MMC.L Regulatory News (MMC)

This announcement contains inside information

29 June 2018

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, JAPAN, CANADA, AUSTRALIA, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA.

THIS ANNOUNCEMENT, WHICH DOES NOT CONSTITUTE A PROSPECTUS OR

PROSPECTUS EQUIVALENT DOCUMENT, IS NOT AN OFFER TO SELL OR THE

SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, AND NEITHER THIS

ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY CONTRACT OR

COMMITMENT WHATSOEVER.

Management Consulting Group PLC

("MCG" or the "Company")

Proposed Placing and Open Offer of 1,000,050,372 New Ordinary Shares to raise approximately £10 million

Placing and Open Offer

The Board announces that the Company is today launching a Placing and Open Offer to raise proceeds of approximately £8.5 million net of expenses under the Placing and Open Offer.

The Placing and Open Offer will result in the issue of 1,000,050,372 additional New Ordinary Shares in the Company at an issue price of 1 penny per New Ordinary Share representing up to 196 per cent. of the Existing Ordinary Share Capital. The Open Offer is being made on the basis of 45 Open Offer Shares for every 23 Existing Ordinary Shares held by Qualifying Shareholders on the Record Date with the option for Qualifying Shareholders to apply for Excess Shares (subject to availability and provided such Qualifying Shareholder has agreed to take up their Open Offer Entitlement in full) up to a maximum number of Excess Shares equal to two times such Qualifying Shareholder's Open Offer Entitlement.

The Open Offer and Excess Application Facility represent a pre-emptive offering that is being made to all Qualifying Shareholders (including BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths, each of which have made commitments pursuant to the Subscription Agreements). The terms of the Subscription Agreements do not afford any of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths any rights to subscribe for additional Ordinary Shares in preference to the other Qualifying Shareholders. Rather, BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths have each irrevocably undertaken to take-up their respective Open Offer Entitlements in full and BlueGem, Lombard Odier and Richard Griffiths have agreed between them to subscribe for up to 337,100,225 further of the New Ordinary Shares being offered pursuant to the Open Offer by making applications for Excess Shares pursuant to the Excess Application Facility.

It is noted that the Directors who will receive Open Offer Entitlements have irrevocably undertaken to exercise their Open Offer Entitlements in full and that Nick Stagg has irrevocably undertaken to apply for 2,670,597 Excess Shares. When taken together with the irrevocable commitments of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths, it is by this mechanism that the Company is ensured that all of the Open Offer Shares will be subscribed for. Once the estimated total costs and expenses of the Placing and Open Offer of approximately £1.5 million are taken into account, the net proceeds to the Company will be approximately £8.5 million.

In addition, the PH Placing constitutes a firm placing to Pamela Hackett on a non pre-emptive basis, which will result in the issue of 5,341,195 New Ordinary Shares. The rationale for the PH Placing is to align Pamela Hackett's interests with those of Shareholders. As Pamela Hackett is Proudfoot Chief Executive and is also proposed to join the Board of Directors of the Company, the PH Placing is subject to the approval of Shareholders pursuant to Listing Rule 11.

The issue price of 1 penny per Ordinary Share represents a discount of 68 per cent. to the Closing Price of the Ordinary Shares on 28 June 2018 (being the last Business Day prior to the date of this announcement). The Issue Price represents a discount of 78 per cent. to the average Closing Price for the period of 90 Business Days up to and including 28 June 2018.

In accordance with the requirements of Listing Rule 9.5.10, shareholder approval is required to issue the New Ordinary Shares at a discount greater than 10 per cent. to the Closing Price on the last Business Day prior to the date of this announcement. Shareholders should be aware that the Board is of the view that it was necessary to set the issue price at this level to ensure the success of the Placing and Open Offer.

In addition, the Placing and Open Offer requires Shareholder approval: (i) of the terms of the Placing and Open Offer and to direct the Directors to implement the Placing and Open Offer; (ii) to grant the Directors authority to allot and issue the New Ordinary Shares; (iii) to disapply statutory pre-emption rights; (iv) to allot the New Ordinary Shares at the Issue Price; and (v) to approve the Rule 9 Waiver (as defined below).

The Board believes that there is a material risk that, in the absence of the Placing and Open Offer, the Group will not have sufficient working capital for its present requirements, that is, for at least 12 months from the date of the Prospectus. The factors influencing the size and timing of any shortfall in working capital are dependent upon ongoing negotiations around the release of the KS Funds (as described below) which is subject to the status of any new, active or potential claims arising.

Specifically, if the Placing and Open Offer does not proceed, then there is a risk that the Group may experience a liquidity shortfall of £0.2 million in February 2019, followed by further shortfalls of £0.2 million in June and July 2019, respectively. There is then a projected major shortfall of £2.5 million in August 2019. Were the Board to become aware that a near-term liquidity shortfall was likely to occur, with no reasonable prospect of remedy, the Board would need to consider whether there was a reasonable prospect of avoiding insolvent liquidation, and the Board might at such time conclude that the Group should take immediate steps to enter into an insolvency process. 

The Directors and the Proposed Director believe that the Placing and Open Offer is the only viable fundraising option to address the working capital shortfall which was announced by the Company on 23 April 2018. The Directors and the Proposed Director have considered alternative fundraising options but as the Group does not have assets of which it can dispose, and, as access to debt financing is restricted due to the Group's perceived level of credit risk and the consequent prohibitively high cost of such debt financing, the Placing and Open Offer is the only option available to the Company within the required timeframe. The Group has already taken steps to reduce its capital expenditure and the Directors and the Proposed Director do not believe there is scope to implement further capital expenditure reductions within the required timeframe.

The Directors who will receive Open Offer Entitlements have each irrevocably agreed, subject to certain exceptions, not to dispose of any interest in any Ordinary Shares held by them until the earlier of them ceasing to be a member of the Board and the date falling eighteen months from Admission. The commitments of the Directors given pursuant to the Directors' Irrevocables demonstrate their confidence in the future of the Company and help ensure that their interests remain aligned with those of Shareholders generally.

Prospectus and notice of General Meeting

In connection with the Placing and Open Offer, the Company also today announces that a prospectus relating to the Placing and Open Offer (the "Prospectus") is expected to be approved by the FCA later today.

The Prospectus is expected to be posted to Shareholders today and it will include a notice convening a General Meeting of the Company to be held at the offices of Baker & McKenzie LLP, 100 New Bridge Street, London EC4V 6JA at 11.00 a.m. on 18 July 2018.

In addition, the Prospectus is expected to be available to view on the Company's website (www.mcgplc.com) later today. Copies of the Prospectus will then be available from the registered office of the Company at St Paul's House 4th Floor, 10 Warwick Lane, London EC4M 7BP and will also be available for inspection up to Admission at the offices of Baker & McKenzie LLP at 100 New Bridge Street, London EC4V 6JA.

Timetable

Each of the times and dates in the table below is indicative only and may be subject to change. Please read the

notes for this timetable set out below.

Notes

(1) Reference to times in this timetable are to London time unless otherwise stated.

(2) The times and dates set out in the expected timetable of principal events above and mentioned throughout this announcement may be adjusted by the Company, in which event details of the new times and dates will be notified to the FCA, the London Stock Exchange and, where appropriate, Qualifying Shareholders. In particular, in the event that withdrawal rights arise under Section 87Q of FSMA prior to Admission the Company and Peel Hunt may agree to defer Admission until such time as such withdrawal rights no longer apply.

(3) Different deadlines and procedures for return of forms may apply in certain cases.

The person arranging release of this announcement on behalf of the Company is Nick Stagg, the Chairman and Chief Executive of the Company.

IMPORTANT NOTICES:

This announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document. Nothing in this announcement should be interpreted as a term or condition of the Placing and Open Offer. Investors should not subscribe for or purchase any New Ordinary Shares referred to in this announcement in connection with the Placing and Open Offer except on the basis of information contained in the Prospectus.

This announcement does not constitute or form a part of any offer to sell or subscribe for, or solicitation of an offer to buy or subscribe for, securities in any jurisdiction in which such offer or solicitation is unlawful and, in particular, is not for distribution in or into the United States, Canada, Australia, New Zealand, the Republic of South Africa or Japan, or any country or territory where to do so may contravene local securities laws or regulations (each, a "Restricted Territory"). The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or under any applicable securities laws of any state, province, territory, county or jurisdiction of any Restricted Territory.

The information in this announcement must not be forwarded, distributed or sent, directly or indirectly, to any other person and must not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the US Securities Act or the applicable laws of other jurisdictions.

This announcement has been prepared for the purposes of complying with the applicable laws and regulations of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

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

Peel Hunt LLP (''Peel Hunt''), which is authorised and regulated by the FCA in the United Kingdom, is acting as sponsor in connection with the publication of the Prospectus and sole financial adviser in connection with the Rule 9 Waiver. Peel Hunt is acting exclusively for the Company and no one else in connection with such matters and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, or providing any advice in relation to the Placing and Open Offer, the contents of this announcement or any matters referred to herein, and will not regard any other person (whether or not a recipient of the Prospectus) as a client in relation to the Placing and Open Offer.

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 Peel Hunt or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS:

This announcement includes forward-looking statements. The words ''believe'', ''anticipate'', ''expect'', ''intend'', ''aim'', ''plan'', ''predict'', ''continue'', ''assume'', ''positioned'', ''may'', ''will'', ''should'', ''shall'', ''risk'' and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. In particular statements regarding the Company's strategy, dividend policy and other future events or prospects are forward-looking statements. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are in many cases beyond the Company's control. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company caution's you that forward-looking statements are not guarantees of future performance and that the Company's actual results of operations, financial condition and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that the Company, or persons acting on its behalf, may issue.

These forward-looking statements reflect the Company's judgment at the date of this announcement and are not intended to give any assurances as to future results. Save as required by MAR, the Listing Rules, Disclosure Guidance and Transparency Rules and/or the Prospectus Rules or other applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements, and will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this announcement. The Company will comply with its obligations to publish updated information as required by law or by any regulatory authority but assumes no further obligation to publish additional information.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, JAPAN, CANADA, AUSTRALIA, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA.

PROPOSED PLACING AND OPEN OFFER

1. INTRODUCTION

The Board today announces that it has conditionally raised proceeds of approximately £8.5 million net of expenses under the Placing and Open Offer. The Placing and Open Offer will result in the issue of 1,000,050,372 additional New Ordinary Shares in the Company at an issue price of 1 penny per New Ordinary Share representing up to 196 per cent. of the Existing Ordinary Share Capital. The Open Offer is being made on the basis of 45 Open Offer Shares for every 23 Existing Ordinary Shares held by Qualifying Shareholders on the Record Date with the option for Qualifying Shareholders to apply for Excess Shares (subject to availability and provided such Qualifying Shareholder has agreed to take up their Open Offer Entitlement in full) up to a maximum number of Excess Shares equal to two times such Qualifying Shareholder's Open Offer Entitlement.

The Open Offer and Excess Application Facility represent a pre-emptive offering that is being made to all Qualifying Shareholders (including BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths, each of which have made commitments pursuant to the Subscription Agreements). The terms of the Subscription Agreements do not afford any of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths any rights to subscribe for additional Ordinary Shares in preference to the other Qualifying Shareholders. Rather, BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths have each irrevocably undertaken to take-up their respective Open Offer Entitlements in full and BlueGem, Lombard Odier and Richard Griffiths have agreed between them to subscribe for up to 337,100,225 further of the New Ordinary Shares being offered pursuant to the Open Offer by making applications for Excess Shares pursuant to the Excess Application Facility.

In addition, it is noted that the Directors who will receive Open Offer Entitlements have irrevocably undertaken to exercise their Open Offer Entitlements in full and that Nick Stagg has irrevocably undertaken to apply for 2,670,597 Excess Shares. When taken together with the irrevocable commitments of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths, it is by this mechanism that the Company is ensured that all of the Open Offer Shares will be subscribed for. Once the estimated total costs and expenses of the Placing and Open Offer of approximately £1.5 million are taken into account, the net proceeds to the Company will be approximately £8.5 million.

In addition, the PH Placing constitutes a firm placing to Pamela Hackett on a non pre-emptive basis, which will result in the issue of 5,341,195 New Ordinary Shares. The rationale for the PH Placing is to align Pamela Hackett's interests with those of Shareholders. As Pamela Hackett is Proudfoot Chief Executive and is also proposed to join the Board of Directors of the Company, the PH Placing is subject to the approval of Shareholders pursuant to Listing Rule 11.

The issue price of 1 penny per Ordinary Share represents a discount of 68 per cent. to the Closing Price of the Ordinary Shares on 28 June 2018 (being the last Business Day prior to the date of this announcement). The Issue Price represents a discount of 78 per cent. to the average Closing Price for the period of 90 Business Days up to and including 28 June 2018.

In accordance with the requirements of Listing Rule 9.5.10, shareholder approval is required to issue the New Ordinary Shares at a discount greater than 10 per cent. to the Closing Price on the last Business Day prior to the date of this announcement. Shareholders should be aware that the Board is of the view that it was necessary to set the issue price at this level to ensure the success of the Placing and Open Offer.

In addition, the Placing and Open Offer requires Shareholder approval: (i) of the terms of the Placing and Open Offer and to direct the Directors to implement the Placing and Open Offer; (ii) to grant the Directors authority to allot and issue the New Ordinary Shares; (iii) to disapply statutory pre-emption rights; (iv) to allot the New Ordinary Shares at the Issue Price; and (v) to approve the Rule 9 Waiver (as defined below).

The Board believes that there is a material risk that, in the absence of the Placing and Open Offer, the Group will not have sufficient working capital for its present requirements, that is, for at least 12 months from the date of the Prospectus. The factors influencing the size and timing of any shortfall in working capital are dependent upon ongoing negotiations around the release of the KS Funds (as described below) which is subject to the status of any new active or potential claims arising.

Specifically, if the Placing and Open Offer does not proceed, then there is a risk that the Group may experience a liquidity shortfall of £0.2 million in February 2019, followed by further shortfalls of £0.2 million in June and July 2019, respectively. There is then a projected major shortfall of £2.5 million in August 2019. Were the Board to become aware that a near-term liquidity shortfall was likely to occur, with no reasonable prospect of remedy, the Board would need to consider whether there was a reasonable prospect of avoiding insolvent liquidation, and the Board might at such time conclude that the Group should take immediate steps to enter into an insolvency process. 

The Directors and the Proposed Director believe that the Placing and Open Offer is the only viable fundraising option to address the working capital shortfall which was announced by the Company on 23 April 2018. The Directors and the Proposed Director have considered alternative fundraising options but as the Group does not have assets of which it can dispose, and, as access to debt financing is restricted due to the Group's perceived level of credit risk and the consequent prohibitively high cost of such debt financing, the Placing and Open Offer is the only option available to the Company within the required timeframe. The Group has already taken steps to reduce its capital expenditure and the Directors and the Proposed Director do not believe there is scope to implement further capital expenditure reductions within the required timeframe.

The Directors who will receive Open Offer Entitlements have each irrevocably agreed, subject to certain exceptions, not to dispose of any interest in any Ordinary Shares held by them until the earlier of them ceasing to be a member of the Board and the date falling eighteen months from Admission. The commitments of the Directors given pursuant to the Directors' Irrevocables demonstrate their confidence in the future of the Company and help ensure that their interests remain aligned with those of Shareholders generally.

The Board believes that the Placing and Open Offer and the PH Placing are in the Shareholders' best interests and the Directors (and in the case of Resolution 4, the Independent Directors) recommend that Shareholders vote in favour of all of the Resolutions in order that the Placing and Open Offer can proceed.

2. BACKGROUND TO, AND REASONS FOR, THE PLACING AND OPEN OFFER

The Group provides consultancy and other professional services across a wide range of industries and sectors via the Proudfoot business. Proudfoot was established in 1946 and is the original business around which the Group was built.

During 2015 and 2016, the Company disposed of the Group's Kurt Salmon businesses by way of a series of separate transactions thereby leaving Proudfoot as the continuing part of the business. Proudfoot continues to deliver value to clients and remains a distinctive and recognised brand as well as an established global operator in its key sectors. Notwithstanding this market position, over the last few years Proudfoot has been loss-making and this is expected to continue in the current financial year. The Board continues to work on the ongoing transformation of the Proudfoot business and remains focused on returning it to profitability.

The release of the KS Funds

Following the disposal of several of the Group's businesses, including Kurt Salmon in Europe, in 2015 and 2016, the Group has continued to manage the residual activities and contingent liabilities related to this disposal programme. A material aspect of managing this process has been the negotiation of the release of the KS Funds, being the funds held under the arrangements which guarantee certain contingent liabilities relating to the disposal of parts of the European Kurt Salmon business to Wavestone (previously named Solucom) in 2016. The KS Funds represented approximately £6 million of the Group's total cash resources of £16.1 million as at 31 March 2018. Under the terms of the agreement with Wavestone, the KS Funds were due to be released in two equal tranches on 7 January 2018, upon expiry of an initial guarantee period, and on 7 July 2018, being the final expiry date of the guarantees, in each case subject to the status of any active claims or potential future claims. However, the release of the first tranche of the KS Funds has taken longer than the Board had expected due to negotiations over the treatment of certain potential indemnification claims. As a result, agreement with Wavestone as to the release of part of the first tranche was only reached on 27 April 2018 with an amount of approximately €2 million (approximately £1.7 million) being released in two parts on 16 March 2018 and 1 May 2018 respectively, while the balance of approximately €2 million (approximately £1.7 million) remains in an escrow arrangement until certain identified potential indemnification claims have been settled or otherwise finally determined on a case by case basis. The agreement reached with respect to the first tranche of the KS Funds does not impact the continuing arrangement with respect to the second tranche of the KS Funds, such that approximately €4 million (approximately £3.5 million) is due to be released on 7 July 2018, although again that release will be subject to the status of any new active claims or potential claims arising prior to that date. The deadline for making any indemnification claims is 30 months from November 2016 being July 2018 (excluding tax claims, which are subject to statutory limitations), and therefore additional claims may be made before that deadline, or in the case of any tax claims, in the future. On 26 June 2018, the Company received a further letter of claim from Wavestone which set out a number of disputes with a potential further estimated aggregate liability of approximately €1.8 million (approximately £1.6 million) against the second tranche of the KS Funds and the Company is assessing the merits of these further claims.

While the Board remains confident as to the Group's overall position in terms of the release of the outstanding KS Funds, as announced on 23 April 2018, it considered that the ongoing negotiations created undue risk to the Group's short term funding position such that it was actively considering options to manage this including raising new funds for the Company. Subsequently, on 1 May 2018, the Company released its preliminary financial results for the year ended 31 December 2017 with the announcement reporting that an unqualified audit report including an emphasis of matter in respect of going concern was issued on the 2017 statutory accounts.

The ongoing transformation of Proudfoot

As previously reported, the Board believes that the Proudfoot business needs to implement additional operational change, together with selective investment, in order to further the continued process of transformation there and so begin to create future value for Shareholders.

A new management team, led by Proudfoot Chief Executive, Pamela Hackett, was put in place in 2017 and good progress has been made in some of Proudfoot's markets, notably Europe and Asia where the transformation of the business was started first. In the Americas, a new management team was recently formed to start the change process in 2017 and the benefits are expected to start to be visible in the second half of 2018.

Proudfoot continues to deliver sustainable improvement and change for its customers and the Board intends to maintain the momentum of the transformation it has started including maintaining the appropriate investment in key talent (both retention and new hires), know-how and intellectual property and brand presence.

In addition, the Board expects to continue to work to reduce the cost base across the Group and at Proudfoot, thereby continuing the work started in 2017.

The proposed fundraising

Accordingly, the Board is proposing the Placing and Open Offer to:

- mitigate the material risks to the Group's short-term funding position associated with delayed release of the KS Funds;

- afford the Board additional flexibility to manage any disputes related to the KS Funds in the best long-term interests of the Group; and

- ensure the Group has sufficient funding to complete the turnaround of Proudfoot and return the business to profitability.

The Board considers that the Placing and Open Offer is an appropriate and proportionate response to the material uncertainty relating to the Company's ability to continue as a going concern referred to in its announcement of preliminary results on 1 May 2018 and subsequently in the 2017 Annual Report.

The Directors and the Proposed Director believe that the Placing and Open Offer is the only viable fundraising option to address the working capital shortfall announced on 23 April 2018. The Directors and the Proposed Director have considered the alternative fundraising options but as the Group does not have assets of which it can dispose, and, as access to debt financing is restricted due to the Group's perceived level of credit risk and the consequent prohibitively high cost of such debt financing, the Placing and Open Offer is the only option available to the Company within the required timeframe. The Group has already taken steps to reduce its capital expenditure and the Directors and the Proposed Director do not believe there is scope to implement further capital expenditure reductions within the required timeframe.

3. STRATEGIC AND OPERATIONAL FOCUS

Strategic focus: return the Proudfoot business to profitability

The Group's strategy is to return its continuing business, Proudfoot, to profitability through selective investment and the transformation of its business. The key strategic objectives of the transformation are to provide Proudfoot with a broader offering and a more flexible set of contracting options for its clients, so as to broaden its client base whilst providing more incentive for existing clients to contract additional work. At the same time, the Group will continue to seek ways to reduce its costs. Success will therefore consist of growing revenues at Proudfoot, notably in the Americas, and a return to profitability, initially on a cash basis.

This transformation is ongoing, with a number of significant changes being made in 2017 and 2018 to date. The key pillars of the transformation are:

- New leadership: in 2017, Proudfoot appointed a new Chief Executive, Pamela Hackett, who has a 30-year history with the business. Pamela previously led the Group's Asian and European businesses where the transformation was introduced first and where the Group has seen promising results including increases in activity in 2017. Proudfoot has removed several layers of management across the business, bringing the Group's most senior expertise directly into its client teams.

- New services: the addition of new services to the Group's core capabilities of Proudfoot Analytics and Proudfoot People Solutions, such as Proudfoot Digital Ready which enables management to lead digital change through their people processes and decision-making.

- Investment in key talent: Proudfoot has invested to maintain its key talent and critically in new hires to ensure it has the right people with the right skills to market and execute its offering. The Group has also introduced a new incentive scheme to retain talent at managing director and sector leadership levels.

- Leveraging know-how and intellectual property: for over 70 years, Proudfoot has delivered client success based on a deep understanding of what makes change effective and improvement sustainable, including taking advantage of the modernisation of processes enabled by digitalisation. Proudfoot is making this know-how and experience more visible and readily available to the Group's existing and prospective clients.

- Direct client engagement: Proudfoot has merged the Group's selling activities with the Group's delivery capabilities, driving greater customer satisfaction. Proudfoot's objectives are to offer more flexibility to clients in the way they engage with the Group. As a result, repeat business has risen in 2018 with some 68% of Proudfoot's clients buying a second engagement.

- Marketing: Proudfoot introduced new marketing methods in 2017, notably digitally-driven marketing in Q4 of that year with early signs of success in opening other channels to market, specifically inbound lead generation for new business.

- Rationalisation of the cost base: the Group has materially simplified its operating structure (including reducing back office functions), reducing peripheral activities and locations with the objective of substantially reducing its cost base. The Group is progressively basing all operations around hubs in Atlanta, London and Hong Kong, whilst maintaining its strong focus on key industry verticals such as natural resources, industrials and digital ready. This more streamlined operational structure enables staffing of engagements in the manner that best matches the Group's expertise to client needs.

Change has been and will continue to be introduced progressively, with recent success with European and Asian clients, where the model was rolled out first, supporting the Board's confidence in Proudfoot's long term potential. Change was started in 2017 in the Americas and the initial client feedback has also been positive in this market.

Clients and peers recognised the Group's impact, with its assignment in natural resources for Rio Tinto receiving an award in the Best International Project category at the 2018 MCA awards and Proudfoot's work for Santa Monica Seafood winning their Service Provider of the Year award. Proudfoot was put on Forbes annual list of Best Consulting Firms in America.

Proudfoot continues to deliver value to clients and remains a distinctive and recognised brand and is an established global operator in key sectors. As stated in the 2017 Annual Report, the Board remains confident in the longer term potential of the Proudfoot model to deliver sustainable improvement and change for its customers, and therefore its ability over time to generate sufficient revenues and revenue growth to result in strong positive cash flows. Additional change and investment is required in order to further progress the transformation the Group started in 2017 and to create value for shareholders. The Board believes that the Placing, the Open Offer and the PH Placing will support this plan.

Operational focus: Group structure

The Chairman and Chief Executive, Nick Stagg, remains committed to delivering further efficiencies in the Group's operations and infrastructure. This will build upon the reduction of nearly 20 per cent in its cost base made in 2017. The Group now comprises one operating unit, Proudfoot, and the Board's intention is to end progressively the distinction between Proudfoot's and the Company's activities, notably as the residual activities and contingent liabilities linked to the prior disposals programme are concluded.

Notwithstanding that, the management of the residual activities and contingent liabilities of the Group will be a key focus of the Board, notably securing the release of the remainder of the KS Funds, as discussed above.

The Group's management is focused on the transformation of Proudfoot and its organic growth plans. Selective investment will be made in Proudfoot's talent and expertise and its brand awareness. Whilst growth will not be from acquisitions, Proudfoot may explore potential partnerships to broaden its reach, offering and expertise.

The Board expects to create future shareholder value through a combination of reduced costs and structure across the Group, a transformed Proudfoot that generates positive and growing cash flows and a conclusion to the material risks linked to the 2015/6 disposal programme.

Board and governance

The Group Chairman and Chief Executive positions are currently jointly held by Nick Stagg. The Board has decided that it intends to appoint the current Chief Executive Officer of Proudfoot, Pamela Hackett to the Board in the near future.

As the Group continues the transformation of Proudfoot, the Board intends to progressively take steps towards greater compliance with the FRC Code. The Governance section of the 2017 Annual Report sets out those areas where the Company is not at this time compliant with the FRC Code. In particular, over the 12 months following completion of the Placing and Open Offer, the Company expects to appoint new director(s) who will be independent under the FRC Code, whilst recognising always the size of the Board and the profitability of the current Group.

Whilst recognising that the Company does not have a Finance Director, the Board is confident that the Group possesses sufficient internal resource, including in its finance function, to deliver the turnaround of Proudfoot. Day-to-day control and oversight of the resources, operations and risks at the Company level remains the responsibility of Nick Stagg, assisted notably by the Group Treasurer and the Group's Financial Controller. Day-to-day control and oversight of Proudfoot, including bidding activity, pricing and monitoring of ongoing projects, resides with the Proudfoot Chief Executive, Pamela Hackett, assisted notably by the Proudfoot Head of Finance.

4. DETAILS OF PLACING AND OPEN OFFER

The Company is proposing to raise approximately £8.5 million (net of expenses) under the Placing and Open Offer through the issue of up to 1,000,050,372 New Ordinary Shares at 1 penny per New Ordinary Share.

The issue price of 1 penny per Ordinary Share represents a discount of 68 per cent. to the Closing Price of the Ordinary Shares on 28 June 2018 (being the last Business Day prior to the date of this announcement), and a discount of 78 per cent. to the average Closing Price for the period of 90 Business Days up to and including 28 June 2018.

Details of the Open Offer

Qualifying Shareholders, subject to the terms and conditions of the Open Offer, are being given the opportunity to apply for the Open Offer Shares at the Issue Price pro rata to their holdings of Existing Ordinary Shares on the Record Date on the basis of:

45 Open Offer Shares for every 23 Existing Ordinary Shares

Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders in the Open Offer and fractional entitlements under the Open Offer will be rounded down to the nearest whole number of Open Offer Shares.

Provided that they take up their Open Offer Entitlements in full, Qualifying Shareholders are also being given the opportunity to apply for Excess Shares, subject to availability, through the Excess Application Facility, up to a maximum number of Excess Shares equal to two times such Qualifying Shareholder's Open Offer Entitlement. Excess Shares will become available as part of the Open Offer where Open Offer Entitlements are not taken up in full by Qualifying Shareholders.

The Open Offer has not been underwritten although, pursuant to the Subscription Agreements, BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths have irrevocably undertaken to take-up their own Open Offer Entitlements in full and BlueGem, Lombard Odier and Richard Griffiths have also agreed between them to subscribe for up to 337,100,225 further of the Open Offer Shares by making applications for Excess Shares under the Excess Application Facility.

It is noted that the Directors who will receive Open Offer Entitlements have irrevocably undertaken to exercise their Open Offer Entitlements in full and that Nick Stagg has irrevocably undertaken to apply for 2,670,597 Excess Shares. When taken together with the irrevocable commitments of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths, it is by this mechanism that the Company is ensured that all of the Open Offer Shares will be subscribed for. Once the estimated total costs and expenses of the Placing and Open Offer of approximately £1.5 million are taken into account, the net proceeds to the Company will be up to approximately £8.5 million.

It is noted that the terms of the Subscription Agreements do not afford any of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths any rights to subscribe for additional shares in preference to the other Qualifying Shareholders. Furthermore, none of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths will be paid any commission pursuant to the Subscription Agreements.

Qualifying Shareholders may apply for any whole number of Open Offer Shares up to their maximum entitlement which, in the case of Qualifying Non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown in Box 2 of their Application Form, or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock account in CREST.

Qualifying Non-CREST Shareholders who wish to apply to acquire more than their Open Offer Entitlement should complete the relevant sections on the Application Form. Qualifying CREST Shareholders will have Excess Open Offer Entitlements credited to their stock account in CREST.

Qualifying Non-CREST Shareholders and Qualifying CREST Shareholders should refer, respectively, to paragraphs 4.1 and 4.2 of Part VII: "Terms and Conditions of the Open Offer" of the Prospectus for information on how to apply for Excess Shares pursuant to the Excess Application Facility.

Qualifying CREST Shareholders will receive a credit to their appropriate stock accounts in CREST in respect of their Open Offer Entitlements and Excess Open Offer Entitlements on 2 July 2018.

Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlements under the Open Offer.

If valid applications under the Excess Application Facility are received for more than the total number of Open Offer Shares available under the Excess Application Facility, such applications will be scaled back in such manner as the Board determines in its absolute discretion, having regard to both the number of Excess Shares applied for and the valid shareholdings held by Qualifying Shareholders (on the Record Date) who make applications under the Excess Application Facility. Furthermore, applications will be scaled back to ensure that no Qualifying Shareholder (other than BlueGem, if the Whitewash Resolution is passed) will as a result of subscriptions for Excess Shares acquire more than 29.9% of the voting rights of the Company. Any monies paid in excess of the amount due in respect of such scaled back applications will be returned to the applicant (at the applicant's risk) without interest within 14 days by way of cheque or CREST payment, as appropriate. There is no guarantee that applications for Excess Shares by Qualifying Shareholders will be met.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying non-CREST Shareholders should also note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST they will have limited settlement capabilities (for the purposes of market claims only), the Open Offer Entitlements and Excess Open Offer Entitlements will not be tradable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholders originally entitled or by a person entitled by virtue of a bona fide market claim. Open Offer Shares for which application has not been made under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up their Open Offer Entitlement and Excess Open Offer Entitlements will have no rights under the Open Offer or receive any proceeds from it.

Conditions and Admission

The Placing and Open Offer is conditional upon the passing of Resolutions 1 through to 5, Admission and the Subscription Agreements and Sponsor's Agreement becoming unconditional in all respects (other than as to Admission) and not being terminated. If these conditions are not satisfied or waived (where capable of waiver), the Placing and Open Offer will not proceed.

If Admission does not take place on or before 8.00 a.m. on 19 July 2018 (or such later time and/or date as Peel Hunt and the Company may determine, not being later than 8.00 a.m. on 25 July 2018), the Open Offer will lapse, any Open Offer Entitlements and Excess Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest, as soon as practicable thereafter and in any event within 14 days. In these circumstances the Placing and Open Offer will also not proceed.

Application will be made to the FCA for the New Ordinary Shares to be admitted to the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 19 July 2018 and that dealings for normal settlement in the New Ordinary Shares (including all Open Offer Shares) will commence at 8.00 a.m. on the same day.

Application has been made for the Open Offer Entitlements and Excess Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 2 July 2018. The Open Offer Entitlements and Excess Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 2 July 2018.

Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying Non-CREST Shareholders should note that their Application Form is not a negotiable document and cannot be traded.

Further information on the Placing and Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in Part VII: "Terms and Conditions of the Open Offer" of the Prospectus and, where relevant, on the applicable Application Form.

Any Qualifying Shareholder who has sold or transferred all or part of his/her registered holding(s) of Ordinary Shares prior to 25 June 2018 is advised to consult his or her stockbroker, bank or other agent through or to whom the sale or transfer was effected as soon as possible since the invitation to apply for Open Offer Shares under the Open Offer may be a benefit which may be claimed from him/her by the purchasers under the rules of the London Stock Exchange.

The New Ordinary Shares (including all Open Offer Shares), when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Admission and in all respects will rank pari passu with the Existing Ordinary Shares. No temporary documents of title will be issued.

Details of the Subscription Agreements

Pursuant to the Subscription Agreements, BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths have irrevocably undertaken to take-up their own Open Offer Entitlements in full and have also agreed between them to subscribe for up to 337,100,225 further of the New Ordinary Shares by applying for Excess Shares under the Excess Application Facility.

It is noted that the Directors who will receive Open Offer Entitlements have irrevocably undertaken to exercise their Open Offer Entitlements in full and that Nick Stagg has irrevocably undertaken to apply for 2,670,597 Excess Shares. When taken together with the irrevocable commitments of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths, it is by this mechanism that the Company is ensured that all of the Open Offer Shares will be subscribed for. Once the estimated total costs and expenses of the Placing and Open Offer of approximately £1.5 million are taken into account, the net proceeds to the Company will be approximately £8.5 million.

Under the terms of the Subscription Agreements, subject to certain conditions:

a) each of BlueGem, Aberforth Fidelity, Lombard Odier and Richard Griffiths have irrevocably undertaken to exercise their respective full Open Offer Entitlements (representing a subscription commitment of £7.2 million); and

b) each of BlueGem, Lombard Odier and Richard Griffiths have irrevocably undertaken to apply for a further 337,100,225 Open Offer Shares under the Excess Application Facility (representing a further subscription commitment of up to £3.4 million).

The obligations of each of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths under the Subscription Agreements to subscribe for Open Offer Shares are subject to:

a) the passing of Resolutions 1 through to 5 at the General Meeting without amendment;

b) the Directors' Irrevocables, the Subscription Agreements and the Sponsor's Agreement each becoming unconditional in all respects; and

c) Admission becoming effective by not later than 8.00 a.m. on 19 July 2018 (or such later time and/or date as Peel Hunt and the Company may agree, being not later than 25 July 2018).

For the avoidance of doubt, to the extent that any of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths apply for Excess Shares under the Excess Application Facility they will do so on the same terms and conditions as all other Qualifying Shareholders who choose to apply for Excess Application Shares. In aggregate, the total number of Open Offer Shares subscribed for by each of BlueGem, Aberforth, Fidelity, Lombard Odier and Richard Griffiths pursuant to the Excess Application Facility must not exceed two times such shareholder's Open Offer Entitlement.

Related party considerations

It is noted that, although BlueGem, Aberforth, Lombard Odier and Richard Griffiths, by virtue of each controlling more than 10% of the Company's share capital, are related parties for the purposes of Chapter 11 of the Listing Rules, these related parties' participation in the Placing and Open Offer does not require the approval of a majority of the Shareholders independent of each such relevant shareholder. The reason for this is that the terms of the Subscription Agreement do not afford any of BlueGem, Aberforth, Lombard Odier and Richard Griffiths any rights to subscribe for additional Ordinary Shares in preference to the other Qualifying Shareholders and that no underwriting or other commission is payable to such shareholders pursuant to the terms of the Subscription Agreements.

As Pamela Hackett is Proudfoot Chief Executive and is also proposed to join the Board, the PH Placing is subject to shareholder approval under Listing Rule 11.

Directors' Irrevocables

Each of Nick Stagg and Julian Waldron, as the Directors who will receive Open Offer Entitlements have entered into the Directors' Irrevocables with the Company dated 28 June 2018, pursuant to which they have undertaken to vote in favour of the Resolutions at the General Meeting and also to take up their full entitlements to subscribe for New Ordinary Shares pursuant to the Open Offer, representing a total commitment to subscribe for approximately £63,000 worth of Open Offer Shares. In addition, each of the Directors has agreed, subject to certain exceptions, not to dispose of any interest in Ordinary Shares or other equity securities in the Company, or any securities convertible into, or exercisable, or exchangeable for, equity securities of the Company, or to publicly announce an intention to effect any such transaction, until the earlier of them ceasing to be a member of the Board and the date falling eighteen months from Admission.

The PH Placing

In addition, the PH Placing constitutes a firm placing to Pamela Hackett on a non pre-emptive basis, which will result in the issue of 5,341,195 New Ordinary Shares at an issue price of 1 penny per New Ordinary Share. The rationale for the PH Placing is to align Pamela Hackett's interests with those of Shareholders.

As Pamela Hackett is Proudfoot Chief Executive and is also proposed to join the Board of Directors of the Company, the PH Placing is subject to the approval of Shareholders pursuant to Listing Rule 11.

5. Use of proceeds

As announced on 1 May 2018 and set out in the 2017 Annual Report, the Board has identified certain material risks to the Group's short-term funding position.

In the first instance, the net proceeds of the Placing and Open Offer will be used to mitigate these material risks to the Group's short term funding position and to afford the Board additional flexibility to manage any disputes related to the KS Funds in the best long-term interests of the Group which will account for £5.8 million of the money raised pursuant to the Placing and Open Offer.

In addition, the remaining part of the net proceeds of the Placing and Open Offer and the proceeds of the PH Placing (together being approximately £2.7 million) will be used to ensure the Group has sufficient funding to complete the turnaround of Proudfoot and return the business to profitability.

As the KS Funds are subsequently released to the Company, the available cash resources will be used for general corporate purposes.

6. Current trading and prospects

As previously announced on 1 May 2018, Proudfoot grew revenues in Q1 2018 compared with a particularly low Q4 in 2017 and early indications are for a continuation of this trend into Q2. The customer reaction to its offering continues to be strong where the Group wins work.

The Board is focusing on the Group's sales and marketing teams and infrastructure to promote its offering more effectively and the Board remains confident in the strength of the Proudfoot model to deliver sustainable improvement and change for its customers. Nonetheless, revenues for the year ending 31 December 2018 are likely to be lower than revenue reported in 2017. In addition and as previously announced, management is continuing its work to reduce costs across the Group as a whole. The Group's total costs were £10.7 million for the year ended 31 December 2017.

The Board is conscious that the turnaround of the business is taking longer than expected but remains focused on continuing to promote the changes needed to restore the Group's growth and profitability.

7. Proposals to be voted on at the general meeting

For the purposes of effecting the Placing and Open Offer and the PH Placing, the Resolutions will be proposed at the General Meeting. As noted above, the notice convening the General Meeting will be set out in the Prospectus.

It should be noted that Resolutions 1 through to 5 are inter-conditional, such that if any one of those Resolutions is not passed by the requisite majority of Shareholders eligible to vote on that Resolution, then the Placing and Open Offer will not proceed. If the Placing and Open Offer does not proceed then the Board believes that there is a material risk that the Group will not have sufficient working capital for its present requirements, that is, for at least 12 months following the date of the Prospectus. 

The factors influencing the size and timing of any shortfall in working capital are dependent upon ongoing negotiations around the release of the KS Funds which is subject to the status of any new active or potential claims arising.

More specifically, if the Placing and Open Offer does not proceed, then there is a risk that the Group may experience a liquidity shortfall of £0.2 million in February 2019, followed by further shortfalls of £0.2 million in June and July 2019, respectively. There is then a projected major shortfall of £2.5 million in August 2019. Were the Board to become aware that a near-term liquidity shortfall was likely to occur, with no reasonable prospect of remedy, the Board would need to consider whether there was a reasonable prospect of avoiding insolvent liquidation, and the Board might at such time conclude that the Group should take immediate steps to enter into an insolvency process.

Resolution 1 (Ordinary) is required by the Listing Rules and seeks to approve the issue of New Ordinary Shares for cash at a price of 1 penny per New Ordinary Share (being a discount of 68 per cent. to the Closing Price at the last practicable Business Day prior to the date of this announcement). Under the Listing Rules, shareholders must approve an issuance of ordinary shares at a discount of greater than 10 per cent. to the Closing Price on the last Business Day prior to the announcement of the same.

Resolution 2 (Ordinary) seeks a new authority to enable the Directors to allot relevant securities. The Directors may not allot new shares in the Company without the prior approval of Shareholders in general meeting. For the reason that it was known that the General Meeting would be called in connection with the Placing and Open Offer, no general authority to allot new shares in the Company will be sought at the annual general meeting to be held on 29 June 2018. Resolution 2 seeks authority to allot relevant securities up to an aggregate nominal amount of £15,109,010, including, but not limited to, the issue of equity securities pursuant to the Placing and Open Offer and PH Placing. This represents approximately 196 per cent. of the Company's Existing Ordinary Share Capital as at the date of this announcement and will provide headroom of approximately 33 1/3 per cent. of the Enlarged Issued Share Capital following the completion of the Placing and Open Offer and PH Placing (assuming no further exercise of options granted or other issue of shares pursuant to the Share Incentive Plans). The Directors currently have no specific plans to allot relevant securities other than in connection with the Placing and Open Offer, the PH Placing and pursuant to the Share Incentive Plans.

Resolution 3 (Special) seeks a new authority to disapply statutory pre-emption rights in relation to the allotment of equity securities for cash. The Directors may also only issue shares on a non-preemptive basis with the prior approval of Shareholders in general meeting. Again, for the reason that it was known that the General Meeting would be called in connection with the Placing and Open Offer, no disapplication of pre-emption rights will be sought at the annual general meeting to be held on 29 June 2018. If approved, Resolution 3 will authorise the Directors to allot shares for cash for the purposes of the Placing and Open Offer and PH Placing and otherwise to allot shares for cash up to a maximum nominal amount of £10,812,180. This represents approximately 196 per cent. of the Company's Existing Ordinary Share Capital as at the date of this announcement and will provide headroom of approximately 5 per cent. of the Enlarged Issued Share Capital following the completion of the Placing and Open Offer and PH Placing (assuming no further exercise of options granted or other issue of shares pursuant to the Share Incentive Plans).

Resolution 4 (Ordinary) is the Whitewash Resolution which is proposed as an ordinary resolution to the Independent Shareholders (other than BlueGem, Marco Capello and Emilio Di Spiezio Sardo who are unable to vote pursuant to the City Code). Under the City Code, the grant of the waiver by the Panel of any requirement under Rule 9 of the City Code on Takeovers and Mergers for BlueGem to make a general offer to the shareholders of the Company as a result of the potential for BlueGem to pass through the 30% threshold by virtue of its participation in the Placing and Open Offer must be approved by a majority of the Shareholders independent of BlueGem.

BlueGem has undertaken to the Company not to vote on Resolution 4, the Whitewash Resolution. BlueGem and its associates will not be entitled to vote on Resolution 4 and any votes cast by BlueGem or its associates will be deemed void.

Resolution 5 (Ordinary) seeks to generally approve the terms of the Placing and Open Offer and PH Placing and to authorise the Directors to implement the Placing and Open Offer and PH Placing.

Finally, Resolution 6 (Ordinary) seeks to approve the PH Placing as a related party transaction for the purposes of Chapter 11 of the Listing Rules. As Pamela Hackett is Proudfoot Chief Executive and is also proposed to join the Board of Directors of the Company, the PH Placing is subject to the approval of Shareholders.

8. The Importance of the Shareholder Vote

The Directors and the Proposed Director believe that the Placing and Open Offer is the only viable fundraising option to address the working capital shortfall announced on 23 April 2018. The Directors and the Proposed Director have considered alternative fundraising options but as the Group does not have assets of which it can dispose, and, as access to debt financing is restricted due to the Group's perceived level of credit risk and the consequent prohibitively high cost of such debt financing, the Placing and Open Offer is the only option available to the Company within the required timeframe. The Group has already taken steps to reduce its capital expenditure and the Directors and the Proposed Director do not believe there is scope to implement further capital expenditure reductions within the required timeframe.

Even if shareholders do not intend to participate in the Open Offer, they are urged to vote on the Resolutions to enable the Placing and Open Offer and PH Placing to proceed.

The Board believes that the Placing and Open Offer and the PH Placing are in the Shareholders' best interests and recommends (and in the case of Resolution 4, the Independent Directors recommend) that Shareholders vote in favour of all of the Resolutions in order that the Placing and Open Offer and PH Placing can proceed.

DEFINITIONS

All references to "pounds", "pounds sterling", "sterling", "£", "pence", "penny" and "p" are to the lawful currency of the United Kingdom.

All references to "Euros", "€" and "c" are to the lawful currency of the member states of the European Union that adopt a single currency in accordance with the Treaty establishing the European Community as amended by the Treaty on European Union.

All references to "US dollars" and "$" are to the lawful currency of the United States.

All references in this announcement to times are, unless the context otherwise appears, references to the time in London, United Kingdom.

This information is provided by RNS

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