NASA.L Regulatory News (NASA)

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

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF NASSTAR PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER, ISSUE OR SOLICITATION WOULD BE UNLAWFUL.

15 August 2016

Nasstar plc

("Nasstar", "Company" or "Group")

Acquisition of Modrus Limited

and

Placing to raise £13.3m

Acquisition and Placing Highlights

· Acquisition of Modrus Limited ("Modrus"), a UK-based provider of per user Hosted Managed Services, on a cash free / debt free basis for £13.0m comprising:

o £11.7m in cash; and

o £1.3m in new Nasstar equity.

· Modrus has a strong presence in Media, Property Services and ISVs (independent software providers) which are new verticals to Nasstar, and also has a presence in existing Nasstar verticals, Financial Services and Recruitment.

· Cash consideration to be funded by a placing of 177,333,334 new Ordinary Shares ("Placing Shares") to raise £13.3m at a price of 7.5 pence per Ordinary Share.

· The Placing will also reduce Nasstar's net debt and fund the costs associated with the Acquisition and Placing.

· The Acquisition, together with the full extent of the Placing, is expected to be modestly earnings enhancing in the first financial year following Completion. On an underlying basis the Acquisition and Placing is expected to be more materially earnings enhancing in the first full financial year following Completion.

Financial and Strategic Highlights

· Modrus is profitable, cash generative and has a demonstrable track record of year-on-year growth in revenue and EBITDA.

· For the year ending 31 March 2016, Modrus generated revenues of £6.1m, and adjusted EBITDA* of £1.6m. 85.6% of revenues are recurring.

· Founded in 2004 and headquartered in Bournemouth, Modrus has a location in London and an office in New Zealand to work the UK 'night shift' for 24/7 support.

· The acquisition of Modrus is in line with Nasstar's strategy to penetrate new vertical markets through acquisition and build a resilient customer base.

· Possible cross-selling opportunities, in particular in relation to some of Kamanchi's specialist Recruitment sector specific capabilities, as well as the in-house technology developed by Modrus in its Unified Communications service offering.

*Adjusted EBITDA comprises earnings adjusted for interest, taxation, depreciation, amortisation, share based payments and exceptional items.

Peter Daresbury, Chairman of Nasstar, commented:

"We are delighted to announce the acquisition of Modrus which represents a significant step in our acquisition strategy to increase our 'go to market' verticals and further diversify our customer base. Modrus introduces three new target market verticals to Nasstar's product suite, Media, Property Services and ISVs whilst adding further penetration in Financial Services and Recruitment. This acquisition represents a highly complementary fit with obvious synergies within licensing costs and data-centre consolidation. We are delighted that our placing to raise £13.3m has been well supported by both new and existing institutional investors" 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact:-

Nasstar plc +44 (0) 1952 225 000

Nigel Redwood, Chief Executive Officer

Niki Redwood, Finance Director

finnCap Limited (Nominated Adviser & Broker) +44 (0) 20 7220 0500

Julian Blunt / Matt Goode, James Thompson (Corporate Finance)

Simon Johnson (Corporate broking)

1. Introduction

The Company announced today that it has conditionally agreed to acquire Modrus for a total consideration of £13.0 million. £11.7 million of the consideration will be paid in cash and the balance will be satisfied by the issue to the Vendors of 17,333,334 new Ordinary Shares. To fund the cash element of the acquisition consideration the Company has also today announced the conditional Placing by finnCap of 177,333,334 new Ordinary Shares at 7.5p per share to raise £13.3 million (before expenses). The excess funds raised under the terms of the Placing over the £11.7 million cash consideration will be used to fund costs relating to the Acquisition and the Placing (£0.6 million) with the balance of £1.0 million used to reduce the Company's indebtedness.

The Placing is conditional on, inter alia, the passing of the Resolution at the General Meeting. It is expected that, subject to passing this Resolution, the Placing Shares will be admitted to trading on AIM on Thursday 1 September 2016 and that the Consideration Shares will be admitted to trading on Friday 2 September 2016.

The Placing Price represents a discount of approximately 13.0 per cent. to the closing mid-market price of 8.625 pence per Ordinary Share on 12 August 2016 (being the last practical date prior to the date of this announcement).

The Placing is not conditional on completion of the Acquisition. As a result, it is possible that the Placing Shares could be issued without the Acquisition proceeding.

2. Information on Modrus

Modrus was founded in 2004 by current Managing Director Edward Armitage and Mark Osborne. Modrus provides Information Technology ("IT") managed services and telecoms solutions to SMEs, offering a comprehensive cloud service including virtual desktop, managed exchange and internet based telephony services ("VoIP") overlaid with full connectivity services. It also offers a full IT managed service package for customers including software, hardware and support. Modrus has approximately 140 managed service clients with the majority of revenue derived from clients ranging in size from approximately 50 to 250 users. Given the nature of Modrus' services, customers tend to be contracted for long periods (typically three years) and tend to renew contracts, providing a high level of revenue visibility, with current monthly recurring revenue carried forward amounting to approximately £468,000 per month.

Modrus delivers a number of services:

a) Per User Managed Service ("PUMS"), encompassing the complete outsourcing of a client's IT department, covering software, hardware and support (Modrus Office) or virtual desktop (Modrus Virtual Office). PUMS also includes Modrus Managed Exchange, the hosting and management of Microsoft Exchange for a customer. PUMS wraps all the technology a client may need into a simple package, priced per user per month.

b) Unified Communications ("UC"), which incorporates a full connectivity service including VoIP and Skype for Business, hosted in the cloud and integrated with a customer's Hosted Exchange. Modrus has developed its own in-house solution to assist in the on-boarding of new UC clients, minimising the risks and downtime associated with traditional 'switch overs'.

c) Infrastructure as a Service ("IAAS"), the provision of an IT platform and related support to a customer's in-house IT department.

d) Support, the on-going support a customer may need that is not covered under any PUMS agreement or existing contract term.

e) ISV ("Independent Software Vendors"), the provision of cloud hosting servers to ISVs for onward selling to their customers, typically on a subscription basis.

f) Project, services that relate to one-off projects, mostly for existing clients.

Modrus has focused principally on direct sales to five key vertical sectors, being recruitment, professional services (comprising primarily financial services organisations and property services), media, private education and software vendors. Businesses in these verticals tend to rely heavily on their IT systems making them very suitable for outsourced IT solutions such as those provided by Modrus.

Summary financial information on Modrus is as follows:

*Adjusted to exclude non-recurring advisory fees, new client set up costs and systems development expenditure

Source: Audited accounts/Unaudited management information

Modrus has grown its business successfully over the course of the last three years, driven principally by Service segment revenues (comprising the services referred to in a) to e) above) which grew at a compound annual growth rate of approximately 22 per cent. over the period. PUMS revenues accounted for the majority of such growth following investment into this segment, resulting in new client wins and organic sales growth in 2015 (mainly from upselling additional services to customers and customer user volume increases).

Gross profit margins improved across the three years as certain non-profitable contracts were actively managed out of the business and as greater focus was given to the Service segment. Whilst investment was made in the Services segment, whose revenues are of a long term and recurring nature, costs were reduced within the Projects segment, in which margins are typically much lower and in which work is more ad hoc in nature.

Modrus has benefitted from strong operating cashflow conversion, with Service segment billing taking place either monthly or quarterly in advance.

Modrus' top ten customers accounted for 49.0 per cent. of total revenue in its financial year to 31 March 2016. Key Service segment customers (those with revenues in excess of £100,000, of which there were 17 in 2016, out of a total of approximately 140) contributed 63.3 per cent. of total revenues in the year to 31 March 2016. Customer churn has been minimal historically, with churn in 2015 and 2016 being below 10 per cent. of Service segment revenues in each year, of which a significant proportion was initiated by Modrus for commercial reasons.

Modrus is headquartered in Bournemouth and currently employs 43 people in the UK and four in New Zealand. The New Zealand based employees provide a 24 hour help desk service to Modrus' clients.  Modrus is a Microsoft Gold Partner and is certified to ISO 27001.

3. Background to and Reasons for the Acquisition

As the Board made clear when Nasstar acquired the e-know.net business in January 2014, there are a range of reasons why an organisation might move its information technology to a Hosted Desktop solution. The Directors believe that the commercial logic for organisations to do so are no less strong today, with hosted solutions continuing to offer a level of flexibility, functionality, cost effectiveness, resilience and security beyond that which many, particularly smaller businesses are likely to be able to achieve themselves.

Since the successful acquisition of e-know.net, the Board has made two further successful acquisitions, each of which has been consistent with Nasstar's stated expansion strategy of organic growth, augmented by selective acquisitions, in each case providing some element of:

· specific sector knowledge; or

· penetration into new target vertical markets; or

· intellectual property; or

· technical expertise or certification.

The focus on specific vertical markets has been a key element to the Group since the acquisition of e-know.net, whose focus on regulated businesses (in particular the legal, financial services and recruitment sectors) had been instrumental in its success. Regulated sectors continue to be viewed by the Board as being particularly receptive to hosted IT solutions; the burden of regulation and compliance on these sectors makes them receptive to the high levels of functionality and security provided by an outsourced solution.

The acquisition of Kamanchi (July 2014) added to the Group's exposure to the recruitment sector, whilst the acquisition of VESK Group (October 2015) added to the Group's presence in the legal and logistics sectors as well as bringing with it G-Cloud accreditation, which has enabled the Group to build a presence in the public sector.

The acquisition of Modrus continues in the same vein, adding breadth as well as scale to the Group, which the Directors believe is important in building resilience to the Group's future earnings.

Likewise, with similar levels of recurring revenues (approximately 86 per cent.), typical contract duration and low customer churn to Nasstar, the Directors believe the Acquisition to be highly complementary to the quality of current Group earnings.

The acquisition of Modrus builds scale in the Group's Recruitment and Financial Services segments, adds complementary exposure to vertical markets in which the Group is not currently represented, including Media, Property Services and software vendors.

The Directors have identified a number of areas in which they consider long term synergies can be achieved including:

· the consolidation of Modrus' premises in London into Nasstar's existing footprint, in which spare capacity exists;

· eliminating Modrus' current data centre costs, using existing Nasstar data centre capacity;

· leveraging Nasstar's preferential software license purchasing rates to improve buying terms for Modrus;

· possible cross selling opportunities, in particular in relation to some of Kamanchi's specialist Recruitment sector specific capabilities, as well as the in-house technology developed by Modrus in its Unified Communications service offering;

· achieving better utilisation of the Group's existing London based resources as a result of Modrus' London based customers;

· using Modrus' New Zealand based support office as a platform for growing the Enlarged Group's out of hours support function on a lower cost basis than would be the case in the United Kingdom.

As well as bringing with it additional technically able staff, the Directors believe that the wider geographic footprint resulting from the Acquisition will be helpful in terms of increasing the catchment area from which to recruit suitably qualified technical people in future.

Taken together, the Acquisition and the Placing are expected to be modestly earnings enhancing in the first full financial year following Completion. On an underlying basis the Acquisition and Placing is expected to be more materially earnings enhancing in the first financial year following Completion, that is in Nasstar's financial year to 31 December 2017.

4. Terms of the Acquisition

Under the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire Modrus for a total consideration of £13.0 million which is being satisfied through a cash payment of £11.7 million and the issue of 17,333,334 new Ordinary Shares to Edward Armitage (one of the Vendors) that, at the Placing Price, have a value of £1.3 million.

Completion of the Acquisition agreement is conditional, inter alia, upon:

i. Shareholders' approval of the Resolution

ii. Admission of the Consideration Shares

The Vendors have agreed to a formal lock-in in respect of the Consideration Shares from Admission until 30 June 2017, following which such shares will be subject to a 12 month orderly marketing provision.

Modrus is to be acquired on a cash free/debt free basis though with a normalised level of working capital retained in Modrus ahead of and at Completion.

Edward Armitage and the senior management team of Modrus have all agreed to remain with the Enlarged Group for a minimum period of twelve months following completion of the Acquisition.

5. The Placing and use of Proceeds

The Company is proposing to raise, in aggregate, £13.3 million (before commissions and expenses) by means of the Placing. The Placing Shares will represent approximately 30.6 per cent. of the Enlarged Issued Share Capital. The aggregate net proceeds after costs related to the Acquisition and Placing are expected to be £12.7 million.

The net proceeds of the Placing will be used to fund the cash element of the Acquisition (£11.7 million) with the balance (£1.0 million) to be used in the short term to reduce Group debt (which at 30 June 2016 stood at £6.3 million on a gross basis, with £4.9 million net of cash held at the same date) which will lead to a reduction in margin paid on the Group's existing borrowing. In due course the Board does expect to make further acquisitions and feels that reducing the Group's indebtedness at this stage is a useful precursor to this.

The Placing Shares and the Consideration Shares shall, when issued, rank in full for any dividend or other distribution declared, made or paid after Admission and otherwise equally in all respects with the existing Ordinary Shares.

Application will be made to the London Stock Exchange for the Placing Shares and the Consideration Shares to be admitted to trading on AIM and it is anticipated that trading in the Placing Shares will commence on AIM at 8.00 a.m. on 1 September 2016 and that trading in the Consideration Shares will commence on AIM at 8.00 a.m. on 2 September 2016.

The Placing is conditional upon, amongst other things,

i. none of the conditions to the Acquisition Agreement having ceased to be capable of being satisfied and no circumstances having arisen which entitle the Company not to proceed with the Acquisition;

ii. the Placing Agreement becoming unconditional in all other respects (save for Admission); and

iii. admission of the Placing Shares to trading on AIM becoming effective by not later than 8:00 a.m. on 1 September 2016 or such later date (being not later than 8.00 a.m. on 30 September 2016) as the Company and finnCap may agree.

Pursuant to the terms of the Placing Agreement, finnCap as agent for the Company, has agreed to use its reasonable endeavours to procure placees for the Placing Shares at the Placing Price; the Placing Agreement contains warranties from the Company in favour of finnCap in relation to, inter alia, the accuracy of the information contained in the documents relating to the Placing and certain other matters relating to the Company and its business. In addition, the Company has agreed to indemnify finnCap in relation to certain liabilities that it and persons associated with finnCap may incur in respect of the Placing.

finnCap may terminate the Placing Agreement in specified circumstances (including for breach of warranty at any time prior to Admission, if such breach is reasonably considered by finnCap to be material in the context of the Placing) and in the event of a force majeure event or material adverse change occurring at any time prior to Admission.

6. Current Trading and Prospects

Nasstar announced its full year results to 31 December 2015 in April 2016. The Company reported revenue and Adjusted EBITDA* growth of 23 per cent. and 27 per cent. respectively, improving gross margins, and a better than expected year end cash position. All of the Company's principal Key Performance Indicators (KPIs) showed an improved or maintained position and the integration of VESK Group, acquired in October 2015, was reported to be progressing to plan. It was against this backdrop that the Board was pleased to declare Nasstar's first ever dividend.

Since reporting its 2015 results the Group has continued to trade in line with the Board's expectations, securing notable hosted desktop contracts in both the legal and recruitment sectors whilst successfully cross-selling the Group's new public cloud integrated services to other Group customers. While it is too early to fully assess the wider economic implications of the UK's decision to leave the EU, the Board recognises the increased uncertainty in the macroeconomic outlook. The Board does however believe the Group remains well positioned, benefitting from high levels of recurring revenue, providing an essential service to its clients on a more reliable, efficient and flexible cost basis than they would be likely to achieve themselves. The Group incurs its licence costs (approximately £1.6 million during the year to 31 December 2015) in US Dollars so any prolonged period of Sterling weakness relative to the US Dollar would have a small impact on results, including the extent of any synergy benefits derived from the Acquisition in due course. Interim results for the 6 months to 30 June 2016 will be announced on 26 September 2016.

Nasstar has specifically enhanced its management team in order to facilitate the integration of acquisitions to ensure the potential long term operational gearing can be achieved. For example in January 2016, after a thorough recruitment process, the Group appointed David McCarthy as Managing Director of the Group. David's role is to support Nigel Redwood in the day to day operations of the Group, including, in particular, the integration of the Group's acquisitions. David's appointment has allowed Nigel to focus more on the execution of the Group's strategy and the sourcing of further acquisition opportunities such as Modrus. This hire has been particularly successful with a positive impact operationally and within the client base.

Two further important initiatives were also announced in April 2016, namely an enhanced marketing plan and a brand unification process, each intended to contribute to the organic growth opportunity available to us.

The enhanced marketing plan involved some new senior hires into the Group, including a new Head of Sales, Chief Marketing Officer and Group Sales Director and the targeting of further vertical markets.

The new brand strategy was officially launched on 18 July 2016. The Board felt that unifying the Group under one brand was necessary to reflect the scale and breadth the Group has now achieved and to create a clear process and strategy for consolidating new brands in the future.

The Directors believe that with the new sub-Board management layer and the new single brand, the Group is well positioned to accelerate any "go to market" benefits of future acquisitions and easily realising marketing synergies.

*Adjusted EBITDA comprises earnings adjusted for interest, taxation, depreciation, amortisation, share based payments and exceptional items.

7. Related Party Transactions

Kestrel Partners LLP ("Kestrel") and Hargerave Hale Limited ("Hargreave Hale") are related parties of the Company for the purposes of the AIM Rules for Companies by virtue of their status as Substantial Shareholders of the Company pursuant to the AIM Rules for Companies. Kestrel and Hargreave Hale have agreed to subscribe for 34,029,904 and 19,861,332 Placing Shares respectively as part of the Placing, conditional on Admission. Taking into account the related party transactions noted above, the Directors consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Placing with such related parties are fair and reasonable insofar as the Company's shareholders are concerned.

8. General Meeting

In the Circular, you will find a notice convening the General Meeting to be held at Datapoint House, 400 Queensway Business Park, Queensway, Telford, Shropshire TF1 7UL on 31 August 2016 at 10.00 a.m.

The notice contains the text of the special Resolution that is to be proposed at the General Meeting to authorise the Directors to allot the Consideration Shares pursuant to the Acquisition Agreement and the Placing Shares under the Placing and to disapply Shareholders' pre-emption rights under the Companies Act 2006 in respect of the Placing Shares. Both the Placing and the Acquisition are conditional on the passing of this Resolution.

The Resolution, if passed, will allow the Placing Shares to be issued at a price of 7.5 pence each (representing a 13.0 per cent discount to the closing middle market price for an Ordinary Share of 8.625 pence for the day immediately prior to the date of the Circular) without them first being offered to Shareholders generally in accordance with their statutory pre-emption rights. The Directors have concluded that proceeding with a placing, rather than a rights issue or open offer, is the most suitable option available to the Company for financing the Acquisition and raising additional funds through the issue of Ordinary Shares and that issuing the Placing Shares at such a discount under the Placing is fair and reasonable so far as all existing Shareholders are concerned.

DEFINITIONS

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

PLACING STATISTICS

EXPECTED TIMETABLE FOR ADMISSION

END OF DRAFT ANNOUCEMENT

APPENDIX

TERMS AND CONDITIONS OF THE PLACINGFor Invited Placees only - Important Information

1. Introduction

All information in this document, including the terms and conditions of the Placing in this Appendix, is directed only at persons ("FSMA Qualified Investors") who are both "qualified investors" as referred to at section 86(7) of the Financial Services and Markets Act 2000 ("FSMA") and are persons at or to whom any private communication relating to the Company that is a "financial promotion" (as such term is used in relation to FSMA) may lawfully be issued, directed or otherwise communicated without the need for it to be approved, made or directed by an "authorised person" as referred to in FSMA.

In this Appendix:

(a) "Admission" means the admission of the Placing Shares to trading on AIM;

(b) "finnCap Person" means any person being (i) finnCap Limited ("finnCap"), (ii) an undertaking which is a subsidiary undertaking of finnCap, (iii) a parent undertaking of finnCap or (other than finnCap) a subsidiary undertaking of any such parent undertaking, or (iv) a director, officer, agent or employee of any such person;

(c) "Impact Announcement" means the Company's proposed regulatory announcement of the Placing;

(d) "Group" means the group comprising the Company and its subsidiary undertakings;

(e) "Placee" means any person who is or becomes committed on a conditional basis to subscribe for Placing Shares under the Placing;

(f) "Placing Agreement" means the conditional placing agreement relating to the Placing proposed to be entered into between the Company and finnCap;

(g) "Placing Price" means the fixed price at which each Placing Share is to be made available for subscription under the Placing, as stated elsewhere in this document;

(h) "Placing Shares" means new ordinary shares in the capital of the Company ("Ordinary Shares"); and

(i) terms defined elsewhere in this document have the same meanings, unless the context requires otherwise.

2. Placing

finnCap is acting as the Company's agent in respect of the Placing. finnCap will determine the extent of each Placee's participation in the Placing, which will not necessarily be the same for each Placee. No commissions will be paid to or by Placees in respect of their agreement to subscribe for any Placing Shares.

Each Placee will be required to pay to finnCap, on the Company's behalf, the Placing Price as the subscription sum for each Placing Share that it is required to subscribe for in accordance with the terms set out in or referred to in this Appendix. Each Placee's obligation to subscribe and pay for Placing Shares under the Placing will be owed to each of the Company and finnCap. Each Placee will be deemed to have read this Appendix in its entirety. Neither finnCap nor any other finnCap Person will have any liability (subject to applicable legislation and regulations) to Placees or to any person other than the Company in respect of the Placing.

Various dates referred to in this document are stated on the basis of the expected timetable for the Placing. It is possible that some of these dates may be changed. The expected date for the release of the Impact Announcement is 15 August 2016. The expected date for Admission is 1 September 2016 and, in any event, the latest date for Admission is 30 September 2016 ("the Long Stop Date").

Placees' commitments in respect of Placing Shares will be made solely on the basis of the information contained in this document and on the terms contained in it. No admission document for the purposes of the AIM Rules for Companies, or prospectus, is required to be published, or has been or will be published, in relation to the Placing or the Placing Shares.

3. Participation and settlement

Participation in the Placing is only available to persons who are invited to participate in it by finnCap.

A Placee's commitment to subscribe for a fixed number of Placing Shares under the Placing will be agreed orally (or, if agreed previously, may be confirmed orally) with finnCap on or before the date on which the Impact Announcement is made. Such agreement will constitute a legally binding commitment on such Placee's part to subscribe for that number of Placing Shares at the Placing Price on the terms and subject to the conditions set out or referred to in this Appendix and subject to the Company's constitution. After such agreement is entered into a written confirmation will be dispatched to the Placee by finnCap stating (i) the number of Placing Shares for which such Placee has agreed to subscribe, (ii) the aggregate amount such Placee will be required to pay for those Placing Shares, (iii) relevant settlement information and (iv) settlement instructions. A settlement instruction form will accompany each written confirmation and, on receipt, should be completed and returned by the date and time stated in it.

Settlement of transactions in the Placing Shares will take place within the CREST system, subject to certain exceptions, on a "delivery versus payment" (or "DVP") basis. finnCap reserves the right to require settlement for and/or delivery to any Placee of any Placing Shares by such other means as it may deem appropriate if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this document or the Impact Announcement.

A Placee whose Placing Shares are to be delivered to a custodian or settlement agent should ensure that the written confirmation is copied and delivered promptly to the appropriate person within that organisation.

4. Placing Agreement

If the Placing proceeds finnCap will enter into the Placing Agreement with the Company under which finnCap will agree on a conditional basis to use its reasonable endeavours as the Company's agent to procure subscribers at the Placing Price for all Placing Shares.

5. Placing conditions

The Placing is conditional on (i) the entry into of the Placing Agreement by the Company and finnCap, (ii) the release of the Impact Announcement through the London Stock Exchange's Regulatory News Service (or another regulatory information service, as that term is used in the AIM Rules for Companies), (iii) the passing of a resolution at a general meeting of the Company to be proposed in the notice of that meeting that is to be included in the Company's circular to its shareholders concerning the Placing and related matters, (iv) none of the conditions to the acquisition agreement to which the Company expects to be a party in respect of its proposed acquisition of Agile referred to elsewhere in this document having ceased to be capable of being satisfied in accordance with its terms and no circumstances having arisen which entitle or would entitle the Company not to proceed with the Acquisition, (v) finnCap's obligations under the Placing Agreement not being terminated in accordance with its terms, (vi) Admission taking place by the relevant time and date to be stated in the Impact Announcement, and (vii) finnCap's obligations under the Placing Agreement becoming unconditional in all other respects. finnCap may extend the time and/or date for the fulfilment of any of the conditions referred to above to a time no later than 5.00 p.m. on the Long Stop Date. If any such condition is not fulfilled (and, if capable of waiver under the Placing Agreement, is not waived by finnCap) by the relevant time, the Placing will lapse and each Placee's rights and obligations in respect of the Placing will cease and terminate at such time.

finnCap's obligations under the Placing Agreement may be terminated by finnCap at any time prior to Admission in certain circumstances including, among other things, following a material breach of the Placing Agreement by the Company or the occurrence of certain force majeure events. The exercise of any right of termination pursuant to the Placing Agreement, any waiver of any condition in the Placing Agreement and any decision by finnCap whether or not to extend the time for satisfaction of any condition in the Placing Agreement or whether or not to enter into the Placing Agreement will be within finnCap's absolute discretion (as is the exercise of any right or power of finnCap that is referred to in this Appendix). finnCap will have no liability to any Placee or to anyone else in respect of any such termination, waiver or extension or any decision to exercise or not to exercise any such right of termination, waiver or extension or any decision not to enter into the Placing Agreement.

6. Placees' warranties and undertakings to the Company and finnCap

By agreeing with finnCap to subscribe for Placing Shares under the Placing a Placee (and any person acting on a Placee's behalf) will irrevocably acknowledge and confirm and warrant and undertake to, and agree with, each of the Company and finnCap, in each case as a fundamental term of such Placee's application for Placing Shares and of the Company's obligation to allot and/or issue any Placing Shares to it or at its direction, that:

(a) it agrees to and accepts all the terms set out in this Appendix;

(b) its rights and obligations in respect of the Placing will terminate only in the circumstances referred to in this Appendix and will not be subject to rescission or termination by it in any circumstances;

(c) this document, which has been issued by the Company, is within the sole responsibility of the Company;

(d) it has not been, and will not be, given any warranty or representation in relation to the Placing Shares or to the Company or to any other member of its Group in connection with the Placing, other than (i) by the Company as included in this document, and (ii) by the Company to the effect that at the time that the Placee enters into a legally binding commitment to subscribe for Placing Shares pursuant to the Placing the Company will not then be in breach of its obligations under the London Stock's Exchange's AIM Rules for Companies or under the EU Market Abuse Regulation (596/2014) to disclose publicly in the correct manner all such information as is then required to be so disclosed by the Company;

(e) it has not relied on any representation or warranty in reaching its decision to subscribe for Placing Shares under the Placing, save as given or made by the Company as referred to in the previous paragraph;

(f) it is not a client of finnCap in relation to the Placing and finnCap is not acting for it in connection with the Placing and will not be responsible to it in respect of the Placing for providing protections afforded to its clients;

(g) it has not been, and will not be, given any warranty or representation by any finnCap Person in relation to any Placing Shares, the Company or any other member of its Group and no finnCap Person will have any liability to it for any information contained in this document or which has otherwise been published by the Company or for any decision by it to participate in the Placing based on any such information or on any other information provided to it;

(h) it will pay the full subscription sum at the Placing Price as and when required in respect of all Placing Shares for which it is required to subscribe under its Placing participation and will do all things necessary on its part to ensure that payment for such shares and their delivery to it or at its direction is completed in accordance with the standing CREST instructions (or, where applicable, standing certificated settlement instructions) that it has in place with finnCap or puts in place with finnCap;

(i) it is permitted to subscribe for Placing Shares under the laws of all relevant jurisdictions which apply to it and it has complied, and will fully comply, with all such laws (including where applicable, the Anti-Terrorism, Crime and Security Act 2001, the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007) and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such subscription, and it will provide promptly to finnCap such evidence, if any, as to the identity or location or legal status of any person which finnCap may request from it in connection with the Placing (for the purpose of complying with any such laws or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by finnCap on the basis that any failure by it to do so may result in the number of Placing Shares that are to be allotted and/or issued to it or at its direction pursuant to the Placing being reduced to such number, or to nil, as finnCap may decide;

(j) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done or to be done by it in relation to any Placing Shares in, from or otherwise involving the United Kingdom and it has not made or communicated or caused to be made or communicated, and it will not make or communicate or cause to be made or communicated, any "financial promotion" in relation to Placing Shares in contravention of section 21 of FSMA;

(k) it is a FSMA Qualified Investor;

(l) it is acting as principal only in respect of the Placing or, if it is acting for any other person (i) it is duly authorised to do so, (ii) it is and will remain liable to the Company and/or finnCap for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person), (iii) it is both an "authorised person" for the purposes of FSMA and a "qualified investor" as defined at Article 2.1(e)(i) of Directive 2003/71/EC (known as the Prospectus Directive) acting as agent for such person, and (iv) such person is either (1) a FSMA Qualified Investor or (2) its "client" (as defined in section 86(2) of FSMA) that has engaged it to act as his agent on terms which enable it to make decisions concerning the Placing or any other offers of transferable securities on his behalf without reference to him;

(m) nothing has been done or will be done by it in relation to the Placing or to any Placing Shares that has resulted or will result in any person being required to publish a prospectus in relation to the Company or to any Ordinary Shares in accordance with FSMA or the Prospectus Rules or in accordance with any other laws applicable in any part of the European Union or the European Economic Area;

(n) it will not treat any Placing Shares in any manner that would contravene any legislation applicable in any territory or jurisdiction and no aspect of its participation in the Placing will contravene any legislation applicable in any territory or jurisdiction in any respect or cause the Company or finnCap to contravene any such legislation in any respect;

(o) (in this paragraph "US person" and other applicable terms have the meanings that they have in Regulation S made under the US Securities Act of 1933, as amended) (i) none of the Placing Shares have been or will be registered under that Act or under the securities laws of any State of or other jurisdiction within the United States, (ii) subject to certain exceptions, Placing Shares may not be offered or sold, resold, or delivered, directly or indirectly, into or within the United States or to, or for the account or benefit of, any US person, (iii) it is (unless otherwise expressly agreed with finnCap) neither within the United States nor a US person, (iv) it has not offered, sold or delivered and will not offer sell or deliver any of the Placing Shares to persons within the United States, directly or indirectly, (v) neither it, its affiliates, nor any persons acting on its behalf, has engaged or will engage in any directed selling efforts with respect to the Placing Shares, (vi) it will not be subscribing Placing Shares with a view to resale in or into the United States, and (vii) it will not distribute this document or any offering material relating to Placing Shares, directly or indirectly, in or into the United States or to any persons resident in the United States;

(p) finnCap may itself agree to become a Placee in respect of some or all of the Placing Shares or by nominating any other finnCap Person or any person associated with any finnCap Person to do so;

(q) time is of essence as regards its obligations under this Appendix;

(r) this Appendix and any contract which may be entered into between it and finnCap and/or the Company pursuant to this Appendix or the Placing, and all non-contractual obligations arising between the Placee and finnCap and/or the Company in respect of the Placing, will be governed by and construed in accordance with the laws of England, for which purpose it submits (for itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute, or matter arising out of or relating to this Appendix or such contract, except that each of the Company and finnCap will have the right to bring enforcement proceedings in respect of any judgement obtained against such Placee in the English courts or in the courts of any other relevant jurisdiction;

(s) each right or remedy of the Company or finnCap provided for in this Appendix is in addition to any other right or remedy which is available to such person and the exercise of any such right or remedy in whole or in part will not preclude the subsequent exercise of any such right or remedy;

(t) any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to finnCap;

(u) nothing in this Appendix will exclude any liability of any person for fraud on its part, and all times and dates in this document are subject to amendment at the discretion of finnCap except that in no circumstances will the date scheduled for Admission be later than the Long Stop Date; and

(v) none of its rights or obligations in respect of the Placing is conditional on any other person agreeing to subscribe for any Placing Shares under the Placing and no failure by any other Placee to meet any of its obligations in respect of the Placing will affect any of its obligations in respect of the Placing.

7. Payment default

A Placee's entitlement to receive any Placing Shares under the Placing will be conditional on finnCap's receipt of payment in full for such shares by the relevant time to be stated in the written confirmation referred to above, or by such later time and date as finnCap may determine, and otherwise in accordance with that confirmation's terms. finnCap may waive this condition, and will not be liable to any Placee for any decision to waive it or not.

If any Placee fails to make such payment by the required time for any Placing Shares (1) the Company may release itself, and (if it decides to do so) will be released from, all obligations it may have to allot and/or issue any such Placing Shares to such Placee or at its direction which are then unallotted and/or unissued, (2) the Company may exercise all rights of lien, forfeiture and set-off over and in respect of any such Placing Shares to the full extent permitted under its constitution or by law and to the extent that such Placee then has any interest in or rights in respect of any such shares, (3) the Company or, as applicable, finnCap may sell (and each of them is irrevocably authorised by such Placee to do so) all or any of such shares on such Placee's behalf and then retain from the proceeds, for the account and benefit of the Company or, where applicable, finnCap (i) any amount up to the total amount due to it as, or in respect of, subscription monies, or as interest on such monies, for any Placing Shares and (ii) any amount required to cover dealing costs and/or commissions necessarily or reasonably incurred by it in respect of such sale, and (4) such Placee will remain liable to the Company and to finnCap for the full amount of any losses and of any costs which it may suffer or incur as a result of it (i) not receiving payment in full for such Placing Shares by the required time, and/or (ii) the sale of any such Placing Shares to any other person at whatever price and on whatever terms are actually obtained for such sale by or for it. Interest may be charged in respect of payments not received by finnCap for value by the required time referred to above at the rate of two percentage points above the base rate of National Westminster Bank plc.

8. Overseas jurisdictions

The distribution of this document and the offering and/or issue of shares pursuant to the Placing in certain jurisdictions is restricted by law. Persons who seek to participate in the Placing must inform themselves about and observe any such restrictions. In particular, this document does not constitute or form part of any offer or invitation, or a solicitation of any offer or invitation, to subscribe for or acquire or sell or purchase or otherwise deal in Ordinary Shares in the United States, Canada, Japan or Australia or in any other jurisdiction in which any such offer, invitation or solicitation is or would be unlawful. The Placing Shares have not been and will not be registered under the US Securities Act of 1933, as amended or under the securities laws of any State of or other jurisdiction within the United States, and, subject to certain exceptions, may not be offered or sold, resold or delivered, directly or indirectly, in or into the United States, or to, or for the account or benefit of, any US persons (as defined in Regulation S under that Act). No public offering of the Placing Shares is being or will be made in the United States.

9. Placing Shares

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued Ordinary Shares.