Lok N Store Regulatory News (LOK)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"), AND IS DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF MAR.

PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

6 July 2023

Lok'nStore Group plc

("Lok'nStore" or the "Group" or the "Company")

Proposed Placing to raise approximately £18 million for the Company and REX Retail Offer

Lok'nStore Group plc (AIM:LOK), a leading company in the UK self-storage market, today announces its intention to conduct a fundraising to raise gross proceeds of approximately £18 million through a placing of new ordinary shares of 1 pence each in the capital of the Company ("Ordinary Shares"), at a placing price of 765 pence per new Ordinary Share (the "Placing Price"), with new and existing institutional investors (the "Placing") and an offer open to existing retail shareholders of the Company using the REX offering platform (the "REX Retail Offer") (the Placing and the REX Retail Offer together being the "Fundraising"). The Fundraising will be conducted by way of an accelerated bookbuild (the "Bookbuild"). For the avoidance of doubt, the REX Retail Offer is not part of the Placing and any ordinary Shares issued pursuant to the REX Retail Offer are not Placing Shares (as defined below).

Highlights

Andrew Jacobs, Chair of Lok'nStore Group said:

"This funding will support the growth of the company in the structurally under-supplied UK self-storage market.  Our pipeline will, when fully operational, add 37.7% to available space, which, as those new stores fill up, will generate more cash flow for future growth investment and increased distributions to shareholders."

This Announcement should be read in its entirety. In particular, your attention is drawn to the detailed terms and conditions of the Placing and further information relating to the Placing and any participation in the Placing that is described in the Appendix to this Announcement (which forms part of this Announcement).

The Placing

Lok'nStore has entered into a placing agreement with finnCap Ltd ("finnCap") and Peel Hunt LLP ("Peel Hunt") to act as joint bookrunners (the "Joint Bookrunners"), and finnCap is acting as nominated adviser, in connection with the Placing. The Placing will be effected pursuant to existing authorities of the Company, granted at the Company's annual general meeting on 8 December 2022 permitting it to issue new Ordinary Shares on a non-pre-emptive basis.

The Placing is being made available to institutional investors and is not being made available to the public. The Company also considers it important that existing retail shareholders have an opportunity (where it is practicable for them to do so) to participate in, to the extent possible, the equity fundraising on equivalent terms and conditions to the Placing. Accordingly, the Company is offering existing retail shareholders the opportunity to participate through the REX Retail Offer.

The Placing is subject to the satisfaction of certain conditions set out in this Announcement and the appendices hereto and is being conducted by way of the Bookbuild which will be launched with immediate effect following release of this Announcement. The timing of the closing of the Bookbuild, the number of new Ordinary Shares issued pursuant to the Placing and allocations are at the sole discretion of the Company and the Joint Bookrunners. The Joint Bookrunners reserve the right to close the Bookbuild without further notice. There can be no certainty that the Placing will complete. The Placing is being undertaken on a reasonable endeavours basis and is not being underwritten.

A further announcement will be made following the close of the Bookbuild, confirming the result of the Fundraising.

The ticker for the Company's ordinary shares is LOK. The Company's LEI is 213800MXVAMG3CA42A19.

IMPORTANT NOTICES AND DISCLAIMER

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

This Announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This Announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the EU Prospectus Regulation and/or the UK Prospectus Regulation (each as defined below)) to be published.

This Announcement is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investment and who are: (a) if in a member state of the European Economic Area, "qualified investors" as defined in Article 2(e) of Regulation (EU) 2017/1129 (the "EU Prospectus Regulation") ("EU Qualified Investors"); (b) if in the United Kingdom, "qualified investors" as defined in Article 2(e) of the EU Prospectus Regulation which forms part of retained EU law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the "UK Prospectus Regulation") and who (i) fall within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (ii) fall within article 49(2)(a) to (d) of the Order and are "qualified investors" as defined in section 86 of the Financial Services and Markets Act 2000 (as amended) (the "FSMA"); (c) persons in Canada that are (i) "accredited investors" within the meaning of section 1.1 of National Instrument 45-106 - Prospectus Exemptions ("NI 45-106") or subsection 73.3(1) of the Securities Act (Ontario), as applicable, and that are either purchasing the Ordinary Shares as principal for their own account, or are deemed to be purchasing the Ordinary Shares as principal for their own account in accordance with applicable Canadian securities laws, for investment only and not with a view to resale or redistribution; (ii) not created or used solely to purchase or hold the Ordinary Shares as an accredited investor under NI 45-106; and (iii) "permitted clients" within the meaning of National Instrument 31-103 - Registration Requirements, Exemptions And Ongoing Registrant Obligations and (d) otherwise, to persons to whom it may otherwise be lawful to communicate it (all such persons together being referenced to as "relevant persons"). Any investment in connection with the Placing will only be available to, and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this Announcement or any of its contents.

This Announcement is not being distributed by, nor has it been approved for the purposes of section 21 of FSMA by, a person authorised under FSMA. This Announcement is being distributed and communicated to persons in the UK only in circumstances in which section 21(1) of FSMA does not apply.

finnCap, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as nominated adviser, joint broker and joint bookrunner to 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 clients of finnCap nor for providing advice in relation to the Placing and/or any other matter referred to in this Announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on finnCap by FSMA or by the regulatory regime established under it, and except in the event of their committing fraud, neither finnCap nor any of its respective affiliates accepts any responsibility whatsoever for the accuracy, completeness or sufficiency of the information contained in this Announcement or for any other statement made or purported to be made by or on behalf of finnCap or any of its respective affiliates in connection with the Company, the Ordinary Shares or the Placing. finnCap and each of its respective affiliates accordingly disclaim all and any liability, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this Announcement.

Peel Hunt LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as joint broker and joint bookrunner to 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 clients of Peel Hunt nor for providing advice in relation to the Placing and/or any other matter referred to in this Announcement.

The distribution of this Announcement and the offering of the Ordinary Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, finnCap or Peel Hunt that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company, finnCap and Peel Hunt to inform themselves about, and to observe, such restrictions.

This Announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan" "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Announcement is subject to change without notice and, except as required by applicable law or regulation, neither the Company nor finnCap nor Peel Hunt, nor their respective affiliates assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement.

No statement in this Announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company. The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares.

The new Ordinary Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

This Announcement does not constitute a recommendation concerning any investor's options with respect to the Placing. Any investment decision to buy Ordinary Shares in the Placing must be made solely on the basis of publicly available information. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this Announcement. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) the UK's implementation of EU Directive 2014/65/EU on markets in financial instruments, as amended ("UKMiFID II"); and (b) the UK's implementation of Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing UK MiFID II, and in particular Chapter 3 of the Product Intervention and Product Governance Sourcebook of the FCA (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 UK MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by UK MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the MiFID II Product Governance Requirements) 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 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 Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, finnCap and Peel Hunt will only procure investors (pursuant to the Placing) 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 UK 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. Persons (including, without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this Announcement should seek appropriate advice before taking any action.

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

INTRODUCTION

The Company today announces a proposed issue of new Ordinary Shares, to raise gross proceeds receivable by the Company of approximately £18 million. The Board intends to use the net proceeds of the Fundraising to support the development of the Company's accretive Landmark store programme, to include new freehold and leasehold stores in the UK whilst maintaining the Group's disciplined use of capital. The Fundraising Shares are being issued under the Company's existing approved shareholder authorities and it is expected that they will be admitted to trading on AIM on or around 12 July 2023.

The Placing is subject to the satisfaction of certain conditions set out in this announcement and the appendices hereto ("Appendices") (together, this "Announcement") and is being conducted by way of an accelerated bookbuild, which will be launched immediately following the publication of this Announcement. Each of finnCap and Peel Hunt are acting as joint bookrunners, and finnCap is acting as Nominated Adviser, in connection with the Placing. The number of Placing Shares which are to be placed at the Placing Price will be determined at the close of the Bookbuild. The timing of the closing of the Bookbuild and the allocations are at the absolute discretion of finnCap, Peel Hunt and the Company. Details of the number of Placing Shares to be placed will be announced as soon as practicable after the close of the Bookbuild. The Placing is not being underwritten by finnCap or Peel Hunt.

The Placing is conditional, inter alia, on the Placing Agreement between the Company, finnCap and Peel Hunt becoming unconditional and not being terminated (in accordance with its terms).

Background to and reasons for the Fundraising

Continued attractive market dynamics

The UK self-storage market continues to grow but remains under-developed compared to the US and Australia. In the UK there is an estimated 0.82 sq. ft. of self-storage capacity per person which is significantly below levels in the US and Australia. Against this backdrop of comparative under-supply, demand for self-storage is increasing

With larger self-storage operators such as Lok'nStore now focusing development on purpose-built stores in retail-facing locations offering customers a higher standard of product and service, the main barriers to entry to the market are the difficulty in finding and securing suitable sites and the requirement to gain appropriate planning consents. This has tended to favour larger operators who now own or manage around a third of all facilities in the UK, equating to 44% of the market in terms of space. 

Drivers of Demand for Self-Storage

Demand for self-storage by both business and household customers is driven by a specific need based on changing circumstances as well as economic activity and business confidence.

For household customers their need is often linked to a life event where they will need space temporarily, for example, to turn a box room into a home office, but increasingly householders are using storage on a semi-permanent basis to free up space at home or store belongings they don't have room for.

Business customers use self-storage for a variety of purposes including storage of goods, excess or seasonal stock, document archiving or storage of equipment and tools. Businesses tend to store for longer than household customers and take larger units, although they also take advantage of self-storage for temporary periods to support seasonal sales or office moves or refurbishments. During the pandemic many of the Group's customers (including the NHS, GP Surgeries and care and home support services) were providing critical services distributing medical and other essential supplies.

Against this attractive market backdrop, the Directors believe that Lok'nStore's strong and resilient business model is well placed. This resilience has been well demonstrated through the Covid-19 pandemic and also more recently in the current economic environment when the Group's strong cash flows and flexible and conservative debt structure has served it well and enabled it to respond positively to market developments. This resilience combined with excellent customer service and a track record of consistent growth, supports the Directors belief that Lok'nStore is well placed to continue to develop its portfolio of purpose-built Landmark stores, attract new customers and add further growth momentum.

Trading performance driving continued expansion

Driven by the favourable market dynamics outlined above, the Group's recent operating and trading performance has remained strong, notwithstanding current inflationary pressures. Despite the fall in ANAV in the Group's interim results to 31 January 2023, year on year ANAV has increased 8.6% to £9.15 (2022: £8.43).

Lok'nStore's total secured pipeline of 10 new stores will result in the Group operating 52 stores when fully developed, increasing the owned store trading space by 37.7%. Trading continues to be buoyant with H2 '23 stores' revenue expected to be up c.10.5% year on year.

The Bedford and Peterborough Landmark stores have recently opened in February 2023 and June 2023 respectively, and the Group recently announced the signing of a new 20-year lease at the existing Eastbourne store. All are expected to enhance ANAV at the Group's next year-end at 31 July 2023. At the same time the Board is aware of continued and recent supportive transactional data in the self-storage industry providing additional confidence regarding valuations in the longer term.

The Company continues to develop its portfolio with further accretive developments. Stores at Basildon and Staines are currently under construction, both of which are due to open later in 2023.

In June 2023 the Company received an indicative intention to formally grant planning permission under delegated powers in Barking, Greater London, subject to the agreement of planning conditions. At c.84,000 sq. ft, this freehold Landmark store will be the Group's biggest store to date when it opens.

The Company has also received a grant from the Planning Committee for updated planning permission at its freehold site in Cheshunt, Hertfordshire, subject to the agreement of planning conditions. With this permission the Company intends to build a c.60,000 sq. ft Landmark store along with retail space for a discount food retailer. They will pay a lease premium to Lok'nStore on completion of planning matters and a further payment to Lok'nStore on completion of the building. The net remaining capital expenditure to complete this project is c.£6.5 million.

Use of proceeds will support pipeline development

The Group runs a continuous programme of evaluating further site opportunities and continues to find high-quality sites for new accretive Landmark stores. All 10 sites in the Group's current secured pipeline are in prominent locations with large catchment areas and little established competition demonstrating the Group's capability in this regard.

The Group has a secured pipeline of 8 Owned Sites and 2 Managed Store sites. On a fully developed basis these new sites would take the Group's total portfolio to 52 stores (Freehold: 24; Leasehold: 10; Managed stores: 18) adding 37.7% trading space to the owned portfolio and 12.3% to the managed portfolio. Beyond this secured pipeline, the Company has a further 3 sites progressing with lawyers.

In light of the strong market conditions and the continued strength of Group's trading performance the Board wishes to continue the development of the Group's new store pipeline, capitalising on a UK self-storage market which is in a state of under-supply and comparative infancy.

The net proceeds of the Fundraising will support the continued development of the Group's secured pipeline of 8 owned sites, as well as providing a pool of capital with which to secure further sites whilst maintaining the Group's conservative approach to debt. Accordingly, the Board is now undertaking the Placing with a view to raising approximately £18 million.

The Directors believe the Fundraising will provide the Group with:

Current trading and prospects

The Group reported interim results for the half year ended 31 January 2023 on 24 April 2023. These highlighted continued strong trading and cash conversion, underpinning a year-on-year increase in ANAV.

The interim results set out increases in total Same Store4 occupied space of 2.6% and year on year achieved rate increases of 9.2%. As a result, Same-Store4 Group revenue was up 11.2% and Same Store4 Group Adjusted EBITDA[2] was up 8.9% compared to the prior period. Whilst Cash Available for Distribution (CAD)[3] per share, dropped 6.8%, largely due to the sale of four mature stores and their related income and increases in energy, rates and finance costs, H1 '23 saw a 15.0% increase in the half year dividend, following the 15.0% increase in the year to 31 July 2022, which marked a twelfth year of consecutive dividend increases.

Trading continues to be excellent with store revenue expected to be up c.10.5% in the second half of the financial year ending 31 July 2023. The Company continues to deliver on its objective of opening more accretive Landmark stores whilst maintaining the strength of its balance sheet and remaining conservatively geared.

The excellent growth in occupied space and achieved rate per square foot over the past 30 months, demonstrates the resilience of the Group's business model, provides significant embedded pricing and margin opportunities in the coming year, and underpins the Board's confidence for the future.

Details of the Placing

Pursuant to the placing agreement, dated 6 July 2023 between finnCap, Peel Hunt and the Company (the "Placing Agreement"), finnCap and Peel Hunt have conditionally agreed, as agents of the Company, to use their reasonable endeavours to procure subscribers for the new Ordinary Shares subject to the Placing (the "Placing Shares"). The Placing is conditional upon, inter alia, admission of the Placing Shares to trading on AIM ("Admission") becoming effective on or before 8.00 a.m. (London time) on 12 July 2023 or such later date as may be agreed between finnCap and Peel Hunt and the Company, but in any event no later than 8.00 a.m. (London time) on 31 July 2023, and the Placing Agreement not having been terminated prior to Admission. The Placing Shares will rank equally in all respects with the Company's existing Ordinary Shares. The Placing is not being underwritten. 

APPENDIX

TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR INVITED PLACEES ONLY REGARDING THE PLACING.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN (THE "ANNOUNCEMENT") IS FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (THE "EEA"), PERSONS WHO ARE 'QUALIFIED INVESTORS' ("EEA QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(E) OF PROSPECTUS REGULATION (EU) 2017/1129 (THE "EU PROSPECTUS REGULATION"); OR (B) IF IN THE UNITED KINGDOM, PERSONS WHO ARE 'QUALIFIED INVESTORS' ("UK QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(E) OF PROSPECTUS REGULATION (EU) 2017/1129 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE "UK PROSPECTUS REGULATION"), AND WHO ARE (I) PERSONS FALLING WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONAL" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"), OR (II) PERSONS WHO FALL WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC) OF THE ORDER ("RELEVANT PERSONS"), OR (C) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS REFERRED TO IN (A), (B) AND (C) ABOVE TOGETHER BEING REFERRED TO AS "ELIGIBLE PARTICIPANTS").

THIS ANNOUNCEMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT ELIGIBLE PARTICIPANTS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO ELIGIBLE PARTICIPANTS AND WILL BE ENGAGED IN ONLY WITH ELIGIBLE PARTICIPANTS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, COMMERCIAL, FINANCIAL AND RELATED ASPECTS OF AN INVESTMENT IN THE PLACING SHARES.

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES (including its territories and possessions, any state of the United States and the District of Columbia (collectively, the "United States")). THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES LAWS, OR WITH ANY SECURITIES REGULATORY AUTHORITY, OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD, RESOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. NO PUBLIC OFFERING OF THE SECURITIES REFERRED TO HEREIN IS BEING MADE IN THE UNITED STATES.

Unless otherwise stated, capitalised terms in this Appendix have the meanings ascribed to them in the definitions below.

This Announcement is for information only and does not itself constitute or form part of an offer to sell or issue or the solicitation of an offer to buy or subscribe for securities referred to herein in any jurisdiction including, without limitation, the United States, Australia, Canada, The Republic of South Africa, New Zealand, Hong Kong, Singapore, Japan or in any other jurisdiction where such offer or solicitation is unlawful (each a "Restricted Territory"). No public offering of securities will be made in connection with the Placing in the United Kingdom, any Restricted Territory or elsewhere.

This Announcement, and the information contained herein, is not for release, publication or distribution, directly or indirectly, in or into any Restricted Territory or to any persons in a Restricted Territory or in any other jurisdiction in which such release, publication or distribution is unlawful. The distribution of this Announcement and the Placing and/or the offer or sale of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company or by finnCap Ltd ("finnCap") or Peel Hunt LLP ("Peel Hunt" and, together with finnCap the "Joint Bookrunners") or any of their respective Affiliates, or any of their or their respective Affiliates' directors, officers, members, employees, agents or advisers which would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons distributing any part of this Announcement must satisfy themselves that it is lawful to do so. 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 such action. Persons into whose possession this Announcement comes are required by the Company, each of the Joint Bookrunners to inform themselves about, and to observe, any such restrictions.

All offers of the Placing Shares will be made pursuant to an exemption under the EU Prospectus Regulation or the UK Prospectus Regulation, as applicable, from the requirement to produce a prospectus. This Announcement is being distributed and communicated to persons in the UK only in circumstances to which section 21(1) of the Financial Services and Markets Act 2000, as amended ("FSMA") does not apply.

The Placing Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into any Restricted Territory or any other jurisdiction outside the EEA and the UK.

Subject to certain exceptions, the securities referred to in this Announcement may not be offered or sold in any Restricted Territory or in any other jurisdiction where such offer or sale is unlawful or to, or for the account or benefit of, a citizen or resident, or a corporation, partnership or other entity created or organised in or under the laws of Australia, Canada, The Republic of South Africa, New Zealand, Hong Kong, Singapore, Japan or in any other jurisdiction where such offer or sale is unlawful.

This Announcement has been issued by, and is the sole responsibility of, the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by any Joint Bookrunner or any of their respective Affiliates, or any of their or their respective Affiliates' directors, officers, employees, agents or advisers 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 party or its advisers, and any liability therefore is expressly disclaimed.

The Joint Bookrunners are acting exclusively for the Company and no-one else in connection with the Placing and are not, and will not be, responsible to anyone (including the Placees) other than the Company for providing the protections afforded to their clients nor for providing advice in relation to the Placing and/or any other matter referred to in this Announcement.

None of the Company, the Joint Bookrunners nor their respective Affiliates, nor any of their or their respective Affiliates' directors, officers, employees, agents or advisers, makes any representation or warranty, express or implied to any Placees regarding any investment in the securities referred to in this Announcement under the laws applicable to such Placees. Each Placee should consult its own advisers as to the legal, tax, commercial, financial and related aspects of an investment in the Placing Shares.

By participating in the Placing, each Placee (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given will (i) be deemed to have read and understood this Announcement, in its entirety; and (ii) be making such offer on the terms and conditions contained in this Appendix, including being deemed to be providing (and shall only be permitted to participate in the Placing on the basis that they have provided) the representations, warranties, indemnities, acknowledgements and undertakings set out herein.

In particular, each such Placee represents, warrants, undertakes, agrees and acknowledges (among other things) that:

· it is an Eligible Participant and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

· if it is a financial intermediary, as that term is used in Article 2(d) of the EU Prospectus Regulation or the UK Prospectus Regulation, as applicable, it understands the resale and transfer restrictions set out in this Appendix and that any Placing Shares acquired 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 circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA to EEA Qualified Investors or in the United Kingdom to Eligible Participants, or in circumstances in which the prior consent of the Joint Bookrunners has been given to each such proposed offer or resale;

· except as otherwise specifically agreed with the Joint Bookrunners and subject to any available exemptions from applicable securities laws, it and any account with respect to which it exercises sole investment discretion, is either (i) located outside the United States and acquiring the Placing Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S under the Securities Act ("Regulation S"); or (ii) a "qualified institutional buyer" as defined in Rule 144A under the Securities Act (a "QIB"); and

· if it is a Placee resident in Australia, it:

· it is acquiring the Placing Shares for its own account or is acquiring the Placing Shares for an account with respect to which it exercises sole investment discretion and has the authority to make and does make the representations, warranties, indemnities, undertakings, agreements and acknowledgements contained in this Announcement.

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

Unless defined elsewhere in this Appendix, defined terms used in this Appendix are set out in the definitions below.

Bookbuild

Following the release of this Announcement, the Joint Bookrunners will commence a bookbuilding process in respect of the Placing (the "Bookbuild") to determine demand for participation in the Placing by Placees. The book will open with immediate effect following release of this Announcement. No commissions will be paid to Placees or by Placees in respect of any Placing Shares. Members of the public are not entitled to participate in the Placing. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing.

The Joint Bookrunners and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their absolute discretion, determine.

Details of the Placing Agreement and of the Placing Shares

The Joint Bookrunners are acting as agents for the Company in connection with the Placing. The Joint Bookrunners have entered into an agreement with the Company (the "Placing Agreement") under which, subject to the conditions set out therein, the Joint Bookrunners have agreed, as agents for the Company, severally (and not jointly or jointly and severally) to use their respective reasonable endeavours to procure Placees for Placing Shares.

The final number of Placing Shares will be determined following completion of the Bookbuild and set out in a term sheet to be entered into between Joint Bookrunners and the Company (the "Term Sheet"). The timing of the closing of the book and allocations are at the discretion of the Company and the Joint Bookrunners. Details of the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.

The Placing Shares have been or will be duly authorised and will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares after their date of issue. The Placing Shares will be issued free of any encumbrances, liens or other security interests.

Applications for admission to listing and trading

Application will be made to the London Stock Exchange plc ("LSE") for the Placing Shares to be admitted to trading on the AIM Market of the LSE ("AIM") ("Admission"). It is expected that Admission will take place at 8.00 a.m. (London time) on 12 July 2023 (or such later date as may be agreed between the Company and the Joint Bookrunners).

Relationship of the Joint Bookrunners

Participation in, and principal terms of the Placing

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. The Joint Bookrunners' obligations under the Placing Agreement are conditional on certain conditions, including (without limitation):

If: (i) any of the conditions contained in the Placing Agreement, including (without limitation) those described above, are not fulfilled or (where applicable) waived by the Joint Bookrunners by the relevant time or date specified therein (or such later time or date as the Company and the Joint Bookrunners may agree); or (ii) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and the Placees' rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by it in respect thereof.

The Joint Bookrunners may, at their absolute discretion (acting jointly) waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement (to the extent that the Joint Bookrunners are capable of waiving such condition). Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

Neither of the Joint Bookrunners nor any of their respective Affiliates, nor any of its or their respective Affiliates' directors, officers, employees, agents or advisers shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it or another person may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision it may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Joint Bookrunners.

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

Termination of the Placing Agreement

The Joint Bookrunners (together and individually) are entitled at any time before Admission, to terminate the Placing Agreement in accordance with its terms in certain circumstances, including, inter alia, if:

By participating in the Placing, Placees agree that the exercise by the Joint Bookrunners of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Joint Bookrunners or for agreement between the Company and the Joint Bookrunners (as the case may be) and that neither the Company nor the Joint Bookrunners need make any reference to, or undertake any consultation with, Placees and that neither they nor any of their respective Affiliates, agents, directors, officers or employees shall have any liability to Placees whatsoever in connection with any such exercise.

No prospectus

No offering document, prospectus or admission document has been or will be prepared or submitted to be approved by the FCA (or any other authority) in relation to the Placing, and Placees' commitments will be made solely on the basis of publicly available information taken together with the information contained in this Announcement and any Exchange Information (as defined below) previously published by or on behalf of the Company simultaneously with or prior to the date of this Announcement and subject to the further terms set forth in the contract note (referred to in paragraph 5 above under "Participation in, and principal terms of, the Placing") to be provided to individual prospective Placees.

Each Placee, by participating in the Placing, agrees that the content of this Announcement and the publicly available information released by or on behalf of the Company 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 other information, representation, warranty, or statement made by or on behalf of the Company (other than publicly available information) or the Joint Bookrunners or their respective Affiliates or any other person and none of the Joint Bookrunners nor the Company, nor any of their respective Affiliates nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees 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 and agrees that it has relied on its own investigation of the business, financial or other position of the Company in making an offer to participate in the Placing.

Lock-up

The Company has undertaken to the Joint Bookrunners that, between the date of the Placing Agreement and 180 calendar days after the date of Admission, it will not, without the prior written consent of the Joint Bookrunners (such consent not to be unreasonably withheld or delayed), enter into certain transactions involving or relating to the Ordinary Shares, subject to certain customary carve-outs agreed between the Joint Bookrunners and the Company.

By participating in the Placing, Placees agree that the exercise by the Joint Bookrunners of any power to grant consent to waive the undertaking by the Company of a transaction which would otherwise be subject to the lock-up under the Placing Agreement shall be within the absolute discretion of the Joint Bookrunners and that they need not make any reference to, or consult with, Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise of the power to grant consent.

Registration and settlement

Settlement of transactions in the Placing Shares (ISIN: GB0007276115) following Admission will take place within the relevant system administered by Euroclear ("CREST"), using the delivery versus payment mechanism, subject to certain exceptions. Subject to certain exceptions, the Joint Bookrunners and the Company 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 practicable in CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Following the close of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Joint Bookrunners and settlement instructions. It is expected that such contract note will be despatched on or around 7 July 2023 and that this will also be the trade date.

Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with the relevant Joint Bookrunner.

The Company will deliver the Placing Shares to a CREST account operated by the relevant Joint Bookrunner as agent for the Company and the relevant Joint Bookrunner will enter its delivery (DEL) instruction into the CREST system. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

It is expected that settlement in respect of the Placing Shares will be on 12 July 2023 on a delivery versus payment basis.

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 four percentage points above the Bank of England's base rate from time to time but 4% per year for any period during which that base rate is below zero.

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

If Placing Shares are to be delivered to a custodian or settlement agent, Placees 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 a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject to as provided below, be so registered free from any liability to UK stamp duty or UK stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax (and/or any interest, fines or penalties relating thereto) is payable in respect of the allocation, allotment, issue or delivery of the Placing Shares (or for the avoidance of doubt if any stamp duty or stamp duty reserve tax is payable in connection with any subsequent transfer of or agreement to transfer Placing Shares), neither of the Joint Bookrunners nor the Company shall be responsible for the payment thereof.

Representations, warranties, undertakings and acknowledgements

By submitting a bid and/or participating in the Placing, each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with each of the Joint Bookrunners (in their capacity as placing agents in respect of the Placing) and the Company, in each case as a fundamental term of its application for Placing Shares, the following:

The foregoing acknowledgements, agreements, undertakings, representations, warranties and confirmations are given for the benefit of the Company as well as each of 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. Each Placee, and any person acting on behalf of a Placee, acknowledges that none of the Joint Bookrunners or the Company owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as nominee or agent) free of UK stamp duty and UK stamp duty reserve tax relates only to their allotment and issue to Placees, or such persons as they nominate as their agents or nominees, direct from the Company for the Placing Shares in question. None of the Company or the Joint Bookrunners will be responsible for any UK stamp duty or UK stamp duty reserve tax (including any interest and penalties relating thereto) arising in relation to the Placing Shares in any other circumstances.

Such agreement is subject to the representations, warranties and further terms above and also assumes, and is based on a warranty from each Placee, 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. None of the Joint Bookrunners nor the Company are liable to bear any stamp duty or stamp duty reserve tax or any other similar duties or taxes ("transfer taxes") that arise (i) if there are any such arrangements (or if any such arrangements arise subsequent to the acquisition by Placees of Placing Shares) or (ii) on a sale of Placing Shares, or (iii) for transfer taxes arising otherwise than under the laws of the United Kingdom. Each 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 transfer taxes undertakes to pay such transfer taxes forthwith, and agrees to indemnify on an after-tax basis and hold the Joint Bookrunners, the Company and their respective Affiliates harmless from any such transfer taxes, and all interest, fines or penalties in relation to such transfer taxes. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises.

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that either of the Joint Bookrunners or any of their respective Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares. Each Placee acknowledges and is aware that the Joint Bookrunners are receiving a fee in connection with their role in respect of the Placing as detailed in the Placing Agreement.

When a Placee or person acting on behalf of the Placee is dealing with the Joint Bookrunners, any money held in an account with either of the Joint Bookrunners 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 rules and regulations of the FCA made under the FSMA. 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 Joint Bookrunners' money in accordance with the client money rules and will be used by the Joint Bookrunners in the course of its own business, and the Placee will rank only as a general creditor of the Joint Bookrunners.

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

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

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 of one will not prevent the exercise of others.

If a Placee is a discretionary fund manager, the Placee may be asked to disclose in writing or orally to the Joint Bookrunners the jurisdiction in which the funds are managed or owned.

DEFINITIONS

The following definitions apply to this Announcement, including this Appendix: