Inspired Regulatory News (INSE)

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10 July 2020

Inspired Energy plc

("Inspired Energy" or the "Group")

Placing and Open Offer to raise up to £35.0 million

Proposed acquisition of the outstanding 60% of Ignite Energy

Inspired Energy (AIM: INSE), a leading consultant for energy procurement, utility cost optimisation and legislative compliance to corporate energy consumers in the UK and Ireland announces a proposed placing of new Ordinary Shares to raise gross proceeds of up to approximately £30 million by way of an accelerated bookbuilding process (the "Placing").

To enable other Shareholders who are not able to participate in the Placing to participate in the proposed issue of new Ordinary Shares, the Company is proposing to raise up to an additional £5.0 million (before expenses) by way of an Open Offer made to Qualifying Shareholders (together, the Placing and Open Offer constitute the "Fundraise").

Inspired Energy is also pleased to announce it has conditionally agreed to acquire the outstanding 60 per cent. of Ignite Energy LTD ("Ignite") not already owned by it for an initial consideration of £11.0 million on a debt free cash free basis (the "Acquisition"), following the Strategic Investment of an initial 40 per cent. interest in August 2019. Under the acquisition agreement further contingent consideration of up to a maximum of £19.0 million in cash and shares in the Company, may be payable subject to the achievement of certain performance criteria ("Earn-out Consideration"). Payment of the Earn-out Consideration is based upon the financial performance of Ignite to FY 2023.

Rationale for the Fundraise

The Fundraise is being conducted to fund the initial cash consideration for the Acquisition and to provide additional financing to fund further acquisition opportunities to accelerate the Company's growth strategy in ESG.

· Environmental Social Governance ("ESG") is of growing importance for UK and ROI corporates, with energy being both one of the highest cost components in the ESG wheel and one of the most data intensive elements of the climate change segment

· Corporate energy spend in the UK is estimated to be £17.7 billion, it is a high value item and corporate consumers require assurance that they have bought professionally, accounted for their energy properly and complied with their legal obligations

· Inspired provides services to over 2,800 clients, and the Group plays an important role in supporting its clients' ESG objectives and increasingly is evolving to be a market leader in this area

· As part of this evolving trend, the Board believes that this is the right time to take full control of Ignite:

o Ignite performed ahead of the Board's expectations for FY2019 and during Q1 FY2020;

o Cross-selling potential and integration of Ignite can be accelerated; and

o The Group will benefit financially from consolidating Ignite's earnings and cash flow

· The Board believes that there is significant scope to accelerate its successful acquisition strategy moving forward as there will continue to be M&A opportunities to enhance the Group's strategic momentum

· The Group has a successful track record in M&A with 15 acquisitions successfully integrated within the Group's Corporate Division since 2011

· The development of the Group's markets is being accelerated by COVID-19 disruption and this is presenting an unprecedented opportunity to accelerate its strategic plan

· The Board has identified a significant short-term pipeline of acquisition opportunities which the net proceeds of the Fundraise will enable the Group to pursue

· The Group is actively reviewing a number of targets, with the potential to deliver enhanced capability, market share and / or significant synergies

· The Board will prioritise opportunities capable of delivering the greatest return and are confident that the net proceeds of the Fundraise can be deployed effectively in the near term

Ignite Acquisition highlights

· Ignite offers a broad spectrum of energy management services, with a strong focus on delivering energy efficiency projects and Optimisation Services to blue chip corporate customers, including Halford's, Starbucks and WH Smith

· The Acquisition will accelerate the Group's organic growth in Optimisation Services and will provide the opportunity:

o to have full control and utilise its position to leverage off its existing platform to cross-sell to its customer base, with the first cross sell already completed; and

o to develop market share in the £857 million Optimisation Services market, which is twice the size of the Assurance services market, and which remains relatively immature with only one in six corporate consumers using an energy adviser

· In the year ended 31 December 2019, Ignite generated revenues of £15.9 million and EBITDA of £4.3 million

· Following completion, the Group will benefit from 100% of Ignite free cash flow and Ignite will be included in full within Group EBITDA for the purposes of calculating Net Adjusted Leverage under the Group's existing facility agreement(currently not included)

· Ignite has achieved 15% CAGR organic revenue growth from 2016 - 2019

Fundraise highlights

· The Placing Price represents a discount of approximately 12.5 per cent. to the closing price of 17.15 pence of the Ordinary Shares on 9 July 2020

· Inspired Energy is proposing to raise up to £30.0 million (before expenses) through

o a placing of 71,396,800 new Ordinary Shares under the Firm Placing raising £10.7 million

o a placing of 128,603,200 new Ordinary Shares under by way of a Conditional Placing raising £19.3 million

· An Open Offer to Qualifying Shareholders at the Placing Price to raise up to an additional £5.0 million

· Shore Capital and Peel Hunt are acting as Joint Bookrunners in connection with the Placing

Update on trading and financial position (unaudited)

· Q2 2020 Group revenue decreased by c.9% (Q2 2019: £10.47m) and Adjusted EBITDA by c.49% (Q2 2019: £4.13m) reflecting the impact of COVID-19 outbreak on customer activity and energy usage

· Following a very strong Q1 2020, H1 2020 Group revenue increased by c.19% (H1 2019: £21.56m) with Adjusted EBITDA reducing by c.8% (H1 2019: £8.71m)

· H1 2020 cash conversion remained strong and in excess of 90%

· 30 June 2020 Net Debt of £34.7m with Adjusted Leverage at c.2.55x against a covenant at 3.10x

· Board's COVID-19 downside scenario planning case used as a basis for agreeing amendments to banking covenants predicated conservatively on >40% client energy consumption reduction in Q2 and Q3 2020

· I&C actual energy consumption reduction in April of 27%, May of 24% and June of 20% resulting in Q2 Adjusted EBITDA comfortably ahead of downside scenario

· Board's intention, subject to no material deterioration in conditions, to recommence payment of dividends with the declaration of an interim dividend in conjunction with the release of the Company's results for H1 2020 in September 2020

· The Board intends to adopt a progressive dividend policy with initial dividend coverage of at least 3x earnings

Commenting on the proposed acquisition, Mark Dickinson, Chief Executive Officer of Inspired Energy, said:

"I am delighted we have reached agreement to acquire the outstanding 60 per cent. of Ignite, which represents an important milestone in our strategic focus of accelerating the growth of our optimisation services offering. We are pleased with the progress made to date in identifying cross-selling opportunities and look forward to maximising the commercial overlap between the optimisation and assurance services' markets.

 "This fundraising will secure the Company's ability to respond quickly to, and execute, other acquisition opportunities which we believe are likely to emerge over the coming months and would add incremental capability to our growing platform.

"A key area of focus for Inspired continues to be its development of ESG solutions, where we provide assurance on buying strategies for customer and support them to reduce consumption and improve efficiency with the ultimate aim of delivering net zero carbon. Ignite, together with other M&A targets, will expand our service offering to customers."

Enquiries:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

1. Each of the above times and/or dates is subject to change at the absolute discretion of the Company and the Brokers. If any of the above times and/or dates should change, the revised times and/or dates will be announced through a Regulatory Information Service.

2. All of the above times refer to London time unless otherwise stated.

3. All events listed in the above timetable following the General Meeting are conditional on the passing of the Resolutions at the General Meeting.

4. Monies will be returned as soon as reasonably practicable to Qualifying CREST Shareholders not later than 4 business days

STATISTICS RELATING TO THE ACQUISITION AND THE FUNDRAISE

Note:

1. Assuming full take up under the Open Offer

The Appendices set out further information relating to the Acquisition and Placing and the terms and conditions of the Placing.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement.

Important notice

The information contained in this announcement is for information purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

This announcement, including the Appendix, and the information contained herein is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into or from the United States, Canada, Australia, New Zealand, Japan, the Republic of South Africa or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction (the "Restricted Jurisdictions"). This announcement does not constitute or form part of any offer to sell, or any solicitation of an offer to buy, securities in the United States. The Placing Shares and the Open Offer Shares (together the "New Ordinary 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 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 New Ordinary Shares is being made in the United States. The New Ordinary Shares are being offered and sold outside the United States in offshore transactions, as defined in, and in compliance with, Regulation S under the Securities Act. Persons receiving this announcement (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing and Open Offer. This announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for New Ordinary Shares in any jurisdiction including, without limitation, the Restricted Jurisdictions or any other jurisdiction in which such offer or solicitation is or may be unlawful. This announcement and the information contained in it is not for publication or distribution, directly or indirectly, to persons in a Restricted 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, Shore Capital and Corporate Limited, Shore Capital Stockbrokers Limited (together with Shore Capital and Corporate Limited, "Shore Capital") or Peel Hunt LLP (("Peel Hunt" and, together with Shore Capital, "Joint Bookrunners") or any of their respective directors, officers, partners, agents, employees or affiliates that would permit an offer of the New Ordinary Shares or possession or distribution of this announcement or any other publicity material relating to such New Ordinary Shares in any jurisdiction where action for that purpose is required. Persons receiving this announcement are required to inform themselves about and to observe any such restrictions.

This announcement is directed at and is only being distributed to: (A) persons in member states of the European Economic Area who are "qualified investors", within the meaning of Article 1(4)(a) of the Prospectus Regulation (EU) 1129/2017d, (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 or are persons to whom it may otherwise lawfully be communicated and (ii) are "qualified investors" as defined in section 86 of FSMA (each, a "Relevant Person"). No other person should act or rely on this announcement and persons distributing this announcement must satisfy themselves that it is lawful to do so. By accepting the terms of this announcement, you represent and agree that you are a Relevant Person.

This announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this announcement or the Placing and Open Offer relate is available only to Relevant Persons and will be engaged in only with Relevant Persons. As regards all persons other than Relevant Persons, the details of the Placing and Open Offer set out in this announcement are for information purposes only.

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

Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which may use words such as "aim", "anticipate", "believe", "could", "intend", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts. These forward-looking statements involve risks, assumptions and uncertainties that could cause the actual results of operations, financial condition, liquidity and dividend policy and the development of the industries in which the Company's businesses operate to differ materially from the impression created by the forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given those risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by the FCA, the London Stock Exchange, the AIM Rules or applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Any indication in this announcement of the price at which the Ordinary Shares 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 announcement is intended to be a profit forecast and no statement in this announcement 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.

Each of Shore Capital and Peel Hunt, which are authorised and regulated in the United Kingdom by the FCA, are acting for the Company and for no one else in connection with the Placing and Open Offer and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Shore Capital or Peel Hunt or for affording advice in relation to the Placing and Open Offer, or any other matters referred to in this announcement.

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 either Joint Bookrunner or by any of their respective affiliates or either Joint Bookrunner or their respective affiliates' agents, directors, officers and employees 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 therefor is expressly disclaimed. Nothing in this Important notice shall be effective to limit or exclude any liability for fraud or which, by law or regulation, cannot otherwise be so limited or excluded.

The New Ordinary Shares to be issued pursuant to the Placing and Open Offer will not be admitted to trading on any stock exchange other than AIM.

The Appendix to this announcement (which forms part of this announcement) sets out the terms and conditions of the Placing. By participating in the Placing, each person who is invited to and who chooses to participate in the Placing by making an oral and legally binding offer to acquire Placing Shares will be deemed to have read and understood this announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions set out in this announcement, and to providing the representations, warranties, undertakings and acknowledgements contained in the Appendix.

Members of the public are not eligible to take part in the Placing and no public offering of securities is or will be made.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that such New Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, Placees and Qualifying Shareholders should note that: the price of the New Ordinary Shares may decline and Placees and Qualifying Shareholders could lose all or part of their investment; the New Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the New Ordinary Shares is compatible only with Placees and Qualifying Shareholders who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraise. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Shore Capital Stockbrokers and Peel Hunt LLP will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Ordinary Shares. Each Placee and Qualifying Shareholder is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.

1. Introduction

The Company today announced its intention to raise an aggregate of £30.0 million (before expenses) through a placing of 200,000,000 New Ordinary Shares at the Placing Price. The Placing will be comprised of two tranches, with the first tranche comprising the 71,396,800 Firm Placing Shares, utilising the Company's existing shareholder authorities to issue new shares on a non-pre-emptive basis for cash, and the second tranche comprising the 128,603,200 Conditional Placing Shares, to be issued subject to Shareholder approval at the General Meeting.

The Conditional Placing Shares are being placed conditionally, amongst other things, on the passing of the Placing Resolutions at the GM and Third Admission. The Placing has not been underwritten.

Furthermore, to enable other Shareholders not able to participate in the Placing an opportunity to subscribe for additional Ordinary Shares, the Company is proposing to raise up to an additional £5.0 million (before expenses) by way of an Open Offer made to Qualifying Shareholders of up to 33,445,183 Open Offer Shares at the Placing Price on the basis of:

2 Open Offer Shares for every 43 Existing Ordinary Shares held on the Record Date

payable in full on acceptance.

The net proceeds from the Firm Placing Shares will be used to fund the Acquisition, also announced today, further details of which are set out below under the heading "Details of the Acquisition". The net proceeds from the Conditional Placing and the Open Offer will be used to enable the Group to take advantage of its active pipeline of potential acquisition targets which the Directors believe are capable of being executed in the near term, whilst also keeping the Group's gearing within the Board's target range.

The Board believes that there will continue to be significant scope to progress its successful acquisition strategy moving forward and the Fundraise will provide the Company with the capability to act decisively where value-enhancing opportunities are presented.

Further details of the Fundraise are set out below under the heading "Details of the Fundraise and the use of proceeds".

2. Information on Inspired

Inspired provides Assurance and Optimisation Services to over 2,800 clients in managing their entire energy cost equation, including both the price and consumption elements of a client's energy usage. The Group is organised into two divisions, being the Corporate division and the SME division. The Corporate division is the core of the business operation, accounting for c.90% of Group revenues in FY 2019. The Corporate division typically focuses on corporates who spend more than £100,000 per year on energy.

2.1. Corporate division

The Corporate division has seen significant growth both organically and through acquisition and delivers core services, including energy and water procurement, energy accounting, compliance consultancy and optimisation services for Corporate clients. The Group seeks to manage the whole energy cost equation for its corporate customers and deliver their Net Zero Carbon and ESG objectives.

The division has been organised to operate under a unified "Inspired" brand with the service offering segmented into four broad categories of customer focus being:

· Energy intensive;

· Estate intensive;

· Public Sector; and

· Mid-market.

The Corporate division focuses on providing products to suit the individual energy requirements of its clients offering to simplify, verify, inform, protect and optimise; this may encompass a number of products or services. To meet its clients evolving needs, the Group is seeking to continue the expansion of its service and solution offering, with the current focus on the following strategic areas:

· Optimisation Services: expansion of the Optimisation Services division to match client's increasingly sophisticated needs with respect to monitoring, targeting and efficiency;

· Software Solutions: creation of a Software Services division to provide software solutions across the energy value chain; and

· Research and Development: creation of an 'Inspired Incubator' to allow Inspired to support early stage energy and utility solutions, which have the potential to add value to energy consumers in the future.

In FY 2019, the Corporate division generated revenues of £43.7 million (up 60% on FY 2018) and Adjusted EBITDA of £20.2 million (up 47% on FY 2018). As at 30 June 2020, the Procurement Corporate Order Book stood at £61.5 million, having increased from £57.5 million as at 31 December 2019.

2.2. SME division

SME energy consultants contact prospective SME clients to offer price comparison services and contract arrangement services based on the situation of the customer. Leads are generated and managed by the Group's internally developed CRM and case management IT system. Tariffs are offered from a range of suppliers and the Group works with suppliers to increase the range of products available to SME clients. In FY 2019, the SME division generated revenues of £5.6 million and Adjusted EBITDA of £1.9 million.

3. Market overview

3.1. Corporate market overview

The corporate market consists of 1.1 million meters, being potential "Units of Opportunity" for the Group, of which c. 925,000 are electricity meters with the balance of 252,000 being gas meters with a total market value of c. £1.25 billion.

Based on the data provided by Cornwall Insight there are four service areas currently of relevance to the Group, which could provide additional Units of Opportunity, described further below, and the table below sets out both the estimated market value and the estimated available market opportunity based upon the current available levels of market penetration within each segment:

Source: Cornwall Insight

The Group's procurement and energy accounting services support the client in managing the price side of the client's energy cost equation. For these services, three in four UK Corporate energy consumers use a TPI to assist them in these areas. This represents a £0.43 billion market opportunity which the Board believes underpins the Group's stable underlying organic growth engine delivering 6% to 8% organic growth.

Only one in six Corporate energy consumers engage with TPIs on the consumption side of the energy cost equation which represents £0.85 billion of the £1.25 billion market. The Board believes this provides the Group with a significant opportunity within Optimisation Services and the Acquisition will help to accelerate further organic growth in this area.

3.2. The Group's current market position

The Group's current penetration within the four service areas is as follows:

Source: Cornwall Insight

A key focus of the Board is to increase the number of "Units of Opportunity" being meters in the market place, owned by companies with whom the Group has a transactional relationship. These are predominantly "Meters under Management" being meters covered by the Group's core services of Energy Procurement and Energy Accounting. Through the expansion of its service offering, the Group continues to increase the level of "Accessible Revenue" per Meter under Management by creating additional cross selling opportunities. This creates a "White Space Bank", being the quantified value of cross selling the Group's broader Compliance and Optimisation Services to existing Meters under Management, to provide an organic growth engine to complement the Group's M&A strategy.

4. 2020 trading update (unaudited)

4.1. Current trading and outlook

In Q1 FY 2020 Q1 Group revenue increased by c.46% (Q1 2019: £11.08m) with Adjusted EBITDA increasing by c.29% (Q1 2019: £4.58m). With the impact of COVID-19 in Q2 FY 2020 Group revenue decreased by (c.9%) (Q2 2019: £10.47m) with Adjusted EBITDA decreasing by (c.49%) (Q2 2019: £4.13m). Over the period for the six months to 30 June 2020 Group revenue increased by c.19% (H1 2019: £21.56m) with Adjusted EBITDA decreasing by (c.8%) (H1 2019: £8.71m). Cash conversion remained high with cash conversion in H1 being in excess of 90%.

Following the outbreak of COVID-19 the Board has undertaken detailed scenario planning to manage the financial position and risk. The Board considered a "downside scenario" for the purpose of agreeing amendments to the Group's banking covenants this assumed a >40% reduction in energy consumption for Q2 and Q3 2020. To date market data indicates year on year industrial and commercial consumption reductions of 27% in April, 24% in May and 20% in June, as such Group EBITDA has remained comfortably ahead of the Board's "downside scenario".

4.2. Financial position and liquidity

For the period ended 30 June 2020 the Group's net debt was £34.7 million (30 June 2019: £25.1 million) with cash equivalents of £11.5 million on hand. Approximately £14.0m of the Group's £60.0 million Revolving Credit Facility is undrawn with an additional £25.0 million accordion option available. The Group's cash position at 30 June 2020 was enhanced by: i) utilisation of the Coronavirus Job Retention Scheme, ii) Q2 VAT payment holiday, iii) Q2 PAYE payment holiday and iv) election not to declare a final dividend in response to COVID-19.

From Completion the Group will receive the full free cash flow benefits of wholly owning Ignite. Currently, Inspired receives 40% of the profits distributed by Ignite every six months via dividends.

4.3. Q2 2020 Trading performance and Covenant Performance

§ Corporate Division Adjusted EBITDA: c.£1.5 million favourable

§ SME Division Adjusted EBITDA: (c.£0.1 million) adverse

§ Q2 renegotiated Adjusted Leverage covenant 3.10x, actual Q2 outturn c.2.55x

4.4. Dividend policy

Since its IPO in 2011, Inspired has established a track record of delivering on financial forecasts which has facilitated a consistent and progressive dividend policy. However, considering the exceptional circumstances caused by the COVID-19 outbreak, the Board deemed it prudent to defer declaration of the FY19 final dividend and reassess the position on release of the 2020 interim results. The Board remains confident in the Group's ability to continue to pay a dividend and it is the Board's intention, subject to no material deterioration in conditions, to recommence payment of dividends with the declaration of an interim dividend in conjunction with the release of the Company's results for H1 2020 in September 2020. The Board intends to adopt a progressive dividend policy with initial dividend coverage of at least three times.

5. Background to and rationale for the Fundraise

5.1. UK Corporate Energy market and ESG

ESG is becoming of growing importance for UK corporates. The Board believes that this will be an area of increased focus as the economy is rebuilt in the coming period and ESG becomes more central to the investment decisions of businesses. Energy is one of the highest cost components in the ESG wheel, set out below, and one of the most data intensive elements of the climate change segment.

Corporate energy spend is estimated to be £17.7 billion yet currently, many companies are unable to accurately collect and audit their energy consumption information and struggle to identify and implement initiatives to meaningfully reduce energy usage within their operations.

Inspired provides services to over 2,400 UK corporate business consumers, which represent c.6.5% of the UK's expenditure on electricity and over 400 in the Republic of Ireland with the Group supporting corporates as they seek to reduce energy consumption, improve efficiency and achieve targets aligned with the goal of Net Zero Carbon emissions.

The Group has the ability to play an important role in supporting its clients' ESG objectives and is seeking to establish itself as a market leader in this area. In 2019, the Group delivered significant growth and record results in a year in which the Group completed strategically important and value-enhancing investments and acquisitions and further expanded its capacity, both financially and operationally. The acquisition of an initial 40% of the issued share capital of Ignite was a key milestone for the Group. Ignite is an optimisation services specialist and as such expanded the Group's service offering and providing significant cross-selling opportunities, which have substantially increased the Group's white space bank of opportunity. The Board believes that the validity of this strategy is underpinned by the Group's positive start to Q1 FY2021 which included the successful completion of the Group's first cross sell to Ignite notwithstanding the challenges faced in the period due to COVID-19. The Board expects the contribution of Optimisation Services to materially grow over the financial year as the Group continues to develop its broader ESG offering. The Group has already experienced a significant upturn in the number of inbound queries from clients in relation to Optimisation Services arising out of a focus from the client base on Net Zero Carbon objectives and the significance of ESG reporting.

5.2. Strategy

The Group intends to continue to expand both the breadth and scale of its service offering by expanding its Corporate division, which includes traditional Assurance Services which help energy consumers manage the price side of their cost equation and cross-selling of Optimisation Services to existing clients, helping them manage the consumption side of that cost equation. Organic growth will be supplemented by ongoing M&A activity. The Group's focus for acquisitive growth is:

a) continuing to build Optimisation Services delivery capability;

b) further consolidation of the energy advisory sector; and

c) development of adjacent capability within the ESG wheel.

The strategic investment in Ignite and acquisitions of Waterwatch and IU Energy have, in the Directors' opinion, significantly accelerated the Group's Optimisation Services capability. During the next 12 months Inspired will continue to focus on ESG as a core driver of growth.

6. Information on Ignite

Ignite was founded in 2009 and operates primarily from Headquarters in Oxfordshire, with further premises in Northampton and Harrogate. Ignite offers a broad spectrum of energy management services, with a strong focus on delivering energy efficiency projects and optimisation services to blue chip corporate customers, including Halford's, Starbucks and WH Smith. Ignite's service offering includes:

· optimisation services to support clients through increasing the effectiveness of their energy consumption by implementing large scale energy demand reduction projects; and

· a specialism in efficiency projects and optimisation services, which the Directors believe is highly complementary to Inspired's customer base, with a particular relevance to the Group's estate and energy intensive customer segments.

The company currently employs 65 staff, its strategy is to focus on estate intensive corporates, with greater than 30 operating locations and an annual energy usage volume of more than 25 GWh. Ignite has managed to generate material savings for its customers including c.£3.8 million per annum for WH Smith and c.£1.5 million per annum for SSP Group plc.

6.1. Summary financial results of Ignite

In FY 2019 Ignite generated £15.9 million in revenues delivering a 27% EBITDA margin. Ignite has achieved 15% CAGR organic revenue growth from 2016 - 2019 and is highly cash generative.

6.1.1. Profit & Loss*

6.1.2. Balance sheet*

Note:

*Ignite financials to 31 December 2018 and 2019 are audited financial statements which were prepared under UK GAAP. From completion of the strategic investment in August 2019, INSE consolidated Ignite wholly into the Inspired Group and the conversion to IFRS (and notably IFRS15 and IFRS16) did not result in a material change in the reported financial results.

During the first half of FY20, Ignite delivered £5.9 million in revenues and £1.9 million in EBITDA. COVID-19 created a delay in Ignite's ability to progress its optimisation projects and therefore Ignite was break even in Q2 2020. Whilst the business is expected to recover quickly in a post lock down environment, the consideration structure (set out in full in 8.2), is designed such that the Initial Consideration of £11.0 million is effectively the minimum price of £10.8 million under the superseded Option Agreement. Tranche 1 of the Earn-out Consideration only becomes payable when Ignite returns to an LTM FY19 run rate of £5.22m of EBITDA before deduction for central overheads. Furthermore, Tranches 2, 3 and 4 of the Earn-out Consideration only become payable on delivery of year-on-year growth in 2021, 2022 and 2023 respectively.

7. Background to and reasons for the Acquisition

The Acquisition is consistent with Inspired's stated strategy of generating growth organically and through acquisition.

The UK Optimisation Services market is a £857 million opportunity, twice the size of the Assurance services market, and remains relatively immature with only one in six corporate consumers using an energy adviser. In addition, service delivery models in this area, which are typically project based rather than recurring are expected to evolve over time as customer demand is accelerated due to the growing demands of consumers and investors with respect to Net Zero Carbon and ESG. Against this backdrop, the Board has been focused on ensuring that, whilst it continues to build out its Optimisation Services capabilities, the Group remains flexible and able to adapt its offering in this area in line with market developments.

As part of this strategy, the Group acquired an initial 40% interest in Ignite on 2 August 2019. Ignite has achieved material improvements in the energy efficiency for its clients delivering significant reduction in costs.

Ignite achieved 15% CAGR organic growth from 2016-2019 prior to the benefit of access to Inspired's energy intensive customer base. In FY 2018 Ignite generated £12.4 million of revenues from c.10 clients generating significantly higher levels of revenues and EBITDA per meter point relative to Inspired. Revenues at Ignite continued to grow to £15.9 million in FY 2019 from c.23 clients. Ignite performed ahead of the Board's expectations for FY 2019 and Q1 FY 2020 and the Board has already identified 43 customers which could benefit from the services that Ignite provides giving significant cross-selling opportunities to the Group.

The Acquisition will provide Inspired with the opportunity to have full control and utilise its position to leverage off its existing platform to cross-sell the broader range of capabilities and services that the Group provides into Ignite's customer base. Already, since the Company's acquisition of the initial stake in Ignite, Ignite has achieved its first cross sell and has developed a pipeline of further opportunities. The Board believes the Acquisition will enable an acceleration of this organic growth.

The Board believes that there is scope to generate operational efficiencies across the enlarged Group through economies of scale and the dilution of central costs as well as operational synergies through the alignment of internal IT systems, procedures and processes.

7.1. Benefits to the Group's balance sheet and banking covenants

From Completion the Group will receive the full free cash flow benefits of wholly owning Ignite. Currently, Inspired receives 40% of profits distributed by Ignite every six months via dividends. Following Completion, the Group will have the benefit of cash as it is generated.

Subsequent to the year end, the Group agreed an amendment with its banks to its leverage covenant covering the test periods ending 30 June 2020 through to 30 June 2021 (inclusive) as part of its prudent and measured response to the COVID-19 pandemic. Under the Net Adjusted Leverage definition per the facility agreement, the EBITDA contribution from Ignite was not included within Group EBITDA under the existing shareholder structure, with the Acquisition Inspired will get the full benefit of Ignite's contribution. On Completion, Inspired will include the full 100% of LTM EBITDA for Ignite in calculating the Net Adjusted Leverage covenant.

The treatment of Ignite EBITDA, the FCF of ownership and the funding of the transaction via equity, will significantly deleverage the Group from a covenant perspective on Completion.

8. Details of the Acquisition

8.1. Background

On 2 August 2019, the Company announced the acquisition of a 40% stake in Ignite. The Group paid consideration of £5.0 million on a cash free debt free basis, with a further £3.0 million of contingent consideration on delivery of £4.0 million adjusted EBITDA for the year ending 31 December 2019. The £3.0 million of contingent consideration was paid in full in May 2020.

Pursuant to an option agreement entered into by Inspired with the other Ignite shareholders ("Option Agreement") from completion of the acquisition of the 40% stake in Ignite until 31 July 2021, Inspired has an exclusive one-way call option to acquire the outstanding balance of 60% of the issued share capital of Ignite ("Remaining Ignite Shares"). Under the terms of the Option Agreement, Inspired would pay consideration for the Remaining Ignite Shares which equates to an enterprise value of 6.0x EBITDA ("Option Consideration"). The Option Consideration was to be based off a minimum EBITDA of £3.0 million, and at the time of exercising the Option Agreement, an amount of £10.8 million would become payable by Inspired . Upon such exercise, in circumstances where the Ignite EBITDA was greater than £3.0 million in either of the scenarios shown below, then additional consideration would become payable by Inspired, being the higher of 60% of:

· 6.0x Ignite's EBITDA for the last twelve months ending on the date of the exercise of the option under the Option Agreement;

· 6.0x Ignite's EBITDA for the financial year ending the year in which the option is exercised under the Option Agreement; or

· less the £10.8 million already paid on exercise of the option, subject to a maximum EBITDA of £7.0 million.

Any additional consideration due pursuant to such option would be payable within 90 days following the end of the financial year in which the Option Agreement is exercised. Ignite's financial year end is 31 December.

8.2. Acquisition Agreement

Inspired has agreed revised terms with the Vendors of Ignite to acquire the remaining 60% of Ignite.

8.2.1. Initial Consideration

Under the terms of the Acquisition Agreement, Inspired has agreed to acquire the remaining 60% of issued share capital of Ignite which it does not already own, from the Vendors for the Initial Consideration of £11.0 million, on a cash free: debt free basis, consisting of £5.5 million in cash and a further £5.5 million to be satisfied through the issue of the Consideration Shares. Completion of the Acquisition is conditional on the receipt of the subscription monies relating to the Firm Placing Shares.

The Initial Consideration of £11.0 million is effectively the minimum price (£10.8 million) that could have been paid under the superseded Option Agreement entered into at the time of the strategic investment in August 2019. The Initial Consideration has been split to include £5.5 million in cash and £5.5 million of Consideration Shares to align the Vendors with wider shareholder interests.

The Acquisition Agreement contains warranties and indemnities in favour of Inspired customary for a transaction of this nature. The fundamental warranties relating to the Vendors' title to the shares being sold, their capacity to sell such shares and the solvency of the Vendors and of Ignite were given on signing of the Acquisition Agreement and will be repeated on completion of the Acquisition ("Completion"). The remaining warranties relating to the business of Ignite were also given on signing of the Acquisition Agreement but will not be repeated on Completion.

However, the Vendors also provide customary business conduct protections in respect of the period post-signing and pre-Completion of the Acquisition Agreement and in addition to the receipt of subscription monies relating to the Firm Placing Shares, Completion is also conditional on no breach of those provisions having occurred and the Vendors not having caused or allowed to occur a material breach of any warranties.

8.2.2. Earn-out Consideration

Under the Acquisition Agreement further contingent consideration of up to a maximum of £19.0 million, may be payable subject to the achievement of certain performance criteria ("Earn-out Consideration"). Payment of the Earn-out Consideration is based upon the financial performance of Ignite to FY 2023. Should the Earn-out Consideration become payable in full, the Company will pay in aggregate an additional £11.2 million in cash and £7.8 million through the issue of Contingent Consideration Shares. The Earn-out Consideration will be payable as follows:

*Any payment due to be split 50:50 in cash and Contingent Consideration Shares

The net proceeds raised from the issue of the Firm Placing Shares will finance the Initial Consideration and, if payable in full, the cash requirements for the first two tranches of the Earn-out Consideration. Tranches 3 and 4 of the Earn-out Consideration would be satisfied from cash generated as a result of the financial performance of Ignite required to achieve payment of the Earn-out Consideration in full.

The Contingent Consideration Shares will be issued at a price being the lower of:

· the average of the closing middle market quotations for an Ordinary Share for each of the last five dealing days before exchange under the Acquisition Agreement; or

· the average of the middle market quotations for an Ordinary Share for each of the last five dealing days before the relevant payment date for the Contingent Consideration Shares.

8.2.3. Lock in and Orderly Market provisions in respect of the Consideration Shares and Contingent Consideration Shares

Consideration Shares

The Vendors have entered into a restriction on sale of their Consideration Shares. The Vendors have each entered into lock-in agreements confirming that they will not (and will procure, insofar as they are able, that any of their associates will not) dispose of any interest in Ordinary Shares following completion, save in certain very limited circumstances. The restrictions are tapered as follows:

(a) Until 31 August 2021 in respect of 100% of the Consideration Shares

(b) Until 31 March 2022 in respect of 75% of the Consideration Shares

(c) Until 31 August 2022 in respect of 50% of the Consideration Shares

(d) Until 31 August 2023 in respect of 25% of the Consideration Shares

Contingent Consideration Shares

The Vendors have each also undertaken that they will not (and will procure, insofar as they are able, that any of their associates will not) dispose of any interest in Contingent Consideration Shares for a period of 12 months following the issue of the relevant tranche of Contingent Consideration Shares unless such disposal is effected through the Brokers, to ensure an orderly market ("Orderly Market Period"). Any sale of Contingent Consideration Shares during the Orderly Market Period will be at the sole discretion of the Brokers.

9. Details of the Fundraise and use of proceeds

9.1. Placing

The Fundraise will raise, in aggregate, £35.0 million (before commissions and expenses) through the Placing and Open Offer (assuming the Open Offer is taken up in full) at a price of 15 pence per New Ordinary Share. Inspired is proposing to raise up to £30.0 million (before expenses) pursuant to the Placing with institutional and other investors. The Placing Price equates to a discount of 12.5 per cent. to the closing price of 17.15 pence on the Latest Practicable Date prior to the announcement of the Fundraise.

The Placing Shares, when issued, will represent approximately 20.3 per cent. of the Enlarged Share Capital immediately following Third Admission. The Firm Placing Shares and Conditional Placing Shares will rank in full for all dividends with a record date on or after the date of First Admission or Third Admission respectively, and otherwise equally with the Ordinary Shares in issue from the date of Admission.

The Firm Placing is conditional, inter alia, upon the Placing and Open Offer Document not having been terminated and becoming unconditional in respect of those shares, including First Admission which it is expected will become effective, and dealings in the Firm Placing Shares are expected to commence, at 8.00 am. on 16 July 2020.

The Conditional Placing and Open Offer (which is not being underwritten) is conditional, amongst other things, upon:

(a) the Firm Placing having become unconditional and First Admission having become effective;

(b) the Placing and Open Offer Document becoming unconditional in all respects as regards the Conditional Placing and Open Offer (Third Admission occurring) and not having been terminated in accordance with its terms prior to Third Admission;

(c) the Placing Resolutions set out in the Notice of General Meeting being approved by the Shareholders; and

(d) Admission of the Conditional Placing Shares and Open offer becoming effective on or before 8.00 a.m. on 29 July 2020 or such later date as the Company, Shore Capital and Peel Hunt may agree, being no later than 8.00 a.m. on 31 August 2020.

9.2. Open Offer

Inspired is proposing to raise up to approximately £5.0 million (before expenses) pursuant to the Open Offer, all Qualifying Shareholders are being given the opportunity to participate in the Open Offer.

The Open Offer provides Qualifying Shareholders with the opportunity to apply to acquire Open Offer Shares at the Placing Price pro rata to their holdings of Existing Ordinary Shares as at the Record Date on the following basis:

2 Open Offer Shares for every 43 Existing Ordinary Shares

Entitlements to apply to acquire Open Offer Shares will be rounded down to the nearest whole number and any fractional entitlement to Open Offer Shares will be disregarded in calculating the Open Offer Entitlement. Fractions of Open Offer Shares will not be allotted to Shareholders in the Open Offer and entitlements under the Open Offer will be rounded down to the nearest whole number of Open Offer Shares and made available in the Excess Application Facility. Qualifying Shareholders who do not take up their Open Offer Entitlements in full will experience a dilution to their interests of approximately 27.0 per cent. following Third Admission (assuming full take up under the Open Offer). Qualifying Shareholders should note that the Open Offer Shares have neither been placed under the Placing subject to clawback under the Open Offer nor have they been underwritten, and that the Placing is not conditional upon the number of applications received under the Open Offer. The Open Offer is subject to, amongst other matters, the Placing and Open Offer Document becoming unconditional in all respects (other than as to Third Admission) and the passing of the Placing Resolutions, as set out in the Notice of General Meeting. The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Third Admission.

9.2.1. Excess applications

The Open Offer is structured to allow Qualifying Shareholders to subscribe for Open Offer Shares at the Placing Price pro rata to their existing holdings of Ordinary Shares on the Record Date.

Qualifying Shareholders may also make applications in excess of their Open Offer Entitlements. To the extent that Open Offer Entitlements are not subscribed by Qualifying Shareholders, such Excess Shares will be available to satisfy such excess applications, subject to a maximum of 33,445,183 Excess Shares in aggregate. To the extent that applications are received in respect of an aggregate of more than 33,445,183 Excess Shares, excess applications will be scaled back accordingly.

Qualifying Shareholders should note that the Open Offer is not a rights issue

Qualifying Non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that, in the Open Offer, unlike in a rights issue, any entitlements to Open Offer Shares not applied for or not taken up will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer.

Overseas Shareholders

The attention of Qualifying Shareholders who have registered addresses outside the United Kingdom, or who are citizens or residents of countries other than the United Kingdom, or who are holding Existing Ordinary Shares for the benefit of such persons (including, without limitation, custodians, nominees, trustees and agents), or who have a contractual or other legal obligation to forward the Circular, Form of Proxy, or, if relevant, the Application Form to such persons, is drawn to the information which appears in paragraph 6 of Part II of this the Circular.

In particular, Qualifying Shareholders who have registered addresses in or who are resident in, or who are citizens of, countries other than the UK, should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to take up their entitlements under the Open Offer.

CREST Instructions

Application has been made for the Open Offer Entitlements for Qualifying CREST Shareholders to be admitted to CREST. It is expected that the Open Offer Entitlements will be admitted to CREST on 14 July 2020. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim on any Open Offer Entitlements.

The Excess CREST Open Offer Entitlements will also be admitted to CREST on 14 July 2020. These are not applicable to any bona fide market claim.

Qualifying Non-CREST Shareholders will receive an Application Form which gives details of their Open Offer Entitlement (as shown by the number of the Open Offer Shares allocated to them) with the Circular. If they wish to apply for Open Offer Shares under the Open Offer, they should complete the accompanying Application Form in accordance with the procedure for application set out in the Circular and on the Application Form itself. The completed Application Form, accompanied by full payment, should be returned by post in the enclosed business reply paid envelope to Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 27 July 2020.

Qualifying CREST Shareholders will receive no Application Form with the Circular but will receive a credit to their appropriate stock account in CREST in respect of their Open Offer Entitlement and Excess CREST Open Offer Entitlements, equivalent to 10 times their Ordinary share holding as at the Record Date. They should refer to the procedure for application set out in Part II of the Circular. The relevant CREST instruction must have settled by no later than 11.00 a.m. on 27 July 2020.

The latest time for applications under the Open Offer to be received is 11.00 a.m. on 27 July 2020. The procedure for application and payment depends on whether, at the time at which application and payment is made, a Qualifying Shareholder has an Application Form in respect of their Open Offer Entitlement or has their Open Offer Entitlement credited to their stock account in CREST. If you are in any doubt as to what action you should take, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent professional adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

9.3. The Placing and Open Offer Document

Pursuant to the terms of the Placing and Open Offer Document, the Brokers have conditionally agreed to use their reasonable endeavours, as agents for the Company, to procure subscribers for the Placing Shares at the Placing Price with certain institutional and other investors.

The Placing and Open Offer Document contains warranties from the Company in favour of the Brokers in relation to, amongst other things, the accuracy of the information in the Circular and other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Shore Capital and Peel Hunt in relation to certain liabilities they may incur in respect of the Fundraise. The Brokers have the right to terminate the Placing and Open Offer Document in certain circumstances prior to First and /or Third Admission, in particular, in the event of a material breach of the warranties given in the Placing and Open Offer Document, the failure of the Company to comply in any material respect with its obligations under the Placing and Open Offer Document, the occurrence of a force majeure event which in the Brokers' opinion may be material, or a material adverse change affecting the financial position or business or prospects of the Company.

9.4. Settlement and dealings

An application has been made to the London Stock Exchange for the Firm Placing Shares to be admitted to trading on AIM and First Admission is expected to become effective and dealings in the Firm Placing Shares are expected to commence on 16 July 2020. An application has been made to the London Stock Exchange for the Consideration Shares to be admitted to trading on AIM and Second Admission is expected to become effective and dealings in the Consideration Shares are expected to commence on 17 July 2020. Neither First Admission nor Second Admission will be subject to the passing of the Placing Resolutions at the GM. An application will be made to the London Stock Exchange for the Conditional Placing Shares and the Open Offer Shares to be admitted to trading on AIM. It is expected that Third Admission will become effective and that dealings in the Conditional Placing Shares and the Open Offer Shares will commence on 29 July 2020, subject to the passing of the Placing Resolutions at the GM.

The Firm Placing Shares being issued pursuant to the Placing will, on First Admission, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after First Admission and will otherwise rank pari passu in all respects with the issued Ordinary Shares.

The Consideration Shares will, on Second Admission, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after Second Admission and will otherwise rank pari passu in all respects with the issued Ordinary Shares.

The Conditional Placing Shares being issued pursuant to the Placing and the Open Offer Shares being issued pursuant to the Open Offer will, on Third Admission, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after Third Admission and will otherwise rank pari passu in all respects with the issued Ordinary Shares.

9.5. Use of proceeds

The Board is mindful of the uncertainty presented by the COVID-19 crisis. Inspired is a leader in its markets, the evolution of which will be accelerated by the current backdrop and the Board believes that there is significant scope to progress its successful acquisition strategy moving forward as there will continue to be M&A opportunities to accelerate the Group's strategic momentum. The Fundraise will provide the Company with the financial capability to act decisively where value-enhancing opportunities are presented.

The Company intends to use the net proceeds of the Firm Placing to finance the cash element of the Initial Consideration of the Acquisition and the cash payments of the first two tranches of the Earn-out Consideration, if payable. The Company intends to use the net proceeds of the Conditional Placing and the Open Offer to continue its stated acquisition strategy to acquire either one larger acquisition or several smaller bolt-on acquisitions. The Group have a number of opportunities that are currently under review and active consideration that the Directors' believe are capable of being executed in the near term.

10. Irrevocable undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolutions from all Directors who hold Ordinary Shares together with certain Shareholders who hold, or are interested in, an aggregate of 6,945,482 Existing Ordinary Shares, representing approximately 1.0 per cent. of the Company's current issued share capital.

11. Recommendation

The Directors consider the Fundraise to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend that Shareholders vote in favour of the Resolutions as they intend to do in respect of their beneficial holdings amounting, in aggregate, to 6,945,482 Existing Ordinary Shares, representing approximately 1.0 per cent. of the current issued share capital of the Company.

Definitions

Note: Any reference to any provision of any legislation includes any amendment, modification, re-enactment or extension of it. Words importing the singular include the plural and vice versa and words importing the masculine gender shall include the feminine or neuter gender.

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 AND NO PUBLIC OFFERING OF SECURITIES WILL BE MADE. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO IN IT ARE DIRECTED ONLY AT PERSONS SELECTED BY SHORE CAPITAL STOCKBROKERS LIMITED ("SCS") AND/OR PEEL HUNT LLP ("PEEL HUNT" AND TOGETHER WITH SCS, THE "JOINT BOOKRUNNERS" AND EACH A "JOINT BOOKRUNNER") WHO ARE (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE "QUALIFIED INVESTORS", AS DEFINED IN ARTICLE 2(E) OF THE PROSPECTUS REGULATION (REGULATION (EU) 2017/1129) AS AMENDED FROM TIME TO TIME (THE "PROSPECTUS REGULATION") AND (B) IF IN THE UNITED KINGDOM, INVESTORS WHO ARE QUALIFIED INVESTORS, AS DEFINED IN ARTICLE 2(E) OF THE PROSPECTUS REGULATION (ACTING AS PRINCIPAL OR IN CIRCUMSTANCES TO WHICH SECTION 86(2) OF FSMA APPLIES) AND WHO ARE 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"); (II) FALL WITHIN THE DEFINITION OF "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" IN ARTICLE 49(2)(A) TO (D) OF THE FPO; OR (III) OTHERWISE PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT 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 ANNOUNCEMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED OR PROHIBITED BY LAW. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.

This announcement does not constitute or form part of any offer to sell, or any solicitation of an offer to buy, securities in the United States. 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 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. The Placing Shares are being offered and sold outside the United States in offshore transactions, as defined in, and in compliance with, Regulation S under the Securities Act. Persons receiving this announcement (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing.

CANADA

No prospectus has been filed with any securities commission or similar regulatory authority in Canada in connection with the offer and sale of the Placing Shares. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this document or on the merits of the Placing Shares and any representation to the contrary is an offence. The offer and sale of the Placing Shares in Canada is being made on a private placement basis only and is exempt from the requirement that the issuer prepares and files a prospectus under applicable Canadian securities laws. Any resale of Placing Shares acquired by a Canadian investor in this offering must be made in accordance with applicable Canadian securities laws, which resale restrictions may under certain circumstances apply to resales of the Placing Shares outside of Canada.

As applicable, each Canadian investor who purchases the Placing Shares will be deemed to have represented to the issuer, the underwriters and to each dealer from whom a purchase confirmation is received, as applicable, that the investor (i) is purchasing as principal, or is deemed to be purchasing as principal in accordance with applicable Canadian securities laws, for investment only and not with a view to resale or redistribution; (ii) is an "accredited investor" as such term is defined in section 1.1 of National Instrument 45-106 Prospectus Exemptions ("NI 45-106") or, in Ontario, as such term is defined in section 73.3(1) of the Securities Act (Ontario); and (iii) is a "permitted client" as such term is defined in section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this announcement and/or the Circular (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts ("NI 33-105") (or section 3A.4 in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction), this offering is conducted pursuant to any exemption from the requirement that Canadian investors be provided with certain underwriter conflicts of interest disclosure that would otherwise be required pursuant to subsection 2.1(1) of NI 33-105.

IMPORTANT INFORMATION

This announcement 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 Restricted Jurisdictions (as defined above) or any other jurisdiction in which such offer or solicitation is or may be unlawful. This announcement and the information contained in it is not for publication or distribution, directly or indirectly, to persons in a Restricted 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, SCS, SCC (as defined below) or Peel Hunt or any of their respective directors, officers, partners, agents, employees or affiliates that would permit an offer of the Placing Shares or possession or distribution of this announcement or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this announcement 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 announcement should seek appropriate advice before taking any action.

Any indication in this announcement of the price at which the Ordinary Shares 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 announcement is intended to be a profit forecast and no statement in this announcement 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.

Shore Capital and Corporate Limited ("SCC"), which is authorised and regulated by the FCA, is acting as nominated adviser to the Company for the purposes of the AIM Rules. Shore Capital Stockbrokers Limited ("SCS"), which is a member of the London Stock Exchange and is authorised and regulated by the FCA, is acting as joint broker to the Company in the United Kingdom for the purposes of the AIM Rules. Persons receiving this document should note that SCC and SCS are acting exclusively for the Company and no one else and will not be responsible to anyone, other than the Company, for providing the protections afforded to customers of SCC and SCS or for advising any other person on the transactions and arrangements described in this document. No representation or warranty, express or implied, is made by SCC or SCS as to any of the contents of this document in connection with the Acquisition and Placing, or otherwise.

Peel Hunt LLP ("Peel Hunt"), which is a member of the London Stock Exchange and is authorised and regulated by the FCA, is acting exclusively for the Company in connection with the Placing and no one else and will not be responsible to anyone, other than the Company, for providing the protections afforded to customers of Peel Hunt or for advising any other person on the transactions and arrangements described in this document. No representation or warranty, express or implied, is made by Peel Hunt as to any of the contents of this document in connection with the Acquisition and Placing, or otherwise.

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 subscribe for Placing Shares is deemed to have read and understood this announcement in its entirety (including this Appendix) and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained in this Appendix.

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

Details of the Placing and Open Offer Agreement and the Placing Shares

The Company has today entered into a placing and open offer agreement (the "Placing and Open Offer Agreement") with the Joint Bookrunners. Pursuant to the Placing and Open Offer Agreement, the Joint Bookrunners have, subject to the terms set out in such agreement, agreed to use reasonable endeavours, as agents of the Company, to procure Placees for the Firm Placing Shares and the Conditional Placing Shares (the "Placing").

The Placing 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 of £0.00125 each in the capital of the Company ("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 Placing Shares.

The Placing Shares will be issued free of any encumbrance, lien or other security interest.

Applications for Admission

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that (i) First Admission will become effective and that dealings in the Firm Placing Shares will commence on or around 8.00 am on 16 July 2020; (ii) Second Admission will become effective and that dealings in the Consideration Shares will commence on or around 8.00 am on 17 July 2020; and (ii) Third Admission will become effective and that dealings in the Conditional Placing Shares and the Open Offer Shares will commence on or around 29 July 2020, subject to the passing of the Placing Resolutions which are set out within the Notice of General Meeting.

Principal terms of the Placing

1. The Joint Bookrunners are acting as agents of the Company in connection with the Placing on the terms and subject to the conditions of the Placing and Open Offer Agreement.

2. Participation in the Placing will only be available to persons who may lawfully be, and are, invited by the Joint Bookrunners to participate. The Joint Bookrunners and any of their affiliates are entitled to participate in the Placing as principal.

3. The price per Placing Share (the "Placing Price") is a fixed price of £0.15 and is payable to the relevant Joint Bookrunner (as agent for the Company) by all Placees.

4. Each Placee's allocation, including how each Placee's allocation will be allocated between First Admission and Third Admission, will be determined by the Joint Bookrunners in accordance with the principles of allocation discussed between the Joint Bookrunners and the Company and will be confirmed orally by either SCS or Peel Hunt and each Placee's allocation and commitment will be evidenced by a contract note issued to such Placee by the relevant Joint Bookrunner. The terms of this Appendix will be deemed incorporated in that contract note.

5. SCS or Peel Hunt's oral confirmation of an allocation will give rise to an irrevocable, legally binding commitment by that person (who at that point becomes a Placee), in favour of such Joint Bookrunner and the Company, under which it agrees to acquire the number of Placing Shares allocated to it on the terms and subject to the conditions set out in this Appendix and in accordance with the Company's articles of association. Except with the relevant Joint Bookrunner's consent, such commitment will not be capable of variation or revocation at the time at which it is submitted.

6. Each Placee's allocation and commitment to subscribe for Placing Shares will be made on the terms and subject to the conditions in this Appendix and will be legally binding on the Placee on behalf of which it is made and except with the relevant Joint Bookrunner's consent will not be capable of variation or revocation after the time at which it is submitted.

7. Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to SCS or Peel Hunt (as applicable), as agent for the Company, to pay to it (or as it 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 and the Company has agreed to allot and issue to that Placee.

8. Except as required by law or regulation, no press release or other announcement will be made by the Joint Bookrunners or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.

9. Irrespective of the time at which a Placee's allocation(s) pursuant to the Placing is/are confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".

10. All obligations under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing".

11. By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

12. The Placing is not conditional on the Acquisition completing and therefore there is a risk, albeit the Directors consider it highly unlikely, that the Placing will complete and the Acquisition does not complete.

13. To the fullest extent permissible by law, neither: (a) the Joint Bookrunners, nor (b) any of their affiliates, agents, directors, officers, consultants or employees nor (c) to the extent not contained within (a) or (b), any person connected with the Joint Bookrunners as defined in FSMA ((b) and (c) being together "Affiliates" and individually an "Affiliate" of the Joint Bookrunners) shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any other person whether acting on behalf of a Placee or otherwise. In particular, neither Joint Bookrunner nor any of their affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of each Joint Bookrunner's conduct of the Placing or of such alternative method of effecting the Placing as the Joint Bookrunners and the Company may agree. Nothing in this Appendix shall be effective to limit or exclude any liability for fraud or which, by law or regulation, cannot otherwise be so limited or excluded.

Conditions of the Placing

The Firm Placing is conditional upon the Placing and Open Offer Agreement becoming unconditional in respect of the Firm Placing and not having been terminated in accordance with its terms prior to First Admission. The Conditional Placing is conditional upon the Placing and Open Offer Agreement becoming unconditional in respect of the Conditional Placing and not having been terminated in accordance with its terms prior to Third Admission.

The obligations of each of the Joint Bookrunners under the Placing and Open Offer Agreement are, and the Firm Placing, is conditional upon, inter alia:

1. the Firm Application and all other documents required to be submitted with the Firm Application, together with payment for the relevant AIM fee (as defined in the AIM Rules) payable to the Exchange, being delivered to the Exchange by SCC not later than 8.00 am on 13 July 2020;

2. the First Announcement being released through a Regulatory Information Service (as defined in the AIM Rules) by no later than 7.00 am on 10 July 2020 or such later time and/or date agreed between the Company, SCC, SCS and Peel Hunt;

3. the Second Announcement being released through a Regulatory Information Service (as defined in the AIM Rules) by no later than 4.30 pm on 10 July 2020 or such later time and/or date agreed between the Company, SCC, SCS and Peel Hunt;

4. none of the warranties in the Placing and Open Offer Agreement (the "Warranties") being untrue or inaccurate or misleading in any material respect at any time between the date of the Placing and Open Offer Agreement and First Admission and no fact or circumstance having arisen which would render any of the Warranties untrue or inaccurate or misleading in any material respect if it was repeated as at any time up to First Admission by reference to such facts or circumstances;

5. as at immediately prior to First Admission, the Acquisition Agreement remaining in full force and effect and not having been breached by any of the parties thereto and not having been terminated;

6. SCS and Peel Hunt having received, in terms satisfactory to them, indications from Placees at the Placing Price in respect of not less than 200,000,000 Placing Shares;

7. a meeting of the board of the directors of the Company taking place to approve, amongst other things, the execution of the Placing and Open Offer Agreement, the Transaction and the allotment of the Firm Placing Shares (subject only to First Admission);

8. the delivery by the Company to SCC, SCS and Peel Hunt of certain documents required under the Placing and Open Offer Agreement by the agreed time;

9. First Admission taking place no later than 8.00 am on 16 July 2020 or such later time as may be agreed between the Company, SCC, SCS and Peel Hunt, not being later than 8.00 am on the Long Stop Date;

10. no supplementary circular being required by the AIM Rules or otherwise prior to First Admission; and

11. the delivery by the Company to the Joint Bookrunners of a duly executed warranty certificate in the form set out in the Placing and Open Agreement by the agreed time,

and, in respect of the Conditional Placing specifically, inter alia:

1. each of the following having occurred: (i) First Admission, and (ii) completion of the Acquisition in accordance with the Acquisition Agreement;

2. the Circular having been sent out to the Company's shareholders entitled to receive it by first class post by no later than 13 July 2020;

3. the passing at the Meeting of each of the Resolutions by the requisite majority under the Companies Act and such Resolutions remaining in full force and effect as at Third Admission;

4. the Conditional Application and all other documents required to be submitted with the Conditional Application being delivered to the Exchange not later than 8.00 am on 24 July 2020;

5. none of the Warranties being untrue or inaccurate or misleading in any material respect at any time between the date of the Placing and Open Offer Agreement and the Third Admission and no fact or circumstance having arisen which would render any of the Warranties untrue or inaccurate or misleading in any material respect if it was repeated as at any time up to the Third Admission by reference to such facts or circumstances;

6. a meeting of the Board taking place to approve, amongst other things, the allotment of the Conditional Placing Shares and the Open Offer Shares (subject only to Third Admission);

7. the delivery by the Company to SCC and SCS of certain documents required under the Placing and Open Offer Agreement by the agreed time;

8. each condition to enable the Open Offer Entitlements to be admitted as a participating security (as defined in the CREST Regulations) in CREST being satisfied on or before the date of the Circular;

9. the Open Offer Entitlements of Qualifying CREST Shareholders being admitted as a participating security (as defined in the CREST Regulations) to CREST; Open Offer Entitlements of Qualifying CREST Shareholders being credited to the CREST stock accounts of Qualifying CREST Shareholders in the proportions set out in the Circular; and the Open Offer Entitlements of Qualifying CREST Shareholders becoming enabled for settlement within CREST, in each case by not later than the Business Day following the date of the Placing and Open Offer Agreement;

10. Third Admission taking place no later than 8.00 am on 29 July 2020 or such later time as may be agreed between the Company, SCC, SCS and Peel Hunt, not being later than 8.00 am on the Long Stop Date;

11. no supplementary circular being required by the AIM Rules or otherwise under the Placing and Open Offer Agreement prior to Third Admission; and

12. the delivery by the Company to SCC and SCS of a duly executed warranty certificate in the form set out in the Placing and Open Agreement by the agreed time.

(all conditions to the obligations of the Joint Bookrunners included in the Placing and Open Offer Agreement being together, the "conditions").

If prior to First Admission (a) any of the Firm Placing conditions are not fulfilled (or to the extent permitted under the Placing and Open Offer Agreement, waived by the Joint Bookrunners) by the relevant time or date specified in the Placing and Open Offer Agreement, or (b) the Placing and Open Offer 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. If prior to Third Admission (a) any of the Conditional Placing conditions are not fulfilled (or to the extent permitted under the Placing and Open Offer Agreement, waived by the Joint Bookrunners) by the relevant time or date specified in the Placing and Open Offer Agreement, or (b) the Placing and Open Offer Agreement is terminated in the circumstances specified below, the Conditional Placing will lapse and each Placee's rights and obligation hereunder in respect of the Conditional Placing only shall cease and determine at such time and no claim may be made by a Placee in respect thereof. Neither of the Joint 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 they 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 and Open Offer Agreement or in respect of the Placing generally.

The Joint Bookrunners may (acting jointly) waive compliance by the Company with certain of the Company's obligations in relation to the conditions in the Placing and Open Offer Agreement. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.

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 and Open Offer Agreement", and will not be capable of rescission or termination by the Placee.

Right to terminate under the Placing and Open Offer Agreement

The Joint Bookrunners may, at any time before First Admission or Third Admission (as the case may be), terminate their obligations under the Placing and Open Offer Agreement by giving notice to the Company if, inter alia:

1. the Company is in material breach of any provision in the Placing and Open Offer Agreement;

2. the Company proceeds to completion of the Acquisition Agreement with full satisfaction (or, with the consent of SCC, SCS and Peel Hunt, waiver) of the conditions precedent thereto;

3. the Warranties or any of them are not true and accurate or are misleading or would not be true and accurate or would be misleading if they were repeated at any time before First Admission or Third Admission (as the case may be), each in any material respect;

4. trading in the Ordinary Shares on AIM is suspended or threatened with suspension;

5. the Company is required to publish a supplementary circular;

6. any statement contained in either of the Announcements or Circular is or has become, or has been discovered to be, untrue, incorrect or misleading in any material respect, or any event, fact, circumstance or matter has arisen or occurred which would, if such Announcement or the Circular were to be issued at that time, constitute a material omission from it or would otherwise render it untrue or misleading in any material respect;

7. the Exchange, the FCA or any other Agency in any jurisdiction launches or threatens to launch an investigation into the affairs of the Enlarged Group or the trading of the Ordinary Shares;

8. there occurs a material adverse change in or an event having a serious adverse change in or affecting, the condition (financial, operational, legal or otherwise), earnings, business affairs, management, prospects, or solvency of the Company or the Group taken as a whole, which is material in the context of the Firm Placing or the Conditional Placing (as the case may be), or First Admission or Third Admission (as the case may be), whether or not arising in the ordinary course of business;

9. in the opinion of SCS, SCC or Peel Hunt (acting in good faith), there has been: (a) a material event, action, state, condition or major financial occurrence of national or international consequence; (b) a material change in law or regulation, including by OFGEM, which has a direct and material effect on the business or operations of the Enlarged Group; (c) a material change in national or international financial, political, economic or stock market conditions (primary or secondary), including any material change in the market for the Firm Placing Shares or the Conditional Placing Shares and/or Open Offer Shares (as the case may be); (d) an incident of terrorism, outbreak or escalation of hostilities, war, declaration of martial law or any other calamity or crisis; (e) if any inquiry, investigation or other proceeding (whether formal or informal) is commenced, threatened or announced or any order or ruling is issued by any officer of any stock exchange, market or regulatory authority in the United Kingdom or elsewhere or under or pursuant to any statute of the United Kingdom or elsewhere or there is any change of law or the interpretation of administration thereof by a stock exchange, market or regulatory authority, which in the reasonable opinion of SCS, SCC or Peel Hunt, operates to prevent or materially restrict the trading of Ordinary Shares or the distribution of the Firm Placing Shares or the Conditional Placing Shares and/or Open Offer Shares (as the case may be); or (f) any material change in currency exchange rates or exchange controls or a disruption of settlement systems or a material disruption or general moratorium in commercial banking as would, in the opinion of SCC, SCS or Peel Hunt be likely to materially prejudice the success of the Firm Placing or the Conditional Placing (as the case may be).

If the Placing and Open Offer Agreement is terminated in accordance with the above termination provisions, including (but not limited to) any non-fulfilment of the conditions, prior to (i) First Admission then the Joint Bookrunners will be paid the expenses payable pursuant to the terms of the Placing and Open Offer Agreement together with any VAT payable thereon (if applicable); or (ii) Third Admission then the Joint Bookrunners will be paid the expenses payable pursuant to the terms of the Placing and Open Offer Agreement as well as any commission due in relation to the Firm Placing together with any VAT payable thereon (if applicable).

If the Placing and Open Offer Agreement is terminated in accordance with its terms, prior to (i) First Admission the rights and obligations of each Placee in respect of the Placing as described in the Announcements shall cease and terminate at such time and no claim can be made by any Placee in respect thereof or (ii)Third Admission, the rights and obligations of each Placee in respect of the Conditional Placing as described in the Announcements shall cease and terminate at such time and no claim can be made by any Placee in respect thereof.

By participating in the Placing, each Placee agrees with the Joint Bookrunners that the exercise by the Joint Bookrunners of any right of termination or other discretion under the Placing and Open Offer Agreement shall be within the absolute discretion of the Joint Bookrunners and that neither of the Joint Bookrunners need make any reference to the Placees in this regard and that, to the fullest extent permitted by law, neither of the Joint Bookrunners 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 to be published and Placees' commitments will be made solely on the basis of the information contained in this announcement and any information previously published by or on behalf of the Company by notification to a Regulatory Information Service. Each Placee, by accepting a participation in the Placing, agrees that the content of this announcement is exclusively the responsibility of the Company and confirms to the Joint 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 Joint 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 neither of the Joint Bookrunners nor 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 Joint Bookrunners for themselves and as agent for the Company that, except in relation to the information contained in this announcement, 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: GB00B5TZC716) following First Admission and Third Admission will take place within the CREST system, subject to certain exceptions. The Joint 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 announcement 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 Joint Bookrunner and settlement instructions.

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: (i) the Company may release itself (if it decides in its absolute discretion to do so) and will be released from all obligations it may have to issue any such Placing Shares to such Placee or at its direction which are then unissued; (ii) the Company may exercise all rights of lien, forfeiture and set-off over and in respect of any such Placing Shares to the fullest extent permitted under its articles of association or otherwise by law and to the extent that such Placee then has any interest in or rights in respect of any such Placing Shares; (iii) the Company or the Joint Bookrunners may sell (and each of them is irrevocably authorised by such Placee to do so) all or any of such Placing Shares on such Placee's behalf and then retain from the proceeds, for the account and benefit of the Company or, where applicable, the Joint Bookrunners (a) any amount up to the total amount due to it as, or in respect of, subscription monies, or as interest on such monies, for any Placing Shares, (b) any amount required to cover any stamp duty or stamp duty reserve tax (together with any interest or penalties) arising on the sale of such Placing Shares on such Placee's behalf, and (c) any amount required to cover dealing costs and/or commissions necessarily or reasonably incurred by it in respect of such sale; and (iv) such Placee shall remain liable to the Company and to the Joint Bookrunners (as applicable) for the full amount of any losses and of any costs which it may suffer or incur as a result of it (a) not receiving payment in full for such Placing Shares by the required time, and/or (b) the sale of any such Placing Shares to any other person at whatever price and on whatever terms are actually obtained for such sale by or for it.

If Placing Shares are to be delivered to a custodian or settlement agent, the Placee should ensure that the contract note 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 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 Joint 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):

1. represents and warrants that it has read and understood this announcement in its entirety (including this Appendix) and acknowledges that its participation in the Placing will be governed by the terms of this announcement (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 Joint 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 announcement and further agrees that the provisions of this announcement shall survive after completion of the Placing;

4. acknowledges that the Placing Shares will be admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules for Companies, which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and the Company's announcements and circulars published in the past 12 months and the Company's admission document (collectively, the "Exchange Information"), and that it is able to obtain or access such information without undue difficulty and has read and understood the Exchange Information;

5. acknowledges that neither of the Joint 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 either of the Joint 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 announcement is exclusively the responsibility of the Company and that neither of the Joint Bookrunners, 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 announcement or any information previously published by or on behalf of the Company and neither of the Joint Bookrunners, nor any of their respective Affiliates 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 announcement 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 announcement 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 Joint 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 Joint Bookrunners, their respective Affiliates or any person acting on their or any of their respective Affiliates' behalf and understands that (i) neither of the Joint Bookrunners, 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) neither of the Joint Bookrunners, 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 announcement or otherwise; and that (iii) neither of the Joint Bookrunners, 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 announcement 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 Joint 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 or in transactions exempt from or not subject to the registration requirements of the Securities Act;

12. represents and warrants that its acquisition of the Placing Shares has been or will be made in an "offshore transaction" as defined in and pursuant to Regulation S under the Securities Act;

13. 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 or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

14. understands that upon the initial issuance of, and until such time as the same is no longer required under the Securities Act or applicable securities laws of any state or other jurisdiction of the United States, any certificates representing the Placing Shares (to the extent such Placing Shares are in certificated form), and all certificates issued in exchange therefore or in substitution thereof, shall bear a legend setting out the restrictions relating to the transfer of the certificated security including with respect to restrictions relating to the United States federal securities laws;

15. represents and warrants that, if it is a financial intermediary, as that term is used in Article 5(1) of the Prospectus Regulation, 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 Regulation other than "qualified investors" as defined in Article 2(e) of the Prospectus Regulation, or in circumstances in which the prior consent of the Joint Bookrunners has been given to the offer or resale;

16. 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 or the United Kingdom except in circumstances falling within the Prospectus Regulation which do not result in any requirement for the publication of a prospectus pursuant to that Regulation;

17. 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;

18. 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;

19. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, the EU Market Abuse Regulation (2014/596/EU), 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;

20. if in the United Kingdom, represents and warrants that it is a Qualified Investor within the meaning of Article 2(e) of the Prospectus Regulation (acting as principal or in circumstances to which section 86(2) of FSMA applies) and a person who has professional experience in matters relating to investments falling within (i) Article 19(5) of the FPO; or (ii) a high net worth entity falling within article 49(2)(a) to (d) of the FPO; or (iii) is a person to whom this announcement may otherwise be lawfully communicated;

21. if in a member state of the EEA (other than the United Kingdom), represents and warrants that it is a Qualified Investor within the meaning of Article 2(e) of the Prospectus Regulation;

22. 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; undertakes that it (and any person acting on its behalf) will pay for the Placing Shares acquired by it in accordance with this announcement on the due time and date set out in this announcement or any trade confirmation issued pursuant to this announcement against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other Placees or sold as either the Joint Bookrunners or the Company may, in their 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 costs, commissions, 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 announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;

23. if it has received any confidential price sensitive information about the Company in advance of the Placing, it warrants that it has received such information within the marketing soundings regime provided for in article 11 of Regulation (EU) No. 596/2014 on market abuse (as amended) and associated delegated regulations and has not: (a) dealt in the securities of the Company; (b) encouraged or required another person to deal in the securities of the Company; or (c) disclosed such information to any person, prior to the information being made publicly available;

24. acknowledges that neither of the Joint Bookrunners, 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 neither of the Joint Bookrunners, 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 and Open Offer Agreement or for the exercise or performance of any of the Joint Bookrunners' rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;

25. 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) neither of the Joint Bookrunners 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 issued to the CREST stock account of the relevant Joint 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;

26. 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;

27. acknowledges that it irrevocably appoints any director of the relevant Joint 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;

28. represents and warrants that (unless otherwise agreed with the Joint Bookrunners) it is not a resident of any Restricted 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 Restricted Jurisdiction and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Restricted Jurisdiction;

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

30. 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 Joint Bookrunners will be responsible. If this is the case, the Placee should take its own advice and notify the Joint Bookrunners accordingly;

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

32. acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with the relevant Joint Bookrunner, any money held in an account with the relevant Joint 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 Joint Bookrunner money in accordance with the client money rules and will be used by the relevant Joint Bookrunner in the course of its business; and the Placee will rank only as a general creditor of the relevant Joint Bookrunner (as the case may be);

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

34. acknowledges and understands that the Placing is not conditional on the Acquisition completing and therefore there is a risk, albeit the Directors consider it highly unlikely, that the Placing will complete and the Acquisition does not complete;

35. acknowledges and understands that the Firm Placing is not conditional on the Conditional Placing and therefore there is a risk that the Firm Placing Shares will be allotted and First Admission will become effective but that the Conditional Placing Shares will not be allotted and Third Admission will not become effective;

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

37. irrevocably authorises the Company and the Joint 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 in this announcement; and

38. that its commitment to subscribe for Placing Shares on the terms set out in this announcement 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 Joint 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 Joint 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 to this announcement or the performance of its obligations pursuant to this announcement 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 Joint 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 Joint Bookrunners in the event that any of the Company and/or either of the Joint 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 announcement may be subject to amendment. The Joint Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any such changes.

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

(a) if he is an individual, his nationality; or

(b) if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or fully predictable return profile, who are not looking for full capital protection or full repayment of the amount invested, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Joint Bookrunners will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.