PPC.L Regulatory News (PPC)

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

President Energy Plc

("President" or the "Company")

Open Offer of up to 44,358,875 New Ordinary Sharesat 10 pence per share

Conversion of loan into New Ordinary Shares at 10 pence per shareandNotice of General Meeting

President Energy Plc (AIM: PPC), the upstream oil and gas company with a diverse portfolio of production and exploration assets focused primarily in Argentina, is pleased to announce that, further to the Company's announcement on 20 October 2017, a circular containing details of the Open Offer, together with the notice of General Meeting (the "Circular"), will be posted to Shareholders on 31 October 2017.

The Open Offer proposes to raise up to €5 million by the issue of up to a maximum of 44,358,875 New Ordinary Shares pursuant to an Open Offer to Qualifying Shareholders, at an issue price of 10 pence per New Ordinary Share.

Further information regarding the Open Offer, including the timetable of principal events, is set out below.

A copy of the Circular will be available on the Company's website (www.presidentenergyplc.com) shortly.

For further information please contact:

Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as defined in the Circular.

Important Information

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

Any person receiving this announcement is advised to exercise caution in relation to the Open Offer. If in any doubt about any of the contents of this announcement or the action that you should take, independent professional advice should be obtained.

finnCap Ltd, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser and broker to the Company in connection with the Open Offer and is not acting for any other persons in relation to the Open Offer. finnCap Ltd is retained by the Company in connection with the Open Offer and shall not be responsible to any other party for providing advice or taking any other action in relation to the Open Offer. Persons receiving this announcement should note that finnCap Ltd will not be responsible to anyone other than the Company for providing the protections afforded to clients of finnCap Ltd or for advising any other person on the arrangements described in this announcement. finnCap Ltd has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by finnCap Ltd nor does it make any representation or warranty, express or implied, for the accuracy of any information or opinion contained in this announcement or for the omission of any information. finnCap Ltd disclaims all and any responsibility or liability whether arising in tort, contract or otherwise which it might otherwise have in respect of this announcement. finnCap Ltd may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Ordinary Shares (including the Open Offer Shares) and/or related instruments for its own account for the purposes of hedging any underwriting exposure or otherwise. Except as required by applicable law or regulation, finnCap Ltd does not propose to make any public disclosure in relation to any such transactions.

This announcement does not constitute an offer to sell or an invitation to subscribe for, or solicitation of an offer to subscribe for or buy, New Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation. In particular, this announcement must not be taken, transmitted, distributed or sent, directly or indirectly, in, or into, and Open Offer Entitlements may not be transferred through CREST, in or into, the United States of America, Canada, Australia, Japan or the Republic of South Africa or transmitted, distributed or sent to, or by, any national, resident or citizen of such countries. Accordingly, the New Ordinary Shares and/or Open Offer Entitlements may not, subject to certain exceptions, be offered or sold, directly or indirectly, in, or into, or credited to the stock account of any person in the United States of America, Canada, Australia, Japan or the Republic of South Africa or in any other country, territory or possession where to do so may contravene local securities laws or regulations. The New Ordinary Shares and the Open Offer Entitlements have not been, and will not be, registered under the United States Securities Act of 1933 (as amended) or under the securities legislation of any state of the United States of America, any province or territory of Canada, Australia, Japan or the Republic of South Africa and they may not be offered or sold, directly or indirectly, within the United States of America or Canada, Australia, Japan or the Republic of South Africa or to or for the account or benefit of any national, citizen or resident of the United States of America, Canada, Australia, Japan or the Republic of South Africa or to any US person (within the definition of Regulation S made under the US Securities Act 1933 (as amended)).

Forward-looking statements

This announcement contains (or may contain) certain forward-looking statements with respect to the Company and certain of its goals and expectations relating to its future financial condition and performance which involve a number of risks and uncertainties. No forward-looking statement is a guarantee of future performance and actual results could differ materially from those contained in any forward-looking statements. All statements, other than statements of historical facts, contained in this announcement, including statements regarding the Group's future financial position, business strategy and plans, business model and approach and objectives of management for future operations, are forward-looking statements. Generally, the forward-looking statements in this announcement use words such as "aim", "anticipate", "target", "expect", "estimate", "plan", "goal", "believe", "will", "may", "could", "should", "future", "intend", "opportunity, "potential", "project", "seek" and other words having a similar meaning. 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 changes in interest rates and foreign exchange rates, changes in legislation, changes in consumer habits and other factors outside the control of the Company, that may cause actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements contained in this announcement are based upon information available to the Directors at the date of this announcement. The forward-looking statements in this announcement are based on the Directors' beliefs and assumptions and information only as of the date of this announcement, and the forward-looking events discussed in this announcement might not occur. Therefore, investors should not place any reliance on any forward-looking statements. Except as required by law or regulation, the Directors undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Investors are advised to read this announcement and, once available, the Circular, in their entirety for a further discussion of the factors that could affect the Company's or the Group's future performance and the industries in which they operate. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

This summary should be read in conjunction with the full text of the announcement which follows.

OPEN OFFER AND LOAN CONVERSION STATISTICS

* Assuming full take-up under the Open Offer

Exchange Rates

In this announcement, references to "pounds sterling", "£", "pence" and "p" are to the lawful currency of the United Kingdom and references to "US dollars", "$" and "cents" are to the lawful currency of United States of America. Unless otherwise stated, the basis of translation of US dollars into pounds sterling for the purposes of inclusion in this announcement is US$0.7627/£1.00 and the basis of translation of pounds sterling into US dollars for the purposes of inclusion in this announcement is £1.00/US$1.3112.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

In the Circular, all references to times and dates are to dates and times in London, United Kingdom.

If you have any questions on the procedure for acceptance and payment, you should contact Equiniti Group Plc, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, telephone: 0371 384 2050 from the UK or +44 121 415 0259 from overseas.

Calls may be recorded and randomly monitored for security and training purposes. Lines are open from 8.30 a.m. until 5.30 p.m. (London time) Monday to Friday (excluding UK public holidays). Please note that Equiniti cannot provide financial advice on the merits of the Open Offer or as to whether or not you should take up your entitlement.

The ISIN code for the Ordinary Shares is GB00B3DDP128. The ISIN code for the Open Offer Basic Entitlements is GB00BF92G142. The ISIN for Open Offer Excess Entitlements is GB00BF92G258.

The following text is extracted from the Circular:

1. Introduction

On 20 October 2017, the Company announced that it had raised approximately US$8.75 million (£6.67 million) by way of an institutional placing which was completed on 26 October 2017. At the same time, President announced its intention to launch an open offer in order raise up to €5 million (before expenses) through the issue of up to 44,358,875 New Ordinary Shares at a price of 10 pence per New Ordinary Share. The Issue Price of 10 pence per New Ordinary Share represents the same price at which Ordinary Shares were issued to institutional investors pursuant to the Placing.

The fundraising is being made by way of an Open Offer, thus allowing the Company's existing Shareholders the opportunity to participate on the same terms as institutions in the Placing through the Open Offer.

Qualifying Shareholders may subscribe for Open Offer Shares on the basis of 1 Open Offer Share for every 23 Existing Ordinary Shares held on the Record Date. Shareholders subscribing for their full entitlement under the Open Offer may also request additional New Ordinary Shares through the Excess Application Facility. Assuming full take-up under the Open Offer, the issue of the Open Offer Shares will raise gross proceeds of up to US$5.82 million (£4.44 million) for the Company. The New Ordinary Shares to be issued pursuant to the Open Offer are to be admitted to trading on AIM at the time of Admission, which is expected to take place on 8.00 a.m. on 21 November 2017.

The gross proceeds of the Open Offer of up to US$5.82 million (£4.44 million) together with the funds raised under the Placing will be used principally to strengthen the Company's capitalised position as it continues to actively consider production acquisition opportunities and to support the ongoing work programme in Argentina.

The Open Offer is conditional, inter alia, on the passing of the Resolutions by Shareholders at the General Meeting, notice of which is set out at the end of this announcement. If the Resolutions are passed, the New Ordinary Shares will be allotted immediately after the General Meeting and Admission of the New Ordinary Shares is expected to occur at 8.00 a.m. on 21 November 2017. Should Shareholder approval not be obtained at the General Meeting the Open Offer will not proceed.

In addition, the Company is intending to capitalise part of the Existing Loan Facility through the issue of the Loan Conversion Shares at the Issue Price. The Company will only issue the Loan Conversion Shares to the extent that such issuance will enable Peter Levine (and his related companies) to remain below 30 per cent. of the Enlarged Share Capital since Peter Levine does not wish to incur an obligation to make a mandatory offer under the City Code on Takeovers and Mergers.

2. Background to and reasons for the Open Offer and Loan Conversion

On 9 October 2017 the Company announced that it had agreed the acquisition of the Puesto Flores and Estancia Viejo Concession from Chevron Argentina S.R.L for an initial payment of US$400,000 with a further additional payment of US$15 million to the Rio Negro Province upon extension of the relevant licences and a further US$7 million payable during 2018. This acquisition marks the Company's entry into the prolific Neuquén basin and provides immediate positive cashflow at field level of approximately US$1 million per month at the current production levels. The Company believes there is potential to develop and expand production from these Concessions to 3,000 bopd through a work programme already agreed with the province.

At the same time the Company agreed an extension of the existing loan arrangements with IYA, a member of the PLLG Group to cover the potential payments to the Rio Negro province. The Company noted at that time that loans from shareholders are not the optimum financing medium and that it was exploring other financing options. Accordingly, and in reaction to positive market demand and as further detailed in the Use of Proceeds section in this letter, the Company, as part of the financial tool-kit at its disposal, announced the Placing and Open Offer on 20 October 2017. As noted elsewhere in this letter, the Open Offer is intended to allow those Shareholders who were not afforded the opportunity to participate in the Placing the chance to invest in the equity of the Company on the same terms. In addition to the Placing and Open Offer and as previously announced, the Company remains in discussions with institutional style type senior debt providers with a view to them replacing and/or supplementing the Company's current loan arrangements if the Company views it expedient to do so. Moreover, the Loan Conversion will reduce the Company's current gearing, interest payments and its reliance upon shareholder loans.

3. Current Trading and Prospects

As announced on 17 October 2017, the Company received its payment of US$1.5 million from the first shipment of oil from Puesto Flores. This payment was for oil produced and ready at that stage to be shipped ie received into storage tanks at the port being at the end of the transport pipeline, thus not calculated in terms of daily production and consequently representing only a part of a month's worth of revenue calculated at US$55/barrel. Production at Puesto Flores remains running at over 1,200 boepd and the Company estimates it is currently achieving in excess of the US$1 million monthly positive cashflow contribution from this Concession. No production has been contributed to this figure from the Estancia Vieja Field which has been shut-in for some time. Total Argentine production is running at approximately 2,000 boepd taking into account production from Puesto Guardian Concession, where although as previously announced, production is currently constrained, that Concession, like Puesto Flores is now generating free cash flow before capex and G&A.

As likewise previously announced, a pilot workover capex programme of shut-in wells is due to commence ‎at Puesto Flores in November. No new material capex is expected to be committed in Puesto Guardian for the next twelve months. New pumps, already ordered and being constructed, due for delivery in the next few months will further enhance surface facilities and optimise the production capability of the wells successfully worked over earlier in the year.

Production in Louisiana continues as normal and in line with expectations, remaining free cash positive and benefiting from the current increase in oil prices in which regard at the date of this Circular the November price of Louisiana Light Crude, which is the reference price for President's production there, is estimated to be US$57 per barrel.

 In Paraguay the Company has commenced a farm-out process and as disclosed there is an encouraging level of interest shown by a number of parties.

4. Use of Proceeds

The net proceeds from the Placing and Open Offer will contribute towards a number of important developments in the coming months. In particular, the proceeds will:

(i) strengthen the Company's capitalised position as it continues to actively consider other appropriate production acquisition opportunities capable of delivering strong shareholder value;

(ii) support and, as the case may be, accelerate the ongoing work programme at the recently acquired Puesto Flores and Estancia Vieja Concession in the Neuquén Basin situated in the Rio Negro Province, Argentina, which has the potential to materially increase reserved and production to over 3,000 boepd;

(iii) contribute to the overall funding package or monies to be paid to the Rio Negro Province in relation to the extension of the Concession for Puesto Flores; and

(iv) permit the Loan Conversion to take place.

5. Details of the Existing Loan Facility

Under the Existing Loan Facility, the Company has a facility with IYA, a member of the PLLG Group, which is beneficially owned by the Company's Executive Chairman and its largest shareholder, Peter Levine. The Existing Loan Facility is is currently up to US$26 million, comprising the original facility of US$10 million together with the extended facility to cover the recent acquisition as referred to above and more particularly set out in the Company's announcement of 21 September 2017. Such principal monies as are then outstanding are repayable on 31 December 2021. The Company pays interest monthly and the facility has been provided on a revolving credit basis, thus giving complete flexibility to the Company. President is free without penalty to permanently retire any part of the facility during the term but has no obligation to so do, however, no part of the proceeds of the Placing or Open Offer will be used to repay any of the debt. At the current date, taking into account monies paid to Chevron, apportionments, and costs related to the acquisition as well as capex so far incurred, the drawn element of the facility is approximately US$13.5 million which is expected to normalise in the coming few months as the full benefit of the positive cash flow is received from the latest acquisition on a regular basis.

Pursuant to the Loan Conversion, it has been agreed (assuming that the Open Offer is fully subscribed) that up to approximately £2.125 million of the principal amount under the Existing Loan Facility will be capitalised through the issue of the Loan Conversion Shares to IYA. To the extent that the Open Offer is not taken up in full the amount of the Existing Loan Facility to be converted into New Ordinary Shares will be reduced such that Peter Levine's shareholding (together with those related to him) will not exceed 29.99% of the Enlarged Share Capital.

6. Details of the Open Offer

6.1 Open Offer Structure

The Open Offer provides an opportunity for all Qualifying Shareholders to participate in the fundraising by acquiring Open Offer Shares pro rata to their current holdings of Existing Ordinary Shares with the option for subscribing for more pursuant to the Excess Application Facility subject to clawback.

The Issue Price of 10 pence per New Ordinary Share represents the same price at which institutional investors subscribed for Ordinary Shares pursuant to the Placing. The offer ratio will be 1 Open Offer Share for every 23 Existing Ordinary Shares.

6.2 Principal terms of the Open Offer

Subject to the fulfilment of the conditions set out below and in Part IV of the Circular, Qualifying Shareholders are being given the opportunity to subscribe for the Open Offer Shares at a price of 10 pence per Open Offer Share, pro rata to their holdings of Existing Ordinary Shares on the Record Date on the basis of:

1 Open Offer Share for every 23 Existing Ordinary Shares

Qualifying Shareholders are also being given the opportunity, provided that they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility.

The allotment and issue of the Open Offer Shares will also need to be made following and conditional on, inter alia, the Shareholder approval referred to above.

Assuming full take-up under the Open Offer, the issue of the Open Offer Shares will, in addition to the amount raised under the Placing raise further gross proceeds of approximately US$5.82 million (£4.44 million) for the Company.

The Open Offer Shares will, upon issue, rank pari passu with the Existing Ordinary Shares.

Fractions of Open Offer Shares will not be allotted, each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number.

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

6.3 Excess Application Facility

The Excess Application Facility will enable Qualifying Shareholders, provided that they take up their Open Offer Entitlement in full, to apply for Excess Open Offer Entitlements. Qualifying non-CREST Shareholders who wish to apply to acquire more than their Open Offer Entitlement should complete the relevant sections on the Application Form. Qualifying CREST Shareholders will have Excess CREST Open Offer Entitlements credited to their stock account in CREST. Applications for Excess Open Offer Entitlements will be satisfied only and to the extent that corresponding applications by other Qualifying Shareholders are not made or are made for less than their Open Offer Entitlements. If applications under the Excess Application Facility are received for more than the total number of Open Offer Shares available following take-up of Open Offer Entitlements, such applications will be scaled back pro rata to the number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility.

Application will be made for the Open Offer Entitlements and Excess Open Offer Entitlements in respect of Qualifying CREST Shareholders to be admitted to CREST. It is expected that such Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 1 November 2017. Such Open Offer Entitlements and Excess Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 1 November 2017. Applications through the means of the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Qualifying non-CREST Shareholders will have received an Application Form with the Circular which sets out their entitlement to Open Offer Shares as shown by the number of Open Offer Entitlements allocated to them. Qualifying CREST Shareholders will receive a credit to their appropriate stock accounts in CREST in respect of their Open Offer Entitlements on 1 November 2017.

Shareholders should note that the Open Offer is not a rights issue. Qualifying CREST Shareholders should note that although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. Qualifying non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer. If applications are made for less than all of the Open Offer Shares available, then the lower number of Open Offer Shares will be issued.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in Part IV of the Circular.

For Qualifying non-CREST Shareholders, completed Application Forms, accompanied by full payment, should be returned by post or by hand (during normal business hours only) to Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 17 November 2017. For Qualifying CREST Shareholders the relevant CREST instructions must have been settled as explained in the accompanying Circular by no later than 11.00 a.m. on 17 November 2017.

6.4 Other information relating to the Open Offer and Loan Conversion

The Open Offer and Loan Conversion are conditional, inter alia, upon:

(i) the passing of Resolutions; and

(ii) Admission of the Open Offer Shares and Loan Conversion Shares becoming effective by not later than 8.00 a.m. on 21 November 2017 (or such later time and/or date as the Company may decide, not being later than 8.00 p.m. on 28 November 2017).

Accordingly, if any of such conditions are not satisfied, or, if applicable, waived, the relevant part or parts of the Open Offer and Loan Conversion will not proceed.

The Open Offer and Loan Conversion will result in the issue of in total 65,608,875 New Ordinary Shares assuming full take up under the Open Offer (representing, in aggregate, approximately 6.00 per cent. of the Enlarged Share Capital assuming full take up under the Open Offer). The New Ordinary Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and therefore rank equally for all dividends or other distributions declared, made or paid after the date of issue of the New Ordinary Shares. No temporary documents of title will be issued.

Application will be made to the London Stock Exchange for the Open Offer Shares and the Loan Conversion Shares to be admitted to trading on AIM. It is expected that Admission will become effective at 8.00 a.m. on 21 November 2017 and that dealings for normal settlement in the New Ordinary Shares will commence at 8.00 a.m. on 21 November 2017.

7. General Meeting

A notice convening a General Meeting of the Company, to be held at the offices of fieldfisher LLP Riverbank House, 2 Swan Lane, London EC4R 3TT on 20 November 2017 at 10.00 a.m. is set out at the end of this announcement. At the General Meeting, the following Resolutions will be proposed:

(1) an ordinary resolution to grant authority to the Directors to allot up to 65,608,875 New Ordinary Shares in the capital of the Company or to grant rights to subscribe for or convert any security into shares in the capital of the Company pursuant to section 551 of the Act, being up to an aggregate nominal amount of £656,088.75. The Directors will limit this authority to the allotment of New Ordinary Shares pursuant to the Open Offer and Loan Conversion;

(2) a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the Act in respect of the allotment of up to 65,608,875 New Ordinary Shares with an aggregate nominal amount of up to £656,088.75. The Directors will again limit this authority to the allotment of New Ordinary Shares pursuant to the Open Offer and Loan Conversion;

(3) an ordinary resolution to grant a general authority to the Directors to allot up to 361,954,334 shares in the capital of the Company or to grant rights to subscribe for or convert any security into shares in the capital of the Company pursuant to section 551 of the Act, being up to an aggregate nominal amount of £3,619,543.34. This authority will represent 33.33 per cent. of the Enlarged Share Capital and is in line with the Directors' existing share authorities granted pursuant to section 551 of the Act at the Company's last AGM which was held in 2017. The authority will expire at the conclusion of the Annual General Meeting of the Company to be held later this year; and

(4) a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the Act in respect of the allotment of up to 108,586,300 equity shares with an aggregate nominal amount of up to £1,085,863.00. This authority will represent approximately 10 per cent. of the Enlarged Share Capital and is in line with the Directors' existing share authorities granted in respect of the disapplication of section 561(1) granted at the Company's last AGM which was held in 2017. The authority will expire at the conclusion of the Annual General Meeting of the Company to be held later this year.

PLLG, an entity controlled by Peter Levine, has irrevocably undertaken to vote in favour of the Resolutions.

8. Action to be taken

8.1 General Meeting

Shareholders will find accompanying the Circular a Form of Proxy for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete, sign and return the Form of Proxy in accordance with the instructions printed on it to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA as soon as possible and, in any event, so as to arrive no later than 10.00 a.m. on 18 November 2017 or alternatively the CREST Proxy in accordance with the instructions on the front page. Completion and return of the Form of Proxy or CREST Proxy will not affect your right to attend and vote in person at the General Meeting if you so wish.

8.2 Open Offer

Qualifying non-CREST Shareholders

If you are a Qualifying non-CREST Shareholder you will have received an Application Form which gives details of your maximum entitlement under the Open Offer (as shown by the number of Open Offer Entitlements allocated to you). If you wish to apply for Open Offer Shares under the Open Offer (whether in respect of your Open Offer Entitlement or both your Open Offer Entitlement and any Excess Open Offer Entitlements), you should complete the accompanying Application Form in accordance with the procedure for application set out in paragraph 4.1.4 of Part IV of the accompanying Circular and on the Application Form itself.

Qualifying CREST Shareholders

If you are a Qualifying CREST Shareholder and do not hold any Ordinary Shares in certificated form, no Application Form accompanies the Circular and you will receive a credit to your appropriate stock account in CREST in respect of the Open Offer Entitlements representing your maximum entitlement under the Open Offer except (subject to certain exceptions) if you are an Overseas Shareholder who has a registered address in, or is a resident in or a citizen of an Excluded Territory. Applications by Qualifying CREST Shareholders for Excess Open Offer Entitlements in excess of their Open Offer Entitlements should be made in accordance with the procedures set out in paragraph 4.1.2 of Part IV of the accompanying Circular, unless you are an Overseas Shareholder in which event, applications should be made in accordance with the procedures set out in paragraph 6 of Part IV of the accompanying Circular.

The latest time for applications under the Open Offer to be received is 11.00 a.m. on 17 November 2017. The procedure for application and payment depends on whether, at the time at which application and payment is made, you have an Application Form in respect of your entitlement under the Open Offer or have Open Offer Entitlements credited to your stock account in CREST in respect of such entitlement. The procedures for application and payment are set out in Part IV of the Circular.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with the Circular and the Open Offer.

9. Overseas Shareholders

Information for Overseas Shareholders who have registered addresses outside the United Kingdom or who are citizens or residents of countries other than the United Kingdom appears in paragraph 6 of Part IV of the accompanying Circular, which sets out the restrictions applicable to such persons. If you are an Overseas Shareholder, it is important that you read that part of the Circular.

10. Related Party Transactions

The issue of the Loan Conversion Shares to IYA as part of the Loan Conversion is classified as a related party transaction under the AIM Rules. Accordingly, the Directors, excluding Peter Levine (who is not considered to be independent by virtue of his relationship with IYA), consider, having also consulted with finnCap in its capacity as the Company's nominated adviser, that the terms of IYA's participation in the Loan Conversion are fair and reasonable insofar as independent Shareholders are concerned.

11. Additional Information

Your attention is drawn to the additional information set out in Parts II to V (inclusive) of the Circular.

12. Directors' recommendation

The Directors consider the Open Offer to be in the best interests of the Company and its Shareholders as a whole.

The Independent Directors consider the Loan Conversion to be in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

DEFINITIONS

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