Team Internet Regulatory News (TIG)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SWITZERLAND, NEW ZEALAND, UNITED ARAB EMIRATES OR THE REPUBLIC OF SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED INTO THOSE COUNTRIES OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL SECURITIES LAWS OR REGULATIONS.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING IN THIS ANNOUNCEMENT SHALL CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES REFERRED TO HEREIN NOR SHOULD IT FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR COMMITMENT WHATSOEVER. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THE SUMMARY.

21 February 2014

THE INNOVATION GROUP PLC

Proposed Firm Placing and Placing and Open Offer at 32 pence per New Share

The Board of The Innovation Group plc ("Innovation" or the "Company") announces today that it is proposing to raise gross proceeds of £67 million (approximately £65 million net of expenses) by the issue of 209,375,000 New Shares by way of a Firm Placing and Placing and Open Offer at 32 pence per New Share.

· Approximately £33.5 million will be raised, before expenses, through a Firm Placing of 104,533,556 New Shares; and

· Approximately £33.5 million will be raised, before expenses, through a Placing and Open Offer of 104,841,444 New Shares.

The Issue Price represents a discount of approximately 5.2 per cent. to the Closing Price of 33.75 pence per Ordinary Share on 20 February 2014 (being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer).

Investec is acting as sole bookrunner on the Firm Placing and Placing and Open Offer. The New Issue is being fully underwritten by Investec subject to, and in accordance with, the terms and conditions of the Underwriting Agreement.

The New Issue is conditional on, among other things, the approval of Shareholders at a General Meeting to be held at 9:30 a.m. on 13 March 2014. Details relating to the General Meeting will be contained in the prospectus concerning the Firm Placing and Placing and Open Offer (the "Prospectus"). If the Resolutions are passed and the other conditions to the Firm Placing and Placing and Open Offer are satisfied, it is expected that dealings in the New Shares will commence at 8:00 a.m. on 14 March 2014.

It is intended that the Prospectus will be sent to Qualifying Shareholders next week. Further details of the Firm Placing and Placing and Open Offer are set out in this announcement and in the Prospectus.

Summary and Highlights

Innovation's BPS solutions are designed to reduce the cost of transactions, increase efficiency and enhance the customer experience. In the UK, Innovation's property offering is currently limited to the peril of subsidence covering all areas of the claims value chain from first-notice-of-loss, claims management, supply chain management, fulfilment, settlement and recovery. Over recent years this division has built up its market share and focuses its effort on building a track record of significantly reducing claims costs whilst at the same time offering a unique fixed price model in the market. However, claims volumes in this niche sector can be volatile as they are very dependent on dry weather and this is not an offering that is easily transportable as subsidence is not an insurable peril in any of Innovation's other geographies. In addition, out of a total of £2.7bn of property related claims costs in the UK during 2012, subsidence only accounted for £100m (4 per cent.) according to Datamonitor*, hence the market Innovation is currently addressing is only a very small percentage of the potential addressable market.

Therefore, it is the Board's view that there is significant opportunity to broaden Innovation's service proposition in the UK property sector to cover a wider range of perils - predominantly 'wet' perils being escape of water, flood and storm and to a lesser degree other 'dry' perils including fire and theft. Based on 2012 claims statistics compiled by Datamonitor, this would give access to in excess of a further 60 per cent. of the UK property market as the total claims spend on wet perils alone in 2012 was £1.3bn.

To address this opportunity, the Board has identified LAS as an attractive target for Innovation, given its breadth of offering in the UK property market. LAS and Innovation have no overlap in the services they currently offer and also have the benefit of a significantly different customer base providing good opportunity for future cross-selling.

LAS provides its customers with a full suite of outsourced services that handle claims across a range of property-related perils including storm, burst pipes, flood, fire, theft and accidental damage. The vast majority of LAS's revenue comes from water-related claims: also known in the insurance industry as "wet" perils. The addition of "wet" perils skills and capabilities to the Group's service portfolio completes a key strategic goal for the Group, and will increase the UK Property division's addressable property market from a claims spend of £100m - currently available for its traditional subsidence (or "dry" perils) market - to £1.4bn based on the Datamonitor 2012 information. Over time, the Group will also be able to replicate this business model in other geographies it currently serves.

LAS's approach allows insurers to incorporate their own third party supply chain and their own software systems into the claim process, providing them with greater transparency and enabling them to offer an enhanced service to their own customers. LAS also has the capability to manage the complete process of a given claim or a particular aspect of the claim, dependent upon its client's requirements.

The Directors believe Innovation Group's and LAS's offerings are highly complementary, as are their respective operations. It is expected that the combination of the two businesses will generate both significant revenue synergies and operational leverage.

A sale and purchase agreement for the acquisition of LAS was entered into on 17 February 2014. Completion of the Acquisition is conditional on the passing of the Resolutions, the Underwriting Agreement having become unconditional in all respects (save in respect of any condition relating to Admission) and Admission occurring. The New Issue is not conditional on the acquisition of LAS completing.

The consideration payable for the Acquisition will be £35m in cash, inclusive of an element of consideration to be deferred for two years post completion (currently expected to be circa. £1.2m). The Acquisition will be funded from part of the proceeds of the Firm Placing and Placing and Open Offer. The Firm Placing and Placing and Open Offer takes into account the acquisition of Crash-worth Limited, announced separately on 17 February 2014, the Acquisition and in addition will give the Group the flexibility to pursue an additional bolt on acquisition in Motor, which is in very early stage discussions.

In respect of the financial year ended 31 July 2012, LAS reported £34.3m of revenue (£8.3m net of claims costs), £0.3m loss before tax (after deducting £1.4m of interest relating to shareholder loan notes) and £17.8m of gross assets. However, since that balance sheet date the business has been restructured and it has secured several significant contract wins. The current annualised run-rate EBITDA is in excess of £3.5m.

On completion, Darren Cooper, CEO of LAS, will join Innovation Group, together with others on the LAS senior management team. LAS will form part of the Group's enlarged UK Property division.

The Acquisition, the acquisition of Crash-worth Limited and the Firm Placing and Placing and Open Offer together are expected to be EPS accretive in the year ending 30 September 2014 and in the year ending 30 September 2015.

The Directors believe that the successful completion of the Firm Placing and Placing and Open Offer will enable the acquisition of LAS, enable a further acquisition in motor claims management and ensure the Company is in a stronger financial position to continue pursuing its corporate strategy.

This summary should be read in conjunction with, and is subject to, the full text of this announcement as well as the Prospectus relating to the Firm Placing and Placing and Open Offer which will be sent to Qualifying Shareholders and will also be made available on the Company's website www.innovation-group.com.

* Copyright © 2013, Datamonitor Financial UK Household Insurance Market Dynamics and Opportunities, reproduced with permission of Datamonitor Ltd

IMPORTANT INFORMATION

The defined terms set out in the Appendix apply to this announcement. Unless otherwise stated, references to time contained in this announcement are to UK time.

This announcement is an advertisement and does not constitute a prospectus. Nothing in this announcement should be interpreted as a term or condition of or form a part of, and should not be construed as, any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities in the Company must be made only on the basis of the information contained in and incorporated by reference into the Prospectus.

This announcement, and the Prospectus and any materials distributed in connection with this announcement or the Prospectus are, subject to certain exceptions, not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any Restricted Jurisdiction or any other locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

This announcement is not an offer of securities for sale, or a solicitation of an offer to buy securities, in the United States or in any other jurisdiction where such offer or solicitation would not be permitted. Securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration. The securities described in this announcement, when and if offered, will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or with any regulatory authority or under the applicable securities laws of any state or other jurisdiction of the United States, or the relevant laws of any state, province or territory of any other Restricted Jurisdiction and the New Shares may not be offered, sold, pledged, or otherwise transferred directly or indirectly, within the United States (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities law. This announcement does not constitute an offer to sell or a solicitation of an offer to buy New Shares in any jurisdiction in which such offer or solicitation is unlawful. This announcement is not a prospectus or other offering document. There will be no public offering of securities in the United States.

Investec Bank plc ("Investec"), which is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the FCA, is acting for the Company only and no-one else in connection with the Firm Placing and Placing and Open Offer and Admission and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Firm Placing and Placing and Open Offer or Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Firm Placing and Placing and Open Offer or Admission or any matters referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Investec by FSMA, Investec accepts no responsibility whatsoever for the contents of this announcement, including its accuracy, completeness or verification of for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the New Shares, the Firm Placing and Placing and Open Offer or Admission. Investec accordingly disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement of any such statement.

Certain statements made in this announcement constitute forward-looking statements. Forward-looking statements can be identified by the use of words such as "may", "will", "should", "predict", "assurance", "aim", "hope", "risk", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or other similar expressions that are predictive or indicative of future events. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Group's expectations, intentions and beliefs concerning, amongst other things, the Group's results of operations, financial position, growth strategy, prospects, dividend policy and the industries in which the Group operates, are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Group and its Directors, which may cause the actual results, performance, achievements, cash flows, dividends of the Group or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. As such, forward-looking statements are no guarantee of future performance.

Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. Among the important factors that could cause the Group's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, economic conditions in the relevant markets of the world, market position of the Company or its subsidiaries, earnings, financial position, cash flows, return on capital and operating margins, political uncertainty, the actions of competitors, activities by governmental authorities such as changes in taxation or regulation, changing business or other market conditions and general economic conditions and such other risk factors identified in the "Risk Factors" section of the Prospectus. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement and are not intended to give assurance as to future results.

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

THE INNOVATION GROUP PLC

Proposed Firm Placing of 104,533,556 New Shares at 32 pence per New Share and Placing and Open Offer of 104,841,444 New Shares at 32 pence per New Share

Introduction

The Board of Innovation announces today that it is proposing to raise gross proceeds of £67 million (approximately £65 million net of expenses) by the issue of 209,375,000 New Shares by way of a Firm Placing and Placing and Open Offer at 32 pence per New Share. 104,533,556 New Shares will be issued through the Firm Placing and 104,841,444 New Shares will be issued through the Placing and Open Offer. The Issue Price of 32 pence per New Share represents a discount of approximately 5.2 per cent. to the Closing Price of 33.75 pence per Ordinary Share on 20 February 2014 (being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer).

The New Issue is being fully underwritten by Investec subject to, and in accordance with, the terms and conditions of the Underwriting Agreement.

Information on Innovation

The Group, which is headquartered in Whiteley, Hampshire, is a solution provider primarily to the insurance industry through the provision of technology-led BPS and specialist technology. Its principal offices are situated in the United Kingdom, Germany, France, Belgium, Spain, South Africa, Australia, United States of America, Canada and Pakistan. The Group also provides services to the vehicle fleet and leasing and automotive manufacturing (warranty repair and maintenance) markets.

These services and solutions are designed to provide clients with significant savings on claim settlement and vehicle management costs whilst enabling them to achieve high levels of customer satisfaction. The Group has core competencies in the provision of first-notice-of-loss administration, repair management, loss assessing, full claims handling, supplier network management and provision of management information. Additionally, as a provider of technology to insurance companies, it builds and operates the underlying business systems that are required to manage claims administration and policy processes. This technology can be used either to complement the Group's outsourcing services or be implemented on a stand-alone basis for clients. The Group provides its services on a non-branded basis and does not perform underwriting functions.

As a leading specialist technology-led BPS provider, the Group continues to innovate and create new products for its clients. The Group licenses these products both directly to clients and through partners such as IBM and Symbility. The Group's focus is on providing a responsive and sustainable service which exceeds customer expectations and helps them to meet their needs for efficiency, productivity and profitability. Operating as a single client-centric organisation, the goal is to globally service more clients with more incidents.

Innovation focuses on motor and property general insurance, across both personal and commercial lines, as well as intersecting markets such as fleet, lease management companies and motor manufacturers. The Group delivers services for some of the largest insurance and vehicle fleet operating businesses in the world, including Aviva, AVIS, Ford Motor Company of South Africa, Toyota (South Africa), Lloyds Banking Group, The Insurance Australia Group, Jaguar Drive Plan (South Africa), AXA Insurance, QBE, Homesite and Zurich.

Background to and reasons for the New Issue

Innovation's BPS solutions are designed to reduce the cost of transactions, increase efficiency and enhance the customer experience. In the UK, Innovation's property offering is currently limited to the peril of subsidence covering all areas of the claims value chain from first-notice-of-loss, claims management, supply chain management, fulfilment, settlement and recovery. Over recent years this division has built up its market share and focuses its efforts on building a track record of significantly reducing claims costs whilst at the same time offering a unique fixed price model in the market. However, claims volumes in this niche sector can be volatile as they are very dependent on dry weather and this is not an offering that is easily transportable as subsidence is not an insurable peril in any of Innovation's other geographies. In addition, out of a total of £2.7bn of property related claims costs in the UK during 2012, subsidence only accounted for £100m (4 per cent.) according to Datamonitor, hence the market Innovation is currently addressing is only a very small percentage of the potential addressable market.

Therefore, it is the Board's view that there is significant opportunity to broaden Innovation's service proposition in the UK property sector to cover a wider range of perils - predominantly 'wet' perils being escape of water, flood and storm and to a lesser degree other 'dry' perils including fire and theft. Based on 2012 claims statistics compiled by Datamonitor this would give access to in excess of a further 60 per cent. of the UK property market as the total claims spend on wet perils alone in 2012 was £1.3bn.

To address this opportunity, the Board has identified LAS as an attractive target for Innovation, given its breadth of offering in the UK property market. LAS and Innovation have no overlap in the services they currently offer and also have the benefit of a significantly different customer base providing good opportunity for future cross-selling.

LAS provides its customers with a full suite of outsourced services that handle claims across a range of property-related perils including storm, burst pipes, flood, fire, theft and accidental damage. The vast majority of LAS's revenue comes from water-related claims: also known in the insurance industry as "wet" perils. The addition of "wet" perils skills and capabilities to the Group's service portfolio completes a key strategic goal for the Group, and will increase the UK Property division's addressable property market from a claims spend of £100m - currently available for its traditional subsidence (or "dry" perils) market - to £1.4bn based on the Datamonitor 2012 information. Over time, the Group will also be able to replicate this business model in other geographies it currently serves.

LAS's approach allows insurers to incorporate their own third party supply chain and their own software systems into the claim process, providing them with greater transparency and enabling them to offer an enhanced service to their own customers. LAS also has the capability to manage the complete process of a given claim or a particular aspect of the claim, dependent upon its client's requirements.

The Directors believe that Innovation Group's and LAS's offerings are highly complementary, as are their respective operations. It is expected that the combination of the two businesses will generate both significant revenue synergies and operational leverage.

A sale and purchase agreement for the acquisition of LAS was entered into on 17 February 2014. Completion of the Acquisition is conditional on the passing of the Resolutions, the Underwriting Agreement having become unconditional in all respects (save in respect of any condition relating to Admission) and Admission occurring. The New Issue is not conditional on the acquisition of LAS completing.

The consideration payable for the Acquisition will be £35m in cash, inclusive of an element of consideration to be deferred for two years post completion (currently expected to be circa. £1.2m). The Acquisition will be funded from part of the proceeds of the Firm Placing and Placing and Open Offer. The Firm Placing and Placing and Open Offer takes into account the acquisition of Crash-worth Limited, announced separately on 17 February 2014, the Acquisition and in addition will give the Group the flexibility to pursue an additional bolt on acquisition in Motor, which is in very early stage discussions.

In respect of the financial year ended 31 July 2012, LAS reported £34.3m of revenue (£8.3m net of claims costs), £0.3m loss before tax (after deducting £1.4m of interest relating to shareholder loan notes) and £17.8m of gross assets. However, since that balance sheet date the business has been restructured and it has secured several significant contract wins. The current annualised run-rate EBITDA is in excess of £3.5m.

On completion, Darren Cooper, CEO of LAS, will join Innovation Group, together with others on the LAS senior management team. LAS will form part of the Group's enlarged UK Property division.

The Acquisition, the acquisition of Crash-worth Limited and the Firm Placing and Placing and Open Offer together are expected to be earnings enhancing in the year ending 30 September 2014 and in the year ending 30 September 2015.

The Directors believe that the successful completion of the Firm Placing and Placing and Open Offer will enable the acquisition of LAS enable a further acquisition in motor claims management and ensure the Company is in a stronger financial position to continue pursuing its corporate strategy.

Use of Proceeds

The Company intends to use the net proceeds of the Firm Placing and Placing and Open Offer for the following purposes:

(a) the acquisition of LAS and payment of associated acquisition costs including adviser fees; and

(b) the remaining monies of approximately £30 million for general corporate purposes including future acquisitions which support the Group's strategy.

Should the acquisition of LAS not proceed, the Board would seek to execute other acquisition opportunities utilising the proceeds of the Firm Placing and Placing and Open Offer. The Board believes there are a number of such potential acquisition opportunities, including in motor claims management.

Pending utilising of the proceeds of the Firm Placing and Placing and Open Offer to fund acquisitions, monies will be used to strengthen the balance sheet and for working capital to support the Group's strategy. In particular, the proceeds will relieve the revolving credit facility with Barclays Bank plc following the Crash-worth Limited acquisition.

The Board considers the Firm Placing and Placing and Open Offer to be a suitable fundraising structure as it will allow access to new investors to broaden the Company's shareholder base, whilst providing existing Shareholders with the opportunity to participate in the fundraising to an extent through the Open Offer.

Current trading and prospects

On 17 February 2014, Innovation provided the following Interim Management Statement:

"The Group has delivered a solid start to the year. Good operational efficiencies have been achieved and further delivery has been secured against strategic objectives, building on a strong year for orders and significant new customer wins in the financial year ended 30 September 2013.

Progress has been positive during the quarter in our US business, with motor volumes from new Tier 1 carriers increasing since December and a number of software projects moving to user acceptance trials.

In addition, on 31 January 2014 the Group acquired the entire share capital of Crash-worth Limited ("Crash-worth") for a maximum cash consideration of £11.75m, of which £5.0m was paid on completion with the balance payable over the course of the period to 31 December 2015. Of the £6.75m balance, £2.0m is contingent on the profit performance of the enlarged UK Motor business in the twelve months ending 30 September 2015. Current annualised monthly profit before tax run-rate is £1.7m.

Crash-worth manages an established and efficient motor repair network. The acquisition will enable the Group to move closer to realising its objective to transform its Motor business into the number one motor claims management business in the UK in terms of client experience, customer experience, operational efficiency and profitability. The combined business will become the second largest manager of vehicle repair claims in the UK, allowing clients to benefit from increased efficiencies. Crash-worth will also add a consultancy proposition for those clients seeking to gain competitive advantage in a fast changing environment.

Chris Ashworth, the founder of Crash-worth and a leading figure in the UK motor claims industry for the last 20 years, will join the Group as Managing Director of the enlarged UK Motor division.

Overall, on a local currency basis, the Board is confident that the Group's trading performance is on track to meet its expectations for the current financial year."

This Interim Management Statement reinforces the statement made on 2 December 2013:

"The Board has seen substantial improvement in the profitability of the Group and a significant number of contracts signed in the 6 months ended 30 September 2013 should lead to improved organic growth in the business next year. The Directors believe that Innovation's combined offering of BPS and software remains compelling and the Group is well positioned for strong performance in the coming year and beyond."

There has been no significant change to the current trading and prospects of the Group since 17 February 2014.

Principal terms and conditions of the New Issue

The Company is proposing to raise gross proceeds of £67m (approximately £65 million net of expenses) by the issue of 209,375,000 New Shares through the Firm Placing and Placing and Open Offer at 32 pence per New Share. Of the 209,375,000 New Shares being issued, 104,533,556 New Shares will be issued through the Firm Placing and 104,841,444 New Shares will be issued through the Placing and Open Offer.

In each case, the New Shares have been conditionally placed with institutional and other investors by Investec (subject, in the case of the Conditional Placed Shares, to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer). Qualifying Shareholders (other than Excluded Overseas Shareholders) are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer.

The Issue Price was set having regard to the prevailing market conditions and the size of the New Issue. The Issue Price represents a discount of approximately 5.2 per cent. to the Closing Price of 33.75 pence per Ordinary Shares on 20 February 2014 (being the last Business Day before the announcement of the Firm Placing and Placing and Open Offer).

The New Issue is expected to result in 209,375,000 New Shares being issued (representing approximately 21.0 per cent. of the existing issued share capital and 17.4 per cent. of the Enlarged Ordinary Share Capital). The New Issue is being fully underwritten by Investec subject to, and in accordance with, the terms and conditions of the Underwriting Agreement.

Firm Placing

The Firm Placees required the Firm Placing in order to give them certainty as to the size of their shareholding in the Company following the fundraising. The Firm Placees have conditionally agreed to subscribe for 104,533,556 New Shares at the Issue Price (representing gross proceeds of approximately £33.5 million and approximately 8.7 per cent. of the Enlarged Ordinary Share Capital). The Firm Placed Shares are not subject to clawback to satisfy the valid applications by Qualifying Shareholders under the Open Offer and are not part of the Placing and Open Offer.

Placing and Open Offer

The Directors recognise the importance of pre-emption rights to Shareholders and consequently 104,841,444 New Shares are being offered to existing Shareholders by way of an Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders (other than Excluded Overseas Shareholders) to participate in the fundraising by both subscribing for their respective Basic Entitlements and by subscribing for Excess Shares under the Excess Application Facility, subject to availability. Under the Placing and Open Offer, the Company intends to issue 104,841,444 New Shares at the Issue Price (representing gross proceeds of approximately £33.5 million and approximately 8.7 per cent. of the Enlarged Ordinary Share Capital).

As part of the Placing and Open Offer, 104,841,444 New Shares are being allocated to Conditional Placees who have agreed to subscribe for the Conditional Placed Shares pursuant to the Placing. The Conditional Placed Shares are subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer.

In the event that valid applications are not received in respect of any of the Open Offer Shares under the Open Offer, unallocated Open Offer Shares may be allocated to Qualifying Shareholders to meet any valid applications under the Excess Application Facility or placed under the Placing.

Qualifying Shareholders (other than Excluded Overseas Shareholders) are being offered the opportunity to subscribe at the Issue Price for Open Offer Shares on the following basis:

2 Open Offer Shares for every 19 Existing Shares

registered in their name on the Record Date.

Basic Entitlements under the Open Offer will be rounded down to the nearest whole number and any fractional entitlements to Open Offer Shares will not be allocated but will be aggregated and sold for the benefit of the Company under the Excess Application Facility and/or the Placing. The aggregate number of Open Offer Shares available for subscription pursuant to the Open Offer will not exceed 104,841,444 New Shares.

Qualifying Shareholders (other than Excluded Overseas Shareholders) are also being offered the opportunity to subscribe for Excess Shares. Subject to availability, the Excess Application Facility enables the Qualifying Shareholders (other than Excluded Overseas Shareholders) to apply for Excess Shares up to a maximum number of Excess Shares equal to approximately 0.25 times the number of Existing Shares registered in their name at the Record Date.

Allocation of Excess Shares shall be determined in such manner as the Directors, in their absolute discretion, determine and no assurance can be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full or in part or at all.

General Meeting

A General Meeting is to be held at 9.30 a.m. on 13 March 2014 at the offices of DLA Piper UK LLP, 3 Noble Street, London EC2V 7EE.

At the General Meeting, the Resolutions will be proposed to:

(a) grant the Directors authority pursuant to section 551 of the 2006 Act to allot the New Shares; and

(b) disapply where relevant statutory pre-emption rights set out in section 561 of the 2006 Act in connection with the issue of the New Shares.

Directors' intentions

Each of the Directors is supportive of the fundraising and has irrevocably undertaken to subscribe or apply, in aggregate, for 854,316 New Shares under the Firm Placing and Placing and Open Offer as follows:

In addition, each of the Directors has irrevocably undertaken to vote, or procure the registered holder of their Ordinary Shares votes, in favour of all of the Resolutions in respect of his/her own beneficial holdings to the extent that he/she has any such holding. The combined beneficial holdings of the Directors together amount to 7,522,274 Ordinary Shares, representing approximately 0.8 per cent. of the Ordinary Shares in issue as at 20 February 2014 (being the last practicable date prior to the publication of this announcement).

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

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

Notes:

The times set out in the expected timetable of principal events above and mentioned throughout this announcement are times in London unless otherwise stated, and may be adjusted by the Company in consultation with or, if required, with the agreement of Investec, in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, Shareholders.

APPENDIX

DEFINITIONS

The following expressions have the following meaning throughout this announcement, unless the context otherwise requires: