Placing to raise £27.8 million

RNS Number : 7519Z

Harworth Group PLC

17 March 2017

 

THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, NEW ZEALAND OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.

Harworth Group plc

("Harworth", the "Company" or the "Group")

Placing to raise £27.8 million to accelerate growth of strategic land bank

Harworth, the brownfield regeneration and property investment specialist, is pleased to announce that it has conditionally raised £27.8 million (before expenses) by placing 29,226,974 new ordinary shares of 10 pence each (the "Placing Shares") at a price of 95.0 pence per Placing Share (the "Placing Price") in order to accelerate continued expansion of its strategic land bank.

Highlights

·      Placing of 29,226,974 Placing Shares at a price of 95.0 pence per Placing Share raising gross proceeds of approximately £27.8 million.

·     Net proceeds of Placing will primarily be used to accelerate the continued expansion of the Company's strategic land bank.

·      Harworth recently entered into four option agreements to acquire, in aggregate, approximately 200 acres of strategic land, the masterplans for which are expected to deliver in aggregate over 1,500 residential plots and 600,000 sq. ft. of new commercial space (the "Option Agreements"), requiring approximately £19.2 million to exercise the options and fund the first three years of expenditure on planning, remediation and infrastructure works, and further site assembly.

·      Strategic land bank increases to approximately 2,750 acres, including 10,429 consented residential plots and approximately 10.4 million consented sq. ft. of commercial space, assuming the Option Agreements are exercised following successful confirmatory due diligence.

·  The Option Agreements are expected to generate an internal rate of return ("IRR") in excess of management's target return requirements, being accretive to both earnings and net asset value per share in the medium term after taking account of the impact of the Placing.

·      Four further potential strategic land opportunities are in negotiation, to acquire in aggregate up to 407 acres of strategic land for both residential and commercial development, requiring approximately £15.5 million investment ("Further Acquisition Opportunities").

·      Maintains prudent gearing: pro forma net loan to value ("LTV") as at 31 December 2016 of approximately 3.1 per cent. following the Placing and before any acquisition spend providing headroom and flexibility to support business activities.  As the acquisitions and investment being targeted are strategic land, once the proceeds of the Placing have been invested, there would be no change to the pro forma net LTV of 31.3 per cent when measured against income generating assets.

·      Investec and Canaccord Genuity are acting as joint bookrunners and joint brokers to the Placing.

Owen Michaelson, Harworth Chief Executive commented:

"An important part of our strategy is to replenish our land and property portfolio, both by securing new recurring income streams and to grow and expand our strategic land bank, which is fundamental to us continuing to deliver value to our shareholders. While we have made good progress in the past two years in securing valuable acquisition opportunities, today's Placing enables us to accelerate our acquisition strategy through the funding of the purchase of, and investment in, further sites to support the long term growth prospects of the business."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulations (EU) No. 596/2014 ("MAR") and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Cardew Group, Investor Relations Manager.

For further information, please contact:

Harworth Group plc	Tel: [phone]
Owen Michaelson, Chief Executive
Andrew Kirkman, Finance Director
Investec Bank plc (Joint Bookrunner and Joint Broker)	Tel: [phone]
Chris Sim
Jeremy Ellis
David Anderson
Neil Coleman
Canaccord Genuity Limited (Joint Bookrunner and Joint Broker)	Tel: [phone]
Bruce Garrow
Charlie Foster
Ben Griffiths
Cardew Group (Media Enquiries)	Tel: [phone]
Emma Crawshaw
Shan Shan Willenbrock
Emma Ruttle

Notes to Editors

Harworth Group plc (LSE: HWG) is a leading brownfield regeneration and property investment specialist which owns and manages a portfolio of approximately 22,000 acres of land over 140 sites located throughout the Midlands and North of England. The Company specialises in the regeneration of former coalfield sites and other brownfield land into employment areas, new residential developments and low carbon energy projects. http://www.harworthgroup.com/

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

The Appendix to this announcement (which forms part of this announcement) sets out the terms and conditions of the Placing. Persons who have chosen to participate in the Placing, by making an oral or written offer to subscribe for Placing Shares, will be deemed to have read and understood this announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in the Appendix.

IMPORTANT NOTICES

This announcement is not an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States. The Placing Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States unless the Placing Shares are registered under the US Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act, in each case in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offering of the Placing Shares in the United States.

This announcement may contain "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning.  By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company including, amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions, fluctuations in the property market for the price of land, the effect of tax and other legislation and other regulations in the United Kingdom, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel.  As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements.  Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made.  Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Investec Bank plc ("Investec") is authorised by the Prudential Regulatory Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority ("FCA") and is acting exclusively for the Company and no one else in connection with the Placing and will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to in this announcement.

Canaccord Genuity Limited ("Canaccord Genuity"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and no one else in connection with the Placing and will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to in this announcement.

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 Investec and Canaccord Genuity (together, the "Joint Bookrunners") or by any of their respective 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 contains certain financial measures that are not defined or recognised under IFRS, including EPRA NAV.  Information regarding these measures are sometimes used by investors to evaluate the efficiency of a company's operation and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements.  There are no generally accepted principles governing the calculation of these measures and the criteria upon which these measures are based can vary from company to company.  These measures, by themselves, do not provide a sufficient basis to compare the Company's performance with that of other companies and should not be considered in isolation or as a substitute for operating profit or any other measure as an indicator of operating performance, or as an alternative to cash generated from operating activities as a measure of liquidity.

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.

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

 

Placing to raise £27.8 million to accelerate growth of strategic land bank

Introduction

Harworth, the brownfield regeneration and property investment specialist, is pleased to announce that it has conditionally raised £27.8 million (before expenses) by placing 29,226,974 new ordinary shares of 10 pence each ("Ordinary Shares") at a price of 95.0 pence per Placing Share in order to accelerate the continued expansion of its strategic land bank.

Strategy

The Company manages a diversified portfolio of approximately 22,000 acres over 140 sites with a gross aggregate value of £400.3 million (as at 31 December 2016). The Company delivers value enhancing solutions by using its specialist skills in transforming often difficult parcels of brownfield land, requiring remediation and investment infrastructure, into new residential, commercial and energy developments. The Company's strategy and focus on regional markets with strong residential, industrial and logistics occupier demand remains supportive of growth.

Whilst the Group owns a total of approximately 22,000 acres, not all of this land has development potential. The Group's top ten sites account for approximately 55 per cent. of its portfolio value, and the top 20 sites, for approximately 80 per cent., as at 31 December 2016. In light of this since 2015 management have undertaken a programme to rationalise the portfolio through disposing of lower value non-core sites and increase the Group's focus on sites with higher value-add potential.

In order to ensure the sustainable growth of the business, the Directors have identified the need to expand the Group's strategic land portfolio, whilst continuing to secure recurring income streams to improve the resilience and quality of its earnings base. As at 31 December 2016, strategic land encompassed approximately 5 per cent. of the value of the Group's portfolio, markedly down from approximately 15 per cent. at the end of 2015, as a result of the management's success at moving this strategic land through the development process.

Significant brownfield development sites and multi-let business parks with asset management opportunities form the backbone of the Company's acquisitions strategy. Investment in edge of settlement sites and the assembly of new land parcels will also be pursued in order to create new, large scale communities attractive to both residential and commercial customers of the Company, such as that achieved at Waverley, Rotherham, Yorkshire's largest brownfield mixed use development.

Market backdrop

Whilst the outcome of the EU Referendum has led to uncertainty in London and the South East property markets, Harworth's core regional markets of the North of England and the Midlands have remained strong and steady. The Directors believe that regional economic imbalances are starting to be addressed and that infrastructure programmes such as HS2 and those associated with the Northern Powerhouse are expected to drive sustainable long-term economic growth in those core markets. National Government policies announced in 2017, such as the recently published Housing White Paper (February 2017), also continue to support the redevelopment of brownfield sites.

Residential

There remains a fundamental under-supply of new housing. Together with limited price growth in recent years in Harworth's core geographies and positive government stimulus measures, market demand for consented residential land in the regions remains robust, with house builders reporting consistent plot sales.

Commercial

Investment demand for well-connected industrial and logistics space remains strong. The rise of e-tailing and the increasing demands of consumers is driving demand for well-located logistics and distribution space allied to an under-supply of new units across the regions.

Renewables

A particular strength of Harworth's land bank is its attractions to low carbon energy tenants in terms of locations and grid connections. Following changes to renewable subsidies at the end of March 2016, management's focus within the natural resources team is now on alternative technologies, an area of the market which has Governmental support. This includes battery storage facilities that are seen as critical to helping balance supply and demand in the UK power system. Good interest remains for multi-energy schemes across a number of sites to address current power supply system imbalances.

Demonstrable track record

Since the start of 2014, Harworth has made investments in acquisitions of approximately £54.5 million, equating to approximately 1,000 acres. These acquisitions have been financed from a combination of internally generated free cash from the recycling of capital from realisations of approximately £126.8 million during the period, together with additional capital drawn down from the Group's bank facilities. These acquisitions have in aggregate outperformed management's internal hurdle rate of return. The Company's ability to create and realise value through asset sales, together with the value uplift generated on the Company's portfolio, has enabled the Company to deliver EPRA NAV compound annual growth (CAGR) of approximately 14.0 per cent. over the last three financial years.

The core focus of acquisitions in the second half of 2016 was on income producing assets at attractive yields with asset management opportunities, in order to improve the resilience of the Company's income base. Approximately £2 million was added to the Company's annual rent roll from acquisitions during 2016 and has presented the Company with opportunities for rental improvements and yield compression.

Whilst the Company will continue to identify opportunities to grow and strengthen its recurring income base, both within its existing portfolio and through acquisitions, the Directors recognise the need to grow and expand the Company's strategic land bank, to maintain delivery of its target NAV growth through the property cycle. Acquisition opportunities have been identified and secured under option and the Directors consider it appropriate to raise new equity in order to capitalise on those opportunities.

Use of proceeds

As at 31 December 2016 Harworth's strategic land bank stood at approximately 2,548 acres (gross). This portfolio is made up the Group's heritage coalfield portfolio, supplemented by acquisitions over the last two years, funded from free cash flow and banking facilities.

As announced on 6 March 2017, Harworth has entered into the Option Agreements to acquire four strategic land sites equating to approximately 200 acres. The total capital requirement to exercise these options and fund anticipated expenditure on planning, remediation and infrastructure works, and further site assembly over the first three years is estimated by the Directors to be approximately £19.2 million. If exercised and completed, the Directors believe that these sites will in aggregate generate an IRR in excess of management's target return requirements. Further details on each of the optioned sites are set out below:

Residential

Garden village site, Derbyshire

A 90-acre site that is targeting 675 housing plots and equates to 21 per cent. of a wider development scheme encompassing a former surface mine, coking works and agricultural land. The Directors consider that Harworth has the necessary skill set to undertake the further land assembly required to optimise the opportunity to deliver serviced land sales from 2022.

St Helens, Merseyside

A 60-acre cleared brownfield development site with outline planning permission in place for 900 residential plots. An application has already been made for grant funding to finance infrastructure works in order to deliver the opportunity for serviced land sales from 2018. There has already been interest in the site from housebuilders and private rental sector (PRS) firms.

Commercial

Chatterley Valley, Stoke

An option to acquire 24 acres adjacent to an existing Harworth site. This site is part of a Government Enterprise Zone with planning consent for 860,000 sq. ft. of commercial space and includes direct development opportunities.

Bewshill Farm, Bolton

A 12-acre site that has the potential to deliver 150,000 sq. ft. of direct development space as an extension of Harworth's successful Logistics North development.

The Directors intend that the net proceeds of the Placing will primarily be used to fund the exercise of the above Option Agreements, subject to satisfactory due diligence, and to fund investment in these strategic land sites so they can be marketed to potential buyers.

These Option Agreements are expected to be accretive to both earnings and NAV per share in the medium term after taking account of the impact of the Placing.

By raising new equity to fund the acquisition of new strategic land sites, the Directors believe this will enable the Group to continue to fund its existing site and infrastructure investments from free cash flow.

Further Acquisition Opportunities

In addition to the Option Agreements, Harworth has four potential Further Acquisition Opportunities under review:

Residential

Harworth has agreed terms for an option agreement on a 263-acre logistics and residential development site that could deliver 2 million sq. ft. of commercial space and 500 housing plots.

Commercial

Harworth has agreed terms for a drawdown development agreement for a 75-acre logistics development site located in Yorkshire, and an option agreement on a 29-acre logistics development site adjacent to a major motorway junction in the North West of the UK. Harworth is also in advanced negotiations for the unconditional purchase of 40 acres adjacent to an existing Harworth site in the North West

These Further Acquisition Opportunities would require capital investment of approximately £15.5 million in aggregate. If pursued, they could be part funded by the balance of the net proceeds of the Placing, with the remainder of any capital requirement being met by the Group's internally generated free cash.

Further acquisition opportunities continue to be explored as part of the management's strategy to replenish the Group's land and property portfolio.

The Placing is not conditional upon the exercise of the Option Agreements or acquisition of the Further Acquisition Opportunities and there can be no guarantee that any of the Option Agreements will be exercised or the Further Acquisition Opportunities pursued.

Financial position

As at 31 December 2016, the Company's gross debt was approximately £52.5 million and the balance of its cash and cash equivalents was approximately £13.0 million, resulting in net debt of approximately £39.5 million. Based on 31 December 2016 property values, the net LTV ratio was approximately 9.9 per cent. The Company's primary source of debt facilities is its five year £75 million revolving credit facility, with The Royal Bank of Scotland of which approximately £37.0 million was drawn at 31 December 2016. The Company is also able to access infrastructure funding provided by public bodies to promote the development of major sites and, as at 31 December 2016, had six facilities with aggregate drawn balances totalling approximately £15.5 million.

The Company recognises the risk in combining operational and financial gearing and, therefore, employs a strategy of assessing gearing against only business space and natural resources properties, which are income generating and, therefore, are capable of meeting their own debt service costs. This means that, as at 31 December 2016, the Company's net LTV increases to approximately 31.3 per cent. when measured against those income generating assets. The Directors believe this is a prudent and long-term sustainable approach to support the growth of the Company.

On a pro forma basis, taking into account the net proceeds of the Placing, the Company's net loan to value ratio at 31 December 2016 would reduce to approximately 3.1 per cent before any acquisition spend. This conservative level of gearing provides the Company with headroom and flexibility to support its business activities, including through the seasonal variances of investment in infrastructure ahead of plot sales.  As the acquisitions being targeted are strategic land, once the proceeds of the Placing have been invested, there would be no change to the pro forma net LTV of 31.3 per cent when measured against income generating assets.

Details of the Placing

Under the terms of the Placing, Harworth has conditionally placed 29,226,974 Placing Shares, representing approximately 9.9 per cent. of the current issued ordinary share capital, with existing holders of Ordinary Shares ("Shareholders") and new institutional investors at the Placing Price. Members of the public are not entitled to participate in the Placing. Harworth has conditionally raised approximately £27.8 million (gross) (approximately £27.1 million (net)) by way of the Placing. The Placing is not being underwritten.

The Placing Price of 95.0 pence represents a discount of approximately 1.6 per cent. to the closing mid-market price of 96.5 pence per Placing Share on 16 March 2017, being the latest practicable date prior to the publication of this announcement.

Investec and Canaccord Genuity, as agents for and acting on behalf of Harworth, have agreed to use reasonable endeavours to procure Placees for the Placing Shares at the Placing Price. Investec and Canaccord Genuity are acting as joint bookrunners and joint brokers in respect of the Placing.

The Placing Shares will rank pari passu in all respects with each other and with all other Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission, including the final dividend of 0.523 pence per Ordinary Share declared by the Board of Harworth on 6 March 2017 in respect of the year ended 31 December 2016. The issue of the Placing Shares is to be effected by way of a cashbox placing and will be made on a non-pre-emptive basis.

Applications have been made to the FCA for admission of the Placing Shares to the standard listing segment of the Official List of the UK Listing Authority (the "Official List") and to London Stock Exchange plc ("London Stock Exchange") for admission to trading on its main market for listed securities (together, "Admission"). It is expected that Admission will become effective on or around 22 March 2017 and that dealings in the Placing Shares will commence on that date.

Upon Admission, the Company's ordinary share capital as enlarged by the Placing ("Enlarged Share Capital") will comprise 321,496,760 Ordinary Shares with one voting right per share. The Company does not hold any shares in treasury. Therefore, this figure of 321,496,760 Ordinary Shares may be used by Shareholders following Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of Harworth under the FCA's Disclosure Guidance and Transparency Rules.

The Placing is conditional upon, amongst other things, Admission becoming effective and the Placing Agreement between Harworth and the Joint Bookrunners becoming unconditional and not being terminated, in accordance with its terms. The Placing Agreement contains certain warranties and indemnities from the Company in favour of the Joint Bookrunners in relation to, inter alia, the accuracy of the information in this announcement, certain financial information and other matters relating to the Company and its business. 

The Appendix to this announcement (which forms part of the announcement) sets out the terms and conditions of the Placing and expressions used in this announcement shall have the meanings set out in the Definitions section of the Appendix.

Directors and PDMR participation in the Placing

The following Directors and persons discharging managerial responsibility ("PDMR") have agreed to subscribe, in aggregate, for 36,536 Placing Shares pursuant to the Placing as follows:

Name	Role	Number of Placing Shares subscribed	Number of Ordinary Shares held following Admission	Percentage of Enlarged Share Capital
Owen Michaelson	Chief Executive	21,052	146,463	0.05%
Andrew Cunningham	Non-executive Director	1,576	17,333	0.01%
Steven Underwood	Non-executive Director	10,526	38,385	0.01%
Christopher Birch	Group General Counsel and Company Secretary	2,330	5,100	0.002%
Ian Ball	Executive Committee - Income Generation	1,052	21,738	0.01%

Andrew Kirkman (Finance Director) has undertaken to purchase 19,587 Ordinary Shares immediately following the announcement of the Placing, after which he will hold 70,000 Ordinary Shares in aggregate, representing approximately 0.02 per cent. of the Enlarged Share Capital.

Peel and PPF participation in the Placing

Whilst the Company's Ordinary Shares are admitted to the Standard Segment of the Official List, the Directors intend for the Company to comply with the provisions of Chapter 11 of the Listing Rules applicable to companies admitted to the Premium Segment of the Official List in respect of related party transactions.

Peel Group Holdings Limited ("Peel Group") and the Board of the Pension Protection Fund ("PPF") are substantial Shareholders in the Company for the purposes of Chapter 11 of the Listing Rules. Peel and the PPF have agreed to subscribe for 8,591,771 Placing Shares and 7,306,743 Placing Shares respectively in the Placing. If the Company's Ordinary Shares were admitted to the Premium Segment of the Official List, the participations of Peel Group and the PPF in the Placing would constitute smaller related party transactions for the purposes of the Listing Rules and as such would not require the approval of independent Shareholders.

Further, to provide investors with greater certainty regarding the PPF's shareholding, the Company and the PPF have entered into a lock-in deed, pursuant to which the PPF has agreed for a period of six months following Admission, not to transfer or reduce its interest in the Enlarged Share Capital.  In addition, attention is drawn to Harworth's chairman's statement in the 6 March 2017 preliminary results announcement in which the PPF's strong medium to long term support for the Group was reaffirmed.

Placing statistics

Number of Ordinary Shares in issue before the Placing	292,269,786
Number of Placing Shares to be issued pursuant to the Placing	29,226,974
Placing Price	95.0 pence
Gross proceeds of the Placing	£27.8 million
Estimated net proceeds of the Placing	£27.1 million
Number of Ordinary Shares in issue immediately following the Placing	321,496,760
Placing Shares as a percentage of the enlarged share capital	9.1 per cent.

APPENDIX - TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR PLACEES ONLY

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY INVESTEC BANK PLC ("INVESTEC") AND CANACCORD GENUITY LIMITED ("CANACCORD GENUITY") (INVESTEC, TOGETHER WITH CANACCORD GENUITY, THE "BOOKRUNNERS" AND EACH A "BOOKRUNNER") WHO ARE (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE "QUALIFIED INVESTORS", AS DEFINED IN ARTICLE 2.1(E) OF DIRECTIVE 2003/71/EC AS AMENDED (THE "PROSPECTIVE DIRECTIVE") AND (B) IF IN THE UNITED KINGDOM, PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 AS AMENDED (THE "FPO") OR FALL WITHIN THE DEFINITION OF "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" IN ARTICLE 49(2)(A) TO (D) OF THE FPO AND (II) ARE "QUALIFIED INVESTORS" AS DEFINED IN SECTION 86 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") OR (C) OTHERWISE TO PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. BY ACCEPTING THE TERMS OF THIS DOCUMENT YOU REPRESENT AND AGREE THAT YOU ARE A RELEVANT PERSON. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.

DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED OR PROHIBITED BY LAW. PERSONS DISTRIBUTING THIS DOCUMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.

The 29,226,974 new Ordinary Shares (as defined below) in the capital of the Company that are the subject of the Placing (the "Placing Shares") have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration, except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the Placing Shares is being made in the United States.

This document does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan, the Republic of South Africa or any other jurisdiction in which such offer or solicitation is or may be unlawful (a "Prohibited Jurisdiction"). This document and the information contained herein are not for publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction. No action has been taken by Harworth Group plc (the "Company" or "Harworth"), the Bookrunners or any of their respective Affiliates (as defined below) that would permit an offer of the Placing Shares or possession or distribution of this document or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this document are required to inform themselves about and to observe any such restrictions.

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

Any indication in this document of the price at which the Ordinary Shares of the Company have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this document is intended to be a profit forecast and no statement in this document should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

Investec is authorised by the Prudential Regulatory Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority ("FCA") and is acting exclusively for the Company and no one else in connection with the Placing and will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to herein.

Canaccord Genuity is authorised and regulated in the United Kingdom by the Financial Conduct Authority ("FCA") and is acting exclusively for the Company and no one else in connection with the Placing and will not be responsible to anyone (including any Placees) other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to herein.

By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making or accepting an oral offer to take up Placing Shares is deemed to have read and understood this document in its entirety (including this Appendix) and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained herein.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, REGULATORY, TAX, BUSINESS, FINANCIAL AND RELATED ASPECTS OF A PURCHASE OF PLACING SHARES.

Details of the Placing Agreement and the Placing Shares

The Company has today entered into a placing agreement (the "Placing Agreement") with the Bookrunners. Pursuant to the Placing Agreement, the Bookrunners have, subject to the terms set out therein, agreed severally as agents of the Company to use reasonable endeavours to procure Placees for the Placing Shares (the "Placing"). To the extent that any Placee procured by the Bookrunners fails to subscribe for any or all of the Placing Shares which have been allocated to it in the Placing and for which it has agreed to subscribe (the "Defaulted Shares"), the Bookrunners have agreed severally to subscribe for the Defaulted Shares at the Placing Price (as defined below) in their respective proportions.

The issue of the Placing Shares is to be effected by way of a cash box placing.  The Company will allot and issue the Placing Shares to Placees in consideration for the transfer to the Company by Investec of certain shares in Harworth HWG Limited, a Jersey incorporated subsidiary of the Company ("JerseyCo"), in accordance with the terms of the Placing Agreement, an initial subscription and option deed between the Company, Investec and JerseyCo (the "Initial Subscription and Option Deed") and a subscription and transfer deed between the Company, Investec and JerseyCo (the "Subscription and Transfer Deed").

The Placing Shares will, when issued, be subject to the articles of association of the Company, be credited as fully paid and will rank pari passu in all respects with each other and with the existing ordinary shares in the capital of the Company ("Ordinary Shares"), including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares after the date of issue of the Placing Shares.

The Placing Shares will be issued free of any encumbrance, lien or other security interest.

Application for listing and admission to trading

Application will be made to the FCA for admission of the Placing Shares to the standard segment of the Official List maintained by the FCA in accordance with section 74(1) of FSMA for the purposes of Part VI A of FSMA and to the London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the Placing Shares on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will become effective on or around 8.00 a.m. on 22 March 2017 and that dealings in the Placing Shares will commence at that time.

Participation in, and principal terms of, the Placing

The Bookrunners are arranging the Placing as bookrunners and agents of the Company. Each of the Bookrunners and their respective Affiliates (as defined below) is entitled to participate as a Placee.

The placing price will be a single price of 95.0 pence per new Placing Share ("Placing Price") and will be payable by all Placees.

Either of the Bookrunners will re-contact and confirm orally to Placees the size of their respective allocations and a trade confirmation will be despatched as soon as possible thereafter.  Investec's and Canaccord Genuity's (as the case may be) oral confirmation of the size of allocations and each Placee's oral commitments to accept the same will constitute a legally binding agreement upon each such Placee to subscribe for the number of Placing Shares allocated to the Placee at the Placing Price on the terms and conditions set out in this document and in accordance with the Company's articles of association and each Placee will be deemed to have read and understood this document (including this Appendix) in its entirety.

The Bookrunners reserve the right to scale back the number of Placing Shares to be subscribed by any Placee in the event of an oversubscription under the Placing. The Bookrunners also reserve the right not to accept offers to subscribe for Placing Shares or to accept such offers in part rather than in whole. The acceptance of offers shall be at the absolute discretion of each of the Bookrunners. The Company reserves the right (upon agreement with the Bookrunners) to reduce or seek to increase the amount to be raised pursuant to the Placing.

To the fullest extent permissible by law, none of the Company, the Bookrunners, nor any holding company thereof, any subsidiary thereof, any subsidiary of any such holding company, any branch, affiliate or associated undertaking of any such company nor any of their respective directors, officers and employees (each an "Affiliate") nor any person acting on their behalf shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, none of the Company, the Bookrunners, any of their respective Affiliates nor any person acting on their behalf shall have any responsibility or liability (including, to the extent legally permissible, any fiduciary duties), in respect of the Bookrunners' conduct of the Placing as the Bookrunners and the Company may determine. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

An order placed in relation to the Placing will be made on the terms and subject to the conditions in this Appendix and will be legally binding on the Placee on behalf of which it is made and except with the relevant Bookrunner's consent will not be capable of variation or revocation after the time at which it is submitted. Each Placee's obligations will be owed to the Company and to the Bookrunners. Following the oral confirmation referred to above, each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the Company and the relevant Bookrunner as agent of the Company, to pay to the relevant Bookrunner (or as such Bookrunner may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire. The Bookrunners will procure the allotment of the Placing Shares to each Placee by Investec effecting the necessary transfer to the Company of shares in JerseyCo following each Placee's payment to the relevant Bookrunner of such amount.

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

All obligations of the Bookrunners under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing".

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.

The obligations of each of the Bookrunners under the Placing Agreement are conditional, inter alia, on:

1             the representations and warranties on the part of the Company contained in the Placing Agreement being true and accurate and not misleading as of the date of the Placing Agreement and immediately prior to Admission by reference to the facts and circumstances then subsisting;

2             the performance by the Company of its obligations under the Placing Agreement to the extent that they fall to be performed or satisfied prior to Admission;

3             no matter having arisen before Admission which would give rise to an indemnity claim under the Placing Agreement;

4             the Initial Subscription and Option Deed and or the Subscription and Transfer Deed having been executed by all parties thereto and there having occurred no default or breach by the Company or JerseyCo of the terms of the Initial Subscription and Option Deed and/or the Subscription and Transfer Deed by the time immediately prior to Admission;

5             in the opinion of the Bookrunners (acting in good faith), there shall have been no material adverse change in, inter alia, the business or prospects of the Company or its subsidiary undertakings (the "Group") since the date of the Placing Agreement (whether or not foreseeable at the date of the Placing Agreement) before Admission; and

6             Admission occurring not later than 8.00 a.m. on 22 March 2017 or such later time as the Bookrunners may agree in writing with the Company (but in any event not later than 8.00 a.m. on 31 March 2017).

If (a) the conditions are not fulfilled (or, to the extent permitted under the Placing Agreement, waived by the Bookrunners), or (b) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and each Placee's rights and obligations hereunder shall cease and terminate at such time and no claim may be made by a Placee in respect thereof. Neither the Bookrunners nor any of their respective Affiliates 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 it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition in the Placing Agreement 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 the Bookrunners.

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

Right to terminate under the Placing Agreement

Either of the Bookrunners may, at any time before Admission, terminate the Placing Agreement in accordance with its terms by giving notice to the Company and the other Bookrunner and after such consultation with the Company as shall be practicable in the circumstances, if, in the opinion of either of the Bookrunners (acting in good faith), inter alia:

1             the Company is in breach of any warranty in the Placing Agreement;

2             any warranty in the Placing Agreement would be untrue, inaccurate or misleading if it were to be repeated at any time prior to Admission;

3             the Company or JerseyCo (as the case may be) has failed to comply with any of its obligations under the Placing Agreement, the Initial Subscription and Option Deed or the Subscription and Transfer Deed, as applicable;

4             a matter or circumstance has arisen which would be likely to give rise to a claim under an indemnity in the Placing Agreement given in favour of the Bookrunners by the Company;

5             any statement in the Placing Documents (as such term is defined in the Placing Agreement) has become, or an omission in the Placing Documents results in them being, untrue, inaccurate in any material respect or misleading; or

6             there has occurred a material adverse change in, inter alia, the business or prospects of the Group which is material in the context of the Group as a whole, which in each case in the opinion of either of the Bookrunners (acting in good faith) is likely to prejudice the success of the Placing and occurs after the entry into the Placing Agreement.

By participating in the Placing, each Placee agrees with the Bookrunners that the exercise by either of the Bookrunners of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Bookrunners and that neither of the Bookrunners need make any reference to the Placees in this regard and that, to the fullest extent permitted by law, neither of the Bookrunners shall have any liability whatsoever to the Placees in connection with any such exercise.

No Prospectus

No offering document or prospectus has been or will be prepared in relation to the Placing and no such prospectus is required (in accordance with the Prospectus Directive) to be published and Placees' commitments will be made solely on the basis of the information contained in this document and any Exchange Information (as defined below) publicly announced to a Regulatory Information Service by or on behalf of the Company on or prior to the date of this document. Each Placee, by accepting a participation in the Placing, agrees that the content of this document is exclusively the responsibility of the Company and confirms to the Bookrunners and the Company that it has neither received nor relied on any information, representation, warranty or statement made by or on behalf of the Company, the Bookrunners (other than the amount of the relevant Placing participation in the oral confirmation given to Placees and the trade confirmation referred to below), any of their respective Affiliates or any persons acting on its behalf and none of the Company, the Bookrunners, any of their respective Affiliates nor any persons acting on their behalf will be liable for the decision of any Placee to participate in the Placing based on any other information, representation, warranty or statement which the Placee may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons). By participating in the Placing, each Placee 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. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Placing Shares (ISIN GB00BYZJ7G42) following Admission will take place within the CREST system, using the DVP mechanism, subject to certain exceptions. The Bookrunners reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means that they deem necessary, if, in their opinion, delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this document or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation stating the number of Placing Shares allocated to it, the Placing Price, the aggregate amount owed by such Placee to the relevant Bookrunner and settlement instructions. Placees should settle against CREST ID: 331. It is expected that such trade confirmation will be despatched on 17 March 2017 and that this will also be the trade date. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which it has in place with the relevant Bookrunner.

It is expected that settlement will be on 22 March 2017 on a DVP basis in accordance with the instructions set out in the trade confirmation unless otherwise notified by the Bookrunners.

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 the base rate of Barclays Bank Plc.

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

If Placing Shares are to be delivered to a custodian or settlement agent, the Placee 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 the Placee's name or that of its nominee or in the name of any person for whom the Placee is contracting as agent or that of a nominee for such person, such Placing Shares will, subject as provided below, be so registered free from any liability to PTM levy, stamp duty or stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax is payable in respect of the issue of the Placing Shares, neither the Bookrunners nor the Company shall be responsible for the payment thereof. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations and Warranties

By participating in the Placing, each Placee (and any person acting on such Placee's behalf):

1             represents and warrants that it has read and understood this document in its entirety (including this Appendix) and acknowledges that its participation in the Placing will be governed by the terms of this document (including this Appendix);

2             acknowledges that no prospectus or offering document has been or will be prepared in connection with the Placing and it has not received and will not receive a prospectus or other offering document in connection with the Placing or the Placing Shares;

3             agrees to indemnify on an after-tax basis and hold harmless each of the Company, the Bookrunners, their respective Affiliates and any person acting on their behalf 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 document and further agrees that the provisions of this document shall survive after completion of the Placing;

4             acknowledges that the Placing Shares of the Company will be admitted to the Official List of the UK Listing Authority and admitted to trading on the main market of the London Stock Exchange, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the London Stock Exchange/FCA (collectively, the "Exchange Information") and that the Placee is able to obtain or access the Exchange Information without undue difficulty;

5             acknowledges that none of the Company, the Bookrunners, nor any of their respective Affiliates nor any person acting on their behalf has provided, and will not provide, it with any material or information regarding the Placing Shares or the Company; nor has it requested any of the Company, the Bookrunners, nor any of their respective Affiliates nor any person acting on their behalf to provide it with any such material or information;

6             acknowledges that the content of this document is exclusively the responsibility of the Company and that neither of the Bookrunners, nor any of their respective Affiliates nor any person acting on their behalf will be responsible for or shall have any liability for any information, representation or statement relating to the Company contained in this document or any information previously published by or on behalf of the Company and neither of the Bookrunners, nor any of their respective Affiliate nor any person acting on their behalf will be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this document or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing to subscribe for the Placing Shares is contained in this document and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares, and that it has relied on its own investigation with respect to the Placing Shares and the Company in connection with its decision to subscribe for the Placing Shares and acknowledges that it is not relying on any investigation that either of the Bookrunners, any of their respective Affiliates or any person acting on their behalf may have conducted and none of such persons has made any representations to it, express or implied, with respect thereto;

7             acknowledges that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has had sufficient time to consider and conduct its own investigation with respect to the offer and subscription for the Placing Shares, including the tax, legal and other economic considerations and has relied upon its own examination and due diligence of the Company and its affiliates, taken as a whole, and the terms of the Placing, including the merits and risks involved;

8             if it is a pension fund or investment company, represents and warrants that its acquisition of Placing Shares is in full compliance with applicable laws and regulations;

9             represents and warrants that it has neither received nor relied on any "inside information" as defined in the EU Market Abuse Regulation ("MAR"), including any confidential price sensitive information concerning the Company, in accepting this invitation to participate in the Placing;

10            acknowledges that it has not relied on any information relating to the Company contained in any research reports prepared by either of the Bookrunners, their respective Affiliates or any person acting on their or any of their respective Affiliates' behalf and understands that (i) neither of the Bookrunners, nor any of their respective Affiliates nor any person acting on their behalf has or shall have any liability for public information or any representation; (ii) neither of the Bookrunners, nor any of their respective Affiliates, nor any person acting on their behalf has or shall have any liability for any additional information that has otherwise been made available to such Placee, whether at the date of publication, the date of this document or otherwise; and that (iii) neither of the Company, the Bookrunners, nor any of their respective Affiliates, nor any person acting on their behalf makes any representation or warranty, express or implied, as to the truth, accuracy, adequacy or completeness of such information, whether at the date of publication, the date of this document or otherwise;

11            represents and warrants that (i) it (and any person acting on its behalf) is entitled to acquire the Placing Shares under the laws and regulations of all relevant jurisdictions which apply to it; (ii) it has fully observed such laws and regulations and obtained all such governmental and other guarantees and other consents and authorities which may be required thereunder (including, without limitation, in the case of any person on whose behalf it is acting, all guarantees, consents and authorities to agree to the terms set out or referred to in this document) and complied with all necessary formalities to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto; (iii) it has all necessary capacity and authority to commit to participation in the Placing and to perform its obligations in relation thereto and will honour such obligations; (iv) it has paid any issue, transfer or other taxes due in connection with its participation in any territory; and (v) it has not taken any action which will or may result in the Company, either of the Bookrunners, any of their respective Affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing;

12            represents and warrants that it understands that the Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States and may only be acquired in "offshore transactions" as defined in and pursuant to Regulation S under the Securities Act;

13            represents and warrants that it will not offer or sell, directly or indirectly, any of the Placing Shares in the United States except pursuant to an exemption from registration under the Securities Act;

14            represents and warrants 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 the Bookrunners 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). Each Placee agrees that the provisions of this paragraph ‎14 shall survive the resale of the Placing Shares by or on behalf of any person for whom it is acting;

15            represents and warrants that, if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the Placing Shares purchased 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 European Economic Area which has implemented the Prospectus Directive other than "qualified investors" as defined in Article 2.1(e) of the Prospectus Directive, or in circumstances in which the prior consent of the Bookrunners has been given to the offer or resale;

16            represents and warrants 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 European Economic Area 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 the Prospectus Directive;

17            represents and warrants 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 it is permitted to do so pursuant to section 21 of FSMA and it acknowledges and agrees that this document has not been approved by either of the Bookrunners in its capacity as an authorised person under section 21 of FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as financial promotion by an authorised person;

18            represents and warrants that it is aware of and has complied, 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;

19            represents and warrants that it has complied with its obligations under MAR and, in connection with money laundering and terrorist financing, under the Criminal Justice Act 1993, section 118 of FSMA, the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006, the Anti-terrorism Crime and Security Act 2001, the Money Laundering Regulations (2007) (the "Regulations") and the Money Laundering Sourcebook of the FCA and, if it is 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;

20            if in the United Kingdom, represents and warrants that it is (a) a person falling within Article 19(5) of the FPO or (b) a person falling within Article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business only;

21            if in the United Kingdom, represents and warrants that it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive;

22            represents and warrants that it has not been engaged to subscribe for the Placing Shares on behalf of any other person who is not a Qualified Investor unless the terms on which it is engaged enable it to make decisions concerning the acceptance of offers of transferable securities on the client's behalf without reference to the client, as described in section 86(2) of FSMA;

23            represents and warrants that its participation in the Placing would not give rise to an offer being required to be made by it or any person with whom it is acting in concert pursuant to Rule 9 of the City Code on Takeovers and Mergers;

24            represents and warrants that it has the funds available to pay for the Placing Shares for which it has agreed to subscribe and acknowledges, agrees and undertakes that it (and any person acting on its behalf) will pay for the Placing Shares acquired by it in accordance with this document on the due time and date set out herein against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other Placees or sold as either Bookrunner may, in its absolute discretion, determine and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this document) which may arise upon the sale of such Placee's Placing Shares on its behalf;

25            acknowledges that neither of the Bookrunners, nor any of their Affiliates nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Placing and that its participation in the Placing is on the basis that it is not and will not be a client of either of the Bookrunners, and acknowledges that neither of the Bookrunners, nor any of their Affiliates nor any person acting on their behalf has any duties or responsibilities to it for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of the Bookrunners' rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;

26            undertakes that (i) the person whom it specifies for registration as holder of the Placing Shares will be (a) the Placee or (b) the Placee's nominee, as the case may be, (ii) neither of the Bookrunners 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 and (iii) the Placee and any person acting on its behalf agrees to acquire the Placing Shares and it agrees to indemnify on an after-tax basis and hold harmless the Company, each of the Bookrunners and their respective Affiliates in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of the relevant Bookrunner which will hold them as settlement agent as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with payment for the Placing Shares being made simultaneously upon receipt of the Placing Shares in the Placee's stock account on a delivery versus payment basis;

27            acknowledges that 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 behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the courts of England and Wales 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 the Bookrunners in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

28            acknowledges that it irrevocably appoints any director of the relevant Bookrunner as its agent for the purposes of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Placing;

29            represents and warrants that it is not, and any person who it is acting on behalf of is not, and at the time the Placing Shares are subscribed will not be a resident of, or with an address in, or subject to the laws of, any Prohibited Jurisdiction and acknowledges that the Placing Shares have not been and will not be registered nor will a prospectus be cleared in respect of the Placing Shares under the securities legislation of any Prohibited Jurisdiction and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Prohibited Jurisdiction;

30            acknowledges that, in connection with the Placing, a Bookrunner 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 take up, retain, purchase or sell for its own account such Ordinary 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. Neither the Company nor the Bookrunners intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so;

31            represents and warrants that any person who confirms to either Bookrunner on behalf of a Placee an agreement to subscribe for Placing Shares and/or who authorises either Bookrunner to notify the Placee's name to the Company's registrar, has authority to do so on behalf of the Placee;

32            acknowledges that the agreement to settle each Placee's acquisition of Placing Shares (and/or the acquisition of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to an acquisition by it and/or such person direct from the Company of the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company and neither of the Bookrunners will be responsible. If this is the case, the Placee should take its own advice and notify the Bookrunners accordingly;

33            acknowledges that the Placing Shares will be issued and/or transferred subject to the terms and conditions set out in this document (including this Appendix);

34            acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with the relevant Bookrunner, any money held in an account with the relevant Bookrunner on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Bookrunner's money in accordance with the client money rules and will be used by the relevant Bookrunner in the course of its business; and the Placee will rank only as a general creditor of the relevant Bookrunner (as the case may be);

35            acknowledges and understands that the Company, the Bookrunners, and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, undertakings and acknowledgements, and it agrees that if any of the representations, warranties, agreements, undertakings and acknowledgements made is no longer accurate, it shall promptly notify the Company and the Bookrunners;

36            acknowledges that the basis of allocation will be determined by the Bookrunners at their absolute discretion. The right is reserved to reject in whole or in part and/or scale back any participation in the Placing;

37            irrevocably authorises the Company and the Bookrunners to produce this document pursuant to, in connection with, or as maybe required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein; and

38            that its commitment to subscribe for Placing Shares on the terms set out herein will continue notwithstanding any amendment that may in future be made to the terms 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's conduct of the Placing.

The acknowledgements, agreements, undertakings, representations and warranties referred to above are given to each of the Company and the Bookrunners (for their own benefit and, where relevant, the benefit of their respective Affiliates and any person acting on their behalf) and are irrevocable.

No claim shall be made against the Company, the Bookrunners, their respective Affiliates or any other person acting on behalf of any of such persons by a Placee to recover any damage, cost, charge or expense which it may suffer or incur by reason of or arising from the carrying out by it of the work to be done by it pursuant hereto or the performance of its obligations hereunder or otherwise in connection with the Placing.

No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued or transferred (as the case may be) into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee.

Any arrangements to issue or transfer the Placing Shares into a depositary receipts system or a clearance service or to hold the Placing Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Placing Shares in a clearance service, or any arrangements subsequently to transfer the Placing Shares, may give rise to stamp duty and/or stamp duty reserve tax, for which neither the Company nor the Bookrunners will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such stamp duty or stamp duty reserve tax undertakes to pay such stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and the Bookrunners in the event that any of the Company and/or either of the Bookrunners has incurred any such liability to stamp duty or stamp duty reserve tax.

In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

All times and dates in this document may be subject to amendment. The Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any such changes.

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

Each Placee, and any person acting on behalf of the Placee, acknowledges that neither the Company and neither of the Bookrunners owes any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

Each Placee and any person acting on behalf of the Placee acknowledges and agrees that the Bookrunners or any of their Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

The rights and remedies of the Bookrunners 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 or partial exercise of one will not prevent the exercise of others.

Each Placee may be asked to disclose in writing or orally to either of the Bookrunners:

(a)         if he is an individual, his nationality; or

(b)         if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.

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

 

END

 

 

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