanton Investments Limited (a company controlled by the family of David Marks) as directors of the Company, and in the case of M Capital Investment Properties Limited and Lanton Investments Limited an associate of a director of the Company, are considered to be related parties pursuant to Rule 13 of the AIM Rules as they are also shareholders and Sellers in Huddled.

The participation in this Acquisition by Martin Higginson, Lanton Investments Limited and Daniel Wortley is considered to result in a related party transaction under AIM Rule 13 of the AIM Rules due to these individuals being directors or associates of directors of the Company. The Independent Directors of the Company, having consulted with Cavendish Securities PLC, the Company's Nominated Adviser, consider that the terms of the Acquisition are fair and reasonable insofar as the Company's Shareholders are concerned.

In addition, as a result of the interests held by Martin Higginson and the MH Connected Persons (being approximately 21.63%) in the Huddled Sale Shares, the Acquisition constitutes a substantial property transaction for the purpose of section 190 of the Act and, accordingly is also subject to shareholder approval at the General Meeting.

The Company is therefore seeking approval of the SPT Resolution at the General Meeting which will allow it to proceed with the Acquisition.

The Proposals are being voted on by Shareholders at the forthcoming General Meeting.

Background to the Off-Market Buy Backs

On 5 June 2023, the Company announced that it had received requests from a small number of longstanding overseas shareholders who were not able to participate in the Tender Offer for regulatory reasons to be put in the same position as the vast majority of shareholders who were able to participate.

The four shareholders in question have held their shares prior to the Company's IPO in July 2018.

In order to put them in the same position as other shareholders who accepted the Tender Offer, the Company has conditionally agreed to acquire 65% of their respective holdings of Ordinary Shares at a price of 4.75 pence per share. The aggregate consideration for  the Ordinary Shares to be bought back via the Off-Market Buy Backs is £153,261.03.

On the 27 September 2023 the Company entered into the Off-Market Buy Back Agreements which are conditional upon (amongst others) the Company having sufficient distributable profits to fund the acquisitions of the Ordinary Shares and Shareholder approval. Further details of the Off-Market Buy Back Agreements are set out in Part IV of the Circular and copies of each of the Off-Market Buy Back Agreements are available for inspection at the registered office of the Company for a period of 15 days ending on the date of the General Meeting.

The Company is seeking approval of the Off-Market Buy Backs as part of the Proposals.

General Meeting and Resolutions

The Notice of General Meeting is set out in Part VII of the Circular.

The General Meeting will take place at the offices of Cavendish at 1 Bartholomew Close London EC1A 7BL at 2 p.m. on 16 October 2023. At the General Meeting, the Resolutions set out in Part V of the Circular will be proposed to Shareholders.

An ordinary resolution will be passed if 50% or more of the votes cast (in person or by proxy) at the General Meeting are in favour of it. A special resolution will be passed if 75% or more of the votes cast (in person or by proxy) at the General Meeting are in favour of it.

The Resolutions, are summarised below:

Resolution 1 - this is an ordinary resolution to approve the Gary Martin Buy Back Agreement.

Resolution 2 - this is an ordinary resolution to approve the John Ketcham Buy Back Agreement.

Resolution 3 - this is an ordinary resolution to approve the Janice Ritchie Buy Back Agreement.

Resolution 4 - this is an ordinary resolution to approve the Griffin Stenger Buy Back Agreement.

Resolution 5 - this is an ordinary resolution to seeking approval for the Acquisition by the Company of the Huddled Sale Shares from certain individual sellers which include Martin Higginson (a director of the Company) and the MH Connected Persons. It constitutes a substantial property transaction under sections 190 and 191 of the Act, and therefore requires prior approval of the Shareholders in accordance with section 190 of the Companies Act. This resolution is conditional on the passing of resolutions 6 and 7 below.

Resolution 6 - this is an ordinary resolution to specifically authorise the Directors to allot relevant securities up to an aggregate nominal amount of £60,011.07, being equal to 149,621,212 Ordinary Shares (i.e. the number of Consideration Shares to be issued).

Resolution 7 - this is an ordinary resolution to approve the waiver conditionally granted by the Takeover Panel for the disapplication of Rule 9 of the Takeover Code following the Acquisition. The Takeover Panel has confirmed that, subject to the Rule 9 Waiver Resolution being passed by the requisite majority of the Independent Shareholders on a poll, no mandatory bid obligation on the Concert Party under Rule 9 of the Takeover Code would be triggered by virtue of the Acquisition. The Rule 9 Waiver Resolution seeks the approval of the Panel Waiver by Independent Shareholders.

Resolution 8 - this is a special resolution to authorise the Change of Name from Let's Explore Group plc to Huddled Group plc which is conditional upon the passing of resolutions 4-7(inclusive) and the completion of the Acquisition.

In accordance with the requirements of the Takeover Code, members of the Concert Party are not permitted to vote on the Rule 9 Waiver Resolution in respect of their aggregate holding of 39,715,944 Ordinary Shares, but may vote on the remainder of the Resolutions.

Action to be taken in respect of the General Meeting

Shareholders will find a Form of Proxy enclosed with the Circular for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by the Company's Registrars, Neville Registrars Limited, by not later than 2p.m. on 16 October 2023, or 48 hours (excluding any part of a day that is not a Business Day) before any adjourned General Meeting. Completion of the Form of Proxy will not preclude you from attending the meeting and voting in person if you so wish.

Recommendation

The Independent Directors, who have been so advised by Cavendish, consider that the Acquisition and the issue of the Consideration Shares are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, Cavendish has taken into account the Independent Directors' commercial assessments.

The Independent Directors unanimously recommend that Shareholders vote in favour of the Rule 9 Waiver Resolution, as they have undertaken to do in respect of their own beneficial Holdings of 219,360 Ordinary Shares, representing approximately 0.11 per cent. in aggregate of the Voting Share Capital. Martin Higginson, David Marks and Daniel Wortley, who are members of the Concert Party, are not deemed to be independent for the purpose of this recommendation.

The Directors believe that the Resolutions (excluding the Rule 9 Waiver Resolution) to be considered at the General Meeting are in the best interests of the Company and its shareholders as a whole and unanimously recommend that Shareholders vote in favour of each of the Resolutions, as the Directors who are Shareholders intend to do in respect of their beneficial shareholders representing, in aggregate, over 12.07 per cent. of the current issued share capital of the Company.

DEFINITIONS

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