Tissue Regenix Group Regulatory News (TRX)

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

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The information contained herein is not for release, directly or indirectly, in or into the United States of America, Australia, Canada, Japan or the Republic of South Africa. This announcement (and the information contained herein) does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where such an offer or solicitation would be unlawful. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States unless the securities are registered under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No public offering of the securities will be made in the United States.

Tissue Regenix Group plc

Acquisition of CellRight Technologies, proposed placing and subscription of new Ordinary Shares at a price of 10 pence per share to raise approximately £40 million and approval of waiver of obligations under Rule 9 of the Takeover Code

Creates a leading regenerative medical devices company, accelerating growth and penetration in US market

Adds complementary technology, 13 new products and pipeline in the multi-billion dollar market

Increases US sales by 2.5x and accelerates trajectory towards profitability, targeting 2020[1]

Leeds, 20 July 2017 - Tissue Regenix Group plc (AIM:TRX) ("Tissue Regenix" or the "Company"), the regenerative medical devices company, is pleased to announce the conditional acquisition of CellRight Technologies ("CellRight"), a US regenerative medicine business focused on the development and commercialisation of a range of human tissue products based on proprietary bone processing techniques and soft tissue products for clinical applications in spine, dental, sports medicine and general surgery, for a total consideration of up to $30.0 million (£23.0 million)[2] (the "Acquisition"). Tissue Regenix also announces its intention to raise gross proceeds of approximately £40 million pursuant to a placing of up to 400 million new Ordinary Shares less the number of any Subscription Shares (as defined below) (the "Placing Shares") in the Company at a price of 10 pence per Placing Share, with both new and existing institutional investors (the "Placing"). In connection with the proposed fundraise, certain of the Directors intend to subscribe for new Ordinary Shares (the "Subscription Shares") in the Company at a price of 10 pence per Subscription Share (the "Subscription", together with the Placing, the "Offer").

The proceeds from the Offer will be used to finance the initial consideration of $25.9 million (£19.9 million) for the Acquisition, with an additional up to $4.1 million (£3.1 million) earn-out consideration payable subject to the achievement of revenue performance targets. The remaining funds will be used to accelerate the growth of the Enlarged Group and will provide working capital to support the on-going commercialisation of the Group's existing programmes. The Acquisition will expand the market opportunity of the Enlarged Group and accelerate it towards its target of achieving profitability in 2020.[3]

Antony Odell, CEO of Tissue Regenix, said:

"The acquisition of CellRight Technologies provides a transformational opportunity for Tissue Regenix and accelerates the Group's trajectory to break even through the creation of an innovative, regenerative medical devices company. CellRight bring a synergistic regenerative technology focused on bone, which will complement our own dCELL® soft tissue platform. Furthermore, a broad development pipeline of innovative products, multiple established distribution channels and a state of the art US-based manufacturing facility will enable us to increase our growth and market penetration, cementing our presence in the key US market, as well as providing an opportunity to enter new geographies.

"Building on our material progress over the last two years, the additional resources will enable Tissue Regenix to invest in advancing our organic product pipeline and commercial strategy. We would like to thank our existing and new shareholders for their support as we realise our vision of becoming a market leader in the multibillion dollar global regenerative medicine market."

Strategic Rationale for the Acquisition

· CellRight adds an innovative regenerative platform technology focused on bone, with application areas in orthopaedics, spine and general surgery, which is complementary to Tissue Regenix's soft tissue based platform technology;

· The Acquisition broadens the Group's orthopaedic product offering which the Board expects to significantly increase the Group's growth and penetration in the US market as well as other territories;

· CellRight has well established distribution and sales relationships and has demonstrated strong revenue and profit generation as well as cash flow, with a three year sales CAGR in excess of 61 per cent. across the financial years ended 31 December 2013 - 31 December 2016; and

· The Acquisition provides the Enlarged Group with the ability to leverage capacity to meet future growth requirements and drive efficiencies in a state of the art tissue processing facility accredited by the FDA and AATB and located in Universal City, San Antonio, Texas.

The Offer

The Placing is being conducted through an accelerated bookbuilding process to be carried out by Jefferies International Limited ("Jefferies") which shall determine the exact number of the Placing Shares in accordance with the terms and conditions set out in the Appendix to this announcement. Participation in the Placing will be limited to institutional investors. Members of the general public are not eligible to take part in the Placing.

The book will open with immediate effect and is expected to close no later than 9 a.m. on 21 July 2017. The timing of the closing of the book and allocations is at Jefferies' discretion in consultation with the Company. The number of Placing Shares to be allocated and issued pursuant to the Placing is subject to agreement between the Company and Jefferies at the close of the bookbuilding process.

Certain of the Directors have indicated an intention to subscribe for Subscription Shares at the Issue Price pursuant to separate subscription agreements which are expected to be entered into between the Company and such Directors. The maximum number of Placing Shares that may be allocated pursuant to the bookbuilding process will be reduced to the extent that Directors subscribe for such Subscription Shares.

Details of the final terms of the Placing, including its completion, and the Subscription (if any) will be announced as soon as practicable after the close of the bookbuilding process.

Due to the size of the Offer, the Offer is conditional, inter alia, on the passing of certain resolutions by shareholders of the Company at a general meeting expected to be convened at the offices of DLA Piper UK LLP, Princes Exchange, Leeds LS1 4BY on Tuesday 8 August 2017 at 9 a.m. (the "General Meeting").

The Takeover Panel has agreed to waive the obligation of the Concert Party to make a general offer to all Shareholders of the Company ("Rule 9 Waiver") that would otherwise arise as a result of any resulting increase to the Concert Party's percentage holding of shares carrying voting rights pursuant to the Offer, subject to the approval, on a poll, of the Shareholders of the Company other than (i) the Concert Party (and anyone acting in concert with it) and the (ii) other Placees who hold Ordinary Shares and any Directors participating in the Subscription (the "Independent Shareholders"). Accordingly, it is expected that such a whitewash resolution would be proposed at the General Meeting, to be taken on a poll. The Concert Party (and anyone acting in concert with its members), the other Placees and any Directors participating in the Subscription who hold Ordinary Shares would not be entitled to vote on the resolution.

A circular containing details of the Offer, the Acquisition and the Rule 9 Waiver will be posted to shareholders as soon as practicable following the close of the bookbuild.

Jefferies is acting as broker and nominated adviser in connection with the Placing and WG Partners LLP is acting as placement agent. The Offer is not being underwritten.

Terms used but not defined in this announcement shall have the meanings given to such terms in the Appendix. This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market soundings (as defined in MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

Tissue Regenix's management Antony Odell, CEO, and Paul Devlin, CFO, will host a presentation for analysts Friday, 21 July, 2017 at 9.30 a.m. at the offices of FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD.

Please contact tissueregenix@fticonsulting.com for further details.

For more Information:

Expected Timetable of Key Events

About Tissue Regenix

Tissue Regenix is a leading medical devices company in the field of regenerative medicine. Tissue Regenix's patented decellularisation ('dCELL®') technology removes DNA and other cellular material from animal and human tissue leaving an acellular tissue scaffold which is not rejected by the patient's body which can then be used to repair diseased or worn out body parts. The potential applications of this process are diverse and address many critical clinical needs such as vascular disease, heart valve replacement and knee repair.

Tissue Regenix was formed in 2006 when it was spun-out from the University of Leeds. Tissue Regenix commercialises academic research conducted by our partners around the world.

In November 2012 Tissue Regenix Group plc set up a subsidiary company in the United States - 'Tissue Regenix Wound Care Inc.', as part of its commercialisation strategy for its dCELL® technology platform.

Important Notice

This announcement has been issued by, and is the sole responsibility of, the Company.

No prospectus or admission document will be made available in connection with the matters contained in this announcement.

Jefferies, which is authorised and regulated in the United Kingdom by the FCA is acting for the Company and no one else in relation to the Placing, the Acquisition and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Jefferies or for providing advice in relation to any matter contained in this document or any matter or arrangement referred to in it. 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 Jefferies, or by any of its affiliates or agents, as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This announcement (including the Appendix and the terms and conditions set out therein) is directed at persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC, as amended) and, additionally in the United Kingdom, to those qualified investors who (a) are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (investment professionals) or (b) fall within Article 49(2)(a) to (d) of that Order (high net worth companies, unincorporated associations etc).

Forward Looking Statements

This announcement includes statements that are, or may be deemed to be, "forward‑looking statements". These forward‑looking statements can be identified by the use of forward‑looking terminology, including the terms "believes", "estimates", "forecasts", "plans", "prepares", "anticipates", "projects", "expects", "intends", "may", "will", "seeks", or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward‑looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's and the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Company's prospects, growth and strategy. No statement in this announcement is intended to be a profit forecast and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future years would necessarily match or exceed the historical published earnings per share of the Company.

By their nature, forward‑looking statements involve risks and uncertainties because they relate to future events and depend on circumstances that may or may not occur in the future. Forward‑looking statements are not guarantees of future performance. The Company's actual performance, achievements and financial condition may differ materially from those expressed or implied by the forward‑looking statements in this announcement. In addition, even if the Company's results of operations, performance, achievements and financial condition are consistent with the forward‑looking statements in this announcement, those results or developments may not be indicative of results or developments in subsequent periods.

Any forward‑looking statements that the Company makes in this announcement speak only as of the date of such statement, and none of the Company or the Directors undertake any obligation to update such statements unless required to do so by applicable law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

1. INTRODUCTION

The Company is pleased to announce that it has, through its wholly owned subsidiary, Tissue Regenix Holdings Inc. ("Purchaser"), conditionally agreed to acquire all of the membership interests in CellRight Technologies, LLC, ("CellRight"), a US regenerative medicine business focused on the development and commercialisation of a range of human tissue products based on proprietary bone processing techniques and soft tissue products for clinical applications in the spine, dental, sports medicine and general surgical applications. The consideration for the Acquisition will be up to $30.0 million (£23.0 million) on a "cash-free" "debt-free" basis subject to a working capital adjustment mechanism which is capped at a maximum upwards adjustment of $100,000 (£76,693). Of the total consideration payable under the terms of the Acquisition, $25.9 million (£19.9 million) (subject to the working capital adjustment) is payable in cash upon Completion (the "Initial Consideration") and the remaining up to $4.1 million (£3.1 million) is payable to existing members of CellRight in cash subject to CellRight achieving certain revenue performance targets over a two-year period following Completion ("Earn Out Consideration") (the Initial Consideration and the Earn Out Consideration together being the "Consideration").

The Board believes there is strong strategic rationale for the Acquisition which it believes will be transformational for the Group and will drive Tissue Regenix's long term strategy of building a leading regenerative medical devices company by accelerating growth and penetration into the key US markets, broadening the product offering and providing the Enlarged Group with ownership of a state of the art tissue processing facility. The Acquisition will expand the market opportunity of the Enlarged Group and accelerate it towards its target of achieving profitability in 2020[4].

Specifically, the Board believes there is strong strategic rationale for the Acquisition for the following reasons:

· CellRight adds an innovative regenerative platform technology focused on bone, with application areas in orthopaedics, spine and general surgery, which is complementary to Tissue Regenix's soft tissue based platform technology;

· The Acquisitaion broadens the Group's orthopaedic product offering which the Board expects to significantly increase the Group's growth and penetration in the US market as well as other territories;

· CellRight has well established distribution and sales relationships and has demonstrated strong revenue and profit generation as well as cash flow, with a three year sales CAGR in excess of 61 per cent. across the financial years ended 31 December 2013 - 31 December 2016; and

· The Acquisition provides the Enlarged Group with the ability to leverage capacity to meet future growth requirements and drive efficiencies in a state of the art tissue processing facility accredited by the FDA and AATB and located in Universal City, San Antonio, Texas.

Further details of the Acquisition and the Acquisition Agreement are set out below.

Under Rule 9 of the Takeover Code, the issue of the New Ordinary Shares to the Concert Party and any resultant increase in the Concert Party's percentage holding of Ordinary Shares would normally result in the Concert Party being obliged to make an offer to all Shareholders (other than the Concert Party) to acquire their shares. The Takeover Panel has agreed to waive this obligation subject to the approval of the Independent Shareholders.

2. INFORMATION ON CELLRIGHT

CellRight is a profitable, high-growth regenerative medicine company focused on bone, with application areas in orthopaedics, spine and general surgery.

Technology

CellRight's core platform technology transforms human bone into a mouldable matrix that preserves natural bone growth factors: Bone Morphogenic Proteins ("BMP's") and Growth Factors ("GF's"). It has the ability to deliver malleable bone collagen scaffolds in different physical forms to meet various clinical requirements.

The bone matrices and putties that CellRight has developed have distinctive active characteristics when compared to competitor products in the market. In particular, they are guaranteed to be osteo-inductive and are able to retain regenerative properties post-implantation.

The products retain the key five BMP's and GF's needed to signal oesteo-inductivity and assist active regeneration of bone as part of the natural musculoskeletal system. Moreover, key CellRight products contain 100 per cent. allograft bone which has been clinically proven to produce a better clinical outcome when compared to competitor products, which typically have lower allograft percentages. CellRight protects its technology through registered trade secrets and copyrights as well as retaining 'know-how' in respect of core processes within the company.

The business has developed and commercialised a portfolio of products which fall under the HCT/P regulation pathway, allowing for an accelerated market entry.

Product Portfolio and Pipeline

CellRight's technology enables the transformation of cortical and cancellous bone into various physical forms that allow the clinician to select the one most appropriate for the procedure involved.

CellRight has launched 13 products since 2012, addressing a multitude of clinical procedures in key treatment areas, as demonstrated in the chart below which shows selected products and their application areas. As CellRight's technology produces different physical forms of bone, each product is chosen for applicability to the surgery required. This versatility allows for product line extensions, and the potential to apply the technology to different musculoskeletal structures.

As demonstrated by the significant progress in technology and product development to date, CellRight retains extensive development expertise with a strong product pipeline, including new categories, with new products expected to be launched in the second half of 2017.

Sourcing and Sales Infrastructure

CellRight has a well-established, diverse supply chain, currently holding a number of donor recovery agreements with organ provider organisations allowing for the collection of high quality bone and tissue material. As at 31 December 2016, CellRight held approximately $1,836k of raw materials and work in progress and $248k of finished goods. CellRight does not currently employ a direct sales force and has in place a number of significant distribution agreements including ten long-term distribution contracts. In addition, CellRight expects to commence sales with a major new distribution partner during the third quarter of 2017. During 2016, CellRight had 90 active customers and 14 private label accounts.

Facilities

CellRight moved into its existing premises in Universal City, San Antonio, Texas in 2012 and customised the facility to allow for both its current requirements as well as future growth. The facility is 13,650 sq ft and is purpose built, using the extensive experience of the management team to design a flexible modular manufacturing unit. The current design and layout of the existing premises is sufficient to meet Tissue Regenix's requirements for the Enlarged Group to 2020 and beyond, with considerable capacity to accommodate future growth by building new facilities on the one acre of adjacent land also owned by CellRight. The facility is FDA approved and AATB accredited and has a track record of successful FDA and client quality audits.

Financial Information

The business has a track record of increasing sales and profitability and is currently cash generative. CellRight generated sales of $5.4 million in 2016 which represented a three year CAGR in excess of 61 per cent.

CellRight achieved sales of $5.4 million for the year ended 31 December 2016, an increase of 17 per cent. on the previous year (2015: $4.6 million). CellRight's revenue growth in 2016 in comparison to 2015 was due to an increase in the number of customers in 2016 and the annualisation of new product launches and contract gains in 2015. Cross-selling of products to existing customers also contributed to the increase in revenue. Gross margin has been steady over the past 2 years at over 60 per cent. Overheads in 2016 reflected incremental charges related to the proprietors taking market based salaries for the first time, and a change to the accounting treatment for doubtful debts.

In the year ended 31 December 2016, CellRight generated 40 per cent. of its revenue in spine products, 26 per cent. in orthopaedic products, 34 per cent. in general surgery products.

CellRight's top ten customers by revenue in the year ended 31 December 2016 accounted for $3.1 million of total revenue of $5.4 million, with $2.5 million of these top ten customers relating to sales to private label distributors (top ten customers in the year ended 31 December 2015 revenue accounted for $3.3 million of total revenue of $4.6 million, with $3.0 million of these relating to private label distributors).

Distribution agreements are in place predominately for the US market with over 90 per cent. of CellRight's revenue derived from North America in the year ended 31 December 2016. CellRight also makes international sales to Canada and the United Kingdom and has approvals to sell into South Korea and selected countries in the Middle East and South America.

The current financial year has started well with unaudited revenue for the five months ended 31 May 2017 of $2,602k, reflecting a year on year increase of 20.7 per cent.

Key Personnel

Jesus Hernandez, Founder and CEO of CellRight has over 34 years' experience in the biologics and medical industry, Jesus is a former CEO, COO, VP, and director of several biologic companies in the US. With a proven track record of establishing innovative transplant products he holds extensive FDA regulatory knowledge and is an advisor for the United Network of Organ Sharing (UNOS). Jesus founded CellRight in 2012.

Jesus achieved a B.S. Degree from the University of California, Irvine and holds an honorary doctorate Foundation of Ophthalmology, Bogota, Columbia.

CellRight also employs experienced managers to oversee operations and regulatory affairs, who together hold over 45 years' combined experience in the biologics and medical industries.

3. BACKGROUND AND REASONS FOR THE ACQUISITION

Strategic rationale for the Acquisition

There is strong strategic rationale for the Acquisition which the Board believes will be transformational for the Group and will complement Tissue Regenix's long term strategy of building a leading regenerative medical devices company by accelerating growth and penetration into the key US markets, broadening the product offering and leveraging a state of the art tissue processing facility. The Acquisition will expand the market opportunity of the Enlarged Group and accelerate it towards its target of achieving profitability in 2020[5].

Innovative regenerative platform technology, focused on bone, with application areas in orthopaedics, spine and general surgery which is complementary to Tissue Regenix's soft tissue based platform technology

Tissue Regenix launched its first product, DermaPure®, a decellularised allograft dermis for use in chronic and acute wounds in the US in 2014. The success in commercialising DermaPure® highlighted the opportunity for allograft-based products globally. Consequently, the Group launched its joint venture GBM-V in Germany in January 2016 as a platform to build on this opportunity within Europe, via both standard and dCELL® Technology processed tissues primarily DermaPure® and CardioPure™ HAV/HPV.

The Board believes a logical extension of this strategy is to address not only decellularised soft tissue allografts, but also bone-derived technologies. The North American bone graft and substitutes market, which includes the United States, Canada and Mexico, was valued at $1.7 billion in 2016. The largest single market is the United States which accounts for 95 per cent. of the regional revenue and is complementary to Tissue Regenix's pipeline of soft tissue xenograft (porcine) and allograft (human) products that the Group has been developing over the past 5 years. The North America orthopaedic soft tissue market was valued at $2.0 billion in 2015. CellRight's portfolio of cortical and cancellous bone allograft-derived constructs have been well received by the clinical community and have shown an aggregate 61 per cent. year on year sales CAGR over the past three years.

CellRight's products are highly complementary to the Tissue Regenix range, supplementing soft tissue orthopaedics with bone replacement technologies allowing for an enhanced product offering.

Broadening the Group's orthopaedic product offering which the Board expects to significantly increase the Group's growth and penetration in core markets in the US and other territories

CellRight's product portfolio and market penetration will complement Tissue Regenix's dCELL® Technology offering as the Group enters the US orthopaedics market. This augmented product portfolio would allow for the leveraging of existing relationships thus accelerating commercial traction within the marketplace. In addition, Tissue Regenix can use its own commercial expertise to leverage CellRight's product lines through existing agreements and utilising the Group's experienced national accounts team.

CellRight has well established distribution and sales relationships and has demonstrated strong revenue and profit generation as well as cash flow

CellRight has demonstrated a track record of revenue and EBITDA growth over the last three years and will provide additional revenues for the Enlarged Group and positive cash flow, accelerating the drive towards profitability of the Group as further products are developed towards commercialisation.

CellRight has established strategic alliances with a broad network of suppliers and distribution channels which allows for the potential to explore other applications and products for the Enlarged Group. CellRight currently sells its products via different sales channels to Tissue Regenix, which offers significant scope for cross-selling for the Enlarged Group.

Ability to leverage capacity to meet future growth and drive efficiencies in state of the art tissue processing facility accredited by the FDA and AATB in Universal City, San Antonio, Texas

Tissue Regenix would be able to utilise CellRight's state-of-the-art facility to manufacture the Group's decellularised human tendons and menisci, as well as other dCELL® Technology processed human tissues in the US which should ultimately reduce technology transfer times and overhead expenditure.

Tissue Regenix Strategy

The acquisition of CellRight would allow for an extension of the Tissue Regenix Group's existing strategy to become a leading regenerative medical technology company through the exploitation of dCELL® Technology, throughout key clinical areas and territories. Since the last placing, Tissue Regenix has made significant progress in achieving strategic milestones, including undertaking European orthopaedic clinical trials, receiving 510k clearance for SurgiPure™ XD, entry into its joint venture GBM-V, progressing the cardiac market approvals and establishing its US business infrastructure in line with its business plan.

Tissue Regenix's 'dual-tissue' strategy allows it to utilise multiple tissue sources for an expanded product portfolio. In certain territories the shorter timeframe for the approval of allograft tissue based products is advantageous in order to establish a commercial presence which can then be augmented, if required, with the xenograft version once regulatory approval is secured.

Tissue Regenix has the capacity to manufacture in-house xenograft variants of its orthopaedic products and SurgiPure™ XD. With the scope to upscale manufacturing there is little concern around manufacturing capacity in the coming years, with a view to multi-national distribution. However, the Group's human tissue products are currently processed by third party partners, which adds a potential risk to the process, both with intellectual property protection and also tissue donation supply.

Following the Acquisition, Tissue Regenix intends to build on CellRight's strengths, employing its substantial expertise in developing, manufacturing and launching allograft based products, with over 100 years of accumulated management experience in this and related fields. It is intended that CellRight will operate as the human tissue development and processing arm of the Group whilst integrating its products and distribution network (direct and private label) into Tissue Regenix's operating companies Tissue Regenix Wound Care Ltd and Tissue Regenix Orthopaedics Ltd.

Internationally, the Group's EU joint venture GBM-V in Germany intends, following regulatory approval, to produce CellRight's products for launch in Germany and the rest of Europe. There is opportunity to utilise CellRight's existing distribution network to market selected Tissue Regenix dCELL® Technology products.

The Board believes the combination of the two companies will provide strong momentum to both the orthopaedic and wound care businesses particularly in the US, and will help progress both these business units towards commercial success, targeting profitability for the Enlarged Group in 2020[6].

Tissue Regenix does not intend to change the primary focus of CellRight, and moreover given the complementary nature of the product and customer portfolios, it has identified certain potential synergies. These include gaining commercial advantage through cross selling; operational efficiency; overhead leverage and in-house capability to manufacture allograft tissue-derived products. The Group will invest in systems and will provide resources to expedite the delivery of the integration of CellRight into the Enlarged Group.

CellRight's position within the US allograft tissue market will accelerate an entry into the orthopaedic soft tissue market with OrthoPureTM HT/HM.

Use of Proceeds

The Company intends to use the net proceeds of the Offer for the following purposes:

To finance the $25.9 million (£19.9 million) Initial Consideration (plus any working capital adjustment) and up to $4.1 million (£3.1 million) Earn-Out Consideration payable under the Acquisition Agreement and payment of associated acquisition costs, including advisor fees.

The remaining funds of approximately £12.5 million will be used to accelerate the growth of the Enlarged Group and will provide working capital to support the on-going commercialisation of the Group's existing programmes.

Tissue Regenix intends to launch seven products over the next two years.

Wound Care

- Drive continued growth of Tissue Regenix's US wound care business.

- Integrate CellRight's Matrix IQ product to the wound care product portfolio in the US and eventually Europe.

- Launch SurgiPure™ XD in the US H1 2018, and continue to expand and develop CellRight's product offering in the general surgery market.

- Launch DermaPure® in the EU.

Orthopaedics

- Subject to regulatory approval, launch and roll out OrthoPure™ XT for ACL repair in Europe with subsequent line extensions planned.

- Launch of OrthoPure™ HT and OrthoPure™ HM in the US.

- Accelerate development of CellRight's distributor & private label business in the US and internationally for both CellRight and Tissue Regenix products.

- Continue to expand and develop CellRight's product offering in the spine and orthopaedic spaces and its market share in each.

GBM-V/Cardiac

- Subject to regulatory approval for CardioPure™ HAV/HPV in Germany, roll out in H2 2017/H1 2018.

- Subject to regulatory approval for DermaPure® in Germany, roll out in H2 2017.

- GBM-V drive to EBITDA positive during the 2019 financial year.

The Acquisition, along with the additional funding will expand the market opportunity of the Enlarged Group and accelerate it towards its target of achieving profitability in 2020[7].

Current trading and outlook

On 2 June 2017 the Group announced its results for the 11 months to 31 December 2016. Tissue Regenix Group plc grew sales by 77 per cent. to £1,443k in the 11 months to 31 December 2016 (January 2016: £816k) which includes £1,322k of sales in the US. Operating loss in the same period was £11,060k (January 2016: £10,242k). Finance income was £114k in the period (January 2016: £213k) with a research and development tax credit of £1,034k (January 2016: £527k) generating a loss after tax of £9,912k (January 2016: £9,502k) of which £9,786k was attributable to equity holders.

Note: All comparatives are 11 months to December 2016 versus 12 months to January 2016

Following the award of two major GPO contracts with Premier and Vizient in December 2016 and March 2017 respectively, the Group now has 75% coverage for hospital based wounds in the US, complementing the 93% Medicare reimbursement coverage for outpatient settings. To identify the areas of highest opportunity and to maximise the sales potential of these GPO contracts, the Group undertook a detailed analysis of its addressable hospital market and has accordingly restructured its direct sales force on a regional basis to prioritise high potential hospitals, whilst continuing to use distributors to access other areas. To support this new focus, the Group has strengthened its US leadership team, acquiring specific expertise pivotal to the success of driving performance and pulling through clinical demand from the GPO agreements, which the Group expects will maximise sales execution and ultimately enhance revenue performance.

These operational changes were implemented in the first quarter of this year with the impact of these changes taking effect progressively throughout H1. Tissue Regenix achieved wound care revenue of $0.6m in the 4 months to 30 April 2017, with 45% of revenue in April secured via GPO agreements. With the benefits of the restructured sales force already becoming evident and as individual hospital approvals increase, the Group expects sales in wound care to accelerate significantly in the second half of the year.

With DermaPure® now positioned to meaningfully increase market penetration, the Group expects a significant and sustained acceleration in sales growth over the medium term based on DermaPure®'s superior patient outcomes, strong clinical support and increasingly broadly-based hospital approvals. As hospital-based adoption increases the Group believes that this will benefit its distributor channels as well as its ability to address the out-patient setting.

The one year clinical data for OrthoPure™ XT has been submitted to support CE mark and European market authorisation. There is, however, added uncertainty brought by the new Medical Device Regulation which introduced additional review steps and will impact the regulatory approval process. Therefore, the timeline for launch is now difficult to predict as these changes are implemented. The Company is working closely with the notified body with the aim of expediting this process and providing clarity around timelines.

In addition, GBM-V, the Group's controlled joint venture in Europe is expected to make an increased contribution over the course of this year with momentum expected to continue as the year progresses.

The Group believes that the refocused sales approach targeting key markets, its broad development pipeline of innovative products offering exciting organic growth opportunities and its forthcoming entry into the US orthopaedics market in 2018, means that it is well placed for future growth.

Tissue Regenix Wound Care Inc. and Community Tissue Services (which manufactures products in the US on behalf of Tissue Regenix) have received a complaint from LifeNet Health alleging potential infringement of one of its patents. Tissue Regenix Wound Care Inc. and Community Tissue Services respect third party intellectual property and although they do not believe that there has been infringement, they have taken LifeNet Health's notice under review and have responded accordingly.

Principal terms of the Acquisition

Pursuant to the terms of the Acquisition Agreement, the Purchaser has conditionally agreed to acquire all of the membership interests of CellRight which will, following Completion, be owned by the Purchaser. The Acquisition Agreement provides for a maximum aggregate consideration of up to $30.0 million (£23.0 million) on a "cash-free" "debt-free" basis subject to a working capital adjustment mechanism which is capped at a maximum upwards adjustment of $100,000 (£76,693). Of the total Consideration payable under the terms of the Acquisition, the Initial Consideration of $25.9 million (£19.9 million) (subject to the working capital adjustment) is payable in cash upon Completion and the remaining Earn Out Consideration of up to $4.1 million (£3.1 million) is payable to the members of CellRight ("Members"), in cash subject to CellRight achieving certain revenue performance targets over a two-year period following Completion as detailed below.

A payment of $2.04 million is payable upon CellRight reaching $7.0 million revenue by the end of the 12 months following Completion. Should this not be met, there is a mechanism that allows for a proportion of the payment to be made provided revenue equals or exceeds $6.0 million in such period.

In addition, if revenue in the 12 months following Completion is equal to or exceeds $10.0 million, then the Purchaser will make an additional $1.0 million payment to the Members ("Performance Advance").

A further $2.04 million, less an amount equal to the Performance Advance, if any, is payable upon CellRight reaching $12.5 million revenue by the end of the second 12 month period following Completion. There is also a mechanism for a proportion of the payment to be made provided revenue equals or exceeds $10.0 million.

Details Of The Placing

The Company intends to conditionally raise approximately £40 million (before expenses) by way of a proposed placing of up to 400 million new Ordinary Shares, less the number of any Subscription Shares, at a price of 10 pence per Placing Share in order to finance the Consideration payable in respect of the Acquisition, as well as provide additional capital for the Enlarged Group. The Issue Price represents a discount of approximately 18.4 per cent to the closing middle market price of 12.25 pence per Ordinary Share on 20 July 2017 (being the latest practicable date prior to the date of this document). In connection with the proposed fundraise, certain of the Directors intend to subscribe for Subscription Shares in the Company at a price of 10 pence per Subscription Share.

The New Ordinary Shares will rank pari passu in all respects with each other and with the existing Ordinary Shares.

Financing of the Acquisition

The Acquisition will be funded by the Placing and the Subscription (if any) of 400 million New Ordinary Shares at a price of 10 pence per share, a discount of approximately 18.4 per cent to the closing middle market price of 12.25 pence per Ordinary Share on 20 July 2017, being the latest practicable date prior to the announcement of the Offer. The total consideration payable is up to $30.0 million (£23.0 million) on a "cash-free" "debt-free" basis subject to a working capital adjustment mechanism which is capped at a maximum upwards adjustment of $100,000 (£76,693). The Initial Consideration of $25.9 million (£19.9 million) (subject to the working capital adjustment) will be paid in cash at Completion, with deferred Earn Out Consideration of a maximum $4.1 million (£3.1 million) being subject to CellRight achieving the revenue performance targets detailed above.

Management

Following Completion, Jesus Hernandez, CEO of CellRight will join Tissue Regenix as Chief Scientific Officer. It is intended that a separate CellRight board will be established comprising of Antony Odell, Chairman; Paul Devlin, Chief Financial Officer and Jesus Hernandez, CEO of CellRight.

 4. RELATED PARTY TRANSACTIONS

The proposed participations in the Placing by Invesco Asset Management Limited acting as agent for its discretionary managed clients including the Invesco Funds ("IAML"), IP Group (or its affiliates) and Woodford Investment Management Limited acting as agent for its discretionary managed clients ("Woodford") are expected to constitute related party transactions for the purposes of the AIM Rules by virtue of their status as substantial shareholders of the Company pursuant to the AIM Rules. Further details of any participation by IAML, IP Group and Woodford in the Placing will be set out in the announcement to be made on the closing of the bookbuild exercise, which is expected to be made tomorrow.

APPENDIX

TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

1. Details of the Placing

1.1 Jefferies has entered into an agreement with the Company (the "Placing Agreement") under which, subject to the conditions set out in that agreement, Jefferies has agreed, as agent and on behalf of the Company, to use reasonable endeavours to procure placees (the "Placees") for the Placing Shares at a price of 10 pence per Placing Share (the "Issue Price"), where the exact number of the Placing Shares to be allocated and issued to each Placee shall be determined following completion of an accelerated bookbuilding process (the "Bookbuild"), described in this announcement and set out in the Placing Agreement (the "Placing"). The Placing is not underwritten.

1.2 The Placing is conditional on, amongst other things, the approval by Shareholders of the Shareholder Resolutions which will: (i) grant authority to the Directors to allot the Placing Shares and disapply pre-emption rights in respect of the Placing Shares; and (ii) approve a proposed waiver of Rule 9 of the Takeover Code. The Circular containing details of the proposed Placing and the notice of the General Meeting is expected to be sent to Shareholders as soon as practicable following the close of the Bookbuild.

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

1.4 As a term of the Placing, the Company has agreed that it will not issue or sell any Ordinary Shares (other than the Placing Shares or the Subscription Shares) for a period ending on the date falling 90 days after Admission, without Jefferies' prior consent. This agreement does not however prevent the Company from granting or satisfying exercises of options granted pursuant to existing share schemes of the Company.

2. Application for admission to trading

2.1 Application will be made to the London Stock Exchange for the Admission of the Placing Shares to trading on AIM. It is expected that Admission will become effective on or around 9 August 2017 and that dealings in the Placing Shares will commence at that time.

3. Bookbuild

3.1 Jefferies will today commence the Bookbuild to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

3.2 Jefferies and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their absolute discretion determine.

4. Participation in, and principal terms of, the Placing

4.1 Jefferies is acting as bookrunner and agent of the Company in respect of the Placing.

4.2 Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Jefferies. Jefferies and each of its affiliates are entitled to enter bids in the Bookbuild as principal.

4.3 The Bookbuild will be carried out on the basis of the Issue Price of 10 pence per Placing Share payable to Jefferies by all Placees whose bids are successful. The number of the Placing Shares to be allocated and issued to each Placee will be determined by Jefferies in consultation with the Company following completion of the Bookbuild. Further details of the Placing, including its completion, will be announced on a regulatory information service ("RIS") following the completion of the Bookbuild.

4.4 Certain of the Directors have indicated an intention to subscribe for new Ordinary Shares in the Company at the Issue Price pursuant to separate subscription agreements which are expected to be entered into between the Company and such Directors. The maximum number of Placing Shares that may be allocated pursuant to the Bookbuild will be reduced to the extent that Directors subscribe for such Subscription Shares.

4.5 To bid in the Bookbuild, prospective Placees should communicate their bid by telephone to their usual sales contact at Jefferies. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Issue Price. Bids may be scaled down by Jefferies on the basis referred to in paragraph 4.9.

4.6 The Bookbuild is expected to close no later than 9 a.m. (London time) on 21 July 2017, but may be closed earlier or later at Jefferies' discretion. Jefferies may, in agreement with the Company, accept bids that are received after the Bookbuild has closed. The Company reserves the right (upon the agreement of Jefferies) to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.

4.7 Each prospective Placee's allocation will be determined by Jefferies in consultation with the Company and will be confirmed orally by Jefferies as agent of the Company following the close of the Bookbuild. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) in favour of Jefferies and the Company to subscribe for the number of Placing Shares allocated to it at the Issue Price on the terms and conditions set out in this Appendix and in accordance with the Company's articles of association.

4.8 Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Jefferies as agent of the Company, to pay Jefferies (or as it may direct) in cleared funds, an amount equal to the product of the Issue Price and the number of Placing Shares that such Placee has agreed to subscribe for and the Company has agreed to allot and issue to that Placee.

4.9 Jefferies may choose to accept bids, either in whole or in part, on the basis of allocations determined in consultation with the Company and may scale down any bids for this purpose on such basis as it may determine. Jefferies may also, notwithstanding paragraphs 4.6 and 4.7 above, subject to the prior consent of the Company (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.

4.10 A bid in the Bookbuild will be made on the terms and subject to the conditions in this announcement and will be legally binding on the Placee on behalf of which it is made and except with Jefferies' consent will not be capable of variation or revocation after the time at which it is submitted.

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

4.12 All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing Agreement".

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

4.14 To the fullest extent permissible by law, neither Jefferies nor any of its affiliates, agents, directors, officers or employees shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither Jefferies nor any of its affiliates, agents, directors, officers or employees shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of their conduct of the Bookbuild or of such alternative method of effecting the Placing as Jefferies and the Company may determine.

5. Conditions of the Placing

5.1 The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. The obligations of Jefferies under the Placing Agreement in respect of the Placing are conditional on, amongst other things:

5.1.1 agreement being reached between the Company and Jefferies on the terms of the Placing, including the number of Placing Shares to be allocated and issued to each Placee and publication of an announcement by the Company giving details of the results of the Placing, through a RIS, by no later than 9 a.m. on 21 July 2017;

5.1.2 the Shareholder Resolutions being approved by the requisite majority of Shareholders attending and voting at the General Meeting, and the proposed waiver of Rule 9 of the Takeover Code having been granted and not revoked by the Takeover Panel (conditional only on approval by the independent shareholders);

5.1.3 the warranties contained in the Placing Agreement being true and accurate in every respect and not misleading on the date of the Placing Agreement and at Admission, as though they had been given and made on such date by reference to the facts and circumstances then subsisting;

5.1.4 the Company performing all of its obligations under the Placing Agreement to the extent the same fall to be performed or satisfied prior to Admission;

5.1.5 the membership interest purchase agreement entered into in connection with the acquisition of the Target (the "Acquisition Agreement"): (i) having been duly executed by the parties thereto by or on the date of the Placing Agreement; (ii) remaining in full force and effect and not having been modified, rescinded, lapsed or been terminated (in whole or in part) prior to Admission (save with the consent of Jefferies); (iii) having become unconditional in all respects save for any condition relating to the Placing Agreement not having been terminated and having become unconditional in all respects; and (iv) having been completed in escrow (the sole escrow condition being the satisfaction of certain payment obligations of the Purchaser under the Acquisition Agreement) prior to Admission;

5.1.6 Jefferies having received confirmation in writing from (i) the Target's solicitors that they have received an irrevocable instruction from the vendors; and (ii) the Company's solicitors that they have received an irrevocable instruction from the Purchaser, in each case to release certain documents held by them in escrow (pursuant to the Acquisition Agreement) upon the satisfaction of certain payment obligations of the Purchaser under the Acquisition Agreement;

5.1.7 Admission taking place by 8.00 a.m. (London time) on 9 August 2017 (or such later date as the Company and Jefferies may otherwise agree, being no later than 31 August 2017) (the " Admission Date"); and

5.1.8 in the sole opinion of Jefferies, there shall not have been a material adverse change in, or affecting, the condition (financial, operational, legal or otherwise) or the earnings, management, business affairs, solvency or prospects of the Company, the Group or the Target Group (in each case, taken as a whole), whether or not arising in the ordinary course of the business and whether or not foreseeable at the date of the Placing Agreement (a "Material Adverse Change") since the date of the Placing Agreement.

5.2 If: (i) any of the conditions contained in the Placing Agreement in relation to the Placing (including those described above) are not fulfilled or waived by Jefferies, by the time or date where specified (or, in each case, such later time and/or date as the Company and Jefferies may agree); or (ii) the Placing Agreement is terminated in the circumstances specified below, the Placing will not proceed and the Placees' rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

5.3 Jefferies may, at its absolute discretion and upon such terms as it thinks fit, waive compliance by the Company with the whole or any part of certain of the Company's obligations in relation to the conditions in the Placing Agreement. The condition in the Placing Agreement relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.

5.4 None of Jefferies, the Company or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Jefferies.

6. Termination of the Placing Agreement

6.1 Jefferies may at any time prior to Admission (acting in good faith) terminate the Placing Agreement by giving notice in writing to the Company, if, amongst other things:

6.1.9 the Company's application for Admission has been refused by the London Stock Exchange or, in the judgement of Jefferies acting in good faith in pursuance of its duties as the nominated adviser of the Company, will not be granted; or

6.1.10 there has been a Material Adverse Change and, in the opinion of Jefferies, the effect of such change is that it would materially prejudice the success of the Placing or the distribution of Placing Shares; or

6.1.11 there has occurred, happened or come into effect:

(a) any government regulation or other occurrence of any nature whatsoever which, in the good faith opinion of Jefferies, materially and adversely affects or will or is reasonably likely materially and adversely to affect the business of the Group taken as a whole; or

(b) a suspension or material limitation in trading in securities generally on the London Stock Exchange's market for listed securities, a general moratorium on commercial banking activities in London or New York or a material disruption in commercial banking or securities settlement or clearance services in the United Kingdom or United States of America, an incident of terrorism or the outbreak or escalation of hostilities involving the UK, any other EU Member State or the USA or the declaration by the UK, any other EU Member State or the USA of a national emergency or war or the occurrence of any other calamity or crisis resulting in a change in financial, political, market or economic conditions or currency exchange rates in the UK or US, which, in Jefferies' good faith opinion, makes it impractical or inadvisable to continue with the Placing.

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

6.3 By participating in the Placing, Placees agree that the exercise by Jefferies of any right of termination or other discretion under the Placing Agreement shall be within Jefferies absolute discretion and that Jefferies need not make any reference to Placees and that neither Jefferies nor any other person shall have any liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

7. No prospectus

7.1 The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require a prospectus in the UK. No offering document, prospectus or admission document has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing and Placees' commitments will be made solely on the basis of their own assessment of their own assessment of the Company, the Placing Shares and the Placing based on the Company's publicly available information taken together with the information contained in this announcement (including this Appendix), and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.

7.2 Each Placee, by accepting a participation in the Placing, agrees that the content of this announcement (including this Appendix) is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or Jefferies or any other person and none of Jefferies or the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude or limit the liability of any person for fraudulent misrepresentation by that person.

8. Registration and Settlement

8.1 Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. Jefferies and the Company reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in their opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

8.2 Following the close of the Bookbuild for the Placing, each Placee to be allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares allocated to it at the Issue Price and settlement instructions. The number of Placing Shares allocated to each Placee will be allocated in a manner determined by Jefferies in its absolute discretion in consultation with the Company and Placees will be notified of the relevant allocation in the contract note.

8.3 Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with Jefferies.

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

8.5 It is expected that settlement in respect of the Placing Shares will take place on 9 August 2017 on a delivery versus payment basis.

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

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

8.8 If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

9. Representations and warranties

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

9.1.1 it has read and understood this announcement in its entirety and that its subscription of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein;

9.1.2 that no offering document, listing particulars, prospectus or admission document has been or will be prepared in connection with the Placing and it has not received and will not receive a prospectus, admission document or other offering document in connection with the Bookbuild, the Placing or the Placing Shares;

9.1.3 the Placing does not constitute a recommendation or financial product advice and Jefferies has not had regard to its particular objectives, financial situation or needs;

9.1.4 unless paragraph 9.1.5 below applies, it has neither received nor relied on any 'inside information' (for the purposes of MAR and section 56 of the Criminal Justice Act 1993) concerning the Company in accepting this invitation to participate in the Placing;

9.1.5 if it has received any 'inside information' (for the purposes of MAR and section 56 of the Criminal Justice Act 1993) in relation to the Company and its securities, it confirms that it has received such information within the market soundings regime provided for in article 11 of MAR and associated delegated regulations and it has not: (i) dealt (or attempted to deal) in the securities of the Company; (ii) encouraged, recommended or induced another person to deal in the securities of the Company; or (iii) unlawfully disclosed inside information to any person, prior to the information being made publicly available;

9.1.6 it has the power and authority to carry on the activities in which it is engaged, to subscribe for and/or acquire the Placing Shares and to execute and deliver all documents necessary for such acquisition and/or subscription;

9.1.7 that the existing Ordinary Shares in the capital of the Company are admitted to trading on AIM, and that the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM, which includes a description of the nature of the Company's business and its most recent balance sheet and profit and loss account, and that it is able to obtain or access such information and such information or comparable information concerning any other publicly traded company, in each case without undue difficulty;

9.1.8 that neither Jefferies nor the Company nor any of their respective affiliates nor any person acting on behalf of any of them has provided, and none of them will provide it, with any material regarding the Placing Shares or the Company or any other person other than this announcement; nor has it requested Jefferies, the Company, any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;

9.1.9 unless otherwise specifically agreed with Jefferies, that neither it nor the beneficial owner of the Placing Shares is, or at the time the Placing Shares are acquired, neither it nor the beneficial owner of the Placing Shares will be, a resident of, or otherwise located in, Australia, Canada, Japan or the Republic of South Africa and it further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of Australia, Canada, Japan or the Republic of South Africa and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;

9.1.10 that it and each account it represents is either:

(a) (i) not within the United States and will not be within the United States at the time that any buy order for Placing Shares is originated by it; (ii) acquiring the Placing Shares in an "offshore transaction" as defined in Regulation S under the US Securities Act of 1933, as amended (the "Securities Act"); and (iii) not acquiring any of the Placing Shares as a result of any form of "directed selling efforts" (within the meaning of Regulation S under the Securities Act); or

(b) (i) a "qualified institutional buyer" ("QIB") as defined in Rule 144A under the Securities Act; and (ii) not acquiring any of the Placing Shares as a result of any form of "general solicitation" or "general advertising" within the meaning of Rule 502(c) of Regulation D under the Securities Act;

9.1.11 that it understands, and each account it represents has been advised that, (i) the Placing Shares have not been and will not be registered under the Securities Act or with any regulatory authority of any other state or other jurisdiction of the United States; (ii) the Placing Shares are being offered and sold only (a) to persons reasonably believed to be QIBs pursuant to an exemption from or in transactions not subject to, the registration requirements of the Securities Act or (b) in an "offshore transaction" within the meaning of and pursuant to Regulation S under the Securities Act; and (iii) no representation has been made as to the availability of any exemption under the Securities Act or any relevant state or other jurisdiction's securities laws for the reoffer, resale, pledge or transfer of the Placing Shares;

9.1.12 it and each account it represents is not acquiring the Placing Shares with a view to any offer, sale, resale or delivery, directly or indirectly, of any Placing Shares in or into the United States other than pursuant to an effective registration under the US Securities Act or pursuant to an exemption from, or in transactions not subject to, the registration requirements thereunder and in compliance with any applicable securities laws of any state or other jurisdiction of the United States;

9.1.13 that it will not distribute, forward, transfer or otherwise transmit this announcement or any other materials concerning the Placing (including any electronic copies thereof), in or into the United States;

9.1.14 that the content of this announcement is exclusively the responsibility of the Company and that neither Jefferies nor any person acting on its behalf have or shall have any liability for any information, representation or statement contained in this announcement or any information previously or subsequently published by or on behalf of the Company, including, without limitation, any information required to be published by the Company pursuant to applicable laws (the "Exchange Information") and will not be liable for its decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. It further represents, warrants and agrees that the only information on which it is entitled to rely and on which it has relied in committing itself to subscribe for the Placing Shares is contained in this announcement and any information previously published by the Company by notification to a RIS, such information being all that it deems necessary 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, warranties or statements made by Jefferies or the Company and neither Jefferies nor the Company will be liable for Its decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. It further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. None of Jefferies, the Company or any of their respective affiliates has made any representations to it, express or implied, with respect to the Company, the Placing and the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information, and each of them expressly disclaims any liability in respect thereof. Nothing in this paragraph or otherwise in this announcement excludes the liability of any person for fraudulent misrepresentation made by that person;

9.1.15 neither it, nor the person specified by it for registration as holder of Placing Shares is, or is acting as nominee or agent for, and the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act of 1986 (depositary receipts and clearance services);

9.1.16 that it has complied with its obligations under the Criminal Justice Act 1993, MAR and in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006, the Money Laundering Regulations 2007 and the Money Laundering Sourcebook of the FCA (the "Money Laundering Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

9.1.17 that it is acting as principal only in respect of the Placing or, if it is acting for any other person; (i) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person; and (ii) it is and will remain liable to the Company and/or Jefferies for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person);

9.1.18 if it is a financial intermediary, as that term is used in Article 3(2) of the EU Prospectus Directive (which shall mean Directive 2003/71/EC and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), that the Placing Shares subscribed by it in the Placing 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 other than qualified investors, or in circumstances in which the prior consent of Jefferies has been given to the proposed offer or resale;

9.1.19 that it has not offered or sold and will not offer or sell any Placing Shares to the public in any member state of the EEA except in circumstances falling within Article 3(2) of the Prospectus Directive which do not result in any requirement for the publication of a prospectus pursuant to Article 3 of that Directive;

9.1.20 that 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;

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

9.1.22 if in a member state of the EEA, unless otherwise specifically agreed with Jefferies in writing, that it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive;

9.1.23 if in the United Kingdom, that it is a person (i) having professional experience in matters relating to investments who falls within the definition of "investment professionals" in Article 19(5) of the Order or (ii) who falls within Article 49(2) (a) to (d) ("High Net Worth Companies, Unincorporated Associations, etc") of the Order, or (iii) to whom this announcement may otherwise lawfully be communicated;

9.1.24 that no action has been or will be taken by either the Company or Jefferies or any person acting on behalf of the Company or Jefferies that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

9.1.25 that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions which apply to it and that it has fully observed such laws and obtained all such governmental and other guarantees, permits, authorisations, approvals and consents which may be required thereunder and complied with all necessary formalities and that it has not taken any action or omitted to take any action which will or may result in Jefferies, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any jurisdiction in connection with the Placing;

9.1.26 that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to its participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this announcement) and will honour such obligations;

9.1.27 that it and any person acting on its behalf will make payment for the Placing Shares allocated to it in accordance with this announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Jefferies may in its absolute discretion determine and without liability to it;

9.1.28 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 subscribe for, and that Jefferies or the Company may call upon it to subscribe for a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;

9.1.29 that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither Jefferies nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax or other similar taxes resulting from a failure to observe this requirement. It and any person acting on its behalf agrees to indemnify the Company and Jefferies in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of Jefferies who will hold them as nominee on its behalf until settlement in accordance with standing settlement instructions;

9.1.30 that neither Jefferies, nor any of its affiliates, agents, directors, officers or employees, nor any person acting on its behalf, is making any recommendations to it or, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of either of Jefferies and that Jefferies do not have any duties or responsibilities to it for providing the protections afforded to its clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

9.1.31 that in making any decision to subscribe for the Placing Shares, it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for or purchasing the Placing Shares. It further confirms that it is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of participating in, and are able to sustain a complete loss in connection with, the Placing. It further confirms that it relied on its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved, and not upon any view expressed or information provided by or on behalf of Jefferies;

9.1.32 that in connection with the Placing, Jefferies and any of its affiliates acting as an investor for its own account may take up Placing Shares in the Company and in that capacity may retain, purchase or sell for its own account such Placing Shares in the Company and any securities of the Company or related investments and may offer or sell such securities or other investments otherwise than in connection with the Placing. Jefferies do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so;

9.1.33 that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits, on its own behalf and on behalf of any person on whose behalf it is acting, to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, 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 Company or Jefferies in any jurisdiction in which it is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

9.1.34 that the Company, Jefferies and their respective affiliates and others will rely upon the truth and accuracy of the representations, warranties and acknowledgements set forth herein and which are given to Jefferies on its own behalf and on behalf of the Company and are irrevocable and it irrevocably authorises the Company and Jefferies to produce this announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein;

9.1.35 none of the Company or Jefferies owes any fiduciary or other duties to any Placee in respect of any acknowledgements, confirmations, undertakings, representations, warranties or indemnities in the Placing Agreement;

9.1.36 its commitment to take up Placing Shares on the terms set out in this Announcement (including this Appendix) will continue notwithstanding any amendment that may or in the future be made to the terms and conditions of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company or Jefferies' conduct of the Placing; and

9.1.37 that it will indemnify and hold the Company and Jefferies and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this announcement and further agrees that the provisions of this announcement shall survive after completion of the Placing.

9.2 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. The Company and Jefferies are not liable to bear any transfer taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold Jefferies 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.

9.3 Each Placee and any person acting on behalf of each Placee acknowledges and agrees that Jefferies or any of its respective affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

9.4 When a Placee or person acting on behalf of the Placee is dealing with Jefferies, any money held in an account with Jefferies 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 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 Jefferies' money in accordance with the client money rules and will be used by Jefferies in the course of its own business; and the Placee will rank only as a general creditor of Jefferies.

9.5 All times and dates in this announcement may be subject to amendment. Jefferies shall notify the Placees and any person acting on behalf of the Placees of any changes.

9.6 The rights and remedies of Jefferies and the Company under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.

9.7 Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

DEFINITIONS

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

All references in this announcement to "£", "pence" or "p" are to the lawful currency of the United Kingdom, all references to "US$" or "$" are to the lawful currency of the United States

GLOSSARY

The following terms used in this announcement have the following meanings: