SIG Regulatory News (SHI)

19 June 2020

SIG plc

Proposed Capital Raise of £165 million to Strengthen the Capital Structure, Provide Liquidity and Deliver the Group's New Strategy

Further to its announcement on 29 May 2020, SIG plc ("SIG", the "Company" or, together with its subsidiaries, the "Group") announces a proposed capital raise of £165 million, alongside the amendment of certain terms in respect of the Group's Revolving Credit Facility and Private Placement Notes.

The proposed capital raise comprises:

· an investment from CD&R Sunshine S.à r.l ("CD&R") of £60 million, pursuant to which CD&R has committed to subscribe for 240,000,000 New Ordinary Shares at an issue price of 25 pence per share (the "CD&R Investment"); and

· a firm placing and placing and open offer of £105 million (the "Firm Placing and Placing and Open Offer" and, together with the CD&R Investment, the "Capital Raise") of, in aggregate, 347,901,900 New Ordinary Shares at an issue price of 30 pence per New Ordinary Share (the "Issue Price").

CD&R has agreed to invest £20 million pursuant to the Firm Placing as well as up to £14 million pursuant to the Placing and Open Offer (subject to clawback by existing shareholders under the Open Offer) at the Issue Price.

The Firm Placing and Placing and Open Offer are being conducted by way of an accelerated bookbuild process (the "Bookbuild"), which will be launched immediately following this announcement (the "Announcement") and are subject to the terms and conditions set out in the Appendix to this Announcement (which forms part of this Announcement) (the "Appendix").

Jefferies International Limited ("Jefferies") and Peel Hunt LLP ("Peel Hunt") are each acting as Joint Bookrunner, Joint Sponsor and Joint Financial Adviser to the Company. Lazard & Co. Limited is acting as Lead Financial Adviser to the Company.

Key Points

The Capital Raise

· Intention to raise gross proceeds of £165 million to strengthen the Group's capital structure.

· As part of the Capital Raise, CD&R, a leading global investment manager, has agreed to invest up to £94 million, with a guaranteed minimum investment of £80 million.

· The Capital Raise is to be structured through two inter-conditional tranches:

o first tranche of £60 million being placed firm to CD&R at 25 pence per New Ordinary Share; and

o second tranche of £105 million offered by way of the Firm Placing and Placing and Open Offer, of which c.£60 million is to be raised through the Firm Placing, and c.£44 million is to be raised through the conditional Placing (subject to clawback by existing shareholders under the Open Offer).

· IKO Enterprises Limited, a company incorporated in Alberta, Canada (together with its affiliates, "IKO"), is the Company's largest shareholder and has confirmed that it is fully supportive of the Company's new strategy and the Capital Raise and has undertaken to take up its full allocation at the Issue Price as part of the Firm Placing and Placing and Open Offer and vote in favour of the Capital Raise at the General Meeting.

· The Capital Raise is expected to raise £165 million in gross proceeds, and c.£140 million in net proceeds, reflecting fees associated with the Capital Raise, amendment of the debt facilities and lender fees1.

· Net proceeds will be used for the following purposes:

o improve liquidity;

o provide further resilience against the effects of the ongoing COVID-19 pandemic on the Group's business;

o deliver the Company's new strategy;

o repay c.£48 million of outstanding principal of the Group's Notes (as defined below) at par; and

o fund the unwind of various forms of government relief made available to mitigate the effects of the COVID-19 pandemic.

· 240,000,000 New Ordinary Shares will be issued in the first tranche of £60 million being firm placed with CD&R at 25 pence per share.

· 200,012,655 New Ordinary Shares will be issued in the Firm Placing at the Issue Price to raise gross proceeds of c.£60 million and 147,889,245 New Ordinary Shares will be issued in the Placing and Open Offer at the Issue Price to raise gross proceeds of c.£44 million at the Issue Price.

· Shareholders are being given the opportunity to subscribe for New Ordinary Shares in the Open Offer pro rata to their existing shareholdings at the Issue Price on the basis of:

1 New Ordinary Share for every 4 Existing Ordinary Shares

· The Issue Price represents a discount of 10.6% to the closing price of 33.5 pence per Ordinary Share on 18 June 2020 (being the last Business Day before the publication of this announcement).

· In addition, Directors and Senior Management are expected to subscribe for approximately c.£0.6 million in aggregate of New Ordinary Shares at the Issue Price (the "Directors and Senior Management Subscription").

· The Firm Placing and Placing and Open Offer (not including the £60 million CD&R Investment and the Directors and Senior Management Subscription) are fully underwritten by the Joint Bookrunners.

· The CD&R Investment, the Firm Placing and Placing and Open Offer and the Directors and Senior Management Subscription are conditional upon, among other things, the approval of SIG's Shareholders at a general meeting of the Company which will take place at 11 a.m. on 9 July 2020 (the "General Meeting").

1 Reflects approximately £153.1 million in net cash proceeds from the Capital Raise (being gross proceeds of £165.0 million, less estimated fees and expenses of approximately £11.9 million in connection with the Capital Raise), as well as the payment of debt advisory fees of £8.2 million, together with lender fees relating to the Notes of £1.8 million and lender fees relating to the RCF of £2.9 million

Amended Debt Facilities Agreements

· Alongside the Capital Raise, the Company has agreed with the lenders under its Revolving Credit Facility (the "RCF") and the holders of its Private Placement Notes (the "Notes") a reset of financial covenants and amendments to other terms and conditions in order to provide the Group with the flexibility to execute its new strategy with a more sustainable financial structure.

· The Company is delighted to announce that on 18 June 2020 it entered into amendment and restatement agreements in relation to the RCF and the Notes, including the following changes:

Facilities

· c. £234 million2 of remaining facilities, with no amortisation or scheduled repayments until May 20233 compromising:

§ £139 million2, 4 of Notes following repayment of £48 million of outstanding principal, at par (from the proceeds of the Capital Raise);

§ a £70 million term facility (representing existing RCF drawings);

§ a £25 million revolving credit facility, following a cancellation of existing commitments under the RCF; and

§ all amended debt facilities are unsecured and rank pari passu.

 Covenants

· No leverage or interest cover covenants until March 2022 - starting at 1.25x interest cover in March 2022 and then adjusting to investment grade covenant levels by March 2023 (5 and >3x interest cover). Previous covenants were 3x interest cover.

· Minimum net worth, maximum net debt and minimum liquidity covenants to apply throughout (save that maximum debt covenant to apply only until February 2022).

· Covenant reset and all other terms (other than those stated above to be conditional on a successful Capital Raise) take effect immediately. Failure by the Company to receive at least £125 million (gross) from the Capital Raise by 29 July 2020 would constitute an "Equity Failure Event" which would result in an event of default under the amended and restated facilities.

Current Trading

The Group has seen a gradual improvement in trading performance throughout May and June 2020, particularly in the UK and Ireland where branches continued to reopen during May as lockdown eased.

Underlying revenue for May showed a steady recovery from its low point in April 2020. Although this remained below the underlying revenue achieved in March 2020, the Group's daily sales at the end of May were largely in line with March levels.

The improvement in revenues has continued at the start of June with the Group trading in line with pre-COVID-19 levels. While revenues continued to be impacted by COVID-19 in some of the Group's primary markets, the strength of trading is testament to the capability and resilience of our operating companies which returned to work quickly and effectively.

Although the improvement in trading performance is encouraging, this has been influenced by a range of factors, including re-stocking by customers as a result of previously subdued demand, and it is unclear, given the relatively short period of trading post-lockdown, whether this performance will be maintained going forwards.

Profitability across the Group has also improved materially during May 2020, with operating losses in the UK materially lower than Management estimates at the time of the commencement of the lockdown and the rest of the Group trading profitably (before central costs). This has been driven by a combination of improved trading performance, particularly in the UK and Ireland, decisive cost actions by Management and continued governmental support.

2 FX rates as at 14 June 2020 USD:GBP 1.25, EUR:GBP 1.11.

3 Extensions of current maturities are conditional on a successful Capital Raise.

4 Conditional on a successful Capital Raise, holders of the Company's 2023 and 2026 Notes will be granted an option for these Notes to be redeemed on 31 May 2023.

5 Reducing to 2.75x by June 2023 under the longer dated facilities.

Bookbuild

The Firm Placing and Placing and Open Offer (excluding, for the avoidance of doubt, the £60 million CD&R Investment and the Directors and Senior Management Subscription) are fully underwritten and are being conducted by way of the Bookbuild on the Company's behalf by the Joint Bookrunners. The Bookbuild will open with immediate effect following this Announcement. The Firm Placed Shares and Open Offer Shares, when issued, will be fully paid and will rank pari passu in all respects with the Existing Ordinary Shares.

CD&R has agreed to purchase 66,666,667 New Ordinary Shares at the Issue Price pursuant to the Firm Placing, representing an investment of £20 million, and to purchase up to 46,666,667 New Ordinary Shares at the Issue Price pursuant to the Placing and Open Offer, representing an investment of up to £14 million (subject to clawback by existing shareholders under the Open Offer). This is in addition to the £60 million CD&R Investment pursuant to the first tranche. On completion of the Capital Raise, CD&R is expected to hold approximately 25% of SIG's Enlarged Share Capital and the CD&R Relationship Agreement will become effective. CD&R will be entitled to take two seats on the Board of SIG provided they hold at least 20% of the total enlarged issued share capital.

IKO, the Company's largest shareholder, has undertaken to take up its full allocation as part of the Firm Placing and Placing and Open Offer. IKO will receive an allocation of 65,416,667 New Ordinary Shares at the Issue Price pursuant to the Firm Placing, representing an investment of £19.6 million, and has provided an undertaking to take up in full its entitlement under the open offer of 21,865,427 New Ordinary Shares at the Issue Price, representing a further investment of £6.6 million. On completion of the Capital Raise, IKO is expected to hold approximately 14.8% of SIG's Enlarged Share Capital.

The Bookbuild is expected to close no later than 4.00 p.m. on 19 June 2020, subject to acceleration. Timing of the closing of the Bookbuild and allocations are at the discretion of the Joint Bookrunners and the Company. Details of the results of the Firm Placing and the conditional Placing will be announced as soon as practicable after the close of the Bookbuild.

Placees, excluding IKO, will be required to agree to subscribe for approximately 50% of their total subscriptions in the Firm Placing, and the remaining 50% in the Placing and Open Offer.

If a Placee is entitled to participate in the Open Offer by virtue of being a Qualifying Shareholder it will be able to apply to subscribe for Open Offer Shares under the terms and conditions of the Open Offer.

Your attention is drawn to the detailed terms and conditions of the Firm Placing and Placing and Open Offer described in Appendix II to this Announcement (which forms part of this Announcement).

Capitalised terms used but not otherwise defined in the text of this Announcement are defined in Appendix I of this Announcement.

Expected Timetable of Principal Events

The times and dates set out in the expected timetable of key events below, and mentioned throughout this Announcement, the Application Form and any other document issued in connection with the Capital Raise, are subject to change, and may be adjusted by the Company in consultation with the Joint Bookrunners. The timetable below also assumes that the Capital Raise Resolutions are all passed at the General Meeting without adjournment. In the event of any significant changes to the below expected timetable, details of the new times and dates will be notified to the London Stock Exchange and, where appropriate, Qualifying Shareholders.

If you have any queries on the procedures for application under the Open Offer, you should contact Computershare Investor Services PLC on 0370 707 1293 if calling from the UK or +44 370 707 1293 if calling from outside the UK. The helpline is open between 8.30 a.m. - 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

References to times in this Announcement are to London time unless otherwise stated.

_____________

Notes:

(1) The ability to participate in the Open Offer is subject to certain restrictions relating to Shareholders with registered addresses outside the United Kingdom, details of which are set out in Part 8 ("Terms and Conditions of the Open Offer") of the Prospectus, which is expected to be published later today.

(2) Different deadlines and procedures for applications may apply in certain cases. For example, if you hold your Existing Ordinary Shares through a CREST Member or other nominee, that person may set an earlier date for application and payment than the dates noted above.

(3) Temporary documents of title will not be issued.

LEI: 213800VDC1BKJEZ8PV53

Important Notice: This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014. The person responsible for arranging the release of this announcement on behalf of the Company is Kulbinder Dosanjh.

Enquiries

Important notices

This announcement may contain certain forward-looking statements, beliefs or opinions, with respect to the financial condition, results of operations and business of the Company and the Group. This announcement includes statements that are, or may be deemed to be, "forward-looking statements". The words "believe," "estimate," "target," "anticipate," "expect," "could," "would," "intend," "aim," "plan," "predict," "continue," "assume," "positioned," "may," "will," "should," "shall," "risk", their negatives and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. Forward-looking statements in this announcement include, but are not limited to, statements about: the conditions to the Capital Raise becoming effective being met, the Group's ability to successfully execute, and the costs associated with, its new strategy, and the current development and aftermath of the COVID-19 pandemic. An investor should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are in many cases beyond the control of the Company or the Group. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions investors that forward-looking statements are not guarantees of future performance and that its actual results of operations and financial condition, and the development of the industry in which it operates, may differ materially from those made in or suggested by the forward-looking statements contained in this announcement and/or information incorporated by reference into this announcement. In addition, even if the Company's or the Group's results of operation, financial position and growth, and the development of the markets and the industry in which the Group operates, are consistent with the forward-looking statements contained in this announcement, these results or developments may not be indicative of results or developments in subsequent periods. The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward- looking statements that the Company, or persons acting on its behalf, may issue.

Lazard & Co., Limited (Lazard) and each of Jefferies International Limited (Jefferies) and Peel Hunt LLP (Peel Hunt) (together, in the case only of Jefferies and Peel Hunt, the Joint Bookrunners), which are each authorised and regulated in the UK by the FCA, are each acting exclusively for SIG plc and no one else in connection with the contents of this announcement, the Capital Raise or any other matters referred to in this announcement and will not regard any other person as a client in relation to the Capital Raise or any other matters referred to in this announcement and will not be responsible to anyone for providing the protections afforded to their clients nor for giving advice to any other person in relation to the contents of this announcement, the Capital Raise or any other matter or arrangement referred to in this announcement. Neither Lazard nor the Joint Bookrunners are responsible for the contents of this announcement.

Past performance of the Company cannot be relied on as a guide to future performance. A variety of factors may cause the Company's or the Group's actual results to differ materially from the forward-looking statements contained in this announcement. The Group and the Joint Bookrunners and any of their respective directors, officers, employees, agents, affiliates and advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where required to do so under applicable law.

No statement in this announcement is intended as a profit forecast, project, prediction or estimate and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

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

No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its accuracy or completeness. The information in this announcement is subject to change.

This announcement, including the appendices, is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to sell, allot or issue, or any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities in the United States (including its territories and possessions), Australia, its territories and possessions, Canada, Japan, South Africa, Malaysia, New Zealand or in any jurisdiction to whom or in which such offer or invitation is unlawful, nor does the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment whatsoever with respect to such securities, the Company or otherwise.

Neither this announcement nor any copy of it nor the information contained in it and any related materials is for publication, distribution or release, in whole or in part, directly or indirectly, in or into or from the United States (including its territories and possessions, any State of the United States and the District of Columbia) (subject to certain restrictions), Australia, its territories and possessions, Canada, Japan, South Africa, Malaysia, New Zealand or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.

The distribution of this announcement and the offering of the New Ordinary Shares may be restricted by law in certain jurisdictions.

No action has been taken by the Company, the Joint Bookrunners or any of their respective affiliates that would permit an offer of the New Ordinary Shares or possession or distribution of this announcement or any other offering or publicity material relating to such New Ordinary Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The New Ordinary Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), or under any securities laws of any state or other jurisdiction of the United States. The New Ordinary Shares may not be offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, into or within 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. There will be no public offer of the New Ordinary Shares in the United States. The New Ordinary Shares are being offered: (i) outside the United States in "offshore transactions" as defined in, and in accordance with, Regulation S under the Securities Act (but not, for the avoidance of doubt, to any holders of American depositary receipts); and (ii) in the United States to persons reasonably believed to be "qualified institutional buyers", as defined in Rule 144A under the Securities Act (QIBs) who are subscribing for the New Ordinary Shares in private placement transactions pursuant to an exemption to the registration requirements of the Securities Act; or iii) pursuant to another 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. Prospective purchasers are notified that the Company as issuer of the New Ordinary Shares is relying upon an exemption from the registration requirements of Section 5 of the Securities Act. The New Ordinary Shares may not be offered or sold to, or for the account or benefit of, any holders of American depositary receipts.

The New Ordinary Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission, or state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Capital Raise or the accuracy or adequacy of these terms and conditions. Any representation to the contrary is a criminal offence in the United States.

This announcement does not constitute a recommendation concerning any investor's options with respect to the Capital Raise. The price of 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 shares. Past performance is no guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

The New Ordinary Shares to be issued or sold pursuant to the Firm Placing and Placing and Open Offer will not be admitted to trading on any stock exchange other than 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.

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 New Ordinary Shares to be issued in the Capital Raise have been subject to a product approval process, which has determined that the New Ordinary 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 New Ordinary Shares may decline and investors could lose all or part of their investment; the New Ordinary Shares to be issued in the Capital Raise provide no guaranteed income and no capital protection; and an investment in the New Ordinary Shares to be issued in the Capital Raise 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 Capital Raise. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Jefferies and Peel Hunt 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 group of investors to invest in, or purchase, or take any other action whatsoever with respect to, the New Ordinary Shares.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.

Unless the context otherwise requires, all references to time are to London time.

SIG plc

Proposed CD&R Investment and Firm Placing and Placing and Open Offer of 347.9 million New Ordinary Shares at a price of 30 pence per New Ordinary Share

1. INTRODUCTION

SIG's board of directors (the Board) has today announced a proposed capital raise of £165 million by way of the CD&R Investment and a Firm Placing and Placing and Open Offer (the Capital Raise). The capital raise would provide the Group with an improved capital base from which to deliver the new strategy and accelerate the return to profitable growth.

A Prospectus containing further information on the Capital Raising, including full details of how Shareholders can participate in the Open Offer, is expected to be published later today.

2. SIG business and industry overview

SIG is a leading supplier of specialist building materials to trade customers across the UK, Ireland and Mainland Europe, with strong positions in its core markets as a specialist distributor of insulation and interiors products and as a merchant of roofing and exteriors products.

SIG plays an important role in the construction industry. For its customers, SIG facilitates one-stop access to an extensive product range, provides expert technical advice, breaks bulk supplies into suitable quantities and coordinates often complex delivery requirements, ensuring that customers are supplied with what they need, when it is needed. For its suppliers, SIG provides a channel through which suppliers can bring their products to a highly fragmented market of smaller customers conveniently and efficiently, extends product guidance and support, and provides fulfilment capability to sites that are of insufficient scale to supply direct. SIG is committed to delivering the highest levels of customer service. As at 31 December 2019, the Group employed a headcount of 6,452 employees (excluding Air Handling), across the UK, Ireland, France, Germany, Poland and Benelux, comprising a high proportion of specialist customer service staff.

The Group currently operates two core businesses:

· Specialist Distribution (also known as distribution): The Group is a leading supplier of insulation products and interiors fit-out products in Europe, supplying customers with a comprehensive range of over 250,000 products via an extensive branch network of 200 sites as at 31 December 2019. The specialist distribution business operates primarily in the UK, France and Germany, which collectively represented 76% of the Group's specialist distribution revenue in 2019, as well as in Ireland, Poland and the Benelux area. The Group is either a market leader or a significant market player in the countries in which it operates, according to management estimates. The specialist distribution business (including SIGD) represented 70% of the Group's total underlying revenue in 2019.

· Roofing Merchanting (also known as exteriors): The Group is a leading specialist merchant of roofing products in the UK and France, with a branch network of 225 sites as at 31 December 2019. The roofing merchanting business (including SIGE) represented 30% of the Group's total underlying revenue in 2019.

The Group is exposed to a well-balanced profile of end-markets. The Group believes its focus towards non-discretionary RMI spend mitigates some of the volatility existent in the new-build industry. According to management estimates, in 2019, Specialist Distribution had just under half of its sales from the RMI sector, just under a quarter from the new residential sector, and the remainder split between industrial projects and new non-residential projects. During the same period, Roofing Merchanting had just under half of its sales from the RMI sector, just over half from new residential and new non-residential sectors, and the small remainder from industrial projects.

3. History and previous strategies

3.1. 2009-2019: a decade of disposals, rationalisation, debt and cost reduction

The Group's operating profit margin remained largely stable from 2009 to 2018, due in part to the fact that from 2009 a series of initiatives were implemented at the Group with the objective of reducing cost and debt. Although these actions drove increases in profit, they have masked gradual loss of share in certain markets, as SIG's traditional differentiating strengths of customer proximity, service and expertise have been eroded over time.

In the wake of the 2008 global financial crisis and corresponding downturn in construction activity and a corresponding decrease in the Group's revenues and operating profit, the Group implemented a strategy focused on cost and debt reduction in order to navigate the prevailing austerity. Non-core operations were divested, management layers were reduced and branches were closed or merged to create a leaner organisation with a significantly reduced cost base. For example, between 2009 and 2013 the Group reduced its headcount by approximately 3,700 and closed or merged 220 branches. This was supported by the raising of £325 million of equity in 2009.

This strategy evolved further in 2014, with the Group taking additional steps to reduce the cost of materials and service, more in line with a commodity retail strategy rather than a specialist product and service provider. Cost and debt reduction remained a central focus, with the rationalisation of less profitable products, customers and branches.

In 2017, the cost and debt reduction strategy was sustained under the heading of a new operating model: realigning the Group to more centralised functional structures in each operating company, and thereby increasing operational efficiency, lowering inventory levels and restoring profitability. Price increases were also implemented in an effort to preserve margins. The revised 2017 strategy also prompted the closure or disposal of a number of peripheral, non-core business activities, narrowing the Group's focus while reducing indebtedness. Since the start of 2017, SIG has sold or closed 19 businesses, most recently the sale of its Air Handling business to France Air for an enterprise value of £187 million, generating a net cash inflow of £163 million, before transaction costs, which completed in January 2020.

During this decade, sight was lost of customers, suppliers and the morale of the Group's key commercial people.

3.2. Financial performance over the period 2016 to 2019

The Group's underlying revenue grew from £2,534 million in 2016 to £2,683 million in 2018 (including the results of the Group's Air Handling business). Over the same period, underlying profit before tax increased from £67.4 million to £75.3 million (including the results of the Group's Air Handling business). Net debt reduced from £299.2 million as at 31 December 2016 to £189.4 million as at 31 December 2018, with covenant leverage reducing from 2.6x to 1.7x over the same period. The reduction in debt was partly achieved through more active working capital management, including the use of non-recourse receivables factoring facilities.

The Group continued to demonstrate an improvement in profitability during the first half of 2019 as the levels of less profitable stock keeping units (SKUs) were reduced and branches were closed or merged. Underlying profit before tax increased from £25.1 million in the first half of 2018 to £30.0 million in the first half of 2019, with return on sales increasing from 2.5% to 2.9% over the same period.

However, this growth in profitability was a short-term gain that masked underlying damage to the Group in certain geographies. In the UK and Germany in particular, the prevailing cost and debt reduction strategy had led to the erosion of key unique selling points (USPs) for a fundamentally sales-led organisation, namely customer proximity, service and expertise.

An aggressive branch rationalisation and headcount reduction strategy, where the Group reduced the number of its trading sites from 661 (including Air Handling) at the beginning of 2017 and its headcount from 10,328 employees (including Air Handling) in January 2017, to 425 trading sites (excluding Air Handling) and a headcount of 6,452 (excluding Air Handling) as at 31 December 2019, resulted in weakened customer relationships, while the centralisation of key commercial functions caused a lack of visibility, autonomy and accountability at branch level.

These factors, alongside others, resulted in talent, customers and ultimately sales moving to competitors, as well as a decline in sales. This decline in sales accelerated during the second half of 2019 in the UK, exacerbated by increasing political and macro-economic uncertainty leading up to the UK General Election, with UK Distribution and UK Exteriors experiencing a like-for-like reduction in sales of 26.1% and 12.5% respectively relative to the same period in 2018. Over the same period, Germany experienced a like-for-like reduction in sales of 5.0%.

The picture in SIG's other European markets, where implementation of the Group's strategy had been more selective in the operational changes adopted, were introduced gradually and had been better adapted to local dynamics, was relatively more stable, with full year 2019 like-for-like sales for the Group, excluding the UK and Germany, up by 1.4% compared to the full year 2018.

The overall reduction in full year 2019 like-for-like Group sales of 7.6% for continuing operations relative to the full year 2018 more than offset the Group's cost reduction initiatives in impacting profitability, leading to SIG informing the market on 9 January 2020 that it expected full year underlying profit before tax for 2019 to be approximately £42.0 million, compared to £75.3 million for 2018 (in each case, including the results of the Air Handling business).  

4. New senior leadership

In the context of the deterioration of SIG's financial performance towards the end of 2019, and the substantial completion of the Group's operational restructuring and simplification, the Board determined that it was appropriate to appoint new senior leadership, focused on returning the business to profitable growth and recapturing lost market share, particularly in the UK distribution and German businesses.

Steve Francis was appointed as Director and the interim Chief Executive Officer of the Group on 25 February 2020 and appointed on a permanent basis on 24 April 2020. Steve is a widely experienced CEO with a proven track record of driving rapid performance improvement through strong customer relationships, excellence in customer service and the creation of highly engaged teams.

Kath Kearney-Croft joined the Group in January 2020 initially to provide support to the executive team during the leave of absence of the former CEO, Meinie Oldersma, and was appointed as Director and the interim Chief Financial Officer of the Group on 25 February 2020. Kath has extensive experience from a number of financial leadership roles and was most recently Group Finance Director of The Vitec Group plc.

A number of significant appointments have also been made to strengthen leadership of the Group's operating companies, including a new, highly experienced Managing Director for the Group's UK businesses, whose leadership is to be merged as part of the UK plan to recapture market share. Moreover, the leadership of the Group's Benelux and Germany businesses is being merged to create another strong business unit.

5. Analysis of previous actions leading to underperformance

Following the appointment of Steve Francis and Kath Kearney-Croft, the Board conducted an in-depth review of the factors leading to the deterioration in SIG's performance in the second half of 2019.

The review concluded that although the cost and debt reduction strategy implemented in 2017 had driven a temporary increase in profitability in 2018, this masked a deterioration in SIG's core USPs of customer proximity, service and expertise. The resulting loss of customers and talent contributed to a reduction in market share, particularly within the UK and German businesses. Accordingly, in the UK between 2017 and 2019, the Group's key competitors were able to grow their revenues while those of the Group declined. The situation in SIG's other European operating companies (France, Ireland, Poland and Benelux), which represented 40.9% of full year 2019 sales, was more positive, as implementation of the Group's strategy had been more selective in the operational changes adopted, and were introduced gradually and had been better adapted to local dynamics.

The key findings were as follows:

· Centralisation: Key commercial functions were centralised within operating companies, without adequate support systems and tools provided to enable effective decision-making at the local team and branch levels. Branch managers lost visibility of key sales tools such as rebate structures, impeding their ability to retain and win customers in the market. Group-level systems were rolled out across the operating companies, sometimes against a local operating company's advice, contributing to loss of efficiency.

· Staff motivation and retention: The shift towards a centralised structure undermined the autonomy of branch managers and their teams, making the accountability of the branch unclear. Coupled with other operational decisions that were perceived to damage branch performance, staff morale was negatively impacted. A number of key managers left to join competitors, often taking their best teams and customers with them.

· Price increases: In an effort to offset losses of market share, prices were increased uniformly across a number of product categories, including commodity products in some cases. These increases did not take into consideration the sensitivity of sales volumes to potential price changes, and had a direct adverse impact on sales.

· Generalist vs specialist: A number of initiatives were implemented which compromised the specialist nature of SIG's product and service offering. Branch experts were replaced with generalists in an effort to reduce costs, and inventory was optimised to minimise working capital, contributing to a deterioration in customer service.

· Functional model: The transition to a functional model generated more siloed behaviour and encouraged internal rather than external focus, further undermining customer relationships.

· Branch rationalisation: The closure of branches across the Group resulted in the loss of customers and sales. The branch rationalisation strategy had assumed that sales from branches to be closed would be absorbed by the remaining branches, enabling sales to be maintained while reducing costs. However, this underestimated the importance of customer relationships at the branch level, and these closures instead resulted in a loss of customers to competitors.

These SIG specific issues contributed to a loss of market share in the UK and Germany, compounding a general deterioration in the level of construction activity across key markets. The resulting adverse impact on SIG's financial performance was significant, accelerating in the second half of 2019.

Further, following the Company's full year trading update published on 9 January 2020, the Company commissioned PricewaterhouseCoopers LLP (PwC) to undertake an independent review in light of the disparity between the forecast level of underlying profit before tax for the financial year 2019 set out in the Group's January 2020 trading update and market consensus of forecast profit before that announcement. The evidence as presented in PwC's report (the PwC Report) indicated a number of issues with the 2019 forecasting process, with a principal shortcoming being in the reporting to the Board of information received by the Group from its businesses. Further, the evidence indicated that, in the latter part of the second half of 2019 in particular, underlying forecasts from certain of the Group's businesses were the subject of material positive overlays at the Group level and, in addition, the attendant risks to those underlying forecasts were both poorly classified and poorly reported at the Group level, with the result that the Board was unsighted as to the overall picture. The PwC Report indicated that the issues identified were not adequately communicated to the Board.

Moreover, the Company voluntarily notified the FCA of the progress of the PwC review and has recently shared the PwC Report with the FCA for its consideration. After receipt of the PwC Report, in order to strengthen the Group's financial forecasting and internal reporting, the Company appointed KPMG to work with the Audit Committee to implement appropriate improvements to the Company's forecasting systems, procedures and controls, including those recommended in the PwC Report.

6. SIG's new strategy and medium term vision

6.1. SIG's new strategy: Re-connect, Re-energise and Re-set

Notwithstanding the issues summarised above, the Directors believe based on feedback gathered from discussions with suppliers, customers, senior employees and senior SIG alumni since new management arrived, that it is clear that the Group's franchise in Europe and the UK stands largely intact. The Directors believe SIG remains a market leader and a valued and necessary partner in the construction industry supply chain.

With the proposed strengthened capital structure in place, the Company believes that the Group would be well-positioned for growth with a strong leadership team at the helm and a new strategy focused on recapturing market share through SIG's extensive network of branches, passionate employees and strong customer base.

In order to return SIG to profitable growth and win back market share, the Board has developed a new, customer-centric strategy that reprioritises sales.

Fundamental to the new strategy is the recognition that SIG is a sales-led organisation, where the ability to win and retain customers is critical. The establishment of strong customer relationships, by empowering and energising key account and branch teams, and promoting an entrepreneurial spirit throughout the organisation, is key to this objective.

In France, Benelux, Poland and Ireland, where the Group's operational and financial performance has been more stable, the new strategy seeks to empower the Group's operating companies to move onto a growth footing.

In the UK and Germany, where the Group's operational and financial performance has seen greater deterioration, the new strategy focuses on first repairing the foundations of these businesses, creating the appropriate platform from which market share can be recaptured and profitable growth restored.

The Group's new strategy comprises seven key tenets:

(a) Local P&Ls within a "franchise-style" operating model, supported by best in class operations and systems;

(b) Rebalance the strategic focus between growth and cost reduction;

(c) Strengthen sales-led culture by accelerating salesforce rebuild and augmenting commercial leadership throughout the organisation… "everyone sells";

(d) Gain market share through enhanced customer proximity and service, including strengthening the branch network and augmenting the digital offering;

(e) Generate economies of scale and of skill, including re-establishing more strategic and Board-led supplier partnerships;

(f) Re-establish specialist focus and expertise; and

(g) Leaner, smarter corporate functions; improve governance and financial discipline.

These will be supported by new strategic key performance indicators tracking progress on each of the seven elements listed above.

Through the implementation of these strategic initiatives and select additions to the management team, alongside the proposed Capital Raise, the Board is confident that SIG will return to profitable growth and achieve its vision to be the leading B2B distributor of specialist construction products in its key markets.

Further details on the key tenets of the Group's new strategy are set out below:

(a) Local P&Ls within a "franchise-style" operating model, supported by best in class operations and systems;

The new strategy is underpinned by the transition to a "franchise-style" operating model with local P&Ls, which seeks to rebalance the role of the local teams, branches and the centre. Key commercial functions were over-centralised within operating companies under the 2017-2019 cost and debt reduction strategy, resulting in a loss of autonomy and accountability at the front line (regional, key account / branch level), demotivation of local staff, slower decision-making and the inflation of central costs.

In a business which is sales-led and an industry where local customer relationships and understanding of market dynamics are key, the re-empowerment of key account and branch teams is fundamental to SIG's recovery. The revised operating model inherent to the Group's new strategy is characterised by increased autonomy and accountability at the key account manager and branch levels, ensuring that local teams, branch managers and their staff have the tools and incentives to retain and win customers through excellent customer service and effective pricing.

The local teams and branches will be supported by lean central functions with deep expertise, responsible for overseeing performance, applying suitable controls, setting policy and providing the training and guidance necessary to ensure a common understanding and execution in accordance with the Company's business philosophy: operational excellence and the highest governance standards.

The Group's new strategy is founded on a clear vision and culture. The Group has refreshed these and intends to ensure that they are consistently owned and lived within each of the countries in which the Group operates.

The Group's purpose and vision are summarised as follows:

· Our purpose: Enable sustainable & safe living and working environments in the communities in which we operate

· Our vision: To be the leading B2B distributor of specialist construction products in our key markets

o Applying our specialist knowledge, expertise and synergies of omni-channel distributors in supply chain, sourcing, finance management, reporting and sales

o Leveraging significant capacity to grow in different market segments within the construction market, capturing adjacent opportunities within Roofing and Interiors

o Being opportunist in external growth, respecting local brand and history while integrating new businesses into our model

· Our culture: Our culture is underpinned by our bold, flexible and agile approach and we work together to do the right thing to make a positive difference

· Our key strengths:

o Employee Expertise: Our people are our competitive advantage, with specialist product and market knowledge

o Proximity-led: Our leading branch network and omni channel approach allows greater proximity to our customers

o High Quality Service: Our people go the extra mile to give our customers the products they need at the time they need them

o Scale intelligence: Our scale in each of our operating countries enables strong supplier partnerships

(b) Rebalance the strategic focus between growth and cost reduction

The Group's previous strategy encompassed aggressive cost-cutting measures that sought to increase profits by growing margins rather than revenue. Although this delivered a degree of operational efficiencies in parts of the organisation, this approach also contributed to an erosion of the Group's specialist capabilities, loss of many key skilled employees and, ultimately, a reduction in market share.

The Group's new strategy is founded on a sales-led approach and a plan to recapture lost market share, striking greater balance between cost reduction and revenue growth initiatives. The resulting increase in revenue is expected to result in more efficient use of the Group's existing cost base, rather than necessitate significant additional costs to support this growth.

The Group's strategic focus is summarised as follows:

Our strategic focus

We will achieve our vision through

o Nurturing passionate leadership throughout our business

o Growing our leading share in our chosen specialist markets through excellence in Service, Proximity and Expertise

o Seeking new market opportunities in the construction industry which suit our USPs and strategy and operating model

o Strengthening customer relationships through a consistent, disciplined and proactive approach to sales force management and training. We build sustainable, confident sales teams

o Becoming a primary customer to our key suppliers through scale, coverage and an intimate knowledge of their business and our markets

o Extracting economies of scale and skill through our modernised supply chain and continuously searching for opportunities to digitise our business

o We drive health and safety standards with determination, energy and passion to achieve Zero Harm and act responsibly in our impact on our communities and the environment

o Aim to consistently achieve a profit margin of 5% in operating companies while reinvesting in business efficiency and innovation

o Modernising our operating model, continuing our direction towards:

o Driving an omni-channel customer and sales-led organisation built around strong, local relationships and supported by our network of specialists and well-invested national supply chains utilising digitisation wherever possible;

o Delegating accountability for performance to local teams supported by small divisional teams with deep functional expertise (e.g. Procurement, category management, operations, systems and digitisation);

o Ensuring lean and efficient Corporate and Group function, which oversees performance, provides industry leadership & vision, sets policy, apply suitable controls, provide guidance and support and to ensure high governance standards

Over-and-above the significant growth that the Directors believe can be delivered by a return to doing the basics well, the Board sees considerable value creation potential in the medium term by executing a disciplined consolidation strategy. A number of SIG's end markets remain relatively fragmented and, as a leading player, the Group has developed a clear pipeline of opportunities that are ready to be advanced once the Group has returned to a position of financial strength.

(c) Strengthen sales-led culture by accelerating salesforce rebuild and augmenting commercial leadership throughout the organisation… "everyone sells";

Fundamental to the Group's new strategy is a renewed focus on strengthening customer relationships with a disciplined and proactive approach to sales force management and training. Through this, the Group will seek to build sustainable, winning sales teams that have the necessary autonomy, incentives and support to succeed. The creation of an entrepreneurial culture in which "everyone sells" is central to this objective.

The successful implementation of SIG's new sales-led strategy is highly dependent on the strength of the leadership team in place to deliver it. Significant operational experience and capability was already in place before 2020, particularly in France, Poland and the Benelux countries, with a strong bench of operating company Managing Directors and Financial Directors.

The leadership team has been augmented in 2020 through a number of key appointments, including:

· Steve Francis: CEO

· Philip Johns: MD of newly merged management teams of the SIGD and SIGE UK divisions, the Group's largest division and focus of the Group's near-term market share recovery programme. Phil returns with 30 years of industry experience, gained mostly in SIG

· Kath Kearney-Croft: CFO (interim)

· Ian Ashton: CFO (appointed with effect from 1 July 2020)

· Further senior appointments to upgrade the Group's leadership

The central finance team has also been bolstered under Kath's leadership, with additional internal as well as external support in the near term.

The Group's revised people strategy represents a shift away from a centralised control model towards a culture of entrepreneurship, commitment and empowerment, led from the top. A key component of this is the upskilling and nurturing of key staff throughout the organisation, to ensure they have the capabilities and confidence to lead teams effectively.

(d) Gain market share through enhanced customer proximity and service, including strengthening the branch network and augmenting the digital offering;

Due to the fragmented nature of the markets in which SIG operates, proximity to the customer is fundamental to developing relationships and growing sales.

The Group's extensive network of local teams and branches is considered by the Board to be a key strength, and the development and optimisation of this network, supported by tailored e-commerce channels, will remain an important pillar of the Group's new strategy.

In addition to maintaining and improving geographical coverage, SIG's new strategy seeks to devolve greater accountability and autonomy to the local teams and branches, empowering staff to win in the market.

SIG intends to lead the industry in the adoption of e-commerce and the development of digital intimacy, providing an additional channel through which to strengthen relationships with customers who demand and value it.

Although the disruption of the Group's end markets by online sales to date remains limited, SIG recognises the importance of remaining competitive in this space. Accordingly, over the past several years, SIG has been investing in an enhanced digital platform to complement telephone and branch sales and establish an omni-channel offering. The Group will continue to take a measured and phased approach, financing this investment from the Group's normal annual investment budget, thereby balancing the Group's capital at risk with the scale of the opportunity at each stage.

(e) Generate economies of scale and of skill, including re-establishing more strategic and Board-led supplier partnerships;

SIG's scale is a clear differentiator relative to the majority of its smaller competitors. The new strategy focuses on extracting the benefits of this greater scale, without compromising the importance of the "franchise-style" operating model.

Key areas of benefit include: (i) coordination of nationwide supplier and customer contracts to achieve optimal rebate structures and terms, a key focus area of the new strategy; (ii) leveraging best practices across the Group, both within and across geographies; and (iii) fulfilment of large-scale orders that smaller competitors are unable to challenge for; and collaboration between local teams and branches to generate cross-sales.

The Group plans to also make greater use of economies of skill to complement its traditional economies of scale. The Group's size and breadth enables it to develop and exploit superior knowledge about the latest market trends and customer needs. The Company believes that the significant technical knowledge and capabilities involved in its specialist industry segment make it more difficult for new entrants to replicate the Group's capabilities. This is expected to enable the Group to form more strategic partnerships with suppliers and key customers driven from jointly evolved strategic business, product and supply chain innovation plans.

(f) Re-establish specialist focus and expertise

SIG's role as a specialist rather than commodity distributor has historically been a key strength. By focusing on niche segments and providing customers with a system of products, alongside deep technical expertise, SIG has successfully differentiated its offering from commodity providers and established strong market positions across its end markets.

Although the Group's franchise remains strong, the cost reduction strategy of recent years has resulted in a degree of commoditisation within SIG's offering, with a loss of highly skilled, technical staff and narrowing of the product range towards higher volume but less specialist products. In the UK and, to a lesser extent, Germany, this has contributed to a loss of market share as the Group's differentiating strengths have been eroded.

The Group's new growth strategy is focused on re-establishing the Group's specialist focus and expertise, both in terms of the products and systems offered, as well as the service and technical knowledge provided.

The Group will seek to achieve this through refinement of its product focus, leveraging technical expertise to deliver innovative solutions to customers. Furthermore, a renewed focus on talent attraction, development and retention is intended to support the upskilling of the workforce, strengthening partnerships with both customers and suppliers.

(g) Leaner, smarter corporate functions; improve governance and financial discipline

As SIG's centre has expanded under previous strategies, its role in supporting the Group's operating companies has become confused. As part of the transition to an effective "franchise-style" operating model, an important focus of the Board is to redefine the role of SIG plc. Rather than "command and control", the centre will be repositioned as a lean enabler, providing the Group's operating companies with the necessary resources, guidance and controls to operate effectively within their local markets.

SIG has also implemented a number of measures to improve the Group's financial discipline, in terms of both the quality of financial forecasting, as well as cost and cash management. This has been a key focus area for Steve Francis and Kath Kearney-Croft since joining the business, and revised processes and controls have been put in place to ensure a more rigorous and reliable forecasting process. The central finance team has also been strengthened to facilitate these improvements.

Enhanced key performance indicator (KPI) reporting has already been implemented to improve visibility of operational performance and current trading, allowing informed decisions to be taken on a timely basis.

Actions have also been undertaken to improve cost and working capital discipline at the Group, by adding capability and enhancing processes.

6.2. Market share recapture plan

The Group's market share recapture plan, particularly for SIG's UK businesses, SIGD and SIGE, as well as for its Germany and Benelux businesses, is built upon five key enablers:

(a) Merger of leadership of SIGD and SIGE

SIGD and SIGE will be merged utilizing a similar model to that already deployed in SIG France, to form a single UK division with a combined leadership team leveraging potential synergies in support functions whilst maintaining separate commercial organisations and footprints (primarily branches). The combined business will use a new regional structure focused on promoting local entrepreneurship, accountability and profit and loss responsibility.

SIGD and SIGE previously were supported by an in-house UK based finance shared service centre in conjunction with an outsourced off-shore finance team, creating a complex, inefficient structure with sub-optimal service levels. Plans are in motion to integrate the shared service centre into the UK businesses and to conduct a full review of the performance of the outsourced off-shore finance team.

Since 27 April 2020, the Group's UK businesses have been led by Philip Johns. Philip was Managing Director of SIGE from 2006 to 2015, at which point he left the Group to become CEO of MKM Building Supplies. He brings over 30 years of experience in the construction industry, specialising in merchanting and distribution. Philip's career includes 27 years at SIG. The Directors believe he is uniquely well-placed to lead the UK market share recapture element of the Group's new strategy. The Group's UK business has also recently recruited three commercial leaders, including Andy Williamson, who was formerly the IKO UK managing director, David Hope, who was formerly a SIG UK sales director, and Richard Burnley, who was formerly the SIGD South managing director and the managing director of Kingspan insulation.

(b) Combined Germany/ Benelux Business Unit

A similar combined management approach to that being deployed in the UK and France is being developed to combine the management of the German and Benelux businesses. Accordingly in May 2020, Ronald Hoozemans was appointed managing director of the combined business unit. Ronald was Managing Director of SIG Benelux before this appointment.

(c) A clearer understanding of "core" business

The Company is currently planning a review to refine the definitions of the Group's marketplace, in the light of the new strategy, and thereby revise and expand the definition of "core" business. This is designed to facilitate the development of a more expansive growth strategy in each of the Group's countries of operation. The Company expects this review to highlight opportunities, consistent with the Group's USPs (Expertise, Proximity, Service) to widen its product offering and deepen its geographic coverage.

(d) Energise sales and market share recovery & growth efforts

The Group plans to improve proximity to its customers by identifying and filling gaps in the Group's geographical coverage.

SIG will expand and upskill the sales force by restoring its industry-leading bench-strength of specialist local expertise in areas such as fire protection, energy efficiency and sustainable materials. Salesforce productivity will also be increased though enhanced sales management and training, supported by salesforce management tools, disciplines and aligned incentives. Customer reconnection will be a top priority.

The Group will support SIG representatives in all front line functions, including warehouse employees, drivers, recruiters and accounts teams.

The Group's progress to recapture market share is expected to be accelerated through the acquisition of small add-on local businesses within target product areas.

(e) Facilitate growth through better operations

A number of actions are underway in the Group's operations to increase efficiency and service levels to boost the sales effort, including:

· pricing tools and training for key account and branch managers, providing enhanced visibility and autonomy to set pricing quickly and competitively;

· improved product availability through the use of enhanced systems and more accurate operational key performance indicators such as stock availability;

· enhanced on time and in full delivery; and

· additional training which is being provided to the Group's workforce in order to promote operational excellence and customer service.

6.3. The Group's medium term vision

The Group has a robust plan in place to deliver a return to profitable growth and achieve the Board's vision of establishing SIG as the leading B2B distributor of specialist construction products in its key markets.

In the medium term, the Group is targeting the following key financial metrics:

· Margin: target an operating margin of approximately 5% within the Group's operating companies, and a Group operating margin of approximately 3%, trending towards approximately 5% in the longer-term

· Leverage: covenant leverage of

· Dividend: dividend cover of 2.0-3.0x once appropriate leverage has been achieved

In summary, SIG remains a leading specialist supplier for the building materials and construction industries in its key markets. It is primed for growth under a strong, new management team, with a robust plan in place and positive indications across all the Group's operating companies. SIG remains exposed to a number of high growth end-markets, with leading positions across Mainland Europe. The traditional USPs that supported SIG in its markets previously, provide opportunities for SIG to grow even further and capitalise on the economic recovery following COVID-19.

The targets consist of forward-looking statements and are based upon a number of assumptions (including the successful implementation of the Group's new strategy). Such statements provide no assurance of actual future results, and the Group's actual results may differ materially from these targets due to a variety of factors, some of which are outside the Group's control. In addition, unanticipated events may adversely affect the actual results that the Group achieves in future periods whether or not its assumptions prove to be correct.

7. Impact of Covid-19, mitigating actions and industry dynamics

7.1. Impact of COVID-19

The sudden rise of the COVID-19 pandemic in early 2020 quickly redirected focus from the implementation of the new strategy to more immediate measures designed to mitigate its effects. This required the rapid development of a coordinated and decisive response, and the operational agility of local managers to implement it. Collective actions across the Group's finance, treasury, human resource, sales, procurement and operations functions at branch, regional and Group management levels were implemented in a coordinated and decisive fashion to mitigate the operational and financial impact.

The ability of the organisation to respond effectively to the pandemic through these measures demonstrates the Group's resilience and capacity for organisational change, and points towards the successful adoption of the new strategy as the Group emerges from this period of business disruption.

As a result of government restrictions that were implemented to mitigate the spread of COVID-19, large sections of SIG's end-markets experienced a severe reduction in sales. In the UK and Ireland during the closure period in April, the Group's businesses experienced a reduction of 86% compared to pre-COVID levels, represented by the national 14-day rolling daily average sales between January and mid-March, reflecting the closure of the majority of SIG's trading sites in response to government advice. The Group had re-opened all but two of the UK and Ireland sites by the end of May, resulting in national 14-day rolling daily average sales recovering to 63% of pre-COVID average sales levels as sites and the Group's customers began to re-open.

Trading activity suffered a temporary setback in France following the short-term closure of all branches for three days in mid-March, with the 14-day rolling average daily sales reduced to 32% of pre-COVID levels by early April. A staged reopening throughout April and into May saw, on average, France trading at 56% of pre-COVID revenue levels in April 2020, recovering to 5% above pre-COVID average sales levels by the end of May.

7.2. COVID-19 mitigating actions

In response to the challenges posed by the COVID-19 pandemic, the Group has implemented a comprehensive set of actions to reduce costs and manage liquidity. These actions include, but are not limited to:

· Employees: Over 2,000 employees were furloughed under the UK government's scheme and the majority of trading sites across the UK and Ireland were temporarily closed until mid-May when the majority of sites were reopened in the UK. Remaining staff and senior management agreed to take up to 20% temporary pay reductions, with the salaries of Directors temporarily reduced by up to 50% from 1 April 2020 to 30 June 2020. In mid-May 2020, the Company re-instated the executive Directors' pay from 50% to 80% at the same time as other Group employees were returning to work on full pay. The pay of executive and Non-Executive Directors is expected to be increased to 100% from 1 July 2020. The furloughing of employees, combined with other wage saving initiatives, has enabled the Group to retain an incremental approximately £8 million of cash in the year through 31 May 2020.

· Government support: Relevant government support is being accessed in all countries of operation, including employment support, tax and social security deferrals, and the business is assessing whether to apply for government loans (which are currently being considered in the UK, France and Germany, in coordination with the Group's existing financing arrangements). Tax and social security deferrals have been implemented where available in the UK (PAYE/NIC, VAT), in France (social charges, pension contributions), Germany (VAT), Poland (corporation tax), Belgium (VAT, payroll tax) and the Netherlands (VAT, payroll tax). In the aggregate, use of government support schemes has enabled the Group to defer approximately £19 million of cash payments in the year through 31 May 2020.

· Capital expenditure: Programmes that require significant cash investment and/or do not provide near-term business benefits have been paused, including major IT projects.

· Customers: The Group has maintained a sharp focus on proactively managing collections and monitoring overdue payments.

· Trade suppliers: The Group has conducted active discussions with large trade suppliers, in order to maintain continuity of supply while netting rebates and agreeing slower payment plans where possible.

· Non-trade suppliers: Deferral and term extension requests are being managed across non-trade suppliers, with a significant focus on IT and services and property, with property rates being deferred on UK properties and 'empty' or 'retail' relief claims submitted.

· Landlords: UK landlords have been approached to request that the June rent quarter payment is spread across the subsequent two quarters. In other cases, lease extensions are being offered in return for rent-free periods. The Group's business in Poland has also approached landlords for rent reductions.

· Fleet leases: Payment holidays have been requested from fleet lease providers.

· Dividend: The Board took the decision not to declare a full year 2019 dividend, nor to consider any return to shareholders of the proceeds of recent disposals.

The decisive implementation of these mitigating actions has helped to reduce cash outflows across the Group.

7.3. Industry dynamics beyond COVID-19 disruption

Despite short-term disruption, a number of structural drivers underpin recovery in the construction sector and sustainable growth in the medium to long term, providing a supportive backdrop for SIG's return to profitable growth. The Board sees potential for initial economic recovery as soon as late 2020 with potential for all markets and sub-sectors to return to growth by 2022.

These include:

(a) Position in cycle

The construction sector was at a mid-point in its economic cycle before the COVID-19 pandemic, rather than a cyclical high. Furthermore, in the UK and Europe, construction investment has lagged behind the wider economy since the mid-1980s, implying lower likelihood of a need for overbuild correction once the situation recovers.

(b) Structural housing shortage

Housing has not kept pace with the population across Europe and the UK. Residential under-build remains a key social and political factor across SIG's key geographies. This may result in further public sector support for the sector, such as the possible reintroduction of the UK's Help to Buy scheme, or an increase in private investment.

(c) Fiscal stimulus

Construction is likely to be a prime area of fiscal stimulus post COVID-19, as it provides a strong domestically geared multiplier in addition to addressing the political imperatives related to the residential housing industry. Moreover, the Company believes that there has been a structural under-investment in construction in the UK in particular, which may lead to additional opportunities going forward. Furthermore, there is potential for acceleration of pre-announced Government spending pledges, particularly in relation to infrastructure and housing.

(d) Climate / Environmental, Social and Governance (ESG)

The commitment to reduce greenhouse gas emissions supports greater activity in the construction of low-carbon buildings, through new build or conversion. Energy efficiency linked product verticals such as insulation and roofing are well positioned for growth.

SIG is well positioned to benefit from these positive structural drivers over the medium to long-term. The Group is an essential coordinator within the construction supply chain throughout the UK, Mainland Europe and Ireland, a market that is projected to be one of the first to rebound under government stimulus packages.

8. Financing and liquidity

The Group closely monitors its funding position throughout the year, including monitoring compliance with covenants and available facilities to ensure it has sufficient headroom to fund operations. The Group's covenant net debt as at 31 December 2019 was £168.5 million, compared with covenant EBITDA for 2019 of £78.4 million. The Group's covenant leverage (the ratio of covenant net debt to covenant EBITDA) was 2.1x as at the same date.

As at 26 March 2020, the Group reported that it had cash resources of £135 million, following receipt of the sale proceeds of the Air Handling business. As a result of strengthened cash control measures, the Group was able to preserve its liquidity position and as at 11 June 2020 the Group had cash resources of £181.7 million, compared to £155.3 million as at 30 April 2020, and a net debt position (pre-IFRS 16) of £85.4 million, compared to £114.1 million as at 30 April 2020. See paragraph 11.4 "Current trading liquidity" below for further details.

The cash control measures enacted by the Group (for example, increasing creditor days) and reduction in trading revenues for the year to May 2020 (reducing the amount of cash tied up as working capital) have resulted in a net working capital cash benefit. The unwind of these cash conservation measures, as well as the expected growth in sales as the Group returns to growth, will also require more working capital in the business, compared to its average historic levels, both to improve the service to customers and to support the Group's sales growth. This increase in working capital requirement will be funded from the Group's available resources at the time.

The Group's ability to maintain its liquidity position during this period of extreme uncertainty is a reflection of the effectiveness of the mitigating actions initiated by the Board, the agility of the organisation and the experience of the managers who enacted these measures throughout the Group.

Notwithstanding the effectiveness of these actions, the prolonged impact of COVID-19 is anticipated to have significant consequences on the Group's financial performance in 2020, both in terms of profitability and cash. The effect on profitability and net financial indebtedness is such that the Group anticipated that it would have breached the covenants attached to the Revolving Credit Facility Agreement and the Note Purchase Agreements at the 30 June 2020 testing date.

On arrival of the new CEO and interim-CFO in February 2020, and before the COVID-19 impact, the Company undertook an extensive review of its business and operating strategy. During these reviews, it became clear that, with the Group's reduced size and lower profitability, it would be necessary to re-set the financial structure put in place some years beforehand as average net debt levels remained high for the prospective profit levels in the business.

The Board concluded that a capital raise would be required to secure the continued support of the Group's RCF Lenders and Noteholders, and to establish a capital structure appropriate for the delivery of the Group's new strategy and growth plan. Accordingly, in April 2020, alongside commencing preparations for the Capital Raise, the Group entered into discussions with the RCF Lenders and Noteholders in order to address the anticipated covenant breach and determine a path through the current trading environment that would be amenable to all stakeholders.

The conclusion of this dialogue was that the RCF Lenders and the Noteholders have agreed to the Amendments and the Revised Covenants under their respective finance documents as a means of providing sufficient headroom for the Group to navigate a return to a sustainable financial structure in accordance with its business plan. In addition, conditional upon the Company's receipt of gross proceeds of at least £125 million from the Capital Raise (i) the maturity of the Revolving Credit Facility Agreement will be extended from 27 May 2021 to 31 May 2023; (ii) the maturity of the Company's 2020 and 2021 Notes will be extended to 31 May 2023 and (iii) while the maturity of the Company's 2023 and 2026 Notes will not be amended, the holders of these Notes will be granted an option for these Notes to be redeemed on 31 May 2023 (with a make-whole as calculated in accordance with the terms of the relevant Notes). In addition, the Amended Debt Facilities Agreements include a new event of default which will occur 10 business days after an Equity Failure Event. An Equity Failure Event will occur if (among other events) the Company fails to receive gross proceeds of at least £125 million from the Capital Raise by 29 July 2020.

If an Equity Failure Event occurs the Company would need to immediately re-engage with the RCF Lenders and Noteholders to determine any basis upon which those creditors would be prepared to continue to support the Group in the absence of any further capital in the short term. Those creditors would need to consider, in that context and on the basis of the Group's business plan, whether the Group's capital structure remains sustainable and would enable the Group to continue as a going concern.

9. Requirement for capital raise and use of proceeds

9.1. Requirement for capital raise

As noted above, in order to provide the Group with a strengthened balance sheet from which it can implement its new strategy, and to avoid an event of default under the Amended Debt Facilities Agreements as a result of the occurrence of an Equity Failure Event, the Board is proposing a capital raise seeking gross proceeds of £165 million by way of the Capital Raise.

The Capital Raise is intended to deliver the Group's objectives to:

(a) emerge from the COVID-19 crisis with the financial resources required to deliver its new strategy, recapture market share and strengthen the Group's position as a market leader across its operating businesses;

(b) ensure access to capital that will provide the Group with greater certainty, flexibility and balance sheet strength to pursue future growth opportunities; and

(c) support the deleveraging of the Group's balance sheet, in line with the Board's medium-term target of covenant leverage of below 1.5x.

9.2. Use of proceeds

The Capital Raise is expected to raise £165 million in gross proceeds, which will be used to improve liquidity, provide further resilience against the effects of the ongoing COVID-19 pandemic on the Group's business, deliver the Company's new strategy, repay approximately £48 million of outstanding principal in respect of the Notes and to fund the unwind of various forms of government relief made available to mitigate the effects of the COVID-19 pandemic.

The overall effect is intended to give the Group the flexibility to execute its new strategy with a more sustainable financial structure. The Company believes that the proposed Capital Raise is the optimal solution to address the Group's current challenges and deliver on its renewed strategic potential.

Assuming successful completion of the Capital Raise, the Company believes that the Group remains well positioned in the medium to longer term. As a leading provider of specialist building materials to trade customers across the UK, Ireland and Mainland Europe, the Company is confident of returning the Group to profitable growth.

10. Financial impact of the CAPITAL RAISE

Had the Capital Raise taken place as at the last balance sheet date, being 31 December 2019, the effect on the Group's balance sheet would have been an increase in cash of £92.2 million and a decrease of £52.7 million in liabilities, reflecting approximately £153.1 million in net cash proceeds from the Capital Raise (being gross proceeds of £165 million, less estimated fees and expenses of approximately £11.9 million in connection with the Capital Raise), and the prepayment of £48.0 million in a nominal amount of the Notes (at par plus interest accrued at the date of prepayment), as well as the payment of debt advisory fees of £8.2 million, together with lender fees relating to the Notes of £1.8 million and lender fees relating to the RCF of £2.9 million. The Group's pro forma net assets would have been £472.5 million.

11. Current trading and Outlook

11.1. Pre-COVID-19 period (January 2020 to February 2020)

The Group's underlying revenue for the two months ended 29 February 2020 was £296.0 million, down by £36.9 million from the prior year (two months ended 28 February 2019: £332.9 million), a like-for-like decline of 11.1%. Trading in the UK and Germany saw a continuation of the challenging trends seen in the last quarter of 2019, whilst trading activity in the rest of Europe was relatively stable.

Due to reduced sales volumes in key markets, gross profit margin fell compared to the prior year period (two months ended 28 February 2019).

As reported in the Group's trading update on 26 March 2020, the Group posted an underlying operating loss of £9.1 million (pre IFRS 16) in the two months ended 29 February 2020.

11.2. COVID-19 lockdown period (March 2020 to April 2020)

As announced on 29 May 2020, the Group's underlying revenue for the two months ended 30 April 2020 was £235.0 million, down by £138.8 million from the prior year (two months ended 30 April 2019: £373.8 million). Revenues in the period were significantly impacted by the COVID-19 outbreak, particularly in the UK, Ireland and France.

On 30 March 2020, the Group announced that large parts of its UK market had seen sales fall away rapidly, in common with the broader construction industry. It was concluded that it was necessary and appropriate to temporarily close UK operations. Trading sites in Ireland were also temporarily closed due to restrictions implemented by the Irish Government.

The UK and Ireland businesses remained open to service critical and emergency projects only, such as for the NHS, energy and food sectors. Revenue, during the closure period in April, reduced to approximately £0.4 million per day on average, a reduction of approximately 86% compared to pre-COVID-19 average sales levels (6 January 2020 to 13 March 2020).

Trading activity suffered a temporary setback in France following the short-term closure of all branches for three days in mid-March, with the 14-day rolling average daily sales reduced to approximately 32% of pre COVID-19 levels by early April. A staged reopening throughout April saw, on average, France trading at approximately 56% of pre COVID-19 average sales levels in April.

The Group's operating companies in Germany, Poland and Benelux were impacted by government measures to a lesser extent, where trading continued from all sites and revenue fell to 82% of pre COVID-19 levels in mid-April. By the end of April, these countries saw activity back to pre COVID-19 average sales levels.

Similar to the first two months, the Group's gross profit margin in March and April was negatively impacted by the decline in overall sales, combined with a shift in mix away from the more profitable roofing merchanting businesses in the UK and France.

During the period, the Group took decisive cost actions in response to COVID-19 as well as accessing the government-supported job retention schemes, resulting in a reduction in its operating costs year-on-year.

11.3. Gradual lifting of COVID-19 lockdown restrictions (May 2020 to June 2020)

The Group has seen a gradual improvement in trading performance throughout May and June 2020, particularly in the UK and Ireland where branches continued to reopen during May as lockdown eased.

In the UK and Ireland May revenues averaged approximately £1.3 million per day with 14-day rolling average daily sales recovering to 63% of pre-COVID-19 average sales levels by the end of the month, at which point all but two of the UK and Ireland sites had re-opened. This positive revenue trend has continued into June.

France also demonstrated a strong recovery during May with average sales of £2.1 million per day, notwithstanding that parts of the French construction market were not fully open. Daily sales were 5% above pre-COVID-19 average sales levels by the end of the month, reflecting the release of pent-up demand during the lockdown period, and signalling optimism for the early summer trading period when sales are seasonally strongest. 14-day rolling average daily sales have continued to improve in early June.

Sales in Germany, Poland and Benelux remained at pre-COVID-19 average sales levels during May, demonstrating stable demand after trading through the lockdown period. Although the sales cycle in these geographies mean revenue in the first few days of the month are generally lower, there have been no signs of a reduction in demand.

The Group's underlying revenue for May showed a steady recovery from its low point in April 2020. Although this remained below the underlying revenue achieved in March 2020, the Group's daily sales at the end of May was largely in line with March levels. The improvement in revenues has continued at the start of June with the Group trading broadly in line pre-COVID-19 levels. While revenues continued to be impacted by COVID-19 in some of the Group's primary markets, the strength of trading is testament to the capability and resilience of our operating companies to return to work quickly and effectively.

Although the improvement in trading performance is encouraging, this has been influenced by a range of factors, including re-stocking by customers as a result of previously subdued demand, and it is unclear, given the relatively short period of trading post-lockdown, whether this performance will be maintained going forwards.

Profitability across the Group has also improved materially during May 2020, with operating losses in the UK materially lower than management estimates at the time of the commencement of the lockdown and the rest of the Group trading profitably (before central costs). This has been driven by a combination of improved trading performance, particularly in the UK and Ireland, decisive cost actions by management and continued governmental support.

11.4. Current trading liquidity

The loss of revenues in 2020 is expected to impact profitability, cash generation and therefore debt levels. The Group has taken immediate and decisive action around cash conservation and these measures have resulted in estimated cash savings of approximately £27 million through 31 May 2020, comprising approximately £8 million of wage savings under the furlough schemes and other wage saving initiatives and a further approximately £19 million of tax and other deferrals through the use of government support schemes.

As at 11 June 2020 the Group had cash resources of £181.7 million, compared to £155.3 million as at 30 April 2020, and a net debt position (pre-IFRS 16) of £85.4 million, compared to £114.1 million as at 30 April 2020. While this improvement reflects in part timing benefits of when payments fall due, it also reflects improved levels of profitability, continued cost control actions, utilisation of governmental programmes and intensive, but careful, management of working capital. Whilst this improvement in available liquidity is encouraging, the Group expects that some of this positive cashflow will unwind over the remainder of 2020 as governmental support decreases and certain cash payment deferrals, including VAT and other taxes, are resolved.

The unwind of these cash conservation measures, as well as the expected growth in sales as the Group returns to growth, will also require more working capital in the business, compared to its average historic levels, both to improve the service to customers and to support the Group's sales growth. This increase in working capital requirement will be funded from the Group's available resources at the time.

11.5. Outlook

As a result of the impacts of declining revenues under the previous strategy and COVID-19 on the construction industry across Europe generally, management expects revenues for 2020 to be approximately £500 million lower than 2019 as reported, post the disposal of the Air Handling division. Management is targeting a return to around 2019 levels of Group revenues (as reported, post the disposal of the Air Handling division) in 2022.

While those geographies that were less severely impacted by COVID-19 are expected to recover faster, those which need strategic improvements may take longer to see the impact of management actions. The focus of the UK business through the second half of 2020 will be to continue to put the correct leadership structures and people in place, and restructuring the organisation to better position it to recapture market share. The planned combination of the leadership teams in UK Distribution and UK Exteriors is expected to reduce and simplify the central functions, resulting in a potential reduction in operating costs within the UK businesses of up to £4 million, after investments in front line sales to drive growth. In Germany and Benelux, the consolidation of the management structure is also intended to return Germany to growth after recent underperformance. In France, where the Group has shown resilience over the last few years, the business is expected to recover to targeted levels of revenue faster given its strong existing platform in the region.

Management remains focused on the overall levels of operating cost in the business which, if properly controlled, can result in significant operational gearing. The Group aims to grow its market share over time to leverage its cost base, which the Group seeks to supplement with improved processes and systems which the Board believes will improve Group productivity. The new strategy will be focused on growth with limited cost reductions outside the merging of senior management and central support functions in the UK and Germany and Benelux. Management's medium term target is to restore an operating margin of approximately 5% within the Group's operating companies and a Group operating margin of approximately 3%, trending towards approximately 5% in the longer term.

Depreciation and amortisation as a percentage of sales is expected to remain in line with historical levels going forward, capital expenditure is expected to run slightly ahead of depreciation and as a percentage of sales return to historic levels given management's strategic plan focusing on operational improvements rather than requiring large capex investment.

The improvement in performance seen during May 2020 is encouraging and ahead of management expectations at the time of the commencement of the lockdown. However, there remains material uncertainty around the sustainability of this performance and trading conditions throughout the rest of 2020, particularly in respect of COVID-19.

12. Dividend policy

The Group does not intend to pay a dividend for 2020, and will limit the 2021 interim dividend to £3.0 million. Under the terms of the Amended Debt Facilities Agreements, the 2021 final dividend and all subsequent dividends will be conditional on the Group's leverage being less than 2.25x in each case (including on a look forward basis), and will be subject to the further conditions that: (i) at the time the dividend is declared no default under the Amended Debt Facilities Agreements is continuing or would result from the payment of the dividend; (ii) at the time of payment of such dividend, there are not any outstanding loans under the New RCF; and (iii) the dividend is made in accordance with the Company's most recently stated policy of maintaining a two to three times dividend cover ratio.

13. Working Capital

13.1. Working Capital Statement

In the opinion of the Company, the Group does not have sufficient working capital for its present requirements, that is, for at least twelve months following the date of this Announcement.

The Company has reached this opinion due to the fact that it must raise gross proceeds of at least £125 million by 29 July 2020 in order to avoid an Equity Failure Event under each Amended Debt Facilities Agreement. The Capital Raise relies heavily on the £94 million CD&R Investment, £60 million of which is not underwritten, in order to raise the minimum gross proceeds of £125 million. If the Capital Raise succeeds in raising the required £125 million, there will be no shortfall in working capital for at least twelve months following the date of this Announcement.

The CD&R Investment is subject to certain conditions which are outside the control of the Group and which, if not met, would result in the Capital Raise failing to occur in its present form and on the basis presented in this Announcement. Specifically, the CD&R Investment will not proceed if: (i) the Austrian competition authorities were to commence an investigation in connection with the CD&R Investment; or (ii) the CD&R Subscription Agreement was otherwise to be terminated in accordance with its terms. If the CD&R Investment does not proceed, the Company will have triggered an Equity Failure Event under each Amended Debt Facilities Agreement and the Capital Raise would not occur in its present form and on the basis presented in this Announcement, and Admission of the Shares to trading would not occur. If the Capital Raise were otherwise to fail to proceed or to raise gross proceeds of at least £125 million by 29 July 2020, the Company will also have triggered an Equity Failure Event under each Amended Debt Facilities Agreement. The occurrence of an Equity Failure Event will lead to an Event of Default occurring under each Amended Debt Facilities Agreement 10 business days thereafter.

13.2. Plan to rectify working capital shortfall

The Company proposes to rectify this anticipated shortfall in working capital by completing the Capital Raise by 29 July 2020. The Company is confident in its ability to rectify the working capital shortfall in this manner due to the support the Company has received for the Capital Raise in the form of the conditional CD&R Investment and the agreement by IKO, the Company's largest shareholder, to vote in favour of the Capital Raise Resolutions that it is entitled to vote on, to acquire 65.4 million New Ordinary Shares at the Issue Price in the Firm Placing and to take up in full its Open Offer Entitlements.

13.3. Implications of a failure of the Company's plan to rectify working capital shortfall

If an Equity Failure Event occurs due to: (i) the Austrian competition authorities commencing an investigation in connection with the CD&R Investment; or (ii) the CD&R Subscription Agreement otherwise being terminated in accordance with its terms; or (iii) the Capital Raise otherwise failing to proceed or to raise gross proceeds of at least £125 million by 29 July 2020, the Company is required, no later than 5 business days thereafter, to provide a deleveraging plan for the approval of the RCF Lenders and the Noteholders. If the Event of Default occurring as a result of the Equity Failure Event is not waived by the requisite majority of the RCF Lenders and by each Noteholder, the RCF Lenders and the respective Noteholders would be entitled to accelerate and demand repayment in full of the amounts outstanding under the respective the Amended Debt Facilities Agreements (including principal and accrued interest). The principal amounts outstanding under the Amended Debt Facilities Agreements as at the date of this Announcement are £70 million under the Revolving Credit Facility Agreement and EUR181 million and USD30 million in respect of the Notes. The Group would then have an immediate liquidity need in an amount equal to such amounts, net of any cash then on hand. In such circumstances, the RCF Lenders and the Noteholders would also be entitled to make demand against various Group companies who have provided guarantees in respect of the Amended Debt Facilities Agreements. Following any such demand, the Group does not expect to have the funds available to repay such amounts at that time. In such circumstances, in the absence of being able to successfully agree or implement any of the alternatives discussed below, the Group would be unable to continue as a going concern.

Alongside the provision of a deleveraging plan to the RCF Lenders and Noteholders, the Company would immediately engage with the RCF Lenders and Noteholders to determine any basis upon which they may be prepared to continue to support the Group, if at all, in the absence of CD&R's participation or of any further capital being raised in the short term, as applicable. As a result, if an Equity Failure Event occurs, the Group would first seek to renegotiate the terms of the Amended Debt Facilities Agreements with the RCF Lenders and the Noteholders to secure waivers of any Equity Failure Event which had occurred and further accommodation (including the ability to make further drawings under the Revolving Credit Facility Agreement to meet the Group's liquidity requirements) to enable the Group to continue to trade as a going concern. However, the Group may be unable to obtain such waivers and further accommodation from the RCF Lenders and/or the Noteholders, either at all or without significant cost to the Group.

If the RCF Lenders and/or the Noteholders did not agree to waivers of the Equity Failure Event and to provide further accommodation (including the ability to make further drawings under the Revolving Credit Facility Agreement to meet the Group's liquidity requirements) on commercially acceptable terms to enable the Group to continue to trade as a going concern, the Group may seek alternative sources of funding to refinance the amounts outstanding under the Revolving Credit Facility Agreement and the Notes.

If the Equity Failure Event results from the Capital Raise failing to proceed or to raise gross proceeds of at least £125 million by 29 July 2020, the Company could take action to commence another equity raise under a new prospectus with new shareholder resolutions, or alternatively effect disposals of assets or a merger or acquisition transaction involving the Company. However, the Amended Debt Facilities Agreements restrict the Group's ability to make any such disposals and enter into such merger or acquisition transactions and the Group would need to receive the approval of the RCF Lenders and the Noteholders to make any such disposals or enter into such merger or acquisition transactions, which approval could be withheld.

As any of the above options would require the participation, agreement or approval of external parties, the Directors are not confident that any such alternative courses of action could be achieved in the limited time available on commercially acceptable terms, or that they ultimately would be successful. If the Company fails to secure any alternative funding on commercially acceptable terms and/or is otherwise unable to successfully pursue any of the above options on commercially acceptable terms, or at all, within the required time, the Company will cease to be able to operate as a going concern and the Board may, as a result, decide to place the Company into administration or petition the court for the compulsory liquidation of the Company, or the Company's creditors may petition the court for the administration or compulsory liquidation of the Company.

14. Principal terms of the Capital Raise

14.1. General

The Company intends to raise aggregate gross proceeds of £104.4 million through the issue of 347.9 million New Ordinary Shares at the Issue Price of 30 pence per New Ordinary Share by way of the Firm Placing and Placing and Open Offer.

The Issue Price was set having regard to the prevailing market conditions and the size of the Firm Placing and Placing and Open Offer. The Issue Price represents a discount of approximately 10.6% to the closing price per Ordinary Share of 33.5 pence on 18 June 2020 (the last Business Day before the announcement of the Firm Placing and Placing and Open Offer). The Directors believe that it is necessary to offer the New Ordinary Shares at a discount to complete the Firm Placing and Placing and Open Offer, and accordingly believe that such discount is in the best interests of the Shareholders, and that the Issue Price (and the discount) is appropriate for the Firm Placing and Placing and Open Offer.

The Firm Placing and Placing and Open Offer are conditional on, among other things:

· the Capital Raise Resolutions being passed by the Shareholders at the General Meeting (or, with the Joint Bookrunners' written consent, at any adjournment of it);

· Admission becoming effective by not later than 8.00 a.m. on 27 July 2020 (or such later time and/or date as the Company and the Joint Bookrunners may agree); and

· each of the CD&R Subscription Agreement and the Sponsors and Placing Agreement otherwise becoming unconditional in all respects and not having been terminated in accordance with their respective terms before Admission.

Accordingly, if any such conditions are not satisfied or, if applicable, waived, the Firm Placing and Placing and Open Offer will not proceed, any Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest, as soon as practicable thereafter. In these circumstances, the Firm Placing to the Firm Placees and the Placing to the Conditional Placees will not proceed.

The New Ordinary Shares to be issued pursuant to the CD&R Investment and the Firm Placing and Placing and Open Offer will, following Admission, rank pari passu in all respects with each other and with the Existing Ordinary Shares and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after Admission.

The Capital Raise is expected to result in 590.0 million New Ordinary Shares being issued (representing approximately 49.9% of the Enlarged Share Capital).

Applications will be made to the FCA for the New Ordinary Shares proposed to be issued in connection with the Capital Raise to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on its Main Market for listed securities. Subject to fulfilment of all conditions applicable to Admission, it is expected that Admission will become effective, and dealings for settlement in the New Ordinary Shares will commence, at 8.00 a.m. on 10 July 2020.

A cash box structure will be used for the issue of the New Ordinary Shares pursuant to the Capital Raise (other than the Directors and Senior Management Subscriptions).

14.2. CD&R Investment

CD&R has agreed, subject to fulfilment of certain conditions, to subscribe for New Ordinary Shares in the aggregate amount of up to £94.0 million. Of this amount, £60.0 million has been committed by CD&R in respect of New Ordinary Shares at an issue price of 25 pence per share. Further subscriptions of up to £34.0 million will be made by CD&R at the Issue Price under the Firm Placing (for an aggregate subscription amount of £20 million) and the Placing and Open Offer (for an aggregate subscription amount of up to £14 million, subject to clawback by Qualifying Shareholders under the Open Offer as outlined below). The CD&R Investment is conditional upon, the satisfaction (or waiver by CD&R) of certain conditions, including: (i) passing of the Capital Raise Resolutions; (ii) the Austrian competition authorities (Bundeswettbewerbsbehörde and Federal Cartel Prosecutor) not having requested an investigation of CD&R's proposed subscription for New Ordinary Shares which is expected to be confirmed no later than 3 July 2020; and (iii) Admission occurring by no later than 8 a.m. on 31 August 2020. The CD&R Investment of £60 million in respect of New Ordinary Shares at an issue price of 25 pence per share is not underwritten by the Joint Bookrunners pursuant to the Sponsors and Placing Agreement.

Upon Admission, CD&R will hold approximately 25% of the Enlarged Share Capital and the CD&R Relationship Agreement will become effective, and remain effective for so long as CD&R is entitled to exercise 10% or more of the votes to be cast on matters at general meetings of the Company.

14.3. IKO Support

The Company's largest shareholder as at the date of this Announcement, IKO Enterprises Limited (IKO), holding (together with its affiliates) approximately 14.79% of the issued share capital of the Company as at 18 June 2020 (being the latest practicable date before publication of this Announcement) has agreed with the Company in a deed of irrevocable undertaking dated 19 June 2020 that it irrevocably undertakes, conditional only on the Capital Raise being announced and it receiving an allocation of 65.4 million New Ordinary Shares under the Firm Placing at the Issue Price, to vote in favour of the Capital Raise Resolutions that it is entitled to vote on and to take up in full its Open Offer Entitlements. The ability of IKO to participate in the Firm Placing is subject to independent shareholder approval due to IKO's status as a related party for the purpose of Chapter 11 of the Listing Rules. It has been agreed that IKO will not be subject to the requirement to subscribe for 50% of its total subscriptions in the Firm Placing and the remaining 50% in the Placing and Open Offer. Instead, IKO will receive an allocation of £19.6 million in the Firm Placing and intends to take up in full its Open Offer Entitlements to ensure it maintains its current ownership percentage of the Enlarged Share Capital.

The Firm Placing and Placing and Open Offer (including IKO's participation) is underwritten by the Joint Bookrunners pursuant to the Sponsors and Placing Agreement.

As a consequence of IKO's existing interest in the Company, its agreed participation in the Firm Placing and Placing and Open Offer is a related party transaction for the purposes of Chapter 11 of the Listing Rules and will require the prior approval of independent Shareholders by ordinary resolution. Such a resolution has been included in the Resolutions in the Prospectus, which is expected to be published later today. IKO (and its associates) will not be entitled to vote on this resolution. The Board recognises the value that IKO's support has added to the Capital Raise (including CD&R's participation in the Capital Raise) and the Board has agreed to facilitate IKO's participation in the Capital Raise so that it does not suffer material dilution. The Board, having been so advised by Jefferies International Limited and Peel Hunt LLP in their capacities as Joint Sponsors, considers that this related party transaction is fair and reasonable as far as the Shareholders are concerned and is in the best interests of the Shareholders as a whole. In providing advice to the Board, the Joint Sponsors have taken into account the Board's commercial assessments of the aforementioned related party transaction.

14.4. Firm Placing

The Company intends to raise £60.0 million (gross) through the Firm Placing at the Issue Price of 30 pence per New Ordinary Share to certain institutional investors. The Firm Placing comprises 200 million Firm Placed Shares (representing approximately 33.8% of the Existing Ordinary Shares). The Firm Placed Shares will represent approximately 16.9% of the Enlarged Share Capital following Admission, taking into account the effects of the Capital Raise.

The Firm Placees have agreed to subscribe for the Firm Placed Shares at the Issue Price. The Firm Placing is not subject to clawback in respect of valid applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer. The Firm Placing is subject to the same conditions and termination rights which apply to the Placing and Open Offer.

The Firm Placing has been fully underwritten by the Joint Bookrunners pursuant to the Sponsors and Placing Agreement. To the extent that any Firm Placee procured by the Joint Bookrunners fails to pay for any or all of the Firm Placed Shares which have been allocated to it, each of the Joint Bookrunners has severally agreed, on the terms and subject to the conditions set out in the Sponsors and Placing Agreement, to subscribe for such Firm Placed Shares in their agreed proportions.

Applications will be made to the FCA for the Firm Placed Shares to be admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange's Main Market for listed securities. Subject to fulfilment of all conditions applicable to Admission and FCA approval, it is expected that Admission will become effective, and dealings for settlement in the Firm Placed Shares will commence, at 8.00 a.m. on 10 July 2020.

The Issue Price represents a discount of 3.5 pence (approximately 10.6%) to the closing price per Ordinary Share of 33.5 pence on 18 June 2020, (being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer).

The Firm Placed Shares, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Ordinary Shares in respect of all dividends or other distributions declared, made or paid after Admission. Firm Placees will not be able to participate in the Open Offer with respect to the Firm Placed Shares.

Placees will be required to agree to subscribe for 50% of their total subscriptions in the Firm Placing, and the remaining 50% in the Placing and Open Offer. It has been agreed that IKO will not be subject to this requirement. IKO will receive an allocation of £19.6 million in the Firm Placing and has agreed to take up in full its Open Offer Entitlements to ensure it maintains its current ownership percentage of the Enlarged Share Capital.

14.5. The Placing and Open Offer

Under the Placing and Open Offer, the Company intends to issue 147.9 million Open Offer Shares (representing approximately 25% of the Existing Ordinary Shares) at the Issue Price, raising £44.4 million (gross). The Open Offer Shares will represent approximately 12.5% of the Enlarged Share Capital following Admission, taking into account the effects of the Capital Raise.

The Joint Bookrunners have, pursuant to the Sponsors and Placing Agreement, conditionally placed all of the Open Offer Shares at the Issue Price with institutional investors. The commitments of these placees are subject to clawback in respect of valid applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer. The Placing and Open Offer is fully underwritten. To the extent that any Conditional Placee procured by the Joint Bookrunners fails to pay for any or all of the Open Offer Shares which have been allocated to it, each of the Joint Bookrunners has severally agreed, on the terms and subject to the conditions set out in the Sponsors and Placing Agreement, to subscribe for such Open Offer Shares in their agreed proportions.

Subject to the fulfilment of the conditions set out above and on the terms and conditions of the Open Offer set out in the Prospectus, which is expected to be published later today and, in the case of Qualifying Non-CREST Shareholders, the Application Form, Qualifying Shareholders are being given the opportunity to subscribe for New Ordinary Shares pro rata to their existing shareholdings at the Issue Price on the basis of:

1 New Ordinary Share for every 4 Existing Ordinary Shares

held by Qualifying Shareholders and registered in their name at the close of business on the Record Date. 

Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number. Qualifying Shareholders with fewer than 4 Existing Ordinary Shares will therefore have no entitlement under the Open Offer.

If you have sold or otherwise transferred all of your Existing Ordinary Shares on or after the ex-entitlement date, you are not entitled to participate in the Open Offer.

Qualifying Shareholders may apply for any whole number of New Ordinary Shares up to their maximum entitlement which, in the case of Qualifying Non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown on their Application Form or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock account in CREST. Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their Open Offer Entitlements.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements will be admitted to CREST as soon as possible after 8.00 a.m. on 22 June 2020. The Open Offer Entitlements will also be enabled for settlement in CREST as soon as possible after 8.00 a.m. on 22 June 2020.

The New Ordinary Shares are not being made available in whole or in part to the public except under the terms of the Open Offer. The Open Offer is not being made to Shareholders in the United States or in Excluded Territories (subject to certain exceptions) or to ADR Holders. Accordingly, Application Forms are not being sent to and Open Offer Entitlements are not being credited to the accounts of Shareholders in the United States or in Excluded Territories (subject to certain exceptions) or to ADR Holders.

Shareholders should note that the Open Offer is not a rights issue. 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 on behalf of or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be subscribed for under the Placing for the benefit of the Company. If any Qualifying Shareholder does not take up its Open Offer Entitlements then, following the issue of the Open Offer Shares pursuant to the Open Offer, its interest in the Company will be diluted by approximately 49.9% (taking into account the dilutive effects of the CD&R Investment and the Firm Placing and Placing and Open Offer).

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

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 the Prospectus, which is expected to be published later today and, where relevant, in the Application Form.

For Qualifying Non-CREST Shareholders, completed Application Forms, accompanied by full payment in accordance with the instructions in the Prospectus, which is expected to be published later today should be returned by post to Computershare, Corporate Actions Projects, Bristol, BS99 6AH or by hand (during normal business hours only) to Computershare, The Pavilions, Bridgwater Road, Bristol, BS13 8AE 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 7 July 2020. For Qualifying CREST Shareholders, the relevant CREST instructions must be settled as explained in the Prospectus, which is expected to be published later today by no later than 11.00 a.m. on 8 July 2020.

Some questions and answers in relation to the Open Offer, together with details of further terms and conditions of the Open Offer, including the procedure for applications and payment and the procedure in respect of entitlements not taken up, are set out in the Prospectus, which is expected to be published later today and, where relevant, the Application Form.

15. Effect of the Capital Raise

Upon Admission and assuming no further vesting or exercise of awards under the Share Plans as further described in the prospectus, which is expected to be published later today, the Enlarged Share Capital is expected to be 1,181,556,977 Ordinary Shares. On this basis, the New Ordinary Shares will represent approximately 49.9% of the Enlarged Share Capital, and the Existing Ordinary Shares will represent approximately 50.1% of the Enlarged Share Capital.

Following the issue of the New Ordinary Shares to be allotted pursuant to the Capital Raise, a Qualifying Shareholder that takes up its Open Offer Entitlements in full will be diluted by 37.4% as a result of the CD&R Investment and the Firm Placing. A Shareholder that does not take up any Open Offer Shares under the Open Offer (or that is a Shareholder in the United States or an Excluded Territory that is not eligible to participate in the Open Offer) will experience a dilution of 49.9% as a result of the Capital Raise.

16. Related party transactions

The Company's largest shareholder, IKO Enterprises Limited (IKO), holding (together with its affiliates) approximately 14.79% of the issued share capital of the Company as at 18 June 2020 (being the latest practicable date before publication of this Announcement) has agreed with the Company in a deed of irrevocable undertaking dated 19 June that it irrevocably undertakes, conditional only on the Capital Raise being announced and it receiving an allocation of 65,416,667 New Ordinary Shares under the Firm Placing at the Issue Price, to vote in favour of the Capital Raise Resolutions that it is entitled to vote on and to take up in full its Open Offer Entitlements. The ability of IKO to participate in the Firm Placing is subject to independent shareholder approval due to IKO's status as a related party for the purpose of Chapter 11 of the Listing Rules. Such a resolution has been included in the Resolutions in the Prospectus, which is expected to be published later today. IKO (and its associates) will not be entitled to vote on this resolution.

In addition, the proposed one-off payment of £375,000 to Steve Francis and his participation in the Capital Raise pursuant to the Director and Senior Management Subscriptions will be classed as a related party transaction for the purposes of Chapter 11 of the Listing Rules, but as it is below the required threshold, it will not require the prior approval of Shareholders for the purposes of Chapter 11 of the Listing Rules.

The Board, having been so advised by Jefferies International Limited and Peel Hunt LLP in their capacities as Joint Sponsors, consider that these related party transactions outlined above are each fair and reasonable as far as the Shareholders are concerned and are each in the best interests of the Shareholders as a whole. In providing advice to the Board, the Joint Sponsors have taken into account the Board's commercial assessments of each aforementioned related party transaction.

17. Action to be taken

Full details of the terms and conditions of the Open Offer and the procedure for application and payment will be set out in the Prospectus, which is expected to be published later today.

If you are in any doubt as to the action you should take, you should immediately seek your own personal financial advice from an appropriately qualified independent professional adviser.

18. Overseas Shareholders

Shareholders who have registered addresses outside the United Kingdom, who are citizens or residents of countries other than the United Kingdom, or who are holding Ordinary Shares for the benefit of such persons (including, without limitation, nominees, custodians and trustees) or have a contractual or legal obligation to forward this Announcement or the Application Form to such persons, should refer to the Prospectus, which is expected to be published later today.

19. Admission to trading and dealing arrangements

Applications will be made to the FCA for the New Ordinary Shares to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on its Main Market for listed securities. It is expected that, subject to FCA approval, Admission will become effective, and dealings for settlement in the New Ordinary Shares will commence, at 8.00 a.m. on 10 July 2020.

No application is intended to be made for the Existing Ordinary Shares or the New Ordinary Shares to be admitted to listing or dealt in on any other exchange.

Subject to the satisfaction of the conditions of the Firm Placing and Placing and Open Offer, the New Ordinary Shares to be issued under the Firm Placing and Placing and Open Offer will be registered in the names of the person to whom they are issued, either:

· in certificated form, with the relevant share certificate expected to be dispatched by post, at the applicant's risk, within fourteen days of Admission; or

· in CREST, with delivery (to the designated CREST account) of the New Ordinary Shares applied for expected to take place on 10 July 2020 (unless the Company exercises its right to issue New Ordinary Shares in certificated form).

The results of the Firm Placing and Placing and Open Offer will be announced on a Regulatory Information Service.

20. Additional information

You are recommended to read all the information contained in the Prospectus, which is expected to be published later today and not only rely on the information in this Announcement Shareholders and investors should consider fully and carefully the risk factors associated with the business of the Group and the Company's securities.

21. Taxation

Information on UK taxation with regard to the Firm Placing and Placing and Open Offer is set out in the Prospectus, which is expected to be published later today. This information is intended only as a general guide to the current tax position in the UK.

If you are in any doubt as to your own tax position, or are subject to tax in a jurisdiction other than the United Kingdom, you should consult your own independent professional adviser without delay.

22. Employee share schemes

In accordance with the rules of the Share Plans set out in the Prospectus, which is expected to be published later today, , the number of Ordinary Shares subject to subsisting awards under such plans and/or the exercise price (if any) may be adjusted to take account of the issue of the New Ordinary Shares pursuant to the Open Offer (but not the Firm Placing and Placing). Participants will be contacted separately in due course with further information as to how (if at all) their awards will be adjusted. Participants in the SIP will be contacted with regard to the impact of the Open Offer on the Ordinary Shares held for them under the SIP and the actions (if any) that they may need to take.

23. The Resolutions and the General Meeting

You will find set out in the Prospectus, which is expected to be published later today, a notice convening a general meeting of the Company to be held as a closed meeting at 10 Eastbourne Terrace, London, W2 6LG, United Kingdom at 11 a.m. on 9 July 2020. (the General Meeting). This General Meeting is being held for the purpose of considering and, if thought fit, passing the Capital Raise Resolutions and the Additional Resolution. A summary and explanation of the Capital Raise Resolutions and the Additional Resolution are set out below, but please note that this does not contain the full text of the Capital Raise Resolutions or the Additional Resolution and you should read this in conjunction with the Capital Raise Resolutions and the Additional Resolution in the Notice of General Meeting in the Prospectus, which is expected to be published later today.

The Capital Raise Resolutions will give the Directors authority to:

(a) issue and allot the New Ordinary Shares in connection with the Capital Raise;

(b) issue and allot the New Ordinary Shares in respect of the CD&R Investment at a discount of 10.7% to the closing price of 28 pence per Ordinary Share on the last business day before announcement of the CD&R Investment and issue and allot the New Ordinary Shares in respect of the Firm Placing and Placing and Open Offer at a discount of 10.6% to the closing price of 33.5 pence per Ordinary Share on the last business day before announcement of the Firm Placing and Placing and Open Offer;

(c) issue and allot the New Ordinary Shares without complying with the pre-emption rights in the Companies Act; and

(d) issue and allot New Ordinary Shares to IKO (and/or its associates) in respect of its participation in the Firm Placing, as the issue and allotment of New Ordinary Shares to IKO (and/or its affiliates) would be a related party transaction under Chapter 11 of the Listing Rules, requiring Shareholder approval.

Each of the Capital Raise Resolutions are inter-conditional, so all of the Capital Raise Resolutions must be passed by Shareholders in order for the Capital Raise to proceed. The Board believes the Capital Raise and passing of all of the Capital Raise Resolutions, including the Capital Raise Resolution authorising a related party transaction with IKO as outlined above, will promote the success of SIG and is in the best interests of its Shareholders as a whole.

In addition to the Capital Raise Resolutions, the Board has recommended that, subject to Shareholder approval at the General Meeting of an authorising ordinary resolution (the Additional Resolution) and conditional on completion of the Capital Raise, Steve Francis receive a one-off payment of £375,000 (the One-Off Payment). The Additional Resolution, if passed, will give the Directors authority to make the One-Off Payment. Mr. Francis has agreed, subject to the Additional Resolution being passed, to invest £150,000 of his own money in New Ordinary Shares as part of the Capital Raise. The Additional Resolution is required as the One-Off Payment would be outside the terms of the Directors' Remuneration Policy approved by Shareholders on 7 November 2018. If the Additional Resolution is not passed by Shareholders at the General Meeting, Mr. Francis will not invest in New Ordinary Shares as part of the Capital Raise. Mr Francis joined the Company as interim-CEO on 25 February 2020 on an initial contract to 31 December 2020. His remuneration included the opportunity to earn a bonus of up to 150% of salary based on the achievement of certain objectives. He was appointed as permanent CEO on 24 April 2020. During his time with the Company he has developed a compelling new strategy for the Group, significantly strengthened the top team with the appointment of new Managing Directors for the UK and Germany and helped in the recruitment of a new Group CFO (Ian Ashton), and is expected to have successfully led the Company through the Capital Raise (including the CD&R Investment and gaining the support of IKO). As a result the Company is expected to be financially more soundly based and in a position to execute its new growth strategy, thus providing the opportunity for significant shareholder value creation. The investment by Mr. Francis of £150,000 (if the Additional Resolution is approved) will mean that he will be investing a very meaningful proportion of the net payment amount in shares in the Company, thus further aligning himself with Shareholder interests.

The Capital Raise can proceed if the Additional Resolution is not passed by Shareholders, but Mr. Francis will not be able to participate in the Capital Raise in the manner outlined above in such circumstances.

After completion of the Capital Raise, the Board plans to consult with Shareholders on amendments to the directors' remuneration policy, specifically with respect to long term incentive plan arrangements.

The Company's issued share capital as at 18 June 2020 (being the latest practicable date before publication of this Announcement) was 591,556,982 Ordinary Shares.

The Company is closely monitoring developments relating to the current outbreak of COVID-19, including the related public health guidance and legislation introduced by the UK Government. At the time of publication of this Announcement, the UK Government has advised that large gatherings should not take place. In light of these measures, the Company is planning for the General Meeting, at which the Resolutions will be proposed, to be held as a closed meeting. Shareholders will not be able to attend the meeting and anyone seeking to attend will be refused entry. The Company will make arrangements such that the legal requirements to hold the meeting can be satisfied through the attendance of a minimum number of Directors or employees (who are also Shareholders in the Company) and the format of the meeting will be purely functional. Although the General Meeting is to be held as a closed meeting, the Resolutions will be voted on in accordance with the proxy votes received from Shareholders. Shareholders are therefore strongly encouraged to submit a proxy vote electronically in advance of the meeting. Details on how to submit your proxy vote are set out in the notes to the Notice of General Meeting. Given the current restrictions on attendance, Shareholders are urged to appoint the Chairman of the meeting as their proxy to ensure their vote will be counted (rather than a named person who will not be permitted to attend the meeting).

Arrangements have been made to provide a dial-in facility for the General Meeting to allow Shareholders to listen to the General Meeting remotely given that they will be unable to attend in person. Please note that no facility will be available to Shareholders to vote or to raise questions during the General Meeting, and so Shareholders are (as outlined above) encouraged to submit proxy votes in advance of the General Meeting.

Should any Shareholders wish to submit questions in advance of the General Meeting, they are encouraged to do so by e-mail to cosec@sigplc.com at any time between the date of this Announcement and 5.00 p.m. on 3 July 2020, and the Company will endeavour to provide answers to such questions during the course of the General Meeting.

Details of how Shareholders can access the dial-in facility are included in the Forms of Proxy issued to Shareholders.

The current situation is constantly evolving and the UK Government may change current restrictions or implement further measures relating to the holding of general meetings during the affected period. Any changes to the General Meeting will be communicated to Shareholders before the General Meeting through our website and, where appropriate, by RIS announcement.

24. Importance of vote

Your attention is again drawn to the fact that the Capital Raise is conditional and dependent upon, amongst other things, the Capital Raise Resolutions being passed at the General Meeting.

Shareholders are asked to vote in favour of the Capital Raise Resolutions at the General Meeting in order for the Capital Raise to proceed. Shareholders are also asked to vote in favour of the Additional Resolution at the General Meeting.

The Directors believe that the successful completion of the Capital Raise will significantly strengthen the Group's balance sheet and provide it with the capacity to continue to invest in support of its strategic objectives, for the benefit of Shareholders.

The Capital Raise is conditional on, among other things, the Capital Raise Resolutions being passed at the General Meeting. If the Capital Raise Resolutions are not approved by the requisite percentage of members of the Company by 24 July 2020, the Capital Raise will not be able to proceed and an equity failure event under and as defined in each Amended Debt Facilities Agreement (an Equity Failure Event) will occur. Even if the Capital Raise Resolutions are passed, failure of the Capital Raise to proceed, or to raise gross proceeds of at least £125 million by 29 July 2020, will also constitute an Equity Failure Event.

Should the Capital Raise proceed and raise gross proceeds of at least £125 million, no Equity Failure Event will be triggered and the Company will have sufficient working capital for the next 12 months following the date of the Prospectus which is due to be published later today

However, the Capital Raise relies heavily on the investment contribution of CD&R, £60 million of which is not underwritten, in order to raise the minimum gross proceeds of £125 million. Moreover, in addition to the events set out above, an Equity Failure Event will also occur and the Capital Raise would not occur in its present form and on the basis presented in this Announcement, and Admission of the Shares to trading would not occur if: (i) the Austrian competition authorities (Bundeswettbewerbsbehörde and the Federal Cartel Prosecutor) commence an investigation in connection with CD&R's proposed subscription for ordinary shares in the Company (and the decision in that regard is expected to be known no later than 3 July 2020); or (ii) the CD&R Subscription Agreement or the Sponsors and Placing Agreement are terminated or fail to become effective in accordance with their respective terms, in each case, before the closing of the Capital Raise.

The occurrence of an Equity Failure Event will lead to an event of default occurring under each Amended Debt Facilities Agreement 10 business days thereafter. If an Equity Failure Event occurs, the Company is required, no later than 5 business days thereafter, to provide a deleveraging plan for the approval of the RCF Lenders and the Noteholders. Any deleveraging plan is required to include: (i) the Company's up to date business plan produced on the basis of an Equity Failure Event and the Company's assessment of the COVID-19 situation at the time of the production of such business plan; (ii) the Company's proposed capital structure in light of such business plan; (iii) the actions which the Company intends to pursue to ensure a deleveraging of the Group's balance sheet (including any disposals proposed to be made any member of the Group and the assumed value range in respect of each such disposal); (iv) the Company's requests of the RCF Lenders and Noteholders in light of the same; and (v) the Company's proposals to grant security in favour of the RCF Lenders, the Noteholders and trustee of the UK defined benefit pension scheme (the Pension Scheme) on the basis of principles to be agreed; and (vi) the Company's latest 13 week cashflow forecast and the proposals to meet its immediate liquidity requirements over the period of such forecast.

If an Event of Default occurring as a result of an Equity Failure Event is not waived by the requisite majority of the RCF Lenders and by each Noteholder, the RCF Lenders and the respective Noteholders would be entitled to accelerate and demand repayment in full of the amounts outstanding under the respective Amended Debt Facilities Agreements (including principal and accrued interest). The principal amounts outstanding under Amended Debt Facilities Agreements as at the date of this Announcement are £70 million under the Revolving Credit Facility Agreement and EUR181 million and USD30 million in respect of the Notes. The Group would then have an immediate liquidity need in an amount equal to such amounts net of available of any cash then on hand. In such circumstances, the RCF Lenders and the Noteholders would also be entitled to make demand against various Group companies who have provided guarantees in respect of the Amended Debt Facilities Agreements. Following any such demand, the Group does not expect to have the funds available to repay such amounts at that time. In such circumstances, in the absence of being able to successfully agree or implement any of the alternatives discussed below, the Group would be unable to continue as a going concern.

Alongside the provision of a deleveraging plan to the RCF Lenders and Noteholders, the Company would immediately engage with the RCF Lenders and Noteholders to determine any basis upon which they may be prepared to continue to support the Group, if at all, in the absence of any further capital in the short term. As a result, if the Capital Raise does not proceed or fails to raise gross proceeds of at least £125 million by 29 July 2020 or an Equity Failure Event occurs otherwise, the Group would first seek to renegotiate the terms of the Amended Debt Facilities Agreements with the RCF Lenders and the Noteholders to secure waivers of the Equity Failure Events which had occurred and further accommodation (including the ability to make further drawings under the Revolving Credit Facility Agreement to meet the Group's liquidity requirements) to enable the Group to continue to trade as a going concern. However, the Group may be unable to obtain such waivers and further accommodation from the RCF Lenders and/or the Noteholders, either at all or without significant cost to the Group in the form of additional fees payable to the RCF Lenders and the Noteholders, increased coupon payments and/or additional restrictions on corporate actions (e.g. in respect of acquisitions and disposals), which could adversely affect or delay implementation of the Group's strategies. Without the proceeds of the Capital Raise, any amendments to the Amended Debt Facilities Agreements may only serve as a short-term solution that would not fundamentally address the Group's balance sheet and liquidity concerns in the longer term.

If the RCF Lenders and/or the Noteholders did not agree to waivers of the applicable Equity Failure Event and to provide further accommodation (including the ability to make further drawings under the Revolving Credit Facility Agreement to meet the Group's liquidity requirements) on commercially acceptable terms to enable the Group to continue to trade as a going concern, the Group may seek alternative long-term committed debt facilities to refinance the £70 million outstanding under the Revolving Credit Facility Agreement and/or the EUR181 million and USD30 million outstanding under the Notes, including any make-whole premiums payable under the relevant Notes, and to provide access to further funding to meet the Group's liquidity requirements and to enable the Group to continue to trade as a going concern. The terms of any such new facilities, if available at all, would likely be more expensive and onerous than those which currently apply under the Amended Debt Facilities Agreements. If alternative committed debt facilities could not be secured on commercially acceptable terms, or at all, then the Group could try to secure other forms of funding, such as through a debt and equity restructuring, which may result in a significant dilution of Existing Shareholders' equity interests in the Company or, could result in Existing Shareholders losing the entire value of their equity interests in the Company and/or its operating businesses (for example as may be the case were the Group's operating businesses transferred to a newly established vehicle owned by the RCF Lenders and/or the Noteholders via an administration of the Company). The Group could also take action to effect disposals of assets (such as the disposal of one or more of the Group's operating businesses to facilitate a reduction of the Group's outstanding indebtedness) or a merger or acquisition transaction involving the Company. However, the Amended Debt Facilities Agreements restrict the Group's ability to make any such disposals and enter into such merger or acquisition transactions and the Group would need to receive the approval of the RCF Lenders and the Noteholders to make any such disposals or enter into such merger or acquisition transactions, which approval could be withheld.

As any of the above options would require the participation, agreement or approval of external parties, the Directors are not confident that any such alternative courses of action could be achieved in the limited time available on commercially acceptable terms, or that they ultimately would be successful. If the Company fails to secure any alternative funding on commercially acceptable terms and/or is otherwise unable to successfully pursue any of the above options on commercially acceptable terms, or at all, within the required time, the Company will cease to be able to operate as a going concern and the Board may, as a result, decide to place the Company into administration or petition the court for the compulsory liquidation of the Company, or the Company's creditors may petition the court for the administration or compulsory liquidation of the Company. If the Board is required to place the Company into administration or liquidation, debts would become due from the Group to its Pension Scheme under section 75 of the Pensions Act 1995 which would result in the trustees of that scheme having a substantially higher claim on the remaining assets of the Group. Insolvency proceedings under the laws of the relevant jurisdictions may also be commenced with respect to subsidiaries of the Company which are guarantors under the Amended Debt Facilities Agreements. This could result in Existing Shareholders losing part of or all of their investment in the Company.

Accordingly, the Directors believe that the successful completion of the Capital Raise represents the best option available to the Group.

The Capital Raise does not require the passing of the Additional Resolution to proceed.

If the Additional Resolution is not passed, the Capital Raise can still proceed but the CEO will not be paid the One-Off Payment and will not subscribe for New Ordinary Shares.

25. Directors' participation in the CAPITAL RAISE

Separate to the Firm Placing and Placing and Open Offer, certain Directors and members of Senior Management have agreed to subscribe for 2,098,095 New Ordinary Shares at the Issue Price in connection with the Capital Raise, conditional upon Admission occurring.

As outlined above, if the Additional Resolution is passed Steve Francis intends to invest £150,000 in New Ordinary Shares as part of the Capital Raise pursuant to the Director and Senior Management Subscriptions.

The other Directors participating in the Capital Raise pursuant to the Director and Senior Management Subscriptions intend to subscribe for New Ordinary Shares at the Issue Price as follows (in each case rounded to the nearest pound):

· Andrew Allner proposes to subscribe for New Ordinary Shares for an investment amount of£43,814;

· Alan Lovell proposes to subscribe for New Ordinary Shares for an investment amount of £45,000;

· Kath-Kearney Croft proposes to subscribe for New Ordinary Shares for an investment amount of £20,000;

· Ian Ashton proposes to subscribe for New Ordinary Shares for an investment amount of £50,000; and

· Simon King proposes to subscribe for New Ordinary Shares for an investment amount of £50,000.

Such subscriptions are not related party transactions requiring Shareholder approval in accordance with Chapter 11 of the Listing Rules due to their size.

Such subscriptions are not underwritten by the Joint Bookrunners pursuant to the Sponsors and Placing Agreement However, due to the small quantum of such subscriptions, the fact that they are not underwritten does not materially impact the Capital Raise or, in the Company's view, create a material risk of an Equity Failure Event.

26. Board's recommendation and voting intentions

The Board believes the Capital Raise and passing of all of the Resolutions will promote the success of SIG and is in the best interests of 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, as the Directors each have committed to do so in respect of their own holdings.

The Board, having been so advised by Jefferies International Limited and Peel Hunt LLP in their capacities as Joint Sponsors, consider that each related party transaction in connection with the Firm Placing and Placing and Open Offer is fair and reasonable as far as the Shareholders are concerned and is in the best interests of the Shareholders as a whole. In providing advice to the Board, the Joint Sponsors have taken into account the Board's commercial assessments of each aforementioned related party transaction.

Firm Placing and Placing and Open Offer Statistics

_____________

Notes:

(1) The closing price on the London Stock Exchange's Main Market for listed securities on 18 June 2020, being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer.

(2) Fractions of New Ordinary Shares will not be allotted to Shareholders in the Open Offer and fractional entitlements under the Open Offer will be rounded down to the nearest whole number of New Ordinary Shares.

(3) On the assumption that no further Ordinary Shares are issued as a result of the vesting or exercise of any awards under any Share Plans between 18 June 2020 (being the latest practicable date before the publication of this Announcement) and completion of the Capital Raise.

 Definitions and Glossary

Appendix I: Definitions

The following definitions apply throughout this Announcement, except the terms and conditions in Appendix II, unless the context requires otherwise:

APPENDIX: II TERMS AND CONDITIONS OF THE FIRM PLACING AND PLACING

IMPORTANT INFORMATION ON THE FIRM PLACING AND PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM PLACING OR THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING DISTRIBUTED TO, PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA") AND THE UNITED KINGDOM, PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF REGULATION (EU) 2017/1129 (THE "PROSPECTUS REGULATION") ("QUALIFIED INVESTORS"); (B) IF IN THE UNITED KINGDOM, PERSONS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") OR ARE PERSONS FALLING WITHIN ARTICLE 49(2) OF THE ORDER AND WHO ARE QUALIFIED INVESTORS; OR (C) ANY OTHER PERSON TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED AND, IN EACH CASE, WHO HAVE BEEN INVITED TO PARTICIPATE IN THE FIRM PLACING AND/OR THE PLACING BY THE JOINT BOOKRUNNERS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY IN, INTO OR WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THERE WILL BE NO PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.

EACH INVITED PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES (AS SUCH TERM IS DEFINED IN THE ANNOUNCEMENT OF WHICH THESE TERMS AND CONDITIONS FORM PART).

See Appendix III for the meaning of any defined terms in these terms and conditions.

If a Relevant Person indicates to the Joint Bookrunners that it wishes to participate in the Firm Placing and/or the Placing by making an oral or written offer to acquire Firm Placing Shares pursuant to the terms of the Firm Placing and/or Open Offer Shares pursuant to the terms of the Placing it will be deemed to have read and understood each of: (i) these terms and conditions; (ii) the announcement of which these terms and conditions form part; and (iii) the Placing Proof in their entirety, to be making such offer to participate in accordance with these terms and conditions and to be providing the representations, warranties, indemnities, agreements and acknowledgements contained in these terms and conditions. In particular, each such Placee represents, warrants, undertakes and acknowledges to the Company and the Joint Bookrunners that:

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

in the case of a Relevant Person in the United Kingdom who acquires any Placing Shares pursuant to the Equity Placings, it is a person who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 49(2) of the Order and it is a Qualified Investor;

in the case of a Relevant Person in a member state of the EEA who acquires any Placing Shares pursuant to the Equity Placings, it is a Qualified Investor;

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, agreements and acknowledgements, contained in these terms and conditions;

in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 5(1) of the Prospectus Regulation, that: (i) the Placing Shares acquired by it in the Equity Placings will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the EEA or the UK other than Qualified Investors, or in circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA or the UK to Qualified Investors, or in circumstances in which the prior consent of the Joint Bookrunners has been given to each such proposed offer or resale; or (ii) where the Placing Shares have been acquired by it on behalf of persons in any member state of the EEA or the UK other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Regulation as having been made to such persons;

it understands (or, if acting for the account of another person, such person understands) the resale and transfer restrictions set out in these terms and conditions; and

it is and, at the time the Placing Shares are acquired, will be either: (A) outside the United States, and subscribing the Placing Shares in an offshore transaction in accordance with Rule 903 and Rule 904 of Regulation S; or (B) inside the United States and a "qualified institutional buyer" that is acquiring shares in a transaction not involving any public offering that is exempt from the registration requirements of the Securities Act, in each case, for its own account or purchasing the Placing Shares for an account with respect to which it exercises sole investment discretion, and has signed and returned a US Open Offer Investor Letter or US Placing Investor Letter, as applicable.

These terms and conditions do not constitute an offer to sell or issue or the invitation or solicitation of an offer to buy Placing Shares in the United States or any other jurisdiction where to do so may be unlawful, including, without limitation, Australia, its territories and possessions, Canada, Japan, South Africa, Malaysia, New Zealand, or any other Excluded Territory.

These terms and conditions and the information contained herein are not for release, publication or distribution, directly or indirectly, in whole or in part, to persons in the United States or any other jurisdiction where to do so may be unlawful, including, without limitation, Australia, its territories and possessions, Canada, Japan, South Africa, Malaysia, New Zealand or any other Excluded Territory.

In particular, the Placing Shares referred to in these terms and conditions have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and the Placing Shares may not be offered, sold, resold, pledged or otherwise transferred, directly or indirectly, in, into or within 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 accordance with any applicable state securities laws. There will be no public offering of the Placing Shares in the United States. Subject to certain exceptions, no offering of the Placing Shares will be made in the United States. The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, or state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Equity Placings or the accuracy or adequacy of these terms and conditions. Any representation to the contrary is a criminal offence in the United States.

The distribution of these terms and conditions and the offer and/or placing of Placing Shares in certain other jurisdictions may be restricted by law. No action has been taken by the Joint Bookrunners or the Company that would permit an offer of the Placing Shares or possession or distribution of these terms and conditions or any other offering or publicity material relating to the Placing Shares in any jurisdiction where action for that purpose is required, save as mentioned above. Persons into whose possession these terms and conditions come are required by the Joint Bookrunners and the Company to inform themselves about and to observe any such restrictions.

Each Placee's commitments will be made solely on the basis of the information set out in this announcement and the Placing Proof. Each Placee, by participating in the Equity Placings, agrees that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of either of the Joint Bookrunners or the Company and none of the Joint Bookrunners, the Company, or any person acting on such person's behalf nor any of their respective Affiliates has or shall have liability for any Placee's decision to accept this invitation to participate in the Equity Placings 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 Equity Placings. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

No undertaking, representation, warranty or any other assurance, express or implied, is made or given by or on behalf of either Joint Bookrunner any of their respective Affiliates, their respective directors, officers, employees, representatives, agents, advisers, or any other person, as to the accuracy, completeness, correctness or fairness of the information or opinions contained in the Placing Proof and the Prospectus (when published), this announcement or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company or the Equity Placings and no such person shall have any responsibility or liability for any such information or opinions or for any errors or omissions. Accordingly, save to the extent permitted by law, no liability whatsoever is accepted by either Joint Bookrunner or any of their respective directors, officers, employees or Affiliates or any other person for any loss howsoever arising, directly or indirectly, from any use of this announcement or such information or opinions contained herein or otherwise arising in connection with the Placing Proof and the Prospectus (when published).

These terms and conditions do not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase any Placing Shares or any other securities or an inducement to enter into investment activity, nor shall these terms and conditions (or any part of them), nor the fact of their distribution, form the basis of, or be relied on in connection with, any investment activity. No statement in this announcement is intended to be nor may be construed as a profit forecast and nor should any such statement be interpreted to mean that the Company's profits or earnings per share for any future period will necessarily match or exceed historical published profits or earnings per share of the Company.

Proposed Firm Placing of Firm Placing Shares and Placing of Open Offer Shares subject to clawback in respect of valid applications by Qualifying Shareholders pursuant to the Open Offer

Placees are referred to these terms and conditions, this announcement and the Placing Proof containing details of, among other matters, the Equity Placings. These terms and conditions, this announcement and the Placing Proof have been prepared and issued by the Company, and each of these documents is the sole responsibility of the Company.

The issue of the Placing Shares is to be effected by way of a cash box placing. The Company will allot the Placing Shares to Placees in consideration for the transfer to the Company by Jefferies of certain shares in a Jersey incorporated subsidiary of the Company, certain of which shares in the Jersey company Jefferies shall be obliged to subscribe for using the proceeds of the Equity Placings.

Applications will be made to the FCA for admission of the Placing Shares to listing on the premium listing segment of the Official List of the FCA and to the London Stock Exchange for admission of the Placing Shares to trading on its main market for listed securities.

Firm Placing

The Firm Placing Shares are not subject to clawback and do not form part of the Placing and Open Offer. The Firm Placing is subject to the same conditions and termination rights which apply to the Placing and Open Offer.

The Joint Bookrunners have severally agreed, pursuant to the Placing Agreement, as agent for the Company, to use reasonable endeavours to procure Firm Placees for the Firm Placing Shares at the Offer Price. The Firm Placing is being fully underwritten by the Joint Bookrunners on, and subject to, the terms of the Placing Agreement. To the extent that the Joint Bookrunners fail to procure Firm Placees for any Firm Placing Shares, or any Firm Placee fails pay for any Firm Placing Shares which have been allocated to it in the Firm Placing, the Joint Bookrunners have severally agreed, on the terms and subject to the conditions in the Placing Agreement, to take up such Firm Placing Shares at the Offer Price.

Subject to the conditions below being satisfied, it is expected that Admission will become effective on 10 July 2020 and that dealings in the Firm Placing Shares will commence at 8.00 a.m. on the same day. The Firm Placing Shares, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Existing Ordinary Shares by reference to a record date on or after Admission.

Conditional Placing and Open Offer

The Joint Bookrunners have severally agreed, pursuant to the Placing Agreement, as agent for the Company, to use reasonable endeavours to procure Conditional Placees for the Open Offer Shares at the Offer Price. The commitments of the Conditional Placees in the Placing in respect of the Open Offer Shares are subject to clawback in respect of valid applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer. The Placing is being fully underwritten by the Joint Bookrunners on, and subject to, the terms and conditions of the Placing Agreement. To the extent that there are Open Offer Shares for which valid applications have not been received from Qualifying Shareholders and the Joint Bookrunners fail to procure Conditional Placees for such Open Offer Shares or if any Conditional Placee procured by the Joint Bookrunners fails to pay for such Open Offer Shares which have been allocated to it in the Placing, the Joint Bookrunners have severally agreed, on the terms and subject to the conditions in the Placing Agreement, to take up such Open Offer Shares at the Offer Price.

Qualifying Shareholders are being given the opportunity to apply for the Open Offer Shares at the Offer Price on and subject to the terms and conditions of the Open Offer, pro rata to their holdings of Existing Ordinary Shares on the Record Date. Fractions of New Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement to apply for Open Offer Shares under the Open Offer will be rounded down to the nearest whole number.

The New Ordinary Shares issued under the Placing and Open Offer, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Existing Ordinary Shares after Admission.

Subject to the conditions below being satisfied, it is expected that Admission will become effective on 10 July 2020 and that dealings in the Open Offer Shares will commence at 8.00 a.m. on the same day.

Conditionality of the Equity Placings

The Equity Placings are conditional, inter alia, upon:

(i) the Resolutions being passed by Shareholders, save for the Additional Resolution, at the General Meeting;

(ii) the Strategic Investment Agreement having become wholly unconditional, save for any condition relating to Admission;

(iii) Admission becoming effective by not later than 8.00 a.m. on 10 July 2020 (or such later time and/or date (being not later than 8.00 a.m. on 27 July 2020) as the Company and the Joint Bookrunners may agree); and

(iv) the Placing Agreement having become unconditional in all respects.

The full terms and conditions of the Open Offer will be contained in Part 8 of the Prospectus to be issued by the Company in connection with the Firm Placing and Placing and Open Offer and Admission. The Prospectus to be issued by the Company will be approved by the FCA under section 87A of the FSMA and made available to the public in accordance with Rule 3.2 of the Prospectus Regulation Rules made under Part VI of the FSMA.

Bookbuild of the Equity Placings

The Joint Bookrunners are conducting the Bookbuild to determine demand for participation in the Equity Placings. The Joint Bookrunners will seek to procure Placees as agent for the Company as part of the Bookbuild pursuant to the terms of the Placing Agreement. These terms and conditions give details of the terms and conditions of, and the mechanics of Placee participation in, the Equity Placings.

The Joint Bookrunners and the Company shall be entitled to effect the Equity Placings by such alternative method to the Bookbuild as they may agree between them.

Principal terms of the Bookbuild

a. By participating in the Equity Placings, Placees will be deemed to have read and understood this announcement, these terms and conditions and the Placing Proof in their entirety and to be participating and making an offer for any Placing Shares on these terms and conditions, and to be providing the representations, warranties, indemnities, agreements, acknowledgements and undertakings, contained in these terms and conditions.

b. The Joint Bookrunners are arranging the Equity Placings severally, and not jointly, nor jointly and severally, as agents of the Company.

c. Participation in the Equity Placings will only be available to persons who are Relevant Persons and who may lawfully be and are invited to participate by either of the Joint Bookrunners. The Joint Bookrunners and their respective Affiliates are entitled to enter bids as principal in the Bookbuild.

d. To bid in the Bookbuild, Placees should communicate their bid by telephone or in writing to their usual sales contact at either Joint Bookrunner. Each bid should state the aggregate number of Firm Placing Shares and Open Offer Shares which the Placee wishes to acquire or the total monetary amount which it wishes to commit to acquire New Ordinary Shares, in each case at the Offer Price. Bids may be scaled down by the Joint Bookrunners on the basis referred to in paragraph (l) below.

e. Allocations of Placing Shares will be made in a combination that reflects an approximately 1:1 ratio of Firm Placing Shares to Open Offer Shares, save with respect to the participation of IKO, which will receive an agreed allocation of £19.6 million of Firm Placing Shares, and separately intends to take-up its full Open Offer Entitlements in the Open Offer.

f. The Bookbuild is expected to close no later than noon on 19 June 2020 but may close earlier or later, at the discretion of the Joint Bookrunners and the Company. The timing of the closing of the books and allocations will be agreed between the Joint Bookrunners and the Company. The Joint Bookrunners may, in agreement with the Company, accept offers to acquire Placing Shares that are received after the Bookbuild has closed.

g. An offer to acquire Placing Shares in the Bookbuild will be made on the basis of these terms and conditions (which shall be deemed to be incorporated in such offer) and the Placing Proof and will be legally binding on the Placee by which, or on behalf of which, it is made and will not be capable of variation or revocation.

h. Subject to paragraph (f) above, the Joint Bookrunners reserve the right not to accept an offer to acquire Placing Shares, either in whole or in part, on the basis of allocations agreed with the Company and may scale down any offer to acquire Placing Shares for this purpose.

i. If successful, each Placee's allocation will be confirmed to it by the Joint Bookrunners following the close of the Bookbuild. Oral or written confirmation (at the Joint Bookrunners' discretion) from the Joint Bookrunners to such Placee confirming its allocation will constitute a legally binding commitment upon such Placee (who at that point will become a Placee), in favour of the Joint Bookrunners and the Company to acquire the number of Placing Shares allocated to it (and in the respective numbers of Firm Placing Shares and Open Offer Shares (subject to clawback) so allocated) on the terms and conditions set out herein (which shall be deemed to be incorporated in such legally binding commitment). Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to the Joint Bookrunners, to pay to the Joint Bookrunners (or as the Joint Bookrunners may direct) as agents for the Company in cleared funds an amount equal to the product of the Offer Price and the sum of the number of Firm Placing Shares and, once apportioned after clawback (in accordance with the procedure described in the paragraph entitled "Placing Procedure" below), the Open Offer Shares, which such Placee has agreed to acquire.

j. Each Placee's allocation and commitment together with settlement arrangements will be confirmed by an electronic contract note and/or electronic trade confirmation issued to such Placee by one of the Joint Bookrunners in due course. The contract note or trade confirmation will include the payment and settlement procedures to be followed by Placees in connection with their acquisition of the Placing Shares.

k. The Company will make a further announcement following the completion of the Bookbuild. It is expected that such announcement will be made as soon as practicable after the close of the Bookbuild.

l. The Joint Bookrunners reserve the right not to accept bids or to accept bids, either in whole or in part, on the basis of allocations determined by the Joint Bookrunners and the Company. The Joint Bookrunners may scale down any bids as they may determine to be necessary or desirable, subject to agreement with the Company. The acceptance of bids shall be at the Joint Bookrunners' absolute discretion, subject to agreement with the Company.

m. Irrespective of the time at which a Placee's allocation(s) pursuant to the Equity Placings is/are confirmed, settlement for: (i) all Firm Placing Shares to be acquired pursuant to the Firm Placing will be required to be made at the time specified; and (ii) all Placing Shares to be acquired pursuant to the Placing will be required to be made at the later time specified, on the basis explained below under the paragraph entitled "Registration and Settlement".

n. By participating in the Bookbuild, each Placee agrees that its rights and obligations in respect of the Firm Placing and/or the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee. All obligations under the Equity Placings will be subject to the fulfilment of the conditions referred to below under the paragraph entitled "Conditions of the Equity Placings and Termination of the Placing Agreement".

o. To the fullest extent permissible by law, neither Joint Bookrunner nor the Company any of their respective Affiliates nor any of its or their respective Affiliates' agents, directors, officers or employees, respectively, shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither Joint Bookrunner nor any of their respective Affiliates nor any of its or their respective Affiliates' agents, directors, officers or employees, respectively, shall have any liability (including, to the extent permissible by law, any fiduciary duties) to Placees (or to any person whether acting on behalf of a Placee or otherwise) in respect of the Joint Bookrunners' conduct of the Bookbuild or of such alternative method of effecting the Equity Placings as the Joint Bookrunners and the Company may agree.

Conditions of the Equity Placings and Termination of the Placing Agreement

Placees will only be called on to complete their agreed acquisitions of Placing Shares if the obligations of the Joint Bookrunners under the Placing Agreement have become unconditional in all respects and the Joint Bookrunners have not terminated the Placing Agreement prior to Admission.

The Joint Bookrunners' obligations under the Placing Agreement in respect of the Firm Placing and the Placing and Open Offer are conditional upon, inter alia:

(a) the Prospectus being approved pursuant to the Prospectus Regulation Rules by the FCA not later than 5.00 p.m. on 22 June 2020 (or such later time and/or date as the Joint Bookrunners may agree with the Company);

(b) Admission occurring not later than 8.00 a.m. on 10 July 2020 (or such later time and/or date (being not later than 8.00 a.m. on 27 July 2020) as the Company and the Joint Bookrunners may agree);

(c) the passing without amendment of the Resolutions, save for the Additional Resolution, at the General Meeting on 9 July 2020 (or at any adjournment thereof, or such later date as the Company and the Joint Bookrunners may agree) and the Resolutions remaining in force;

(d) the Strategic Investment Agreement having become wholly unconditional, save for any condition relating to Admission and the Placing Agreement;

(e) the warranties given by the Company to the Joint Bookrunners as contained in the Placing Agreement being true, accurate and not misleading on and as of the date of the Placing Agreement and at all times between the date of the Placing Agreement and Admission, by reference to the facts and circumstances from time to time subsisting;

(f) the Amendment and Restatement Agreement, the Covenant Waivers and Tax Deferrals having been entered into by the parties thereto and having, and continuing to have, full force and effect and not having been terminated, varied, modified, supplemented and not lapsing prior to Admission and no right to terminate or rescind, the Amended Facilities, the Covenant Waivers and/or Tax Deferrals having arisen, in each case a Joint Bookrunner considers (in good faith) (a) would make it impracticable or inadvisable to proceed with the Capital Raising on the terms and in the manner contemplated by the Placing Agreement; or (b) would otherwise be material in the context of the Group, the underwriting of the New Ordinary Shares or Admission;

(g) there not having occurred, in the good faith opinion of a Joint Bookrunner, a material adverse change (as such term is defined in the Placing Agreement) at any time prior to Admission, whether or not foreseeable at the date of the Placing Agreement; and

(h) no matter referred to in Article 23 of the Prospectus Regulation and/or Article 18 of Regulation (EU) 2019/979 arising between the time of publication of the Prospectus and the time of Admission and no supplementary prospectus being required to be published by or on behalf of the Company before Admission in each case, which a Joint Bookrunner considers (in good faith) to be material in the context of the Group, the Capital Raising or Admission;

(i) the Placing Agreement can be terminated in certain circumstances at any time before Admission by either Joint Bookrunner by giving notice to the Company, including (but not limited to): (a) where any of the relevant Conditions in the Placing Agreement are not satisfied at the required times (unless waived by the Joint Bookrunners); (b) the occurrence, in the good faith opinion of a Joint Bookrunner, of a material adverse change (as such term is defined in the Placing Agreement); or (c) the occurrence of certain events.

If any Condition has not been satisfied, has not been waived by the Joint Bookrunners or has become incapable of being satisfied (and is not waived by the Joint Bookrunners as described below) or if the Placing Agreement is terminated, all obligations under these terms and conditions will automatically terminate. By participating in the Equity Placings, each Placee agrees that its rights and obligations hereunder are conditional upon the Placing Agreement becoming unconditional in all respects in respect of the Firm Placing (in respect of Firm Placing Shares acquired under the Firm Placing) and/or in respect of the Placing (in respect of Open Offer Shares acquired under the Placing) and that its rights and obligations will terminate only in the circumstances described above and will not be capable of rescission or termination by it after oral or written confirmation by the Joint Bookrunners (at the Joint Bookrunners' discretion) following the close of the Bookbuild.

The Joint Bookrunners may in their absolute discretion in writing waive fulfilment of certain of the Conditions in the Placing Agreement or extend the time provided for fulfilment of such Conditions. Any such extension or waiver will not affect Placees' commitments as set out in these terms and conditions.

By participating in the Equity Placings each Placee agrees that the exercise by the Company or either Joint Bookrunner of any right or other discretion under the Placing Agreement shall be within the absolute discretion of the Company and each Joint Bookrunner (as the case may be) and that neither the Company nor either Joint Bookrunner need make any reference to such Placee (or to any other person whether acting on behalf of any Placee or otherwise) and that neither the Company nor either Joint Bookrunner shall have any liability to such Placee (or to any other person whether acting on behalf of any Placee or otherwise) whatsoever in connection with any such exercise.

Neither the Company nor either Joint Bookrunner 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 made by the Joint Bookrunners as to whether or not to waive or to extend the time and/or date for the fulfilment of any condition in the Placing Agreement and/or whether or not to exercise any such termination right.

Withdrawal Rights

Placees acknowledge that their acceptance of any of the Placing Shares is not by way of acceptance of the public offer made in the Prospectus and (if applicable) the Application Form/US Open Offer Investor Letter or the US Placing Investor Letter (as applicable) but is by way of a collateral contract and as such Article 23(2) of the Prospectus Regulation does not entitle Placees to withdraw in the event that the Company publishes a supplementary prospectus in connection with the Capital Raising or Admission. If, however, a Placee is entitled to withdraw, by accepting the offer of a placing participation, the Placee agrees to confirm their acceptance of the offer on the same terms immediately after such right of withdrawal arises.

Placing Procedure

Placees shall acquire the Firm Placing Shares and Open Offer Shares to be issued pursuant to the Equity Placings (subject to clawback to satisfy valid applications by Qualifying Shareholders) and any allocation of the Firm Placing Shares and Open Offer Shares (subject to clawback to satisfy valid applications by Qualifying Shareholders) to be issued pursuant to the Equity Placings will be notified to them on or around 9 July 2020 (or such other time and/or date as the Company and the Joint Bookrunners may agree).

Placees will be called upon to acquire, and shall acquire, the Open Offer Shares only to the extent that valid applications by Qualifying Shareholders:

(a) under the Open Offer are not received by 11.00 a.m. on 8 July 2020; or

(b) have otherwise not been deemed to be valid in accordance with the terms and conditions of the Open Offer set out in the Prospectus and the Application Form/US Open Offer Investor Letter or US Placing Investor Letter (as applicable).

Payment in full for any Firm Placing Shares and Open Offer Shares so allocated in respect of the Equity Placings at the Offer Price must be made by 8.00 a.m. on 10 July 2020 (or such other date as shall be notified to each Placee by the relevant Joint Bookrunner). The Joint Bookrunners will notify Placees if any of the dates in these terms and conditions should change, including as a result of delay in the posting of the Prospectus, the Application Forms, the US Investor Open Offer Investor Letter or the US Placing Investor Letter (as applicable) or the production of a supplementary prospectus or otherwise.

Registration and Settlement

Settlement of transactions in the Placing Shares following Admission will take place within the CREST system, subject to certain exceptions. The Joint Bookrunners and the Company reserve the right to require settlement for, and delivery of, the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not possible within the CREST system within the timetable set out in the Placing Proof and/or Prospectus or would not be consistent with the regulatory requirements in the Placee's jurisdiction. Each Placee will be deemed to agree that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which they have in place with the relevant Joint Bookrunner.

Settlement for the Equity Placings will be on a T+1 and delivery versus payment basis and settlement is expected to take place on or around 10 July 2020. Each Placee is deemed to agree that if it does not comply with these obligations, the Joint Bookrunners may sell any or all of the Placing Shares allocated to it on its behalf and retain from the proceeds, for its own account and benefit, an amount equal to the aggregate amount owed by the Placee. By communicating a bid for Placing Shares, each Placee confers on the Joint Bookrunners all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which the Joint Bookrunners lawfully take in pursuance of such sale. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax which may arise upon any transaction in the Placing Shares on such Placee's behalf.

Acceptance

By participating in the Equity Placings, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with the Joint Bookrunners and the Company, the following:

1. in consideration of its allocation of a placing participation, to acquire at the Offer Price any Placing Shares comprised in its allocation which it is required to acquire pursuant to these terms and conditions, subject in respect of the Open Offer Shares only to clawback of the Open Offer Shares in respect of valid applications from Qualifying Shareholders in the Open Offer;

2. it has read and understood this announcement (including these terms and conditions) and the Placing Proof in their entirety and that it has neither received nor relied on any information given or any investigations, representations, warranties or statements made at any time by any person in connection with Admission, the Equity Placings, the Company, the New Ordinary Shares, or otherwise, other than the information contained in this announcement (including these terms and conditions) and the Placing Proof that in accepting the offer of its placing participation it will be relying solely on the information contained in this announcement (including these terms and conditions) and the Placing Proof, receipt of which is hereby acknowledged, and undertakes not to redistribute or duplicate such documents;

3. its oral or written commitment will be made solely on the basis of the information set out in this announcement (including these terms and conditions) and the Placing Proof, such information being all that such Placee deems necessary or appropriate and sufficient to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given, or representations or warranties or statements made, by either Joint Bookrunner or the Company, or any of their respective Affiliates and neither Joint Bookrunner nor the Company nor any of their respective Affiliates or any person acting on behalf of any such person will be liable for any Placee's decision to participate in the Firm Placing and/or the Placing based on any other information, representation, warranty or statement;

4. the contents of this announcement, these terms and conditions and the Placing Proof are exclusively the responsibility of the Company and it agrees that neither Joint Bookrunner nor any of their respective Affiliates nor any person acting on behalf of any of such persons will be responsible for or shall have liability for any information, representation or statements contained therein or any information previously published by or on behalf of the Company, and neither Joint Bookrunner, any of their respective Affiliates nor any person acting on behalf of any such person will be responsible or liable for a Placee's decision to accept its placing participation;

5. (i) it has not relied on, and will not rely on, any information relating to the Company contained or which may be contained in any research report or investor presentation prepared or which may be prepared by either Joint Bookrunner or any of their respective Affiliates or any person acting on behalf of any such person; (ii) neither Joint Bookrunner nor any of their respective Affiliates nor any person acting on behalf of any of such persons has or shall have any responsibility or liability for public information relating to the Company; (iii) neither Joint Bookrunner nor any of their respective Affiliates nor any person acting on behalf of any of such persons has or shall have any responsibility or liability for any additional information that has otherwise been made available to it, whether at the date of publication of such information, the date of these terms and conditions or otherwise; and that (iv) neither Joint Bookrunner nor any of their respective Affiliates nor any person acting on behalf of any of such persons makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of any such information referred to in (i) to (iii) above, whether at the date of publication of such information, the date of this announcement or otherwise;

6. it has made its own assessment of the Company and has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Equity Placings, and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its decision to participate in the Firm Placing and/or the Placing;

7. it is acting as principal only in respect of the Equity Placings or, if it is acting for any other person: (i) 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; (ii) it is and will remain liable to the Company and the Joint Bookrunners for the performance of all its obligations as a Placee in respect of the Equity Placings (regardless of the fact that it is acting for another person); (iii) 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; and/or if it is a financial intermediary, as that term is used in Article 5(1) of the Prospectus Regulation, that (a) the Placing Shares acquired by it in the Equity Placings will not be acquired on a non-discretionary basis for, or on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the EEA or the UK other than Qualified Investors, or in circumstances which may give rise to an offer of securities to the public other than an offer or resale, in a member state of the EEA to Qualified Investors, or in circumstances in which the prior consent of the Joint Bookrunners has been given to each such proposed offer or resale; or (b) where the Placing Shares have been acquired by it on behalf of persons in any member state of the EEA or the United Kingdom other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Regulation as having been made to such persons

8. if it has received any "inside information" (as defined in the market abuse regulation No. 596/2014) about the Company in advance of the Equity Placings, it has not: (i) dealt in the securities of the Company; (ii) encouraged or required another person to deal in the securities of the Company; or (iii) disclosed such information to any person, prior to the information being made generally available;

9. it has complied with its obligations in connection with money laundering and terrorist financing under the Regulations and, if it is making payment on behalf of a third party, it has obtained and recorded satisfactory evidence to verify the identity of the third party as may be required by the Regulations;

10. 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;

11. it is not acting in concert (within the meaning given in the City Code on Takeovers and Mergers) with any other Placee or any other person in relation to the Company;

12. it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom;

13. that a communication that the Equity Placings or the book is "covered" (i.e. indicated demand from investors in the book equals or exceeds the amount of the securities being offered) is not any indication or assurance that the book will remain covered or that the Equity Placings and securities will be fully distributed by the Joint Bookrunners. Each of the Joint Bookrunners reserve the right to take up a portion of the securities in the Equity Placings as a principal position at any stage at their sole discretion, inter alia, to take account of the Company's objectives, MiFID II requirements and/or their allocation policies;

14. it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to this participation in the Equity Placings 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 these terms and conditions);

15. unless otherwise agreed by the Company (in agreement with the Joint Bookrunners), it is not, and at the time the Placing Shares are acquired will not be, subscribing for and on behalf of a resident of the United States (subject to certain exceptions listed below in "Selling Restrictions") or any other jurisdiction where to do so may be unlawful, including, without limitation of Australia, its territories and possessions, Canada, Japan, South Africa, Malaysia, New Zealand or any other Excluded Territory and further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of any Excluded Territory and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;

16. it agrees that the Joint Bookrunners shall have no duties or responsibilities towards it for providing protections afforded to clients under the Rules or advising it with regard to the Placing Shares and that it is not, and will not be, a client of either Joint Bookrunner as defined by the Rules. Likewise, any payment by it will not be treated as client money governed by the Rules;

17. any exercise by a Joint Bookrunner of any right to terminate the Placing Agreement or of other rights or discretions under the Placing Agreement or the Equity Placings shall, subject to the applicable terms of the Placing Agreement, be within that Joint Bookrunner's absolute discretion and neither Joint Bookrunner shall have any liability to any Placee whatsoever in relation to any decision to exercise or not to exercise any such right or the timing thereof;

18. neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee(s) or agent(s) for, and that the Placing Shares will not be allotted to, a person/person(s) whose business either is or includes issuing depository receipts or the provision of clearance services and therefore that the issue to the Placee, or the person specified by the Placee for registration as holder, of the Placing Shares will not give rise to a liability under any of sections 67, 70, 93 and 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 depository receipts or to issue or transfer Placing Shares into a clearance system;

19. it has the funds available to pay for, and will make payment to the Joint Bookrunners (or as the Joint Bookrunners may direct) for, the Placing Shares allocated to it in accordance with the terms and conditions of this announcement on the due times and dates set out in this announcement, failing which the relevant Placing Shares may be sold to or placed with other persons on such terms as the Joint Bookrunners determine in their absolute discretion without liability to the Placee and on the basis that such Placee will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;

20. the person who it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be, and acknowledges that the Joint Bookrunners and the Company will not be responsible for any liability to pay stamp duty or stamp duty reserve tax (together with interest and penalties) resulting from a failure to observe this requirement; and each Placee and any person acting on behalf of such Placee agrees to participate in the Equity Placings on the basis that the Placing Shares will be allotted to a CREST stock account of one of the Joint Bookrunners who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;

21. where it is acquiring Placing Shares for one or more managed accounts, it is authorised in writing by each managed account to acquire Placing Shares for that managed account;

22. if it is a pension fund or investment company, its acquisition of any Placing Shares is in full compliance with applicable laws and regulations;

23. it has not offered or sold and will not offer or sell any New Ordinary Shares to persons in any member state of the EEA or the United Kingdom prior to Admission except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in any member state of the EEA or the United Kingdom within the meaning of the Prospectus Regulation;

24. to provide the Joint Bookrunners with such relevant documents as they may reasonably request to comply with requests or requirements that either they or the Company may receive from relevant regulators in relation to the Equity Placings, subject to its legal, regulatory and compliance requirements and restrictions;

25. any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and Wales and it submits (on its behalf and on behalf of any Placee 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, 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 the Joint Bookrunners in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

26. to fully and effectively indemnify and hold harmless the Company and the Joint Bookrunners and each of their respective Indemnified Persons from and against any and all losses, claims, damages, liabilities and expenses (including legal fees and expenses) (i) arising from any breach by such Placee of any of the provisions of these terms and conditions and (ii) incurred by any Indemnified Person arising from the performance of the Placee's obligations as set out in these terms and conditions;

27. in making any decision to acquire Placing Shares: (i) it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing the Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with, the Equity Placings; (iii) it has relied on its own examination, due diligence and analysis of the Company and its Affiliates taken as a whole (including the markets in which the Group operates) and the terms of the Equity Placings (including the merits and risks involved); (iv) it has had sufficient time to consider and conduct its own investigation with respect to the offer and purchase of the Placing Shares, including the legal, regulatory, tax, business, currency and other economic and financial considerations relevant to such investment; and (v) will not look to the Joint Bookrunners, any of their respective Affiliates or any person acting on their behalf for all or part of any such loss or losses it or they may suffer;

28. the Joint Bookrunners and the Company and their respective Affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgments and undertakings which are irrevocable;

29. that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares to which it will be entitled, and required, to acquire, and that the Joint Bookrunners or the Company may call upon it to acquire a lower number of Placing Shares (if any) in particular as a result of clawback of Open Offer Shares pursuant to the Open Offer but in no event in aggregate more than the aforementioned maximum;

30. it acknowledges and agrees that neither Joint Bookrunner nor the Company owes any fiduciary or other duties to it in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement;

31. it acknowledges that it irrevocably appoints any director or authorised signatories of the Joint Bookrunners as its agent for the purposes of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it or the Placees to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Equity Placings;

32. its commitment to acquire Placing Shares will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Firm Placing and/or the Placing, and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or the Joint Bookrunners' conduct of the Firm Placing and/or the Placing; and

33. each of the Joint Bookrunners and their respective Affiliates may have engaged in transactions with, and provided various commercial banking, investment banking, financial advisory transactions and services in the ordinary course of their business with the Company and/or its affiliates for which they would have received customary fees and commissions. Each of the Joint Bookrunners and their respective Affiliates may provide such services to the Company and/or its affiliates in the future.

Please also note that 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, direct from the Company for the Placing Shares in question. Such agreement assumes that such Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer such Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in such Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor the Joint Bookrunners would be responsible and Placees shall indemnify the Company and the Joint Bookrunners on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold each of the Joint Bookrunners and/or the Company and their respective Affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent. If this is the case, it would be sensible for Placees to take their own advice and they should notify the relevant Joint Bookrunner accordingly. In addition, Placees should 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 acquire any Placing Shares.

Selling Restrictions

By participating in the Equity Placings, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with each of the Joint Bookrunners and the Company, the following:

1. it is not a person who has a registered address in, or is a resident, citizen or national of, a country or countries, in which it is unlawful to make or accept an offer to acquire Placing Shares;

2. it has fully observed and will fully observe the applicable laws of any relevant territory, including complying with the selling restrictions set out herein and obtaining any requisite governmental or other consents and it has fully observed and will fully observe any other requisite formalities and pay any issue, transfer or other taxes due in such territories;

3. if it is in the United Kingdom, it is a qualified investor who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 49(2) of the Order;

4. if it is in a member state of the EEA or the United Kingdom, it is a "qualified investor" within the meaning of Article 2(e) of the Prospectus Regulation;

5. if it is located or resident in Canada, it has received a copy of the Canadian Offering Memorandum prepared by the Company for use in Canada, it satisfies the eligibility requirements described therein, and has complied with the terms and conditions set forth therein;

6. it is a person whose ordinary activities involve it (as principal or agent) in acquiring, holding, managing or disposing of investments for the purpose of its business and it undertakes that it will (as principal or agent) acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business; and

7. it is and, at the time the Placing Shares are purchased, will be either: (A) outside the United States, purchasing in an offshore transaction within the meaning of, and pursuant to, Regulation S; or (B) inside the United States and (i) a "qualified institutional buyer" that is acquiring shares in a transaction not involving any public offering that is exempt pursuant to an exemption from the registration requirements of the Securities Act, and (ii) has signed and returned a US Open Offer Investor Letter or US Placing Investor Letter (as applicable);

8. none of the Placing Shares have been or will be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States; and

9. it (on its behalf and on behalf of any Placee on whose behalf it is acting) has: (a) fully observed the laws of all relevant jurisdictions which apply to it; (b) obtained all governmental and other consents which may be required; (c) fully observed any other requisite formalities; (d) paid or will pay any issue, transfer or other taxes; (e) not taken any action which will or may result in the Company or either Joint Bookrunner being in breach of a legal or regulatory requirement of any territory in connection with the Equity Placings; (f) obtained all other necessary consents and authorities required to enable it to give its commitment to acquire the relevant Placing Shares; and (g) the power and capacity to, and will, perform its obligations under the terms contained in these terms and conditions.

Miscellaneous

If a Placee is entitled to participate in the Open Offer by virtue of being a Qualifying Shareholder it will be able to apply to subscribe for Open Offer Shares under the terms and conditions of the Open Offer.

The Company reserves the right to treat as invalid any application or purported application for Placing Shares that appears to the Company or its agents to have been executed, effected or dispatched from the United States or any Excluded Territory or in a manner that may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of the share certificates of Placing Shares in, or in the case of a credit of Open Offer Entitlements to a stock account in CREST, to a CREST member whose registered address would be in, the United States, any other Excluded Territory or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates or make such a credit.

When a Placee or person acting on behalf of the Placee is dealing with either of the Joint Bookrunners, any money held in an account with either of the Joint Bookrunners on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the Joint Bookrunners' money in accordance with the client money rules and will be used by each Joint Bookrunner in the course of its own business; and the Placee will rank only as a general creditor of the relevant Joint Bookrunner.

Times

Unless the context otherwise requires, all references to time are to London time. All times and dates in these terms and conditions may be subject to amendment. The Joint Bookrunners will notify Placees and any persons acting on behalf of the Placees of any changes.

APPENDIX III: DEFINITIONS TO THE TERMS AND CONDITIONS OF THE FIRM PLACING AND PLACING

The following definitions apply only to the terms and conditions.

Unless otherwise indicated in this announcement, all references to "£", "GBP", "pounds", "pound sterling", "sterling", "p", "penny" or "pence" are to the lawful currency of the UK