BLV.L Regulatory News (BLV)

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SINGAPORE, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS ANNOUNCEMENT IS MADE FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR SOLICITATION TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE SHARES IN BELVOIR LETTINGS PLC IN ANY JUSRISTICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

For Immediate Release 7 June 2016

BELVOIR LETTINGS PLC

(the "Company", "the Group" or "Belvoir") 

Proposed acquisition of Northwood GB Limited

Accelerated bookbuild to raise up to £2.5 million

Belvoir Lettings plc (AIM: BLV) is pleased to announce that it has entered into a conditional agreement to acquire the entire issued share capital of Northwood GB Limited ("Northwood"), the largest remaining independent UK lettings franchise, operating 86 outlets nationwide, for a total consideration of up to £22.0 million (the "Acquisition"). On completion Belvoir will be the largest property franchise group in the UK.

The Acquisition is to be funded in part through a placing of new Ordinary Shares (the "Placing Shares") in Belvoir at a placing price of 112 pence per Placing Share (the "Placing Price") to raise gross proceeds of up to £2.5 million (the "Placing").

The Placing is being conducted through an accelerated bookbuild process which will be launched immediately following this announcement, in accordance with the terms and conditions set out in the Appendix to this announcement. Cantor Fitzgerald Europe is acting as sole bookrunner in connection with the Placing.

The final number of Placing Shares will be agreed by Cantor Fitzgerald Europe and Belvoir at the close of the Bookbuild, and the results of the Placing will be announced as soon as practicable thereafter. The timing for the close of the Bookbuild and the allocation of Placing Shares shall be at the absolute discretion of Cantor Fitzgerald Europe. Belvoir reserves the right to issue and sell a greater or lesser number of shares through the Placing.

Highlights

Acquisition

· Northwood is the largest remaining independent property franchise in the UK, established in 1995, and is a clear strategic fit with the Group.

· It will strengthen the Group's lettings bias by adding more than 17,000 managed properties and will increase the Group's national presence by 86 additional outlets.

· It will position the Group as the largest property franchise in the UK with more than 54,000 managed properties and a total of 301 outlets.

· Following the acquisitions of Newton Fallowell and Goodchilds in 2015, this Acquisition is the next phase in the Group's multi-brand strategy aimed at extending its reach through the acquisition of other franchised networks.

· The Acquisition significantly increases the Group's market presence and provides additional strength and breadth to the franchise recruitment offering.

· Northwood is an established national brand with potential for further geographic expansion.

· The Company has agreed conditionally to acquire Northwood for a total consideration of up to £22.0 million which comprises Initial Consideration of up to £11.5 million and the balance as a two year earn out.

· The Acquisition is expected to be materially earnings accretive in the financial year ending 31 December 2016 (before exceptional costs relating to the Acquisition and Placing).

· The Initial Consideration, capped at £11.5 million, will be settled in cash and shares as follows:

- Cash consideration of £8.0 million which will be funded through a combination of £2.0 million from the net proceeds of the proposed Placing and £6.0 million from new bank facilities; and

- The balance of the Initial Consideration of up to £3.5 million is to be satisfied through the issue of up to 3,000,000 new Ordinary Shares (the "Consideration Shares") at a price of 116.67 pence per share, being the average mid-market price over the 30 days prior to this announcement (the "Consideration Price").

· The Earn-Out Consideration is payable in cash or shares at the Company's discretion. Further details outlined later on in this announcement.

· £6.0 million of bank financing in respect of the Initial Consideration will be provided in the form of new bank financing from NatWest as well as an additional £1.0 million of which £875,000 represents a renewal of an existing facility at favourable terms to those previously obtained.

· Total Consideration is based on a multiple of 8 times the May FY18 adjusted EBITDA.

Placing

· The Placing is expected to raise gross proceeds of £2.5 million to part-fund the Acquisition.

· The Placing is conditional upon, amongst other things, admission of the Placing Shares to trading on AIM ("Admission") by no later than 8 June 2016.

· The allotment and issue of the Placing Shares will not exceed the Company's existing authorities. No shareholder approval is therefore required.

· The Appendix to this Announcement sets out further information relating to the Placing including the terms and conditions of the Placing.

Director's intentions

· Certain Directors and key management of Belvoir intend to subscribe for approximately £70,000 of new Ordinary Shares at the Placing Price following publication of the announcements in respect of the Acquisition and Placing. The details of the subscription will be announced separately in due course.

· In addition, Mike Goddard, Executive Chairman and CEO of Belvoir, intends to make available for sale approximately £650,000 of Existing Ordinary Shares at the Placing Price subject to institutional demand.

Belvoir Current Trading

· The Company continues to trade positively with Managed Serviced Fees ("MSF") up 36% in the first quarter on the same period last year and with the underlying Belvoir network like-for-like MSF growth at 4%.

· The Company has had an encouraging start to the year with trading currently in line with the Board's expectations. A further update will be provided at the time of Belvoir's Interim results due to be announced in September 2016.

Mike Goddard, Executive Chairman and CEO, Belvoir commented:

"We are delighted to be announcing the acquisition of Northwood. This is an exciting milestone in our growth, considerably expanding the size of the Group to become the largest franchised property group in the UK and with a fantastic new brand to add to our portfolio.

This acquisition, which is in line with our multi-brand strategy to grow both organically and by acquisitions, will substantially increase the Group's presence throughout the UK. We look forward to developing Northwood further as part of the Belvoir Group as we continue to grow and also look for further acquisition opportunities."

Gemma Goodson, CEO, Northwood commented:

"The acquisition today of Northwood by Belvoir marks the start of a new chapter in Northwood's history and we are delighted to be joining one of the market's leading property franchises. Belvoir is exactly the right fit for us; all of the staff are excited to be part of the Group's ambitious growth plans and we look forward to our future as part of Belvoir."

For further details:

Background to the Acquisition

Information on Northwood

Northwood is a network of 86 residential lettings and property sales agents operating across the UK.

The business, initially called 'Residential Lettings', was started in 1995 by Andy Goodson who opened the first office in Portsmouth offering a guaranteed rent product. In 1999, after the opening of a number of other branches, the network was turned into a national franchise operation and in 1997 complimentary traditional letting services were introduced. The company changed its name in 2002 to Northwood and subsequently the network has grown to 86 offices located across the UK, from Aberdeen in Scotland to Truro in Cornwall. The network now has approximately 17,200 properties under management of which 69% are under their guaranteed rent scheme. Northwood franchises hold client money protection and are regulated by either NALS, RICS or ARLA. In addition, Northwood was a founding member of SAFEagent.

The Board of Directors currently comprises; Andy Goodson (Chairman), Gemma Goodson (CEO), Eric Walker (Managing Director), Phil Gee (National Operations Director), Vikki Alexander (Finance Director) and Nick Harris (Franchise Sales Director).

All Northwood offices are operated under a franchise agreement, allowing the franchisees to operate within a specific territory, usually allocated on a postcode basis.

Northwood is accredited by The Guild of Letting & Management to offer its franchisees a level 4 BTECH in residential property management. This is a year-long course with a final exam marked by Edexcel.

Summary Financials

Summary unaudited financial results of Northwood in the year ended 31 May 2015, together with comparative information for the prior year, and the Board's expectation of the results for the year ending 31 May 2016.

Strategic Rationale for the Acquisition and Placing

The Company's growth strategy is to increase market share and geographical coverage by pursuing acquisition opportunities and by providing partial funding for franchisee-led acquisitions. The Board has identified opportunities to leverage its expertise as a franchisor by investing in other property franchise operations to support a multi-brand model. The Acquisition is in line with this strategy.

The Board considers Northwood to be a clear strategic and cultural fit with Belvoir and believes the Acquisition will provide a number of commercial, operational and financial benefits which are expected to create value for Shareholders. In particular:

· Northwood is an established brand which is well-respected within the sector.

· Northwood offers both lettings and estate agency with a revenue split of 91% lettings and 9% property sales.

· Strengthens the Group's bias towards lettings adding 17,200 managed properties giving total for the Group of around 54,000.

· Offers opportunity to add value through property sales and related financial services.

· Increases Belvoir's market penetration and provides potential for further network expansion.

· Represents an opportunity to add additional depth and breadth to the Group's service offering to new franchise recruits.

· Is expected to be materially earnings enhancing and improve EBITDA margin in the first full financial year following Completion of the Acquisition.

Details of the Acquisition

On 7 June 2016, the Company entered into the Acquisition Agreements with the Sellers to conditionally acquire the entire issued share capital of Northwood, for an aggregate sum not exceeding £22.0 million, to be satisfied by the payment of the Initial Consideration and by potential further payments of the Earn-Out Consideration.  

Completion of the Acquisition Agreement is conditional on Admission taking place. If the condition is not satisfied on or before 13 June 2016 or, if applicable, waived, the Acquisition will not proceed.

Key terms of the Acquisition are:

· Initial Consideration of up to £11.5 million based on a multiple of 8.5 times the adjusted EBITDA for the year to 31 May 2016 to be satisfied through £8.0 million in cash and up to £3.5 million from the issue of the Consideration Shares at the Consideration Price;

· Earn-Out Consideration is based performance on to May 2018:

- 1st earn-out: Based on a multiple of 8 times the adjusted EBITDA for the year to 31 May 2017 less the Initial Consideration; and

- 2nd earn-out: Based on a multiple of 8 times the adjusted EBITDA for the year to 31 May 2018 less the Initial Consideration and the 1st earn out;

- The total of aggregate Earn-Out Consideration payments cannot exceed the difference between the Initial Consideration and the maximum total consideration of £22.0 million.

· Continuing role for Gemma Goodson during earn-out period to ensure improved performance;

· Continuing full time permanent role for Senior Management

Details of the Placing

Under the terms of the Placing, Cantor Fitzgerald (as agent for the Company) intends to place the Placing Shares with existing shareholders and new institutional investors.

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or pair on or in respect of such Placing Shares after the date of issue of the Placing Shares. The Placing will be made on a non pre-emptive basis.

The Placing is conditional upon, amongst other things, Admission becoming effective and the Placing Agreement becoming unconditional and not being terminated, in accordance with its terms.

Details of the banking terms

Banking facilities of £7.0 million have been secured from NatWest under the Facilities Agreement, providing £6.125 million of new money at a margin of LIBOR plus 2.5%, compared to LIBOR plus 4.5% on the existing loan. The loan has a term of 5 years with a capital repayment holiday of 9 months, annual capital repayments of £0.7 million and a bullet repayment of £4.0 million.

The Facilities Agreement imposes financial covenants on the Company of gross leverage of 2.0x, interest cover of 5.0x, debt service cover of 1.1x and no cap on dividends subject to covenants and 6 month look forward compliance.

Current Trading of Belvoir Group

The Company continues to trade positively with MSF up 36% in Q1 on the same period last year.

During 2016 Belvoir has recruited six new franchisees, four of which were new territories and two were resales of existing Belvoir outlets; and there is a strong pipeline for induction courses in the second half of the year. Also during the year to date, the Company has provided financial assistance to two franchisees to make a local acquisition and has five further Belvoir assisted franchisee acquisitions due for completion within the next two months.

The Company has had an encouraging start to the year with trading currently in line with the Board's expectations. A further update will be provided at the time of Belvoir's Interim results due to be announced in September 2016.

Note to Editors:

About Belvoir Lettings PLC

Founded in 1995, Belvoir is one of the UK's largest specialist property franchises, with 215 outlets nationwide.

Since listing on AIM in February 2012 (BLV.L), Belvoir has continued to diversify its core business offer in lettings by broadening into property sales. Operating from its Central Office in Grantham, Lincolnshire the Group now offers a range of specialist services in property rental, property management, residential lettings, buy to let and property sales.

Belvoir's core revenue is derived from Management Service Fees (MSF); a reliable recurring revenue model which allows the Group to offer franchisees significant support and advice.

In 2015 Belvoir launched its multi-brand franchising strategy; acquiring Newton Fallowell Ltd, an East Midlands-based network of 31 outlets in July 2015 and Goodchilds Estate Agents and Lettings Limited, a West Midlands-based network of 14 outlets in October 2015.

Belvoir continues to grow organically by delivering award winning service, prioritising franchisee recruitment and supporting franchisee acquisitions. In recognition, the Group was awarded the "Best Lettings Agency Franchise Award" at the 2015 Agency of the Year Awards for the fifth time since the awards started six years ago.

The Company remains committed to diversifying its brand portfolio, utilising Belvoir's strong franchising expertise and infrastructure, in order to capitalise on an increasing target market.

Definitions

In addition to the terms defined above in this Announcement, the following additional definitions apply throughout this Announcement including its Appendix (unless the context requires otherwise):

APPENDIX - TERMS AND CONDITIONS OF THE PLACING

TERMS AND CONDITIONS OF THE PLACING

FOR INVITED PLACEES ONLY - IMPORTANT INFORMATION

The information contained herein is restricted and is not for publication, release or distribution in or into the United States, Canada, Australia, Japan, Singapore, the Republic of South Africa, or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

Each Placee should consult with its own advisers as to legal, tax, business and related aspects of any subscription for Placing Shares.

These Terms and Conditions (the "Terms and Conditions") do not constitute an offer or invitation to acquire, underwrite or dispose of, or any solicitation of any offer or invitation to acquire, underwrite or dispose of, any Ordinary Shares or other securities of the Company to any person in any jurisdiction to whom it is unlawful to make such offer, invitation or solicitation in such jurisdiction. Persons who seek to participate in the Placing must inform themselves about and observe any such restrictions and must be persons who are able to lawfully receive this Announcement in their jurisdiction (all such persons being "Relevant Persons"). In particular, these Terms and Conditions do not constitute an offer or invitation (or a solicitation of any offer or invitation) to acquire, underwrite or dispose of or otherwise deal in any Ordinary Shares or other securities of the Company in the United States, Canada, Australia, Japan, Singapore or the Republic of South Africa, subject to certain limited exemptions.

Members of the public are not eligible to take part in the Placing and each Placee agrees and warrants that it is not acquiring Placing Shares on behalf of members of the public or its Retail clients (as that term is defined in the Rules of the FCA), save where the Placee does so on a fully discretionary basis and without reference to any such Retail clients. In the UK, the Terms and Conditions are directed only at persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses and who have professional experience in matters relating to investments falling within the definition of 'investment professionals' in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or are high net worth body corporates, unincorporated associations or partnerships or trustees of high value trusts as described in Article 49 of the Order or to whom it may otherwise lawfully be communicated.

The Placing Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under any other securities legislation of any state of the United States or registered or qualified under the applicable securities laws of any province of Canada or Australia, Japan, Singapore or the Republic of South Africa. Accordingly, the Placing Shares may not, subject to certain limited exceptions, be offered or sold, directly or indirectly, within the United States, any province of Canada or Australia, Japan, Singapore or the Republic of South Africa or a national, citizen or resident of any province of Canada or Australia, Japan, Singapore or the Republic of South Africa. The Placing Shares are being offered and sold outside the United States in offshore transactions complying with Regulation S under the Securities Act, which provides an exemption from the requirement to register the offer and sale under the Securities Act.

These Terms and Conditions apply to any person who offers to subscribe for Placing Shares in the Placing. Each person (a "Placee") to whom these Terms and Conditions apply, as described above, who confirms his agreement, whether by telephone or otherwise, with Cantor Fitzgerald Europe to subscribe for Placing Shares in the Placing, hereby agrees with Cantor Fitzgerald Europe to be legally and irrevocably bound by these Terms and Conditions which will be the Terms and Conditions on which the Placing Shares will be acquired in the Placing.

Capitalised terms not otherwise defined in this Appendix are as defined in the Announcement relating to the Placing of which this Appendix forms a part.

The Terms and Conditions must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which the Terms and Conditions set out herein relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. A Placee may not assign, transfer, or in any manner, deal with its rights and obligations under the agreement arising from the acceptance of the Placing, without the prior written agreement of Cantor Fitzgerald Europe, in accordance with all relevant requirements.

All times and dates in this Appendix are references to times and dates in London (United Kingdom).

All defined terms used in this Appendix but not defined herein shall have the meanings ascribed to those terms in the announcement of which this Appendix forms part.

Terms of the Placing

Each Placee's commitment to subscribe for a fixed number of Placing Shares under the Placing will be agreed orally with Cantor Fitzgerald Europe and such agreement will constitute a binding irrevocable commitment by a Placee, subject to the Terms and Conditions set out in this Appendix, to subscribe and pay for the relevant number of Placing Shares (the "Placing Participation") at the Placing Price. Such commitment is not capable of termination or rescission by the Placee in any circumstances except fraud. All such obligations are entered into by the Placee with Cantor Fitzgerald Europe acting in its capacity as agent of the Company and are therefore directly enforceable by the Company.

After such agreement is entered into, each Placee allocated Placing Shares in the Placing will be sent a confirmatory email stating the number of Placing Shares allocated to it at the Placing Price, the total subscription amount payable to Cantor Fitzgerald Europe and including settlement instructions (the "Confirmation Note").

Each Placee will be deemed to have read this Appendix in its entirety. Cantor Fitzgerald Europe is acting for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of these Terms and Conditions) as a client in relation to the Placing and to the fullest extent permitted by law and applicable FCA rules, neither Cantor Fitzgerald Europe nor any of its affiliates will have any liability, obligation or duty to Placees or to any person other than the Company in respect of the Placing.

The Placing Shares will rank pari passu in all respects and form one class with the Existing Ordinary Shares of the Company in issue on Admission, including the right to receive dividends or other distributions, if any. The Placing Shares will be issued free of any encumbrance, lien or other security interest.

Application for Admission

Application will be made to London Stock Exchange plc for Admission of the Placing Shares to trading on AIM. It is anticipated that Admission of the Placing Shares to AIM will become effective at 8.00 a.m. on 8 June 2016 and that dealings in the Placing Shares will commence at that time and date for normal account settlement.

Placing Participations conditional

Placing Participations are in all respects conditional upon:-

(i) the Placing Agreement entered into between Cantor Fitzgerald Europe and the Company relating to the placing of the Placing Shares becoming unconditional in all respects and not having been terminated in accordance with its terms; and

(ii) Admission having become effective,

in each case by 8.00 a.m. on 8 June 2016 (or such later time and/or date as the Company and Cantor Fitzgerald Europe agree, but in any event being no later than 8.00 a.m. on 13 June 2016 (the "Long Stop Date")).

Scaling back

Cantor Fitzgerald Europe (after consulting with the Company) reserves the right to scale back the number of Placing Shares to be subscribed by any Placee or the number of Placing Shares to be subscribed for by all Placees in aggregate. The Company and Cantor Fitzgerald Europe also reserve the right not to offer allocations of Placing Shares to any person and not to accept offers to subscribe for Placing Shares or to accept such offers in part rather than in whole. Cantor Fitzgerald Europe shall be entitled to effect the Placing by such method as it shall in its sole discretion determine.

To the fullest extent permissible by law, neither Cantor Fitzgerald Europe or any holding company thereof, nor any subsidiary, branch or affiliate of Cantor Fitzgerald Europe (each an "Affiliate") nor any person acting on behalf of any of the foregoing shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, none of Cantor Fitzgerald Europe nor any of its Affiliates nor any person acting on behalf of any such person shall have any liability to Placees in respect of its conduct of the Placing.

Placing Agreement

Pursuant to the Placing Agreement, Cantor Fitzgerald Europe has agreed on behalf of and as agent of the Company, to use its reasonable endeavours to procure persons who will subscribe for the Placing Shares at the Placing Price, subject to these Terms and Conditions. The Placing is not underwritten.

Conditions of the Placing

Cantor Fitzgerald Europe's obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:-

(a) there having been no breach of any of the warranties, representations or undertakings given by the vendors in the Acquisition Agreement, and the Acquisition Agreement not having been terminated or rescinded by any party to it;

(b) the Facilities Agreement not having been terminated or rescinded by any party to it and each condition precedent to drawdown under the Facilities Agreement (save for any condition relating to Admission) having been satisfied or unconditionally waived;

(c) none of the warranties or undertakings contained in the Placing Agreement being untrue, inaccurate or misleading in any material respect at any time before Admission and no fact or circumstance having occurred or arisen which would constitute a material breach of any of the warranties or undertakings on the part of the Company contained in the Placing Agreement;

(d) there having been no breach of any of the warranties, representations or undertakings given by the Sellers in the Acquisition Agreement which gives or has given the Company the right to rescind the Acquisition Agreement (whether or not the Company does so rescind for such breach);

(e) all the conditions to completion of the Acquisition Agreement having been satisfied or fulfilled in accordance with its terms, the Acquisition Agreement not having been rescinded by the Company or the Vendors (as defined therein) and the Acquisition Agreement having been completed (subject only to Admission);

(f) the Placing Shares having been allotted, subject only to Admission, in accordance with the Placing Agreement; and

(g) Admission taking place not later than 8.00 a.m. on 8 June 2016 or such later date as the Company and Cantor Fitzgerald Europe may otherwise agree (but not being later than 8.00 a.m. on the Long Stop Date).

The Placing Agreement contains, inter alia, certain warranties and indemnities from the Company for the benefit of Cantor Fitzgerald Europe.

Right to terminate under the Placing Agreement

Cantor Fitzgerald Europe may, in its absolute discretion, terminate the Placing Agreement (i) if any of the warranties given by the Company to Cantor Fitzgerald Europe in the Placing Agreement (a) was not true or accurate or was misleading at the date of the Placing Agreement (b) would not be true and accurate, or would be misleading, if they were to be repeated at any time prior to Admission (by reference to the facts and circumstances in each case then existing), in the case of each of (a) and (b) in a respect which Cantor Fitzgerald considers to be material in the context of the Placing, (ii) in the event of the failure of the Company to comply with its obligations under the Placing Agreement (iii) in the event of the occurrence (in the sole judgement of Cantor Fitzgerald) a material adverse change in the financial or trading position or prospects of the Company and the Group as a whole; or (iv) in the event of the occurrence of a 'force majeure' event which, in the opinion of Cantor Fitzgerald, is likely to have a materially prejudicial effect on the Placing or make it impracticable or inadvisable to proceed with the Placing. The exercise by Cantor Fitzgerald Europe of any right of termination (or any right of waiver exercisable by Cantor Fitzgerald Europe) contained in the Placing Agreement or the exercise of any discretion under the Terms and Conditions set out herein is within the absolute discretion of the Cantor Fitzgerald Europe and Cantor Fitzgerald Europe will not have any liability to Placees whatsoever in connection with any decision to exercise or not exercise any such rights.

By accepting the Placing Shares referred to in the Announcement to which this Appendix is annexed, each Placee agrees that, without having any liability to such Placee, Cantor Fitzgerald Europe may, in its absolute discretion, exercise the right, (i) to extend the time for fulfilment of any of the conditions in the Placing Agreement (provided that Placees' commitments are not extended beyond the Long Stop Date), (ii) to waive, in whole or in part, fulfilment of certain of the conditions; or (iii) to terminate the Placing Agreement, in each case without consulting Placees (or any of them).

If (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will not proceed and all funds delivered by Placees to Cantor Fitzgerald Europe or the Company pursuant to the Placing and this Appendix will be returned to Placees at their risk without interest, and Placees' rights and obligations under the Placing shall cease and determine at such time and no claim shall be made by Placees in respect thereof.

Registration and Settlement

Settlement of transactions in the Placing Shares (ISIN: GB00B4QY1P51) following Admission will take place within CREST (subject to certain exceptions). If a Placee wishes to receive its Placing Shares in certificated form, it should contact (Kellyann Leeds at Cantor Fitzgerald Europe (+44 (0)20 7894 7913) as soon as possible after receipt of its Confirmation Note. Cantor Fitzgerald Europe reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.

It is expected that settlement will be on 8 June 2016 in accordance with the instructions set out in the Confirmation Note.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of 3 percentage points above The Royal Bank of Scotland plc's base rate, with interest compounded on a daily basis.

Each Placee is deemed to agree that, if it does not comply with these obligations, Cantor Fitzgerald Europe may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Cantor Fitzgerald Europe's account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating a bid for Placing Shares, each Placee confers on Cantor Fitzgerald Europe all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Cantor Fitzgerald Europe lawfully takes in pursuance of such sale.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the Confirmation Note is copied and delivered immediately to the relevant person within that organisation.

Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax.

Placees will not be entitled to receive any fee or commission in connection with the Placing.

Further Terms, Confirmations and Warranties

By accepting the Placing Participation referred to in the Confirmation Note, each Placee makes the following confirmations, acknowledgements, representations, warranties and/or undertakings to Cantor Fitzgerald Europe and the Company and their respective directors, agents and advisers:

1 each Placee confirms, represents and warrants that it has read and understood this Announcement (including this Appendix) in its entirety and acknowledges that its Placing Participation will be governed by the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings of this Appendix;

2 each Placee acknowledges and agrees that its Placing Participation on the Terms and Conditions set out in this Appendix is legally binding, irrevocable and is not capable of termination or rescission by such Placee in any circumstances;

3 each Placee confirms, represents and warrants that it has not relied on, received or requested nor does it have any need to receive, any prospectus, offering memorandum, listing particulars or any other document (other than the Announcement), any information given or any representations, warranties agreements or undertakings (express or implied), written or oral, or statements made at any time by the Company, Cantor Fitzgerald Europe or by any subsidiary, holding company, branch or associate of the Company, Cantor Fitzgerald Europe, or any of their respective officers, directors, agents, employees or advisers, or any other person in connection with the Placing, the Company and its subsidiaries or the Placing Shares and that in making its application under the Placing it is relying solely on the information contained in the Announcement and this Appendix and it will not be relying on any agreements by the Company and its subsidiaries or Cantor Fitzgerald Europe or any director, employee or agent of the Company, Cantor Fitzgerald Europe other than as expressly set out in this Appendix for which none of Cantor Fitzgerald Europe or any of their directors and/or employees and/or person(s) acting on behalf of any of them shall to the maximum extent permitted under law have any liability except in the case of fraud;

4 each Placee confirms, represents and warrants that it is sufficiently knowledgeable to understand and be aware of the risks associated with, and other characteristics of, the Placing Shares and, among others, of the fact that it may not be able to resell the Placing Shares except in accordance with certain limited exemptions under applicable securities legislation and regulatory instruments;

5 each Placee confirms, represents and warrants, if a company, that it is a valid and subsisting company and has all the necessary corporate capacity and authority to execute its obligations in connection with the Placing Participation and confirms, represents and warrants that any person who confirms to Cantor Fitzgerald Europe on behalf of a Placee an agreement to subscribe for Placing Shares is duly authorised to provide such confirmation to Cantor Fitzgerald Europe;

6 each Placee agrees that the exercise by Cantor Fitzgerald Europe of any right of termination or any right of waiver exercisable by Cantor Fitzgerald Europe contained in the Placing Agreement or the exercise of any discretion including (without limitation) the right not to enter into the Placing Agreement is within the absolute discretion of Cantor Fitzgerald Europe and Cantor Fitzgerald Europe will not have any liability to any Placee whatsoever in connection with any decision to exercise or not exercise any such rights. Each Placee acknowledges that if (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will lapse and such Placee's rights and obligations in relation to the Placing shall cease and determine at such time and no claim shall be made by any Placee in respect thereof;

7 each Placee acknowledges and agrees that Cantor Fitzgerald Europe is not acting for, and that it does not expect Cantor Fitzgerald Europe to have any duties or responsibilities towards, such Placee, including, without limitation, for providing protections afforded to customers or clients of Cantor Fitzgerald Europe under the FCA's Conduct of Business Source Book or advising such Placee with regard to its Placing Participation and that such Placee is not, and will not be, a customer or client of Cantor Fitzgerald Europe as defined by the FCA's Conduct of Business Source Book in connection with the Placing. Likewise, Cantor Fitzgerald Europe will not treat any payment by such Placee pursuant to its Placing Participation as Client Money governed by the FCA's Client Assets Sourcebook;

8 each Placee undertakes and agrees that it will be responsible for any stamp duty or stamp duty reserve tax in relation to the Placing Shares comprised in its Placing Participation and that neither Cantor Fitzgerald Europe nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax in relation to the Placing Shares comprised in such Placee's Placing Participation;

9 each Placee confirms, represents and warrants that it is a Relevant Person and that it may lawfully subscribe for or acquire the Placing Shares comprised in such Placee's Placing Participation and that it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by such Placee in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

10 each Placee acknowledges and agrees that the agreement confirmed by the Confirmation Note is a legally binding contract between it and the Company and the Terms and Conditions of such Placee's Placing Participation will be governed by, and construed in accordance with, the laws of England and Wales to the exclusive jurisdiction of whose courts such Placee irrevocably agrees to submit;

11 each Placee agrees that it will ensure delivery and payment is completed in accordance with the settlement instructions set out in the Confirmation Note (or as separately agreed with Cantor Fitzgerald Europe in the case of certificated settlement) and acknowledges and agrees that time shall be of the essence as regards such Placee's obligations pursuant to its Placing Participation;

12 each Placee acknowledges and agrees that it is the responsibility of such Placee (if it is outside of the United Kingdom) to satisfy itself that, in doing so, such Placee complies with the laws of any relevant territory in connection with its Placing Participation and that it obtains any requisite governmental or other consents and observes any other applicable formalities;

13 each Placee acknowledges and agrees that the Announcement does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, Placing Shares in any jurisdiction in which such an offer or solicitation is unlawful. Accordingly, such Placee acknowledges and agrees that the Placing Shares may not, subject to certain limited exceptions, be offered or sold, directly or indirectly, in or into the United States, any province of Canada or Australia, Japan, Singapore or the Republic of South Africa or offered or sold to, or for the account or benefit of, a national, citizen or resident of the United States, any province of Canada or Australia, Japan, Singapore or the Republic of South Africa, in each case subject to limited exemptions, or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction;

14 each Placee acknowledges and agrees that the Placing Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or jurisdiction of the United States, or the relevant Canadian, Japanese, Australian, Singapore or South African securities legislation and therefore the Placing Shares may not be offered, sold, transferred or delivered directly or indirectly into the United States, Canada, Japan, Australia, Singapore or the Republic of South Africa or their respective territories and possessions, subject to limited exemptions, and in the case of the United States, pursuant to an exemption from, or in a transaction not subject to the registration requirements of the Securities Act and in compliance with United States securities laws;

15 each Placee confirms, represents and warrants that it has complied with all relevant laws of all relevant territories, obtained all requisite governmental or other consents which may be required in connection with its Placing Participation, complied with all requisite formalities and that it has not taken any action or omitted to take any action which will or may result in Cantor Fitzgerald Europe, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any territory in connection with the Placing or such Placee's Placing Participation;

16 each Placee confirms, represents and warrants that its subscription for Placing Shares does not trigger, in the jurisdiction in which such Placee is resident or located: (i) any obligation to prepare or file a prospectus or similar document or any other report with respect to such subscription; (ii) any disclosure or reporting obligation of the Company; or (iii) any registration or other obligation on the part of Cantor Fitzgerald Europe or the Company;

17 each Placee confirms, represents and warrants it is acting as principal and for no other person and that its Placing Participation will not give any other person a contractual right to require the issue by the Company of any Placing Shares.

18 each Placee confirms, represents and warrants that in accepting its Placing Participation it is not applying for registration as, or as a nominee or agent for, a person who is or may be a person mentioned in sections 67 to 72 inclusive and sections 93 to 97 inclusive of the Finance Act 1986;

19 each Placee confirms, represents and warrants that, to the extent applicable to it, it is aware of its obligations in connection with the Criminal Justice Act 1993, the Terrorism Act 2006, the UK Anti-Terrorism Crime and Security Act 2001, the Money Laundering Regulations 2007, the Proceeds of Crime Act 2002 and Part VIII of the Financial Services and Markets Act 2000 (as amended), it has identified its clients in accordance with the Money Laundering Regulations 2007 and it has complied fully with its obligations pursuant to those Regulations;

20 each Placee acknowledges and agrees that all times and dates in this Announcement and the Terms and Conditions set out in this Appendix, may be subject to amendment and that Cantor Fitzgerald Europe will notify it of any such amendments;

21 each Placee acknowledges and agrees that no term of the agreement confirmed by the Confirmation Note shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any person other than Cantor Fitzgerald Europe or any affiliate of Cantor Fitzgerald Europe or any Indemnified Person (as hereinafter defined);

22 each Placee acknowledges that any of its monies held or received by Cantor Fitzgerald Europe will not be subject to the protections conferred by the FCA's Client Money Rules;

23 each Placee confirms, represents and warrants that it understands that the Placing Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered or sold or otherwise transferred in the United States or to, or for the account or benefit of, US Persons except pursuant to a registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, and, in connection with any such transfer, the Company will have the right to obtain, as a condition to transfer, a legal opinion of counsel, in form and by counsel reasonably satisfactory to the Company, that no such Securities Act registration is or will be required along with appropriate certifications by the transferee as to the 'Accredited Investor' status and/or other appropriate matters;

24 each Placee confirms, represents and warrants that it has not distributed, forwarded, transferred or otherwise transmitted this Announcement or any other presentation or offering materials concerning the Placing Shares within the United States, nor will it do any of the foregoing. Such Placee further confirms that it understands that the information in this Announcement, including financial information, may be materially different from any disclosure that would be provided in a US offering;

25 each Placee agrees, confirms, represents, warrants and undertakes as follows:-

25.1 it is, at the time of the offer and acceptance of the Placing Shares, outside the United States for the purposes of Regulation S;

25.2 it will not offer or sell the Placing Shares in the United States absent registration or an exemption from registration under the Securities Act;

25.3 it is aware that the Placing Shares are being offered outside the United States in reliance on Regulation S; and

25.4 it did not purchase or otherwise acquire the Placing Shares based on or due to directed selling efforts (as defined in Rule 902 under the Securities Act), including based on an advertisement in a publication with a general circulation in the United States, nor has it seen or been aware of any activity that, to its knowledge, constitutes directed selling efforts in the United States;

26 if it is subscribing for the Placing Shares in the United Kingdom, each Placee is a person falling within the exemption contained in Section 86(1)(a) of the Financial Services and Markets Act 2000 (as amended) or falling within one or more of the categories of persons set out in Article 19 (Investment Professionals) or Article 49 (High net worth companies, unincorporated associations etc.) of the Order;

27 each Placee confirms, represents and warrants that, in making the investment decision with respect to the Placing Shares, it has:-

27.1 not relied on the Company or any of its respective affiliates or on any document published by any of them;

27.2 the ability to bear the economic risk of its investment in the Placing Shares and has no need for liquidity with respect to its investment in the Placing Shares;

27.3 such knowledge and experience in financial and business matters that it is capable of evaluating the merits, risks and suitability of investing in the Placing Shares, and is able to sustain a complete loss of any investment in the Placing Shares; and

27.4 investigated independently and made its own assessment and satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its investment in the Placing Shares, including any federal, state and local tax consequences, affecting it in connection with its subscription for and any subsequent disposal of the Placing Shares;

28 each Placee acknowledges and agrees that it is not entitled to the protections afforded to clients of Cantor Fitzgerald Europe in connection with the Placing and that neither Cantor Fitzgerald Europe nor any of its affiliates nor any of their respective officers, directors, employees or advisers shall be liable for any losses (including, without limitation, loss of profit, loss of business or opportunity and special interest or consequential losses), damages or costs of the Placee save as a result of fraud or for death or personal injury;

29 each Placee acknowledges that the Company, Cantor Fitzgerald Europe, CREST, the registrar, any transfer agent, any distributors or dealers and their respective affiliates and others will rely on the truth and accuracy of the foregoing warranties, acknowledgements, representations, undertakings and agreements, and agrees to notify the Company and Cantor Fitzgerald Europe promptly in writing if any of its warranties, acknowledgements, representations, undertakings or agreements set out above cease to be accurate and complete and to indemnify and hold harmless on an after-tax basis the Company, Cantor Fitzgerald Europe and any of their respective officers, directors, agents, employees or advisers (the "Indemnified Persons") from and against any and all loss, damage, liability or expense, including reasonable costs and attorneys' fees and disbursements, which an Indemnified Person may incur by reason of, or in connection with, any representation or warranty made by such Placee as set out above not having been true when made, any misrepresentation made or any failure by such Placee to fulfil any of its undertakings or agreements set out above or any other document such Placee provides to the Company or Cantor Fitzgerald Europe. Such Placee irrevocably authorises each of the Company, and Cantor Fitzgerald Europe to produce a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby;

30 each Placee acknowledges that the rights and remedies of Cantor Fitzgerald Europe and the Company under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one right or remedy will not prevent the exercise of the other rights and/or remedies; and

31 each Placee undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Cantor Fitzgerald Europe may in its sole discretion determine and without liability to such Placee and such Placee will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to or referred to in these Terms and Conditions) which may arise upon the placing or sale of such Placee's Placing Shares on its behalf.

CREST and certificated Placing Shares

Placing Shares, once issued, will be admitted to CREST with effect from Admission. Placees will receive Placing Shares comprised in their Placing Participation in uncertificated form registered in their CREST member account. Alternatively, those Placees who wish to receive their Placing Shares in certificated form should contact Kellyann Leeds at Cantor Fitzgerald Europe (+44 (0)20 7894 7913)) and are expected to receive their certificates for their Placing Shares by no later than 12 June 2016. If Placees do not provide any CREST details or if Placees provide insufficient CREST details to match within the CREST system to their details, Cantor Fitzgerald Europe may, at its discretion, deliver Placing Shares comprised in any such Placee's Placing Participation in certificated form provided payment has been made in terms satisfactory to Cantor Fitzgerald Europe and all conditions in relation to the Placing have been satisfied or waived.

Responsibility

The Terms and Conditions set out in this Appendix and the Announcement of which it forms part have been issued by the Company and are the sole responsibility of the Company.