CTH.L Regulatory News (CTH)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

CareTech Holdings PLC

("CareTech" or "the Company")

Proposed Placing to raise up to £39 million

CareTech Holdings PLC (AIM: CTH), a leading UK provider of specialist social care services, is pleased to announce a placing of up to 11,000,000 new Ordinary Shares ("New Shares"), representing approximately 17.1 per cent. of the Company's existing ordinary share capital, to raise up to approximately £39 million, before expenses, at a price of 355 pence per share ("Placing Price"). In addition, it is intended that the Cosaraf Trust will be selling up to, in aggregate, 2,060,091 existing Ordinary Shares ("Sale Shares") at the Placing Price.

Highlights

· Up to approximately £39 million, before expenses, to be raised for the Company in a Placing with new and existing investors at a Placing Price of 355 pence per share, representing a discount of 4.7 per cent. to the average closing mid-market price over the previous 30 trading days up to and including 22 March 2017 (being the last dealing day prior to the announcement of the Placing) of 372.3 pence per Ordinary Share.

· The Company intends to use the net proceeds of the Placing to accelerate the Company's growth strategy through the funding of its current acquisition pipeline, organic growth projects and further potential bolt-on acquisition opportunities. The Company intends to deploy the net proceeds of the Placing within one year.

· The Placing will be conducted by way of an accelerated bookbuild ("Bookbuild"), which will be launched immediately following this announcement in accordance with the terms and conditions set out in the Appendix to this announcement. Panmure Gordon (UK) Limited ("Panmure Gordon"), WH Ireland Limited ("WH Ireland") and finnCap Ltd ("finnCap") (together "Bookrunners") are acting as Bookrunners in connection with the Bookbuild.

· Farouq Sheikh (Executive Chairman), Haroon Sheikh (Chief Executive Officer) and Michael Hill (Group Finance Director) (together "Executives") intend, shortly following release of this announcement, to initiate a cashless exercise over their interests in 831,250 Ordinary Shares under the CareTech Executive Shared Ownership Plan 2012 ("ExSOP") jointly held with the Company's Employee Benefit Trust ("EBT"). These arrangements will result in the Executives taking, in aggregate, approximately 0.48 million existing Ordinary Shares into their sole ownership under the ExSOP. The Executives have agreed to a 12 month lock-in period, demonstrating their confidence in the Company's growth strategy.

· Certain of the Company's senior managers also intend to subscribe for New Shares at the Placing Price up to an aggregate amount of approximately £0.13 million pursuant to the Placing.

Farouq Sheikh, CareTech's Executive Chairman, said:

"Our track record of acquisitions and our commitment to providing the highest standards of care mean that we are well placed to accelerate the consolidation of the fragmented market in which we operate. We have already identified a number of acquisition opportunities and it is our intention to use the proceeds of the Placing to fund our acquisition pipeline and to support organic growth initiatives with the objective of delivering double digit growth in underlying earnings."

Background to and reasons for the Placing

CareTech is a profitable, cash generative and asset-backed business with a dividend yield. The Company operates in a growing and fragmented market in which outsourcing to the private sector is increasing. There continues to be a shortfall in specialist service provision whilst the regulatory burden is driving consolidation. These factors are creating significant opportunities for the Company.

CareTech joined AIM in 2005, since which time both the Company and the market in which it operates have grown significantly. On joining AIM, CareTech had a capacity of 435 service users whereas it currently has a capacity in excess of 2,300 service users in three specialist operating divisions: adult services, incorporating adult learning disability and mental health; children services, incorporating foster care and young people residential services; and learning services, incorporating EQL Solutions and Dawn Hodge Associates.

In February 2015, the Company announced a placing to raise £21 million gross to invest in organic growth projects and bolt-on acquisitions. The proceeds were deployed within 12 months, primarily on two earnings-enhancing acquisitions: Spark of Genius and ROC North West, both of which have been accretive and successfully integrated into the Group.

The Placing is now seeking to further accelerate the Company's organic and acquisitive growth strategy and the Company has already identified specific opportunities for organic growth and bolt-on acquisitions. The Company is currently actively progressing three acquisition opportunities, with others at an earlier stage.

Use of Placing proceeds

The net proceeds of the Placing receivable by the Company will be used to fund the Company's current acquisition pipeline, organic growth projects and further potential bolt-on acquisition opportunities. The Company intends to deploy the net proceeds of the Placing within one year.

Current trading

Following the Company's most recent trading update, announced on 7 March 2017, the Directors are pleased to report that CareTech's trading performance for the year to date continues in line with the Board's expectations.

ExSOP

The interests of the Executives in the capital of CareTech include 831,250 Ordinary Shares jointly held with the Company's EBT pursuant to the ExSOP. The Executives intend, shortly following release of this announcement, to initiate a cashless exercise over their interests in 831,250 Ordinary Shares under the ExSOP jointly held with the EBT. These arrangements will result in the Executives taking, in aggregate, approximately 0.48 million existing Ordinary Shares into their sole ownership under the ExSOP. The EBT will take approximately 0.35 million existing Ordinary Shares into its sole ownership. By way of demonstrating their confidence in the Company's growth strategy, the Executives have also agreed a 12 month lock-in covering, in aggregate, Ordinary Shares representing approximately 2 per cent. of its share capital as enlarged by the issue of the New Shares pursuant to the Placing.

Details of the Placing

The Company is proposing to raise up to approximately £39 million before expenses by way of a conditional placing of up to 11,000,000 New Shares at the Placing Price with new and existing institutional investors. The New Shares are to be issued by the Company pursuant to the Directors' existing authority to allot Ordinary Shares for cash on a non-pre-emptive basis. 

The Placing also comprises the proposed placing at the Placing Price of, in aggregate, up to 2,060,091 Sale Shares, to be sold by the Cosaraf Trust, whose beneficiaries include the respective children of Farouq Sheikh and Haroon Sheikh, both of whom are trustees of the Cosaraf Trust.

The Placing will be effected by way of the Bookbuild to be managed by the Bookrunners and will be conducted in accordance with the terms and conditions set out in the Appendix. The Bookbuild will commence with immediate effect and is expected to close no later than 4.30 p.m. on 23 March 2017, but the Bookrunners reserve the right to close the Bookbuild earlier, without further notice.

The timing of the closing of the Bookbuild and allocations are at the absolute discretion of the Bookrunners. The Placing will be limited to the subscription of up to 11,000,000 New Shares, representing approximately 17.1 per cent. of the Company's existing issued share capital, and the sale of up to 2,060,091 Sale Shares. The number of New Shares and Sale Shares will be agreed by the Company with the Bookrunners at the close of the Bookbuild. Details of the number of New Shares and Sale Shares will be announced as soon as practicable after the close of the Bookbuild.

The Placing Price represents a discount of 4.7 per cent. to the average closing mid-market price over the previous 30 trading days up to and including 22 March 2017 (being the last dealing day prior to the announcement of the Placing) of 372.3 pence per Ordinary Share.

The New Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares of the Company, including the right to receive all dividends or other distributions made, paid or declared in respect of such shares after the date of issue of the New Shares.

The Placing is conditional upon, amongst other things, Admission becoming effective and the Placing Agreement not being terminated prior to Admission.

This announcement should be read in its entirety. In particular, your attention is drawn to the Important Notice section of this announcement, to the detailed Terms and Conditions of the Placing and further information relating to the Bookbuild described in the Appendix. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this announcement in its entirety and to be making such offer on the terms and subject to the conditions in it, and to be providing the representations, warranties, acknowledgements and undertakings contained in the Appendix.

For further information please contact:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR") relating to the Placing. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Farouq Sheikh (Executive Chairman), Haroon Sheikh (Chief Executive Officer) and Michael Hill (Group Finance Director).

APPENDIX - TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR PLACEES ONLY

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY PANMURE GORDON (UK) LIMITED ("PANMURE GORDON"), WH IRELAND LIMITED "WH IRELAND") AND FINNCAP LTD ("FINNCAP") (PANMURE GORDON TOGETHER WITH WHI IRELAND AND FINNCAP, THE "BOOKRUNNERS" AND EACH A "BOOKRUNNER") WHO ARE (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE "QUALIFIED INVESTORS", AS DEFINED IN ARTICLE 2.1(E) OF DIRECTIVE 2003/71/EC AS AMENDED (THE"PROSPECTIVE DIRECTIVE") AND (B) IF IN THE UNITED KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AS AMENDED (THE "FPO") OR FALL WITHIN THE DEFINITION OF "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" IN ARTICLE 49(2)(A) TO (D) OF THE FPO AND (II) ARE "QUALIFIED INVESTORS" AS DEFINED IN SECTION 86 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") OR (C) OTHERWISE TO PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.

DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED OR PROHIBITED BY LAW. PERSONS DISTRIBUTING THIS DOCUMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.

The new and existing rdinary shares ("Ordinary Shares") in the capital of CareTech Holdings PLC ("CareTech" or "Company") that are the subject of the Placing (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 the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the Placing Shares is being made in the United States.

This document does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan, the Republic of South Africa or any other jurisdiction in which such offer or solicitation is or may be unlawful (a "Prohibited Jurisdiction"). This document and the information contained herein are not for publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction. No action has been taken by the Company, Panmure Gordon, WH Ireland, finnCap or any of their respective Affiliates (as defined below) that would permit an offer of the Placing Shares or possession or distribution of this document or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this document are required to inform themselves about and to observe any such restrictions.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this document should seek appropriate advice before taking any action.

Any indication in this document of the price at which the Ordinary Shares of the Company have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this document is intended to be a profit forecast and no statement in this document should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

Panmure Gordon (UK) Limited which is authorised and regulated in the United Kingdom by the Financial Conduct Authority ("FCA") is acting exclusively for the Company and no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to in this announcement.

WH Ireland Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting for CareTech and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for affording advice in relation to the Placing, or any other matters referred to herein.

finnCap Limited, which is authorised and regulated in the United Kingdom by the FCA, is acting for CareTech and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for affording advice in relation to the Placing, or any other matters referred to herein.

By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making or accepting an oral offer to take up Placing Shares is deemed to have read and understood this document in its entirety (including this Appendix) and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained herein.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, REGULATORY, TAX, BUSINESS AND RELATED ASPECTS OF A PURCHASE OF PLACING SHARES.

Details of the Placing Agreement and the Placing Shares

The Company and the owner of existing Ordinary Shares that are subject to the Placing ("Selling Shareholder") have today entered into a placing agreement (the "Placing Agreement") with the Bookrunners. Pursuant to the Placing Agreement, the Bookrunners have, subject to the terms set out therein, agreed severally as agents of the Company and the Selling Shareholder to use reasonable endeavours to procure Placees for the Placing Shares (the "Placing"). The Placing is not underwritten.

The New Shares will, when issued be subject to the articles of association of the Company, be credited as fully paid and will rank pari passu in all respects with each other and with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares after the date of issue of the New Shares.

The new Ordinary Shares that are subject to the Placing ("New Shares") will be issued free of any encumbrance, lien or other security interest.

Application for listing and admission to trading

Application will be made to the London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the New Shares on AIM ("Admission"). It is expected that Admission will become effective on or around 8.00 a.m. on or around 28 March 2017 and that dealings in the New Shares will commence at that time.

Participation in, and principal terms of, the Placing

Each of Panmure Gordon, WH Ireland and finnCap and their respective Affiliates (as defined below) is entitled to participate as a Placee.

The Placing Price will be 355p per Placing Share and will be payable by all Placees.

Prospective Placees will be identified and contacted by Panmure Gordon, WH Ireland or finnCap.

The Placing is expected to close today.

Panmure Gordon, WH Ireland or finnCap will re-contact and confirm orally to Placees the size of their respective allocations and a trade confirmation will be despatched as soon as possible thereafter. Panmure Gordon, WH Ireland or finnCap's (as the case may be) oral confirmation of the size of allocations and each Placee's oral commitments to accept the same will constitute a legally binding agreement pursuant to which each such Placee will be required to accept the number of Placing Shares allocated to the Placee at the Placing Price and otherwise on the terms and subject to the conditions set out herein.

The Bookrunners reserve the right to scale back the number of Placing Shares to be subscribed by any Placee in the event of an oversubscription under the Placing. The Bookrunners also reserve the right not to accept offers to subscribe for Placing Shares or to accept such offers in part rather than in whole. The acceptance of offers shall be at the absolute discretion of each of the Bookrunners. The Company reserves the right (upon agreement with the Bookrunners) to reduce or seek to increase the amount to be raised pursuant to the Placing.

To the fullest extent permissible by law, none of Panmure Gordon, WH Ireland or finnCap, any holding company thereof, any subsidiary thereof, any subsidiary of any such holding company, any branch, affiliate or associated undertaking of any such company nor any of their respective directors, officers and employees (each an "Affiliate") nor any person acting on their behalf shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, none of the Bookrunners, any of their respective Affiliates nor any person acting on their behalf shall have any liability (including, to the extent legally permissible, any fiduciary duties), in respect of its conduct of the Placing as the Bookrunners and the Company may determine. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

Each Placee's obligations will be owed to the Company and to the Bookrunners. Following the oral confirmation referred to above, each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the Company and the relevant Bookrunner as agent of the Company, to pay to the relevant Bookrunner (or as such Bookrunner may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire.

All obligations of the Bookrunners under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing".

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.

The obligations of each of the Bookrunners under the Placing Agreement are conditional, inter alia, on:

1 the representations and warranties on the part of the Company and the Selling Shareholder contained in the Placing Agreement being true and accurate and not misleading as of the date of the Placing Agreement and at all times up to and immediately prior to Admission by reference to the facts and circumstances then subsisting;

2 the performance by the Company and the Selling Shareholder of their respective obligations under the Placing Agreement to the extent that they fall to be performed or satisfied prior to Admission;

3 in the opinion of the Bookrunners, there shall have been no material adverse change since the date of the Placing Agreement (whether or not foreseeable at the date of the Placing Agreement) before Admission; and

4 Admission occurring not later than 8.00 a.m. on 11 April 2017 or such later time as the Bookrunners may agree in writing with the Company (but in any event not later than the Long Stop Date).

If (a) the conditions are not fulfilled (or to the extent permitted under the Placing Agreement waived by the Bookrunners), or (b) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and each Placee's rights and obligations hereunder shall cease and determine at such time and no claim may be made by a Placee in respect thereof. None of the Bookrunners, the Company, nor any of their respective Affiliates shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition in the Placing Agreement or in respect of the Placing generally.

By participating in the Placing, each Placee agrees that its rights and obligations hereunder terminate only in the circumstances described below under "Right to terminate under the Placing Agreement", and will not be capable of rescission or termination by the Placee.

Right to terminate under the Placing Agreement

Any of the Bookrunners may, at any time before Admission, terminate the Placing Agreement by giving notice to the Company if in the opinion of either of the Bookrunners, inter alia:

1 the Company or the Selling Shareholder are in breach of any warranty in the Placing Agreement;

2 the Company or the Selling Shareholder (as the case may be) is in breach of any of its obligations under the Placing Agreement;

3 a statement in the Placing Documents (as such term is defined in the Placing Agreement) has become, or an omission in the Placing Documents results in them being untrue, inaccurate or misleading in any respect; or

4 in the opinion of the Bookrunners, there shall have been no material adverse change since the date of the Placing Agreement (whether or not foreseeable at the date of the Placing Agreement) before Admission.

By participating in the Placing, each Placee agrees with the Bookrunners that the exercise by either of the Bookrunners of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Bookrunners and that no Bookrunner need make any reference to the Placees in this regard and that, to the fullest extent permitted by law, no Bookrunner shall have any liability whatsoever to the Placees in connection with any such exercise.

No Prospectus

No offering document or prospectus has been or will be prepared in relation to the Placing and no such prospectus is required (in accordance with the Prospectus Directive) to be published and Placees' commitments will be made solely on the basis of the information contained in this document and any information previously published by or on behalf of the Company by notification to a Regulatory Information Service (as defined in the Listing Rules). Each Placee, by accepting a participation in the Placing, agrees that the content of this document is exclusively the responsibility of the Company and confirms to the Bookrunners and the Company that it has neither received nor relied on any information, representation, warranty or statement made by or on behalf of the Bookrunners (other than the amount of the relevant Placing participation in the oral confirmation given to Placees and the trade confirmation referred to below), any of their respective Affiliates, any persons acting on its behalf or the Company and none of the Bookrunners any of their respective Affiliates, any persons acting on their behalf, nor the Company will be liable for the decision of any Placee to participate in the Placing based on any other information, representation, warranty or statement which the Placee may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons). By participating in the Placing, each Placee acknowledges to and agrees with the Bookrunners for itself and as agent for the Company that, except in relation to the information contained in this document, it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Placing Shares (ISIN: GB00B0KWHQ09) following Admission will take place within the CREST system, using the DvP mechanism, subject to certain exceptions. The Bookrunners reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means that they deem necessary, if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this document or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation stating the number of Placing Shares allocated to it, the Placing Price, the aggregate amount owed by such Placee to the relevant Bookrunner and settlement instructions. Placees procured by Panmure Gordon should settle against CREST ID: 83801, placees procured by WH Ireland should settle against CREST ID: 601 and placees procured by finnCap should settle against CREST ID: CAQAQ 2015095. It is expected that such trade confirmation will be despatched on 23 March 2017 and that this will also be the trade date. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which it has in place with the relevant Bookrunner.

It is expected that settlement will be on 28 March 2017 on a DvP basis in accordance with the instructions set out in the trade confirmation unless otherwise notified by the Bookrunners.

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 two percentage points above the base rate of Barclays Bank Plc.

Each Placee is deemed to agree that if it does not comply with these obligations, the Bookrunners may sell any or all of the Placing Shares allocated to the Placee on such Placee's behalf and retain from the proceeds, for the relevant Bookrunner's own account and profit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The Placee will, however, remain liable for any shortfall below the aggregate amount owed by such Placee and it may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

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

Insofar as Placing Shares are registered in the Placee's name or that of its nominee or in the name of any person for whom the Placee is contracting as agent or that of a nominee for such person, such Placing Shares will, subject as provided below, be so registered free from any liability to PTM levy, stamp duty or stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax is payable in respect of the issue of the Placing Shares, neither the Bookrunners nor the Company shall be responsible for the payment thereof. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations and Warranties

By participating in the Placing, each Placee (and any person acting on such Placee's behalf):

Restart Numbering Applied

1 represents and warrants that it has read and understood this document in its entirety (including this Appendix) and acknowledges that its participation in the Placing will be governed by the terms of this document (including this Appendix);

2 acknowledges that no prospectus or offering document has been or will be prepared in connection with the Placing and it has not received and will not receive a prospectus or other offering document in connection with the Placing or the Placing Shares;

3 agrees to indemnify on an after-tax basis and hold harmless each of the Company, the Bookrunners, their respective Affiliates and any person acting on their behalf from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this document and further agrees that the provisions of this document shall survive after completion of the Placing;

4 acknowledges that the New Shares of the Company will be admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the London Stock Exchange (collectively, the "Exchange Information") and that the Placee is able to obtain or access the Exchange Information without undue difficulty;

5 acknowledges that none of the Bookrunners, nor any of their respective Affiliates nor any person acting on their behalf has provided, and will not provide it with any material or information regarding the Placing Shares or the Company; nor has it requested any of the Bookrunners, nor any of their respective Affiliates nor any person acting on their behalf to provide it with any such material or information;

6 acknowledges that the content of this document is exclusively the responsibility of the Company and that no Bookrunner, nor any of their respective Affiliates nor any person acting on their behalf will be responsible for or shall have any liability for any information, representation or statement relating to the Company contained in this document or any information previously published by or on behalf of the Company and no Bookrunners, nor any of their respective Affiliate nor any person acting on their behalf will be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this document or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing to subscribe for the Placing Shares is contained in this document and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares, and that it has relied on its own investigation with respect to the Placing Shares and the Company in connection with its decision to subscribe for the Placing Shares and acknowledges that it is not relying on any investigation that either of the Bookrunners, any of their respective Affiliates or any person acting on their behalf may have conducted with respect to the Placing Shares or the Company and none of such persons has made any representations to it, express or implied, with respect thereto;

7 acknowledges that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has had sufficient time to consider and conduct its own investigation with respect to the offer and subscription for the Placing Shares, including the tax, legal and other economic considerations and has relied upon its own examination and due diligence of the Company and its affiliates taken as a whole, and the terms of the Placing, including the merits and risks involved;

8 represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting its invitation to participate in the Placing;

9 acknowledges that it has not relied on any information relating to the Company contained in any research reports prepared by either of the Bookrunners, their respective Affiliates or any person acting on their or any of their respective Affiliates' behalf and understands that (no Bookrunner, nor any of their respective Affiliates nor any person acting on their behalf has or shall have any liability for public information or any representation; (ii) no Bookrunner, nor any of their respective Affiliates, nor any person acting on their behalf has or shall have any liability for any additional information that has otherwise been made available to such Placee, whether at the date of publication, the date of this document or otherwise; and that (iii) no Bookrunner, nor any of their respective Affiliates, nor any person acting on their behalf makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such information, whether at the date of publication, the date of this document or otherwise;

10 represents and warrants that (i) it is entitled to acquire the Placing Shares under the laws and regulations of all relevant jurisdictions which apply to it; (ii) it has fully observed such laws and regulations and obtained all such governmental and other guarantees and other consents and authorities which may be required thereunder and complied with all necessary formalities; (iii) it has all necessary capacity to commit to participation in the Placing and to perform its obligations in relation thereto and will honour such obligations; (iv) it has paid any issue, transfer or other taxes due in connection with its participation in any territory; and (v) it has not taken any action which will or may result in the Company, either of the Bookrunners, any of their respective Affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing;

11 represents and warrants that it understands that the Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and may only be acquired in "offshore transactions" as defined in and pursuant to Regulation S under the Securities Act;

12 represents and warrants that it will not offer or sell, directly or indirectly, any of the Placing Shares in the United States except in accordance with Regulation S;

13 represents and warrants that, if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area which has implemented the Prospectus Directive other than "qualified investors" as defined in Article 2.1(e) of the Prospectus Directive, or in circumstances in which the prior consent of the Bookrunners has been given to the offer or resale;

14 represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to the public in any member state of the European Economic Area except in circumstances falling within Article 3(2) of the Prospectus Directive which do not result in any requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive;

15 represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which it is permitted to do so pursuant to section 21 of FSMA;

16 represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom;

17 represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, section 118 of FSMA, the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006, the Anti-terrorism Crime and Security Act 2001, the Money Laundering Regulations (2007) (the "Regulations") and the Money Laundering Sourcebook of the FCA and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

18 if in the United Kingdom, represents and warrants that it is (a) a person falling within Article 19(5) of the FPO or (b) a person falling within Article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

19 if in the United Kingdom, represents and warrants that it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive;

20 represents and warrants that its participation in the Placing would not give rise to an offer being required to be made by it or any person with whom it is acting in concert pursuant to Rule 9 of the City Code on Takeovers and Mergers;

21 undertakes that it (and any person acting on its behalf) will pay for the Placing Shares acquired by it in accordance with this document on the due time and date set out herein against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other Placees or sold as either Bookrunner may, in its absolute discretion, determine and it 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 any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this document) which may arise upon the sale of such Placee's Placing Shares on its behalf;

22 acknowledges that no Bookrunner, nor any of their Affiliates nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Placing, and acknowledges that no Bookrunner, nor any of their Affiliates nor any person acting on their behalf has any duties or responsibilities to it for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of the Bookrunners' rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;

23 undertakes that (i) the person whom it specifies for registration as holder of the Placing Shares will be (a) the Placee or (b) the Placee's nominee, as the case may be, (ii) no Bookrunner nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement and (iii) the Placee and any person acting on its behalf agrees to acquire the Placing Shares on the basis that the Placing Shares will be allotted to the CREST stock account of the relevant Bookrunner which will hold them as settlement agent as nominee for the Placee until settlement in accordance with its standing settlement instructions with payment for the Placing Shares being made simultaneously upon receipt of the Placing Shares in the Placee's stock account on a delivery versus payment basis;

24 acknowledges that any agreements entered into by it pursuant to these terms and conditions, and any non-contractual obligations arising out of or in connection with such agreements, shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter arising out of any such contract;

25 acknowledges that it irrevocably appoints any director of the relevant Bookrunner as its agent for the purposes of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Placing;

26 represents and warrants that it is not a resident of any Prohibited Jurisdiction and acknowledges that the Placing Shares have not been and will not be registered nor will a prospectus be cleared in respect of the Placing Shares under the securities legislation of any Prohibited Jurisdiction and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Prohibited Jurisdiction;

27 represents and warrants that any person who confirms to either Bookrunner on behalf of a Placee an agreement to subscribe for Placing Shares and/or who authorises either Bookrunner to notify the Placee's name to the Company's registrar, has authority to do so on behalf of the Placee;

28 acknowledges that the agreement to settle each Placee's acquisition of Placing Shares (and/or the acquisition of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to an acquisition by it and/or such person direct from the Company of the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor either of the Bookrunners will be responsible. If this is the case, the Placee should take its own advice and notify the Bookrunners accordingly;

29 acknowledges that the Placing Shares will be issued and/or transferred subject to the terms and conditions set out in this document (including this Appendix);

30 acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with the relevant Bookrunner, any money held in an account with the relevant Bookrunner on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Bookrunner money in accordance with the client money rules and will be used by the relevant Bookrunner in the course of its business; and the Placee will rank only as a general creditor of the relevant Bookrunner (as the case may be);

31 acknowledges and understands that the Company, the Bookrunners, and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, undertakings and acknowledgements;

32 acknowledges that the basis of allocation will be determined by the Bookrunners at their absolute discretion. The right is reserved to reject in whole or in part and/or scale back any participation in the Placing;

33 irrevocably authorises the Company and the Bookrunners to produce this announcement pursuant to, in connection with, or as maybe required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein; and

34 that its commitment to subscribe for Placing Shares on the terms set out herein will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing.

The acknowledgements, agreements, undertakings, representations and warranties referred to above are given to each of the Company and the Bookrunners (for their own benefit and, where relevant, the benefit of their respective Affiliates and any person acting on their behalf) and are irrevocable.

No claim shall be made against the Company, the Bookrunners, their respective Affiliates or any other person acting on behalf of any of such persons by a Placee to recover any damage, cost, charge or expense which it may suffer or incur by reason of or arising from the carrying out by it of the work to be done by it pursuant hereto or the performance of its obligations hereunder or otherwise in connection with the Placing.

No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued or transferred (as the case may be) into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee.

Any arrangements to issue or transfer the Placing Shares into a depositary receipts system or a clearance service or to hold the Placing Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Placing Shares in a clearance service, or any arrangements subsequently to transfer the Placing Shares, may give rise to stamp duty and/or stamp duty reserve tax, for which neither the Company nor the Bookrunners will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such stamp duty or stamp duty reserve tax undertakes to pay such stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and the Bookrunners in the event that any of the Company and/or either of the Bookrunners has incurred any such liability to stamp duty or stamp duty reserve tax.

In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

All times and dates in this document may be subject to amendment. The Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any such changes.

This document has been issued by the Company and is the sole responsibility of the Company.

Each Placee, and any person acting on behalf of the Placee, acknowledges that the Bookrunners do not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

Each Placee and any person acting on behalf of the Placee acknowledges and agrees that the Bookrunners or any of their Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

The rights and remedies of the Bookrunners 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 or partial exercise of one will not prevent the exercise of others.

Each Placee may be asked to disclose in writing or orally to either of the Bookrunners:

Important notice

This announcement, and the information contained in it is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or from the United States, Canada, Australia, Japan, the Republic of South Africa or any other state or jurisdiction in which the same would be restricted, unlawful or unauthorised (each a "Restricted Territory"). This announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in any Restricted Territory or to any person to whom it is unlawful to make such offer or solicitation. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Subject to certain exemptions, the securities referred to herein may not be offered or sold in any Restricted Territory or for the account or benefit of any national resident or citizen of any Restricted Territory.

This announcement and the information contained herein is not an offer of securities for sale in the United States and there will be no public offer of securities in the United States. The offering of the Placing Shares will only be made outside the United States in offshore transactions within the meaning of, and in reliance on, Regulation S under the United States Securities Act of 1933, as amended and no offer of the Placing Shares will be made in the United States. No public offering of the shares referred to in this announcement is being made in the United Kingdom, any Restricted Territory or elsewhere.

This announcement has been issued by, and is the sole responsibility, of the Company. No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Panmure Gordon, WH Ireland or finnCap or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Each of Panmure Gordon, WH Ireland and finnCap is authorised and regulated by the FCA in the United Kingdom and is acting solely for the Company in relation to the Placing and nobody else and will not be responsible to anyone other than the Company for providing the protections afforded to customers (as defined in the rules of the FCA) nor for providing advice in relation to the Placing or any other matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Panmure Gordon, WH Ireland and finnCap by the Financial Services and Markets Act 2000, as amended or by the regulatory regime established thereunder, neither Panmure Gordon nor WH Ireland nor finnCap nor any of their respective affiliates accepts any responsibility whatsoever for the contents of the information contained in this announcement or for any other statement made or purported to be made by or on behalf of Panmure Gordon or WH Ireland or finnCap or any of their respective affiliates in connection with the Company, the Placing Shares or the Placing. Each of Panmure Gordon, WH Ireland and finnCap and their respective affiliates accordingly disclaims all and any liability, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this announcement and no representation or warranty, express or implied, is made by Panmure Gordon or WH Ireland or finnCap or any of their respective affiliates as to the accuracy, completeness or sufficiency of the information contained in this announcement. Nothing in this announcement is, or shall be relied upon as a promise or representation in this respect, whether as to the past or the future.

All statements in this announcement other than statements of historical fact are, or may be deemed to be, "forward-looking statements". In some cases, these forward-looking statements may be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout the announcement and include statements regarding the intentions, beliefs or current expectations of the Company and/or Directors concerning, among other things, the trading performance, results of operations, financial condition, liquidity, prospects and dividend policy of the Company. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company's actual performance, result of operations, financial condition, liquidity and dividend policy may differ materially from the impression created by the forward-looking statements contained in this announcement. In addition, even if the performance, results of statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that may cause these differences include, but are not limited to, changes in economic conditions generally; changes in interest rates and currency fluctuations; impairments in the value of the Company's assets; legislative/regulatory changes; changes in taxation regimes; the availability and cost of capital for future expenditure; the availability of suitable financing; the ability of the Group to retain and attract suitably experienced personnel and competition within the industry. Prospective investors should specifically consider the factors identified in this announcement which could cause actual results to differ before making an investment decision.

DEFINITIONS

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