One Media Regulatory News (OMIP)

One Media iP Group Plc - Proposed Fundraise of a minimum of £7.9 million

PR Newswire

London, August 30

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31 August 2018

One Media IP Group plc (“OMIP” or the “Company”)

Proposed Fundraise of a minimum of £7.9 million and Notice of Extraordinary General Meeting

Proposed Placing to raise a minimum of £1.9 million and

proposed Issue of up to £6 million in Loan Notes

Introduction

One Media IP Group plc (AIM: OMIP), an 'intellectual property' (IP) owner and controller of music and video rights, is pleased to announce a proposed Placing and Subscription to raise a minimum of £1.9 million of new equity capital at an issue price of 6 pence per new Ordinary Share, and the proposed issue of up to £6 million of Loan Notes.

The Placing will be conducted by way of an accelerated bookbuild, which will be launched immediately following this announcement. The total number of New Ordinary Shares will be determined following the Bookbuild. Panmure Gordon is acting as sole broker to the Company in connection with the Bookbuild.

Highlights

The Bookbuild is expected to close no later than 4.30 p.m. (London time) on 31 August 2018. The timing of the closing of the Bookbuild and the final number and allocation of the Placing Shares to be issued at the Placing Price are to be determined at the discretion of the Company and Panmure Gordon.

Following the close of the Bookbuild, a further announcement will be made confirming final details of the Placing and the Subscription.

For further information, please contact:

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

Introduction

OMIP is an 'intellectual property' (IP) owner and controller of music and video rights and a B2B and B2C digital content provider, licensing intellectual property rights for music and video. It exploits its catalogue of over 250,000 music tracks and 10,000 hours of video by re-compiling its content for download, streaming and sublicensing through over 600 territorial digital music and video stores worldwide. The Company delivers digital music and video content through aggregators to over 600 global digital stores including iTunes, Spotify, Amazon, Google, Deezer, Tidal, Audible and YouTube.

The Company’s catalogue of nostalgic music tracks is from a range of genres spanning soul to classical music and rock to pop and including performances from over 1,700 diverse artists such as George McCrae, Merle Haggard, Ricky Valance, Edwin Starr, Evelyn Thomas, Mungo Jerry, Eric Burdon, the Troggs, Marv Johnson and the Royal Philharmonic Orchestra. The Company looks to exploit its music tracks and over 10,000 hours of video by recompiling the content for sale through digital music and video stores. In addition, its library of content is available for TV shows, movies, adverts and websites requiring synchronised music. The Company owns all the rights to the Men & Motors TV shows (originally Granada/ITV) that were aired on British TV between 1996 and 2010. Comprising over 3,400 shows, Men & Motors is available for viewing on OMIP’s YouTube channel. The Company is looking to rework the format for digital TV broadcast in the future.

OMIP has a team of full-time creative technicians, all of whom are YouTube certified, who digitise the content, create the metadata, re-compile and prepare the digital music and video releases using bespoke in-house developed software. Additionally, OMIP makes its library of content available for TV shows, movies, adverts and websites requiring synchronised music. OMIP focuses on music performed by well-known artists from every genre. Its classical music library of over 10,000 performances includes the Point Classics catalogue comprising some of the most renowned masterpieces by the world’s greatest composers.

Recently OMIP has developed a content discovery and analytical software service, 'Technical Copyright Analysis Tool' (“TCAT”), which allows record companies, publishers and law firms to search certain digital stores, such as iTunes, Apple Music and Spotify, and carry out a forensic digital audit on behalf of owners to ensure that their music has not been used without licensing agreements being in place. A major record label and the largest independent music distributor are now using this service.

A substantial proportion of the Company’s revenues are generated in US Dollars and as such the Company has a significant exposure to this currency.

Description of the Company’s activities

The Company’s principal activity is the acquisition and exploitation of intellectual property rights over music, video and spoken word via digital platforms, and its music content is also licensed (on an ad-hoc basis) for use in TV and film, advertising, video games and on corporate websites.

Initially, the Company focused on music catalogue acquisition, which later expanded to video and spoken word as the popularity of these formats and access to technology grew.

In addition, it has been developing TCAT as an in-house originated SaaS (Software as a Service) product to license to the major music distributors and record labels.

The music industry has witnessed a major change as a result of the increased adoption of streaming services. After a period of decline, sales of recorded music have returned to growth, principally driven by streaming. With music streaming set to grow, not only is the Company expected to benefit from sales of its portfolio of digital content, it is also able to provide a vital service to copyright owners through TCAT, which can track and monitor where their music is made available for sale.

Lord Michael Grade and Ivan Dunleavy identified that the Company was set to benefit from the return to growth of the music industry and, in December 2017, they made an equity investment in the Company totalling £375,000. In April 2018 they were both appointed to the Board and Ivan Dunleavy became Non-Executive Chairman of the Board.

Background to and reasons for the Proposed Placing

The Directors have been reviewing options to scale up the business, given their belief that the music industry will continue to benefit from the growth generated by streaming services, through the acquisition of music publishing rights and songwriters’ rights. The impact of streaming is expected to positively benefit music publishing revenues, which Goldman Sachs believes will rise from US$5.4 billion in 2015 to US$9.3 billion in 2030.

In order to exploit this opportunity the Directors are seeking to raise a minimum of £1.9 million of new equity capital, and up to £6 million through the issue of Loan Notes, to purchase music rights.

New Consultancy Arrangements

Consultancy Agreement with Ninelives

On Admission the Company intends to enter into an agreement with Ninelives, pursuant to which Ninelives will provide the services of Andrew Michael to the Company. Andrew will be responsible for identifying potential opportunities for the Company to acquire new music IP rights catalogues which are being sold.

Andrew Michael founded Ninelives Capital Limited, which arranges financing solutions for rights owners, performers and creators of recorded music who are looking to raise capital from their music IP rights, either by way of sale or the securing of finance, in 2016. Andrew has over 28 years’ experience in the banking sector, including having been a member of the Barclays Bank media team and establishing the Music & Entertainment Division at Investec. At Investec, he was involved in numerous deals including funding world tours and events, advancing against future royalties and providing lending facilities to music publishing companies.

Andrew has a successful track record in offering lending facilities to rights owners and creators of recorded music. He has extensive contacts across the music industry, spanning artists, songwriters, managers, lawyers and accountants, which will be invaluable to the Group going forward.

Under the terms of the consultancy agreement, Ninelives will provide the Company with a right of first refusal on all music IP rights acquisitions that Andrew Michael sources. The Company will then have 30 days’ exclusivity to decide whether or not an acquisition opportunity will be pursued. If the Company opts not to pursue an opportunity, Andrew and Ninelives will be permitted to offer the opportunity to other parties, provided that they are not competitors of the Group.

The Company has agreed that in the event that Andrew Michael identifies a potential acquisition which the Company subsequently completes, the Company shall pay a commission to Ninelives which will be determined depending upon the nature of the catalogue acquired. It has been agreed that a recoupable advance on commission of £125,000 shall be paid to Ninelives on Admission and this shall be set off against commissions payable on introduced music IP rights acquisitions.

The consultancy arrangement will continue for an initial period of six months, during which time it can only be terminated in certain limited circumstances, and shall be renewable by mutual agreement. In the event that during this initial period Ninelives has not earned sufficient commission to cover the advance paid by the Company, Andrew Michael must continue to present opportunities to the Company until sufficient commission has been earned. The agreement contains standard confidentiality and indemnity provisions and is governed by English law.

In addition, Ninelives has indicated an intention to invest £125,000 as part of the Subscription. If this participation is confirmed, following Admission Ninelives will be subject to a 12 month orderly market arrangement and will agree that for a period of 12 months from Admission, Ninelives will not deal or otherwise dispose of any of the Ordinary Shares that will be issued to it other than through Panmure Gordon (or such other broker appointed by the Company from time to time) and provided that the dealing will not impair an orderly market in the Ordinary Shares.

Consultancy Agreement with Nicola Horlick

On Admission the Company intends to enter into a consultancy agreement with Nicola Horlick, pursuant to which Nicola will source acquisition opportunities for the Company and will also provide investment advice.

Nicola has 35 years’ experience in fund management and establishing investment businesses. Together with Michael Grade, she was a bidder for Imagem Music Company (one of the largest owners of music rights), which was purchased by Concord Bicycle Music in 2017. As Chief Executive Officer of Bramdean Asset Management, she launched a music rights fund, Resonant, which funded film scores (including The King’s Speech, Drive and The Woman in Black) that created royalty revenue streams. This catalogue was sold to Resonant’s partner, Cutting Edge Music Holdings, in 2015.

Other senior roles Nicola has held include Managing Director of Morgan Grenfell Investment Management from 1992 to 1997 and Chief Executive Officer of SG Asset Management UK from 1997 to 2003. She founded Money & Co. in 2013, which is a P2P lending platform.

Under the terms of the consultancy agreement, Nicola will spend a minimum of one day per week on matters for the Company and will not be paid a fee for the services provided to the Company. The agreement will continue unless terminated by mutual agreement of the parties. Should the Company raise further equity capital prior to 31 December 2019, Nicola will become entitled to a bonus of £100,000 otherwise the agreement will terminate without notice. The agreement is intended to cover the initial phase of investment of the monies raised from the Placing and the Loan Notes and as further capital is raised, new terms of engagement are expected to be discussed. The agreement contains standard confidentiality and indemnity provisions and is governed by English law.

Nicola has indicated an intention to invest £225,000 as part of the Subscription.

BOARD RESPONSIBILITIES

Michael Infante, Chief Executive Officer

Michael Infante, founder of OMIP, will continue to oversee the existing activities as Chief Executive and as a main Board Executive Director as well as bringing the benefit of his years of experience to the scale up of music IP rights acquisition activities and, importantly, assisting with driving incremental sales revenues from the Company's IP assets, both acquired and created.

Ivan Dunleavy

Following Admission, Ivan Dunleavy’s responsibilities will be changed from Non-Executive Chairman to Executive Chairman.

Overview of scale up of existing business activities

Acquisition of music publishing rights and songwriters’ rights

The Directors believe that music publishing and songwriters’ rights can be purchased from individual songwriters and small publishing companies at a lower multiple of NPS than the reported acquisition prices of some of the larger music publishing catalogues, giving rise to a possible arbitrage opportunity. The major rights owners tend to buy libraries and portfolios of rights rather than rights for individual songs or small portfolios. The buyers of large portfolios and libraries are often backed by financial institutions.

The recovery that is being seen by the music industry, driven by the growth in streaming, is believed by the Directors to further strengthen the case for a buy and build strategy. There is also an opportunity to exploit the music rights purchased more effectively and to ensure that royalties are being properly collected. OMIP’s TCAT product is expected to assist in ensuring that revenues are increased. In addition, the Company’s experience in deriving revenues from its existing portfolio will be used to identify opportunities to further grow the revenues from the ownership of these newly-acquired music rights.

In 2017 the major recording companies (Sony Music, Universal Music Group and Warner Music Group) had a 58.8 per cent. share of the global music publishing market. Within the remaining 41.2 per cent. there is a highly fragmented long tail of ownership of music rights, typically owned by the writer/co-writer, record producers, record labels and family estates from which the Directors will seek to acquire such music rights.

The OMIP management team will work with artists’ business managers, personal managers, accountants and lawyers to identify opportunities to buy music rights. Through this pro-active approach, the management team believes that the Company will be able to deploy the debt and equity capital raised quickly and efficiently.

How music publishing works

Song writing and producing is the act of creating music. Publishing exploits the musical creation through various revenue outlets. The music publisher (or publishing company) is responsible for ensuring the songwriters and composers receive payment when their compositions are used commercially. The copyrights owned and administered by publishing companies are one of the most important forms of intellectual property in the music industry. Publishing companies play a central role in managing this vital asset. A songwriter or composer “assigns” the copyright of their composition to a publishing company. In return, the publishing company licenses compositions, helps monitor where compositions are used, collects royalties and distributes them to the composers. They also secure commissions for music and promote existing compositions to recording artists, film and television.

The creator of a song, the songwriter, owns the “composition” rights. The songwriter typically, by way of a publisher, grants a license to an artist to make a recording or a performance of the song. The artist, typically through a record label, may then, depending on the contractual arrangements in place, be entitled to a payment for every copy sold of their recording of that song (the technical term is a phono-record, which covers vinyl, CDs, tapes or downloads). The recording artist (or a record label) then owns the rights to the “sound recording” or “master” and also receives payments for every copy of the recording made. If the songwriter is also the recording artist, then they will typically receive both of these royalty streams. If another artist wants to perform a “cover” of the song, the songwriter or the owner of the composition rights (if they have been sold) will be entitled to payment for each copy, download or stream of the song. In order to do this, the new artist, typically through its record label, must procure a mechanical license. The payments are called the mechanical royalties.

In the US, the royalty rates paid are set by the Copyright Royalty Board (“CRB”). The CRB was created by the Copyright Royalty and Distribution Reform Act 2004. When an artist wants to record a song, a statutory license is created by law, which gives the licensee the right to a compulsory license with the songwriter being entitled to the statutory rate per copy. However, the licensee can negotiate a lower rate with the songwriter or the owner of the composition rights, but in practice the latter is only likely to agree if the artist is particularly well known and is likely to generate a very high rate of sales. The CRB confirmed in January 2018 that songwriters and music publishers’ royalties from on-demand subscription services would increase during the five-year term between 2018 and 2022 to 15.1 per cent. of revenue, an increase of up to 43.8 per cent. on the revenues prior to 2018.

As well as mechanical rights, there are also performance and synchronisation rights that accrue to the songwriter/publisher for the use of music in radio, playing in public areas, streaming (performance royalties) and movies, TV shows, commercials, music videos and gaming etc. (synchronisation royalties). Songwriters sign with a performance rights organisation who collects royalties from radio stations, bars, restaurants and other venues where the music is used. In the US, most artists sign with the American Society of Composers, Authors and Publishers (ASCAP) or Broadcast Music, Inc. (BMI). In the UK, the equivalent organisation is the PRS for Music.

With regard to digital platforms like iTunes, in most markets the platform pays the collection societies for the publishing element of each sale and also to the record company for the recording artist’s share. In markets such as USA, Mexico and India, the digital platform pays the record company and the record company then pays the publisher for their share of the sale. Streaming services like Spotify are responsible for making payments to the songwriter/publishing company and the artist.

Given the complexity involved in managing music publishing rights, it is not practical for artists to collect all the revenue due to them directly. They will, therefore, usually engage a music publishing company to administer their rights for them. In many cases, where rights are sold, songwriters have decided to monetise their rights and will sell them for a one-off payment. 

The Directors believe that of the money spent by consumers on music consumption, around 10 per cent. is received by the publisher (which is then shared with the songwriter). Approximately 60 per cent. is received by the record label (which is then shared with the artist) and 30 per cent. is received by either the music platform, ticket seller, promotor or collection agent depending upon how the music is consumed.

Market activity

Recent rights deals have demonstrated that there is high demand for music publishing and songwriters’ rights. Recent transactions include:

Roundhill acquisition of the Carlin America publishing catalogue (January 2018)

Roundhill reportedly raised approximately US$175 million in equity financing from institutional investors and around US$75 million in debt from SunTrust to fund the acquisition of the Carlin America publishing catalogue for US$245 million. Carlin America's artists include Elvis Presley, AC/DC, Artie Resnick, Bobby Darin, Faron Young, Hank Ballard, Rudy Clark, Fats Domino and Billie Holiday.

2. Primary Wave acquisition of a share of Bob Marley’s music publishing catalogue (January 2018)

Primary Wave, backed by institutional investors including BlackRock, acquired an 80 per cent. share of two publishing catalogues: Bob Marley’s songs and Blue Mountain Music, including songs from Marley, Toots and the Maytals, Free, U2 and the Waterboys, from Island Record’s founder Chris Blackwell for US$50 million.

3. Concord Bicycle Music acquisition of Imagem music publishing catalogue (June 2017)

Concord Bicycle Music acquired the Imagem music publishing catalogue which included the Rodgers & Hammerstein and Boosey & Hawkes music catalogues and publishing rights for pop songs performed by artists such as Kaiser Chiefs, Justin Timberlake, Wynton Marsalis, Phil Collins, Genesis, The Temper Trap, Vampire Weekend, M.I.A. and Daft Punk. Imagem was acquired from Stichting Pensioenfonds ABP for a reported US$600 million.

4. Kobalt Capital acquisition of Songs Music Publishing's catalogue (December 2017)

Kobalt Capital acquired Songs Music Publishing's catalogue which included Lorde’s ‘Royals’, The Weeknd’s ‘Can’t Feel My Face’, ‘The Hills’ and ‘Starboy’, and Mark Ronson’s ‘Uptown Funk’. Kobalt Capital also now represents Diplo and Major Lazer. The acquisition was for a reported US$150 million.

5. Universal Music acquisition of Stiff Records’ publishing catalogue (December 2017)

Universal’s publishing arm acquired the rights to songs owned by Stiff Records, as well as the labels ZTT and Perfect Songs, from Trevor Horn, the producer and former member of ’Video Killed the Radio Star‘ band The Buggles. Stiff Records was the UK independent label behind acts including Elvis Costello and Madness.

6. Hipgnosis Song Funds £202 million equity fundraising

Hipgnosis Song Funds Limited listed on the London Stock Exchange raising approximately £202 million and offering exposure to songs and associated musical intellectual property rights, which the Directors believe demonstrates the growing interest in the acquisition of music rights. 

Market opportunity

IFPI released its Global Music Report 2018 in April 2018 and reported that the global recorded music market grew by 8.1 per cent. in 2017, its third consecutive year of growth since IFPI began tracking the market in 1997. Total revenues for 2017 were US$17.3 billion.

According to IFPI, streaming remains the main driver of recovering revenues and, for the first time, has become the single largest revenue source with 176 million users of paid streaming services contributing to year-on-year streaming growth of 41.1 per cent. Streaming now accounts for 38.4 per cent. of total recorded music revenue globally and its growth has more than offset a 5.4 per cent. decline in physical revenue and a 20.5 per cent. decline in download revenue. Total digital income last year accounted for more than half of all revenue (54 per cent.) for the first time.

According to the British Phonographic Industry’s All About The Music 2018 report, music consumption in the UK in terms of album equivalent sales increased by 9.5 per cent. in 2017 to 135.1 million. Growth was solely driven by a 51.5 per cent. increase in the number of tracks streamed on dedicated audio services such as Spotify, Apple Music, Amazon Unlimited and Deezer. Track equivalent albums (singles sold divided by 10), physical albums and digital albums all fell by 24.2 per cent., 9.5 per cent. and 23.4 per cent. respectively. Recorded music revenues in the UK rose by 10.6 per cent. in 2017. The report noted that UK record labels had seen the highest annual growth since 1995. Overall, revenues in the UK were almost £840 million, approaching the level last seen in 2010. Revenues from streaming rose by 41.1 per cent.

Total global recorded music revenues were US$17.3 billion in 2017 up from US$16.0 billion in 2016. Revenues were split as follows:

Digital 54 per cent.

Physical 30 per cent.

Performance rights 14 per cent.

Synchronisation 2 per cent.

The initial wave of technological change in the 1990s resulted in a sharp fall in music revenues as people were able to access music for free through the internet. In 1998, consumers spent 7.6 per cent. of their total entertainment spend on music, but in 2015, this figure was only 4.2 per cent. According to Nielsen, 93 per cent. of consumers regularly listen to music in the US, however YouTube estimates only 20 per cent. of consumers currently pay for it. In 2015, the average spend on music per person per annum in developed markets was US$15.00 and US$1.00 in emerging markets. However, there is evidence that the second wave of technological change involving smartphones, smart speakers and streaming will result in rapid growth in music revenues over the next few years. Indeed, Goldman Sachs expects global recorded music revenues to reach US$41 billion by 2030 with subscription streaming accounting for over 68 per cent. at US$28 billion (US$34 billion including ad-funded streaming revenues).

The growth of streaming has been impressive over the last couple of years. In the first half of 2016, US consumers streamed 630 million songs per day, a year-on-year increase of 97 per cent. There are now approximately 57 streaming platforms in the US and approximately 400 globally. Recent figures suggest Amazon has around 16 million subscribers through its Amazon Prime Music and Music Unlimited services, Spotify has around 75 million, Apple Music has approximately 40 million, Deezer about 6 million and Pandora around 6 million subscribers (all figures rounded to the nearest million). It is estimated that streaming revenues grew from US$0.4 billion in 2010 to US$6.6 billion in 2017. Streaming is most popular with millennials and 4 out of 10 of the most downloaded apps amongst this age group in 2016 were music apps. In 2016 Spotify estimated 72 per cent. of its US listeners were millennials and millennials spend more money than the average consumer on music streaming which means that music is core to most new technology hardware offerings as manufacturers seek to attract this crucial age group. The Directors believe that all of this bodes well for the music industry, including music publishers.

The Recording Industry Association of America (“RIAA”) released its full-year figures for the US recorded music industry in May 2018. They showed that there was a 17 per cent. year-on-year rise in recorded-music retail revenues in 2017 from US$7.5 billion in 2016 to US$8.7 billion in 2017. This growth was driven by paid subscription revenues, which increased by 63 per cent. to US$4.0 billion in 2017 and accounted for 47 per cent. of recorded music revenues in the US during the year. Revenues from ad-supported on-demand streaming services increased by 35 per cent. to US$659 million in 2017 with approximately 300 billion songs streamed by users.

Streaming has three sub-categories: subscription services (e.g. paid versions of Spotify, Tidal, Amazon and Apple Music), digital and customised radio (e.g. Pandora, Sirius XM and other internet radio providers) and ad-supported on-demand streaming services (e.g. Spotify, Vevo, YouTube and Sound Cloud). In 2017, US revenues for each of these were as follows:

Subscription services US$4 million

Digital and customised radio US$914 million

Ad-supported on-demand US$659 million

Although ad-supported on-demand streaming is the smallest category in the US, it is proving to be very popular in territories such as China, allowing the monetisation of music in areas of the world where previously this was not typically the case. It is expected that the availability of ad-supported on-demand streaming will result in dramatic growth for streaming services in emerging markets. China is expected to be one of the fastest growing streaming markets over the next decade as ownership of smart phones and smart speakers continues to rise. In 2015, the ad-supported on-demand streaming market totalled US$1.5 billion and this is likely to rise to over US$7 billion by 2030. To put these figures in context, the global advertising spend in 2018 is expected to reach US$572 billion with radio accounting for US$32.6 billion of this.

The growth of streaming is closely linked to the increase in the number of smartphone users, but in 2015 only 2 per cent. of smartphone users were subscribed to a paid streaming service. Goldman Sachs estimates that 9 per cent. of smartphone users will be using a streaming service by 2030. The advent of free streaming has resulted in a sharp drop in piracy and it is estimated that the proportion of internet users accessing unlicensed music services from desktop-based devices fell globally from 30 per cent. to 20 per cent. between 2012 and 2015. This trend is expected to continue. Growth may also be stimulated by the adoption and increased penetration of certain technologies such as internet-connected cars, the availability of 5G mobile services and voice-activated devices.

The Directors believe that the growth of streaming is extremely good news for owners of back catalogues and has revitalised the long tail of music through the creation and distribution of playlists on online music stores and streaming services. Playlists allow users to discover new artists, both nascent artists or established artists who are new to the user, and can increase the revenues available to owners who might otherwise have found that following their initial release their song stopped generating revenues as time went on. The lower price point from streaming services compared with purchasing a back catalogue in physical or digital format is also helping to revitalise this music. The average Walmart store in the US sells 21,000 tracks, but over 30 million tracks are available on each of Apple Music and Spotify. Tracks recorded before 2015 accounted for 55.3 per cent. of all music streaming in the UK in 2017 with 300 tracks from this period having been played over 10 million times across the course of the year, which illustrates the revitalisation of the back catalogue. In addition, catalogue songs (those released more than 18 months ago) accounted for 70 per cent. of all streaming volumes in 2015, but only represented 50 per cent. of physical album sales and downloads. The Directors expect that this trend will be very favourable to the Company as it builds its music rights catalogue.

The impact of streaming is expected to positively impact music publishing revenues, which Goldman Sachs believes will rise from US$5.4 billion in 2015 to US$9.3 billion in 2030. Again, the Directors anticipate that this trend will be beneficial to OMIP as it acquires its music rights catalogue.

Competitors

With regard to the acquisition of music rights, the Directors believe there are a number of parties who are active in the acquisition of music rights, who fall into three broad categories based on a typical acquisition size:

“Small-scale” competitors including independent publishers and operators such as Bucks Music Group, Chelsea Music Publishing, Mojo Music & Media, Notting Hill Music and Silva Screen Records;

“Medium-scale” competitors including DownTown Music Publishing, Music Sales Group and Hipgnosis; and

“Large-scale” competitors including BMG, Concord Bicycle Music, Kobalt Capital, Round Hill, Sony Music, Universal Music Group and Warner Music Group.

Use of proceeds

OMIP intends that the net proceeds from the Placing, the Subscription and the issue of the Loan Notes will be used to acquire music publishing rights, artist recordings and songwriters’ rights. The Company may look to raise further equity capital in the future in order to enable it to undertake additional acquisitions once the proceeds of this fundraise have been deployed.

The acquisition pipeline

The Company is considering a number of potential music IP rights acquisitions, including those that have been introduced by Ninelives. The Directors will adopt a strict criteria in considering acquisitions, in particular that acquisitions will be of music rights with an established historical revenue stream and typically not music written in the last five years. The Directors will, where appropriate, look to acquire music rights that have opportunities to further enhance revenues from exploitation of the rights and/or opportunities from synchronisation usage.

With effect from Admission, the Company is expected to be in a position to make offers to acquire music publishing rights and/or songwriters’ rights and the focus of the management team will be on completing a number of acquisitions in the coming year subject to satisfactory due diligence. It should be noted that acquisitions are expected to be made in the US as well as the UK and that this would give rise to additional US Dollar income streams in the future.

Whilst the Company is in discussions regarding a number of potential acquisitions, there is no guarantee that any of these potential acquisitions will be successfully concluded by the Company. 

Current trading and prospects

The Company announced its interim results for the period ended 30 April 2018 on 26 July 2018 which provides an update on trading for that period. 

The Placing and Subscription

The Company proposes to raise a minimum of £1.9 million by way of a non-pre-emptive equity Placing and Subscription, and up to £6 million through the issue of Loan Notes, to purchase music rights. The placing price of 6 pence per New Ordinary Share represents a premium of 140 per cent. to 2.5 pence per Ordinary Share, being the price at which Lord Michael Grade and Ivan Dunleavy first invested in the Company in December 2017, and a discount of approximately 42.2 per cent. to the closing price of 10.375 pence on 30 August 2018, being the last practicable trading day prior to the release of this announcement.

As part of the Company’s market sounding exercise, the Company received an indication of interest from BGF that they would invest £600,000 (gross) as part of the Subscription. The Company has also conditionally agreed to grant options to BGF and details of these options are described below. An offer to grant options with the same conditions for exercise, downround protection and adjustment criteria as the options to be granted to BGF has been made by the Company in respect of an indication of interest received from a cornerstone investor. It is intended that the options will be granted to the cornerstone investor at Admission if the indication is confirmed.

Lord Michael Grade and Ivan Dunleavy have each indicated an intention to invest £37,500 in the Subscription. 

Placing

The Placing Shares will be placed with existing and new investors by Panmure Gordon, acting as agent for the Company, in accordance with the terms of the Placing Agreement. The exact number of Placing Shares to be placed will be determined by the Company and Panmure Gordon at the close of the Bookbuild and announced by the Company shortly thereafter.

The Placing Agreement contains warranties from the Company in favour of Panmure Gordon in relation to (amongst other things) the Company and its business. In addition, the Company has agreed to indemnify Panmure Gordon in relation to certain liabilities they may incur in undertaking the Placing. Panmure Gordon has the right to terminate the Placing Agreement in certain circumstances prior to Admission. In particular, Panmure Gordon may terminate in the event that there has been a breach of any of the warranties or for force majeure. The Placing will not be underwritten. 

The Placing is conditional upon, amongst other things, the Placing Agreement having become unconditional in all respects, shareholder approval to issue the Placing Shares being granted at the EGM and Admission. Pursuant to the terms of the Placing Agreement, Panmure Gordon has agreed to use reasonable endeavours to procure Placees for the Placing Shares.

The Placing will be effected by way of the Bookbuild to be managed by Panmure Gordon and will be conducted in accordance with the terms and conditions set out in Appendix II of this announcement. The Bookbuild will commence with immediate effect and the book is expected to close no later than 4.30 p.m. BST today, 31 August 2018, but Panmure Gordon reserves the right to close the book earlier or later, without further notice. The Company has received non-binding indications of interest from potential institutional investors for the Placing during a pre-marketing process.

Subscription

The Subscription Shares will be issued to the Subscribers, at the Subscription Price, by the Company pursuant to the Subscription Agreements. The Subscription is conditional upon shareholder approval to issue the Subscription Shares being granted at the EGM and Admission. The exact number of Subscription Shares to be placed will be determined by the Company and Panmure Gordon at the close of the Bookbuild and announced by the Company shortly thereafter.

New debt facilities

On 30 August 2018, BGF entered into the BGF Subscription Agreement in relation to the Loan Notes. Under the terms of the BGF Subscription Agreement BGF has conditionally agreed to subscribe for an initial tranche of £1.9 million Loan Notes (“Tranche 1”), before costs. Tranche 1 is conditional on, amongst other things, Admission and will be draw down immediately on satisfaction of these conditions. The same day, the Company executed the Loan Note Instrument creating up to £1,900,000 in unsecured fixed rate loan notes.

Pursuant to the terms of the BGF Subscription Agreement, for a period of 24 months from 30 August 2018 the Company shall have the option to draw down an additional two tranches of Loan Notes – a second tranche of £2.325 million (“Tranche 2”) and a final tranche of £1.775 million (“Tranche 3”), before costs – subject to certain conditions being satisfied, including the granting of approval to the draw down by BGF’s internal investment committee and the repetition of warranties by the Company. Transaction fees will be payable on the drawdown of each of the Tranches. The funds raised through the issue of the Loan Notes will be used to part fund the Company’s music rights acquisitions.

The Loan Notes will accrue interest at a fixed rate of 7 per cent. per annum from the date of issue, which in relation to Tranche 1 shall be paid in cash quarterly commencing on 2 September 2019. The relevant dates for Tranche 2 and Tranche 3 will be confirmed if and when the relevant Loan Notes are issued. The Loan Notes issued in Tranche 1 shall be redeemed in four equal tranches that will be due bi-annually from 31 December 2023. The Loan Notes issued in Tranches 2 and 3 shall also be redeemed in four equal tranches which will be due bi-annually commencing on the fifth anniversary of the date of issue. The Company has the option for early redemption of the Loan Notes, subject to a minimum redemption payment. The Loan Notes issued in Tranche 1 will become repayable, along with an early repayment fee, in the event that the Company has not acquired a music catalogue within 12 months of Admission.

Under the terms of the BGF Subscription Agreement, BGF shall have the right to appoint an independent non-executive director to the Board for so long it holds either Loan Notes or 15 per cent. or more of the issued share capital of the Company. In addition, BGF has certain consent rights in relation to actions taken by the Company. Customary representations, undertaking and events of default are set out in the BGF Subscription Agreement.

Pursuant to the terms of the BGF Subscription Agreement, upon the subscription by BGF to each of Tranches 1, 2 and 3 the Company has agreed to simultaneously grant options over Ordinary Shares to BGF. The Company shall enter into the BGF Option Agreement immediately following Admission, at which time the BGF Options shall be granted. Further details of the BGF Option Agreement are set out below. Similar option agreements will be entered upon the drawdown of Tranches 2 and 3.

Option Agreements

BGF Option Agreement

The Company shall enter into the BGF Option Agreement with BGF immediately following Admission. Pursuant to the BGF Option Agreement, BGF shall have the right to subscribe for up to £1,250,000 of Ordinary Shares exercisable in whole or in part at a subscription price equal to the Placing Price per Ordinary Share. The BGF Options can be exercised at any time from Admission until the seventh anniversary of the creation of the BGF Options.

The BGF Options have downround protection and in the event that the Company issues Ordinary Shares at a price less than 6 pence within 24 months of Admission, the exercise price of the BGF Options shall be adjusted in accordance with the terms of the BGF Option Agreement. In addition, the option will be adjusted in certain circumstances, including where the company conducts a share split or share consolidation. Upon the exercise of the BGF Options in accordance with the BGF Option Agreement, BGF shall be issued with Ordinary Shares.

The options to be granted to BGF on the subscription for Tranches 2 and 3, pursuant to the BGF Subscription Agreement, shall be on identical terms to the BGF Option Agreement, subject to any necessary adjustments due to the later date of issue of those options.

Cornerstone Investor

An offer to grant options with the same conditions for exercise, downround protection and adjustment criteria as the options to be granted to BGF has been made by the Company in respect of an indication of interest received from a cornerstone investor. It is intended that the options will be granted to the cornerstone investor at Admission if the indication is confirmed.

Risks and uncertainties

Investors should consider carefully the following potential risks and uncertainties and other information in this Announcement before they decide to invest. An investment in the Ordinary Shares involves risk and investors may lose part or all of their investment. All the information contained in this Announcement should be considered in the light of the risk factors set out below. This list is not comprehensive, but will provide investors with the main risks involved in investing.

The main risk factors considered by the Directors to be relevant when considering an investment in the Company are shown below.

Risks relating to operating history, past performance and future performance

Past performance and historical information is not an indication of future performance. The Company’s actual performance could differ materially from projections. The Company is operating in a competitive industry where the commercial risks are high. The Company is looking to expand significantly through acquisition. Consequently, evaluation of the Company’s prospects must be considered in the light of the risks, expenses and difficulties frequently encountered by companies pursuing an acquisition strategy.

Risk relating to income

As a result of the move from download to streaming, the existing business suffered a fall in revenues and profits in 2016. It experienced a recovery in 2017. The Company remains a small entity within the global music market and its revenues may be disproportionately affected by any adverse market or wider economic conditions. Acquisitions will be made based on historical reported income for the assets that are being purchased. However, there is no guarantee that this income stream will continue in the future at the same level, or at all.

Risks relating to the music industry

The music industry experienced a sharp decline in revenues and profitability over a number of years and has recently seen a recovery. Although the Directors believe that the recovery will continue, driven by the increasing popularity of streaming, there is no guarantee that this will continue.

Future funding requirements

Once the proceeds of the Placing and Subscription have been deployed, the Company will likely look to raise further equity capital to make acquisitions of additional music rights.

There is no certainty that it will be possible for the Company to raise addition equity capital at all or on acceptable terms. In addition, the terms of any such financing may be dilutive to, or otherwise adversely affect, Shareholders.

Currency risk

Some of the Company’s revenues are generated in jurisdictions outside of the UK in currencies other than Pounds Sterling. The Company reports its financial information in Pounds Sterling, with any revenues generated in other currencies being subject to foreign currency exchange risks due to exchange rate movements, which may affect the Company’s transaction costs and the translation of its results.

Brexit risk

On 23 June 2016, the UK held a referendum on its continued membership of the European Union, which resulted in a vote for the UK to exit the European Union. There are significant uncertainties as to the terms of such an exit and the timeframe for doing so in the case that a transition period is agreed with the other members of the European Union. There are also significant uncertainties as to the current and future fiscal, monetary and regulatory landscape in the UK, including but not limited to the regulation of the financial services industry and questions over how, when and to what extent the exit will have an impact more generally on the economy of the UK and the growth of various industries, levels of investor activity and confidence in market performance.

General risks

An investment in the Company is only suitable for investors capable of evaluating the risks and merits of such investment and who have sufficient resources to bear any loss which may result from the investment. A prospective investor should consider with care whether an investment in the Company is suitable for them in the light of their personal circumstances and the financial resources available to the potential investor.

Investment in the Company should not be regarded as short-term in nature. There can be no guarantee that there will be any appreciation in any investment in the Company. Investors may not get back the full amount initially invested.

The price of the Ordinary Shares and the income derived from them can go down as well as up. Past performance is not necessarily a guide to the future.

Changes in economic conditions including, for example, interest rates, rates of inflation, industry conditions, competition, political and diplomatic events and trends, tax laws and other factors can substantially and adversely affect equity investments and the Group’s prospects. Before making any investment decision, prospective investors are strongly advised to consult an independent adviser authorised under FSMA who specialises in advising upon investments.

Market Abuse Regulation

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596 of 2014 (“MAR”). In addition, market soundings (as defined in MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

Circular and Notice of Extraordinary General Meeting

The Company expects to publish a Circular in connection with the Placing and Subscription, which will contain a notice convening an EGM in order to approve the matters necessary to implement these actions, in due course. A copy of the Circular will be made available on the Company’s website at http://omip.co.uk/investor-relations/.

The EGM is expected to be convened for 11.00 a.m. on 19 September 2018 and will take place at the offices of the Company’s solicitors, Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London EC2A 2RS. The actions that Shareholders should take to vote on the Resolutions will be set out in the Circular, along with the recommendation of the Board of Directors of the Company.

Expected timetable

Settlement and dealings

Application has been made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM.

Settlement for the New Ordinary Shares and Admission is expected to take place on or before 8.00 a.m. on 25 September 2018. The Placing and Subscription are conditional upon, amongst other things, Admission becoming effective and the Placing Agreement not being terminated in accordance with its terms.

Definitions

The following definitions apply in this Appendix to this Announcement, and as the context shall admit, in the Announcement:

No statement in this Announcement is intended to be a profit forecast or estimate, and no statement in this Announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share.

The price of Ordinary Shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the Placing and Subscription Shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

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

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

By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making an oral and legally binding offer to acquire Placing Shares will be deemed to have read and understood this Announcement in its entirety, to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in the Appendix.

Panmure Gordon, which is authorised and regulated in the UK by the FCA, is acting solely as broker exclusively for the Company and no one else in connection with the matters set out in this Announcement. In connection with such matters, Panmure Gordon will not regard any other person (including any Placee) as its client, nor will it be responsible to any other person for providing the protections afforded to clients of Panmure Gordon or for providing advice in relation any matter referred to herein. Panmure Gordon does not accept any responsibility whatsoever to any person other than the Company for the contents of this Announcement or for any statement made, or purported to be made, by it or on its behalf in connection with the Placing. Panmure Gordon accordingly disclaims all and any liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this Announcement or any such statement. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Panmure Gordon or by any of its 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.

Cairn is authorised and regulated by the FCA in the United Kingdom. Cairn is acting solely as nominated adviser exclusively for the Company and no one else in connection with the matters set out in this Announcement and will not regard any other person (whether or not a recipient of this Announcement) as its client nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this Announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Cairn by FSMA or the regulatory regime established thereunder, Cairn accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this Announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this Announcement, whether as to the past or the future. Cairn accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this Announcement or any such statement.

Appendix

FORWARD LOOKING STATEMENTS

To the extent that this Announcement contains certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition and performance, a number of risks and uncertainties exist. The Company cautions readers that any forward-looking statement is no guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements.

A forward-looking statement can be identified by the fact that it does not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "predict" or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding or which make assumptions in respect of the planned use of the proceeds of the Placing, the liquidity position of the Company, the future performance of the Company, future foreign exchange rates, interest rates and currency controls, the future political and fiscal regimes in the overseas markets in which the Company operates, the Company's future financial position, plans and objectives for future operations and any other statements that are not historical fact.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals, and expectations set forth in the Company's forward-looking statements. 

Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. These forward-looking statements reflect the Company's judgement at the date of this Announcement and are not intended to give any assurance as to future results. Except as required by the FCA, the London Stock Exchange, the AIM Rules or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

IMPORTANT NOTICES

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT (INCLUDING THIS APPENDIX) AND THE TERMS AND CONDITIONS SET OUT HEREIN (TOGETHER, THIS "ANNOUNCEMENT") ARE DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (1) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"), QUALIFIED INVESTORS AS DEFINED IN ARTICLE 2.1(e) OF DIRECTIVE 2003/71/EC AS AMENDED, ("QUALIFIED INVESTORS"), INCLUDING BY THE 2010 PROSPECTUS DIRECTIVE AMENDING DIRECTIVE (DIRECTIVE 2010/73/EC) AND TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE"); (2) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS AND: (A) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") (INVESTMENT PROFESSIONALS); OR (B) ARE PERSONS WHO FALL WITHIN ARTICLE 49(2)(a) TO (d) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

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

THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE OF THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE.

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

The distribution of this Announcement and/or the Placing and/or issue of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, Cairn, Panmure Gordon or any of their respective affiliates, agents, directors, officers or employees that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company, Cairn and Panmure Gordon to inform themselves about and to observe any such restrictions.

Neither this Announcement nor any part of it constitutes or forms part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including its territories and possessions, any state of the United States and the District of Columbia (the "United States" or the "US")), Australia, Canada, Japan, New Zealand or the Republic of South Africa or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

All offers of the Placing Shares will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus. In the United Kingdom, this Announcement is being directed solely at persons in circumstances in which section 21(1) of FSMA does not apply.

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

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

By participating in the Bookbuild and the Placing, each Placee will be deemed to have read and understood this Announcement in its entirety, to be participating, making an offer and acquiring Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in this Appendix.

In particular, each such Placee represents, warrants, undertakes, agrees and acknowledges (amongst other things) to Panmure Gordon and the Company that:

1. it is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

2. in the case of a Relevant Person in a member state of the EEA which has implemented the Prospectus Directive (each, a "Relevant Member State") who acquires any Placing Shares pursuant to the Placing:

(a) it is a Qualified Investor within the meaning of Article 2(1)(e) of the Prospectus Directive; and

(b) in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive:

(i) the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors or in circumstances in which the prior consent of Panmure Gordon has been given to the offer or resale; or

(ii) where Placing Shares have been acquired by it on behalf of persons in any Relevant Member State other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons;

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

4. it understands (or if acting for the account of another person, such person has confirmed that such person understands) the resale and transfer restrictions set out in this Appendix;

5. except as otherwise permitted by the Company and subject to any available exemptions from applicable securities laws, it (and any person on whose account it is acting, as referred to in paragraph 4 above) is not a US Person (as defined in Regulation S) and is located outside the United States and is acquiring the Placing Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S;

6. it is aware that Rule 904 of Regulation S regarding "Offshore Resales" is not applicable to "affiliates" (as defined in Rule 405 of the Securities Act) of the Company; and

7. it has not offered, sold or delivered and will not offer to sell or deliver any of the Placing Shares to persons within the United States, directly or indirectly, or to, or for the account or benefit of, US Persons; neither it, its affiliates, nor any persons acting on its behalf, have engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the Placing Shares; and it is not taking up the Placing Shares for resale in or into the United States.

No prospectus

The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require any prospectus or other offering document to be published. No prospectus or other offering document has been or will be submitted to be approved by the FCA in relation to the Placing or the Placing Shares and Placees' commitments will be made solely on the basis of the information contained in this Announcement, the announcement of the results of the Placing (the "Result of Placing Announcement"), and any other announcement made through a regulatory information service ("RIS") relating to the Placing (together, the "Placing Announcements") and any information publicly announced through a RIS by or on behalf of the Company on or prior to the date of this Announcement (the "Publicly Available Information") and subject to any further terms set forth in the Form of Confirmation sent to Placees by Panmure Gordon to confirm their subscription for Placing Shares.

Each Placee, by participating in the Placing, agrees that the content of the Placing Announcements is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any information (other than the Publicly Available Information), representation, warranty or statement made by or on behalf of Panmure Gordon, Cairn or the Company or any other person and none of Panmure Gordon, Cairn, the Company nor any other person acting on such person's behalf nor any of their respective affiliates has or shall have any liability for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. No Placee should consider any information in this Announcement to be legal, tax or business advice. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Details of the Placing Agreement and the Placing Shares

Panmure Gordon is acting as sole bookrunner in connection with the Placing and has today entered into the Placing Agreement with the Company under which, on the terms and subject to the conditions set out in the Placing Agreement, Panmure Gordon, as agent for and on behalf of the Company, has agreed to use its reasonable endeavours to procure Placees for the Placing Shares.

The final number of Placing Shares at the Placing Price (as defined below) will be set out in a share placing supplement agreed between Panmure Gordon and the Company following the Bookbuild (the "Placing Supplement"). The Placing is not underwritten by Panmure Gordon or any other party.

The Placing Shares will, when issued, be credited as fully paid up and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of the Ordinary Shares after the date of issue of the Placing Shares, and will on issue be free of all claims, liens, charges, encumbrances and equities.

Application for listing and admission to trading

Application will be made to the London Stock Exchange (the "Application") for admission to trading of the Placing Shares on AIM.

It is expected that Admission of the Placing Shares will occur at or before 8.00 a.m. BST on 25 September 2018 (or such later time and/or date, being not later than 8.00 a.m. BST on 1 October 2018, as the Company and Panmure Gordon may agree) and that dealings in the Placing Shares will commence at that time.

Bookbuild

Panmure Gordon will today commence the accelerated bookbuilding process to determine demand for participation in the Placing by Placees. This Announcement gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

Participation in, and principal terms of, the Placing

Panmure Gordon is arranging the Placing as bookrunner and placing agent of the Company.

Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Panmure Gordon. Panmure Gordon may itself agree to be a Placee in respect of all or some of the Placing Shares or may nominate any member of its Company to do so.

The number of Placing Shares will be agreed by Panmure Gordon (in consultation with the Company) following completion of the Bookbuild. Subject to the execution of the Placing Supplement, the Placing Price and the number of Placing Shares to be issued will be announced on an RIS following the completion of the Bookbuild by way of the Result of Placing Announcement.

To bid in the Bookbuild, prospective Placees should communicate their bid by telephone to their usual sales contact at Panmure Gordon. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for and specify the amount that they are prepared to pay per Placing Share.

Allocations of the Placing Shares will be determined by Panmure Gordon after consultation with the Company (the proposed allocations having been supplied by Panmure Gordon to the Company in advance of such consultation). Subject to the execution of the Placing Supplement, allocations will be confirmed orally by Panmure Gordon and a Form of Confirmation will be despatched as soon as possible thereafter. Panmure Gordon's oral confirmation to such Placee constitutes an irrevocable legally binding commitment upon such person (who will at that point become a Placee), in favour of Panmure Gordon and the Company, to acquire the number of Placing Shares allocated to it and to pay the Placing Price in respect of such shares on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association. Except with Panmure Gordon's consent, such commitment will not be capable of variation or revocation after the time at which it is submitted.

Each Placee's allocation and commitment will be evidenced by a Form of Confirmation issued to such Placee by Panmure Gordon. The terms of this Appendix will be deemed incorporated in that Form of Confirmation.

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

All obligations under the Bookbuild and the Placing will be subject to fulfilment or (where applicable) waiver of the conditions referred to below under "Conditions of the Placing" and to the Placing not having being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".

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

To the fullest extent permissible by law, neither Panmure Gordon, nor the Company, nor any of its affiliates, agents, directors, officers or employees shall have any responsibility or liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In addition, none of Panmure Gordon, nor the Company, nor any of their respective affiliates, agents, directors, officers or employees shall have any responsibility or liability (including to the extent permissible by law, any fiduciary duties) in respect of Panmure Gordon’s conduct of the Placing.

The Placing Shares will be issued subject to the terms and conditions of this Announcement and each Placee's commitment to subscribe for Placing Shares on the terms set out herein will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Placing and Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or Panmure Gordon’s conduct of the Placing.

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

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. Panmure Gordon’s obligations under the Placing Agreement are conditional on customary conditions, including (amongst others) (the "Conditions"):

the execution and delivery of the Placing Supplement by no later than 6.00 p.m. BST on the date of this Announcement (or such later time and/or date as Panmure Gordon may otherwise agree with the Company);

publication of the Result of Placing Announcement through an RIS by no later than 8.00 a.m. BST on the date following this Announcement (or such later time and/or date as Panmure Gordon may otherwise agree with the Company); and

Admission occurring no later than 8.00 a.m. BST on 25 September 2018 (or such later time and/or date, not being later than 8.00 a.m. BST on 1 October 2018, as Panmure Gordon may otherwise agree with the Company) (the "Closing Date").

Panmure Gordon may, at their absolute discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company's obligations in relation to the Conditions or extend the time or date provided for fulfilment of any such Conditions in respect of all or any part of the performance thereof. The condition in the Placing Agreement relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

If: (i) any of the Conditions are not fulfilled or (where permitted) waived by Panmure Gordon in accordance with the Placing Agreement by the relevant time or date specified (or such later time or date as the Company and Panmure Gordon may agree); or (ii) the Placing Agreement is terminated in the circumstances specified below under "Right to terminate under the Placing Agreement", the Placing will not proceed and the Placees' rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by it or on its behalf (or any person on whose behalf the Placee is acting) in respect thereof.

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

Neither Panmure Gordon nor the Company, nor any of their respective affiliates, agents, directors, officers or employees shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any Condition to the Placing, nor for any decision they may make as to the satisfaction of any Condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Panmure Gordon.

Right to terminate under the Placing Agreement

Panmure Gordon is entitled, at any time before Admission, to terminate the Placing Agreement in accordance with its terms in certain circumstances, including (amongst other things):

where there has been a breach by the Company of any of the warranties contained in the Placing Agreement or the Company has not complied with its obligations under the Placing Agreement and has failed to remedy such a breach (if it is capable of remedy);

if any of the Conditions have: (i) become incapable of satisfaction; or (ii) not been satisfied before the latest time provided in the Placing Agreement and have not been waived if capable of being waived by Panmure Gordon; or

the occurrence of a material adverse change or certain force majeure events.

Upon termination, the parties to the Placing Agreement shall be released and discharged (except for any liability incurred or arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement, subject to certain exceptions.

By participating in the Placing, each Placee agrees that: (i) the exercise by Panmure Gordon of any right of termination or of any other discretion under the Placing Agreement shall be within the absolute discretion of Panmure Gordon and that it need not make any reference to, or consult with, Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise or failure to so exercise; and (ii) such Placee’s rights and obligations terminate only in the circumstances described above under "Right to terminate under the Placing Agreement" and "Conditions of the Placing", and its participation will not be capable of rescission or termination by it after oral confirmation by Panmure Gordon of the allocation and commitments following the close of the Bookbuild.

Restriction on Further Issue of Shares

The Company has undertaken to Panmure Gordon that it will not, and will procure that no other member of the Company will, at any time during the Restricted Period enter into any commitment or agreement, or put itself in a position where it is obliged to announce that any commitment or agreement may be entered into, which is or may be material in relation to the issue of the Placing Shares or of the Placing, or issue any shares or options over shares or securities convertible or exchangeable into shares or enter into any agreement or undertaking to do the same without the prior written consent of Panmure Gordon provided that the foregoing restrictions shall not restrict the ability of the Company during the Restricted Period to: (a) issue shares where any person (whether employee, director or neither of the foregoing) exercises rights over such shares granted to him prior to the date of the Placing Agreement; or (b) grant options over shares provided that the number of options outstanding at any given point in time cannot exceed 10 per cent. of the number of shares then in issue, where such options are granted under an existing employee share scheme (as such expression is defined in section 1166 Companies Act). For these purposes the "Restricted Period" shall mean the 180 day period commencing on the date of the Placing Agreement.

By participating in the Placing, Placees agree that the exercise by Panmure Gordon of any power to grant consent to the undertaking by the Company of a transaction which would otherwise be subject to the restrictive provisions on further issuance under the Placing Agreement shall be within the absolute discretion of Panmure Gordon and that it need not make any reference to, or consult with, Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise of the power to grant consent.

Registration and Settlement

Settlement of transactions in the Placing Shares (ISIN: GB00B1DRDZ07) following Admission will take place within the CREST system administered by Euroclear UK & Ireland Limited, subject to certain exceptions. Panmure Gordon reserves the right to require settlement for, and delivery of, the Placing Shares (or any part thereof) to Placees by such other means that they may deem necessary if delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Following the close of the Bookbuild, each Placee to be allocated Placing Shares in the Placing will be sent a Form of Confirmation in accordance with the standing arrangements in place with Panmure Gordon stating the number of Placing Shares allocated to them at the Placing Price, the aggregate amount owed by such Placee to Panmure Gordon, relevant settlement information and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions in respect of the Placing Shares that it has in place with Panmure Gordon.

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

It is expected that settlement in respect of the Placing Shares will take place on 25 September 2018, on a delivery versus payment basis.

A Placee's entitlement to receive any Placing Shares under the Placing will be conditional on Panmure Gordon's receipt of payment in full for such Placing Shares by the relevant time to be stated in the Form of Confirmation, or by such later time and date as Panmure Gordon and the Company may in their absolute discretion determine, and otherwise in accordance with the Form of Confirmation's terms.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above, at the rate of two percentage points above LIBOR as determined by Panmure Gordon.

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

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the Form of Confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are issued in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. If there are any circumstances in which any stamp duty or stamp duty reserve tax or other similar taxes or duties (including any interest and penalties relating thereto) is payable in respect of the allocation, allotment, issue, sale, transfer or delivery of the Placing Shares (or, for the avoidance of doubt, if any stamp duty or stamp duty reserve tax is payable in connection with any subsequent transfer of or agreement to transfer Placing Shares), none of Panmure Gordon nor the Company shall be responsible for payment thereof.

Representations, warranties, undertakings and acknowledgements

By participating in the Placing each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with Panmure Gordon (in their capacity as bookrunner and placing agent of the Company in respect of the Placing) and the Company, in each case as a fundamental term of their application for Placing Shares, the following:

it has read and understood this Announcement in its entirety and its subscription for Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein and that it has not relied on, and will not rely on, any information given or any representations, warranties or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares or otherwise, other than the information contained in this Announcement and the Publicly Available Information;

its rights and obligations in respect of the Placing will terminate only in the circumstances referred to in this Announcement and will not be subject to rescission or termination by the Placee in any circumstances;

the Ordinary Shares are admitted to trading on AIM and that the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM, which includes a description of the Company's business and the Company's financial information, including balance sheets and income statements, and that it is able to obtain or has access to such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded companies, without undue difficulty;

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 your obligations in respect of the Placing;

neither Panmure Gordon nor any of its affiliates, agents, directors, officers and/or employees has or shall have any responsibility for any acts or omissions of the Company or any of the directors of the Company or any other person (other than Panmure Gordon) in connection with the Placing;

time is of the essence as regards its obligations under this Announcement;

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 Panmure Gordon;

no prospectus or other offering document is required under the Prospectus Directive, nor will one be prepared in connection with the Bookbuild, the Placing or the Placing Shares and it has not received and will not receive a prospectus or other offering document in connection with the Bookbuild, the Placing or the Placing Shares;

in connection with the Placing, Panmure Gordon and any of its affiliates acting as an investor for its own account may subscribe for Placing Shares in the Company and in that capacity may retain, purchase or sell for its own account such Placing Shares in the Company and any securities of the Company or related investments and may offer or sell such securities or other investments otherwise than in connection with the Placing. Accordingly, references in this Announcement to the Placing Shares being issued, offered or placed should be read as including any issue, offering or placement of such shares in the Company to Panmure Gordon or any of its affiliates acting in such capacity;

Panmure Gordon and its affiliates may enter into financing arrangements and swaps with investors in connection with which Panmure Gordon and any of its affiliates may from time to time acquire, hold or dispose of such securities of the Company, including the Placing Shares;

Panmure Gordon does not intend to disclose the extent of any investment or transactions referred to in paragraphs 9 and 10 above otherwise than in accordance with any legal or regulatory obligation to do so;

its participation in the Placing is on the basis that:

it is not, and will not be, a client of Panmure Gordonin connection with its participation in the Placing and that Panmure Gordon has no duties or responsibilities to it for providing the protections afforded to its clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right; and

Panmure Gordon does not owe any fiduciary or other duties to it in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement; and

none of Panmure Gordon, nor any of its affiliates, nor any person acting on behalf of them, is making any recommendations to it nor advising it regarding the suitability of any transactions it may enter into in connection with the Placing.

the content of the Placing Announcements and the Publicly Available Information has been prepared by and is exclusively the responsibility of the Company and neither Panmure Gordon nor its affiliates, agents, directors, officers or employees nor any person acting on behalf of any of them is responsible for or has or shall have any liability for any information, representation or statement contained in, or omission from, this Announcement, the Publicly Available Information, the Placing Announcements or otherwise nor will they be liable for any Placee's decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement the Publicly Available Information, the Placing Announcements or otherwise, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by such person;

the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for Placing Shares is contained in the Placing Documents or any Publicly Available Information (save that in the case of Publicly Available Information, a Placee's right to rely on that information is limited to the right that such Placee would have as a matter of law in the absence of this paragraph 15(a)), such information being all that such Placee deems necessary or appropriate and sufficient to make an investment decision in respect of the Placing Shares;

it has neither received nor relied on any other information given, or representations, warranties or statements, express or implied, made, by Panmure Gordon or the Company nor any of their respective affiliates, agents, directors, officers or employees acting on behalf of any of them (including in any management presentation delivered in respect of the Bookbuild) with respect to the Company, the Placing or the Placing Shares or the accuracy, completeness or adequacy of any information contained in the Placing Announcements, or the Publicly Available Information or otherwise;

none of Panmure Gordon, nor the Company, nor any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them has provided, nor will provide, it with any material or information regarding the Placing Shares or the Company or any other person other than the information in the Placing Announcements or the Publicly Available Information; nor has it requested Panmure Gordon, the Company, any of their respective affiliates or any person acting on behalf of any of them to provide it with any such material or information;

none of Panmure Gordon or the Company will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement,

provided that nothing in this paragraph 15 excludes the liability of any person for fraudulent misrepresentation made by that person;

it may not rely, and has not relied, on any investigation that Panmure Gordon, any of its affiliates or any person acting on their behalf, may have conducted with respect to the Placing Shares, the terms of the Placing or the Company, and none of such persons has made any representation, express or implied, with respect to the Company, the Placing, the Placing Shares or the accuracy, completeness or adequacy of the information in the Placing Announcements, the Publicly Available Information or any other information;

in making any decision to subscribe for Placing Shares it:

has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of subscribing for the Placing Shares;

will not look to Panmure Gordon for all or part of any such loss it may suffer;

is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of an investment in the Placing Shares;

is able to sustain a complete loss of an investment in the Placing Shares;

has no need for liquidity with respect to its investment in the Placing Shares;

has made its own assessment and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its investment in the Placing Shares; and

has conducted its own due diligence, examination, investigation and assessment of the Company, the Placing Shares and the terms of the Placing and has satisfied itself that the information resulting from such investigation is still current and relied on that investigation for the purposes of its decision to participate in the Placing;

it is acting as principal only in respect of the Placing or, if it is acting for any other person, it is:

duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person; and

will remain liable to the Company and/or Panmure Gordon 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);

it and any person acting on its behalf is entitled to subscribe for the Placing Shares under the laws and regulations of all relevant jurisdictions that apply to it and that it has fully observed such laws and regulations, has capacity and authority and is entitled to enter into and perform its obligations as a subscriber of Placing Shares and will honour such obligations, and has obtained all such governmental and other guarantees, permits, authorisations, approvals and consents which may be required thereunder and complied with all necessary formalities to enable it to commit to this participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement) and will honour such obligations and that it has not taken any action or omitted to take any action which will or may result in Panmure Gordon, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any jurisdiction in connection with the Placing;

it irrevocably appoints any duly authorised officer of Panmure Gordon as its agent for the purpose of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares for which it agrees to subscribe for upon the terms of this Announcement;

the Placing Shares:

have not been and will not be registered or otherwise qualified and that a prospectus will not be cleared in respect of any of the Placing Shares under the securities laws or legislation of the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa, or any state, province, territory or jurisdiction thereof;

may not be offered, sold, or delivered or transferred, directly or indirectly, in or into the above jurisdictions or any jurisdiction (subject to certain exceptions) in which it would be unlawful to do so and no action has been or will be taken by any of the Company, Panmure Gordonor any person acting on behalf of the Company or Panmure Gordon that would, or is intended to, permit a public offer of the Placing Shares in the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa or any country or jurisdiction, or any state, province, territory or jurisdiction thereof, where any such action for that purpose is required;

unless otherwise specifically agreed with Panmure Gordon, it is not and at the time the Placing Shares are subscribed for, neither it nor the beneficial owner of the Placing Shares will be, a resident of, nor have an address in, Australia, Japan, New Zealand, the Republic of South Africa or any province or territory of Canada;

it may be asked to disclose in writing or orally to Panmure Gordon:

if he or she is an individual, his or her nationality; or

if he or she is a discretionary fund manager, the jurisdiction in which the funds are managed or owned;

it, and any prospective beneficial owner for whose account or benefit it is purchasing the Placing Shares: (i) is not a US Person (as defined in Regulation S) and is, and at the time the Placing Shares are subscribed for will be, located outside the United States and is acquiring the Placing Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S; (ii) is aware of the restrictions on the offer and sale of the Placing Shares pursuant to Regulation S, including that Rule 904 of Regulation S regarding "Offshore Resales" is not applicable to "affiliates" (as defined in Rule 405 under the Securities Act) of the Company; and (iii) has not been offered to purchase or subscribe for Placing Shares by means of any "directed selling efforts" as defined in Regulation S;

it understands that the Placing Shares have not been, and will not be, registered under the US Securities Act and may not be offered, sold or resold in or into or from the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S) except pursuant to an effective registration under the US Securities Act, or pursuant to an exemption from the registration requirements of the US Securities Act and in accordance with applicable state securities laws;

it will not distribute, forward, transfer or otherwise transmit this Announcement or any part of it, or any other presentational or other materials concerning the Placing in or into or from the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa (including electronic copies thereof) to any person, and it has not distributed, forwarded, transferred or otherwise transmitted any such materials to any such person;

if it is in:

a member state of the EEA, unless otherwise specifically agreed with Panmure Gordon in writing, it is a Qualified Investor (as defined in Article 2.1(e) of the ; or;

the United Kingdom, it is a Qualified Investor and is a person who falls within (i) Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") (having professional experience in matters relating to investments who falls within the definition of "investment professionals") or (ii) Article 49(2)(a) to (d) of the Order ("high net worth companies, unincorporated associations, etc.");

it has not offered or sold, and will not offer or sell, any Placing Shares to persons;

in the EEA except to Qualified Investors or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the EEA within the meaning of the Prospectus Directive;

in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000, as amended ("FSMA");

if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive,:

the Placing Shares subscribed for by it in the Placing will not be acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors or in circumstances in which the prior consent of Panmure Gordon has been given to the offer or resale;

where Placing Shares will be acquired by it on behalf of persons in any Relevant Member State other than Qualified Investors, the offer of those Placing Shares to it will not be treated under the Prospectus Directive as having been made to such persons;

it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person and it acknowledges and agrees that the Placing Announcements have not and will not have been approved by Panmure Gordonin its capacity as an authorised person under section 21 of the FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as a financial promotion by an authorised person;

it has complied and will comply with all applicable laws with respect to anything done y it or on its behalf in relation to the Placing Shares (including all applicable provisions in FSMA and Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse ("MAR")) in respect of anything done in, from or otherwise involving, the United Kingdom). In particular, if it has received any 'inside information' (for the purposes of MAR or the Criminal Justice Act 1993) in relation to the Company and its securities in advance of the Placing, it confirms that it has received such information within the market soundings regime provided for in article 11 of MAR and associated delegated regulations and it has not:

dealt with securities of the Company;

encouraged or required another person to deal in the securities of the Company; or

disclosed such information to any person, prior to the information being made publicly available;

it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the "Regulations") and the Money Laundering Sourcebook of the FCA and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

in order to ensure compliance with the Regulations, Panmure Gordon (for itself and as agent on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity. Pending the provision to Panmure Gordon or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at Panmure Gordon absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at Panmure Gordon’s or the Company's registrars', as the case may be, absolute discretion. If within a reasonable time after a request for verification of identify Panmure Gordon (for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, either Panmure Gordon and/or the Company may, at their absolute discretion, terminate a Placee’s commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;

(i) the allocation, allotment, issue and delivery to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a stamp duty or stamp duty reserve tax liability under (or at a rate determined under) any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Placing Shares into a clearance service; (ii) the person whom it specifies for registration as holder of the Placing Shares will be: (a) itself; or (b) its nominee, as the case may be; and (iii) it agrees that none of Panmure Gordon nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax or other similar taxes or duties imposed in any jurisdiction (including interest and penalties relating thereto) for its failure to comply with this provision ("Indemnified Taxes") and each Placee and any person acting on behalf of such Placee agrees to indemnify the Company and Panmure Gordon on an after-tax basis in respect of any Indemnified Taxes;

it (and any person acting on its behalf) has the funds available to pay for the Placing Shares for which it has agreed to subscribe and acknowledges and agrees that it will make payment in respect of the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Panmure Gordonmay in its sole discretion determine and without liability to such Placee, who will remain liable for any amount by which the net proceeds of such sale falls short of the product of the relevant Placing Price and the number of Placing Shares allocated to it and will be required to bear any stamp duty, stamp duty reserve tax or other taxes or duties (together with any interest, fines or penalties) imposed in any jurisdiction which may arise upon the sale of such Placee's Placing Shares;

any money held in an account with Panmure Gordon on behalf of the Placee and/or any person acting on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA made under the FSMA. Each Placee acknowledges that the money will not be subject to the protections conferred by the client money rules: as a consequence this money will not be segregated from Panmure Gordon's money in accordance with the client money rules and will be held by it under a banking relationship and not as trustee;

the rights and remedies of the Company and Panmure Gordon under the terms and conditions in this Announcement are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others;

these terms and conditions of the Placing and any agreements entered into by it pursuant to the terms and conditions of the Placing, and all non-contractual or other obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of England and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract (including any dispute regarding the existence, validity or termination of such contract or relating to any non-contractual or other obligation arising out of or in connection with such contract), except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by either the Company or Panmure Gordonin any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; and

it agrees to indemnify on an after tax basis and hold the Company, Panmure Gordon and their respective affiliates, agents, directors, officers and employees harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings given by the Placee (and any person acting on such Placee's behalf) in this Announcement or incurred by Panmure Gordon, the Company or each of their respective affiliates, agents, directors, officers or employees arising from the performance of the Placees' obligations as set out in this Announcement, and further agrees that the provisions of this Announcement shall survive after completion of the Placing.

The foregoing representations, warranties, confirmations, acknowledgements, agreements and undertakings are given for the benefit of the Company as well as Panmure Gordon and are irrevocable. Panmure Gordon, the Company and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, confirmations, acknowledgements, agreements and undertakings. Each prospective Placee, and any person acting on behalf of such Placee, irrevocably authorises the Company and Panmure Gordon to produce this Announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein.

Taxation

The agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, directly by the Company. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealings in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Panmure Gordon would be responsible. If this is the case, it would be sensible for Placees to take their own advice and they should notify Panmure Gordon accordingly. Places should note that the Company and Panmure Gordon are not liable to bear any taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees. In addition, Placees should also note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares and each Placee, or the Placee's nominee, in respect of whom (or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such non-UK stamp, registration, documentary, transfer or similar taxes or duties undertakes to pay such taxes and duties, including any interest and penalties (if applicable), forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Panmure Gordon in the event that either the Company and/or Panmure Gordon have incurred any such liability to such taxes or duties.

Information to Distributors

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

Notwithstanding the Target Market Assessment, Distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Panmure Gordon will only procure investors who meet the criteria of professional clients and eligible counterparties.

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

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