Acquisition & Placing

RNS Number : 1431W

K3 Business Technology Group PLC

25 April 2016

 

THIS ANNOUNCEMENT 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, JAPAN, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF K3 BUSINESS TECHNOLOGY GROUP PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER, ISSUE OR SOLICITATION WOULD BE UNLAWFUL.

K3 Business Technology Group plc

("K3", "Company" or "Group")

Acquisition of Retail Support International ApS

and

Placing to raise £13.5m

Acquisition and Placing Highlights

·           Conditional agreement to purchase Retail Support International ApS (known as DdD Retail ("DdD")) on a cash free/debt free basis for up to €10m (c.£7.9m) comprising:

-       initial cash consideration of €8.9m (c.£7.0m);

-   deferred cash consideration of up to €1.1m (c.£0.9m) based upon agreed post acquisition performance targets.

·           DdD provides a proprietary combined point of sale ("PoS") software/hardware solution, focusing on the fashion retail industry.

·         Established in 1989 and headquartered in Denmark, DdD operates in Denmark, Germany, Sweden and Norway and has approximately 750 customers across 1,800 stores.  Customers include Esprit, the sportswear chain and Saint Tropez, the women's fashion brand.

·             DdD's software suite is designed as an easy-to-install, 'plug and play' solution which is delivered via the cloud and licensed on a monthly, "consumption" basis.

·             Placing of 4,090,909 new Ordinary Shares ("Placing Shares") to raise £13.5m at a price of 330 pence per Ordinary Share to fund the DdD acquisition, additional product opportunities, working capital and costs associated with the Placing and Acquisition.

·             Acquisition, together with the full extent of the Placing, is expected to be earnings enhancing in K3's next following full financial year.

Financial and Strategic Highlights

·              DdD is a growing, profitable and cash generative business with a significant amount of its own IP.

·             For the year ending 31 December 2015, DdD generated revenues of €6.23m (c.£4.9m),  EBITDA of €1.08m (c.£0.85m) and free cash flow of €1.04m (c.£0.82m).  56% of 2015 revenues are recurring.

·         The acquisition of DdD is in line with K3's strategy to add additional IP-centric businesses, including extending geographic reach.

·              DdD also offers K3 cross-selling opportunities, and further access to cloud-delivered technologies.

·              The DdD management team will remain with the business after acquisition.

Lars-Olof Norell, Chairman of K3, commented:

"We are very pleased to announce the acquisition of DdD which marks an important step in our strategy to increase sales of products with a significant element of K3-owned IP. DdD is a well-established business which has developed a highly attractive, cloud-based software solution for retailers, particularly in the fashion sector. This acquisition represents a highly complementary fit, bringing IP and an extensive customer base delivering significant recurring revenues.  We also see exciting cross-selling opportunities.

We look forward to the management team joining the Group and are also delighted that our placing to raise £13.5m has been well supported by both existing and new institutional investors.

We intend to continue to look for complementary bolt-on acquisitions and will further refine our overall offering as we seek to accelerate the Group's development."

Enquiries:

K3 Business Technology Group plc	David Bolton, Chief Executive Brian Davis, Chief Financial Officer Andrew Hodges, Group Operations Director	T: 0161 876 4498
finnCap Limited (NOMAD & Broker)	Julian Blunt, James Thompson (Corporate Finance) Malar Velaigam (Corporate Broking)	T: 020 7220 0500
KTZ Communications	Katie Tzouliadis, Viktoria Langley, Emma Pearson	T: 020 3178 6378

Exchange Rates of EUR:GBP 1.272 and DKK:EUR 7.45 have been applied consistently throughout this announcement

 

Introduction

K3, which provides and supports software, hosting and managed services to the retail, manufacturing and distribution sectors, is pleased to announce today the conditional acquisition of DdD, a provider of proprietary 'point of sale' software/hardware for retailers, focusing on the fashion sector, for an initial cash consideration of €8.9m (approx. £7.0m) and a further deferred consideration of up to €1.1m (approx. £0.9m) dependent on the attainment of specified performance targets.  DdD is being acquired on a cash free/debt free basis.

As reported at the time of interim results on 21 March, as part of K3's strategy to accelerate growth, the Directors of K3 ("Board" or "Directors") are considering acquisitions that complement the Group's existing activities and in particular acquisitions which add intellectual property ("IP"). The acquisition of DdD is wholly complementary to K3's existing retail software offering and is in line with K3's focus on increased sales of products with a significant element of K3-owned IP.

The Board further announces a conditional placing to raise £13.5m (£12.8m after costs) at a price of 330 pence per 25p ordinary share in the capital of the Company ("Placing Price", "Ordinary Shares" and the "Placing").

The net Placing proceeds will be used to fund the Acquisition (approximately £7.9m) with the balance (approximately £4.9m to be used for additional product enhancement opportunities and working capital.  The Acquisition, together with the full extent of the Placing, is expected to be earnings enhancing in K3's next following full financial year, being the year to 30 June 2017.

DdD is a growing, profitable and cash generative cloud consumption-based business with significant proprietary IP. Its acquisition enhances K3's overall existing offering to the retail sector and in particular increases the number of its own IP based solutions. DdD's consumption-based licensing model and well-established and diverse customer base will also enhance K3's recurring revenues. K3 also believes there are cross-selling opportunities, whilst access to DdD's cloud technologies will enhance K3's product development activities.

Background on DdD

Established in 1989 and headquartered in Denmark, DdD provides proprietary point of sale ("PoS") software, focusing on the fashion retail industry.  Its core offering ("Retail in a Box") is a fully integrated combined hardware/software proposition that provides and integrates PoS, back-office system ("BoS"), and head office system ("HoS").  The suite is designed as an easy-to-install, "plug and play" solution which is delivered via the cloud and licensed on a monthly, 'consumption' basis.  The Board of K3 believe that its attraction to retailers lies in its rich customer interface as well as its ease of use and rapid installation.

DdD currently operates in Denmark, Germany, Sweden and Norway and has approximately 2,700 installations across 1,800 stores covering over approximately 750 customers. Customers include Esprit, the sportswear chain and Saint Tropez, the women's fashion brand.  DdD currently employs 43 people.

Financial Information on DdD

Year Ended 31 December	2013	2014	2015
€'000
Revenue	6,370	6,121	6,233
Of which recurring (%)	46%	52%	56%
Gross margin %	59%	58%	64%
EBITDA	930	739	1,079
EBIT	713	509	868
Net cash from operating activities	808	615	1,159
Capital expenditure/development costs	32	105	117
Free cash flow	776	510	1,042
Net assets	1,356	1,667	2,248

Current Trading and Prospects

As announced, on 21 March 2016, in K3's report for the six months to 31 December 2015, K3's half year trading results were in line with management expectations and showed a significant improvement in profitability with adjusted profit before tax up 33% to £4.72m (2014: £3.56m) (36% at constant currency).  This outturn reflected a strong performance from K3's retail and cloud hosting activities as well as the benefits of reorganisation changes, which helped lift the Group's gross margin percentage to 55.6% from 50.7% in the same period last year.

The Group reported that the pipeline of potential new deals across the business remained very healthy, valued at £56.5m, including potential new orders from channel partners.  This remains the case and the Board is confident about the potential to exploit K3's IP and expects to see continuing progress in its growth strategy. The Board also expects cloud-based consumption licensing to be an increasing feature of the Group's revenue mix, together with rising channel partner sales and hosting.

The Board is engaged in a continual review process of K3's product suite, which inevitably involves "make/buy" decisions around the optimal means of developing the Group's product and service offering.  The investment in this process can be internal, with funds deployed into K3's in-house development effort, or by way of bolt-on acquisitions which can significantly accelerate the development timetable.

As the Board seeks to further develop the business, it also intends to consider both additional acquisitions which enhance K3's existing product offering as well as potential disposals of non-core parts of the Group.

Principal Terms and Conditions of the Acquisition

The Company has today, via its wholly owned subsidiary K3 Retail and Business Solutions Limited, entered into an agreement with the vendors of DdD (the "Vendors") pursuant to which it has conditionally agreed to acquire the entire issued share capital of DdD (the "Acquisition Agreement"). The consideration for the Acquisition is up to €10m (approximately £7.9m) comprising €8.9m (approximately £7.0m) initial cash consideration and up to €1.1m (approximately £0.9m) deferred cash consideration based upon certain post Acquisition performance targets.  DdD is being acquired on a cash free/debt free basis.

Completion of the Acquisition Agreement is conditional, amongst other things, upon:

i.     the Placing Agreement becoming unconditional in all respects (save for Admission) and it not having been terminated;

ii.    admission of the Placing Shares to trading on AIM becoming effective by not later than 8.00 am on 29 April 2016 (or such later time and date as the Company and finnCap may agree, not being later than 8.00 a.m. on 31 May 2016); and

iii.   finnCap receiving from Placees in cleared funds the specified minimum requirement for the purposes of the Acquisition.

All existing senior management and employees will remain with the business following completion of the Acquisition.

Details of the Placing and the Placing Agreement

The Placing

Under the terms of the Placing, 4,090,909 new Ordinary Shares have been conditionally placed on behalf of the Company including those shares allotted pursuant to the Acquisition Agreement.  The Placing is taking place pursuant to existing authorities established at the Company's last Annual General Meeting.  The Placing Shares will represent approximately 11.4 per cent. of the enlarged issued share capital following Admission.

It is expected that Placing Shares to be held in uncertificated form will be delivered in CREST on 29 April 2016 and that share certificates for Placing Shares to be held in certificated form will be despatched by first class post as soon as practicable after 29 April 2016 and in any event by 13 May 2016.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM and it is anticipated that trading in the Placing Shares will commence on AIM at 8.00 a.m. on 29 April 2016.

The Placing Shares will, when issued and fully paid, rank in full for any dividend or other distribution declared, made or paid after Admission and otherwise equally in all respects with the existing Ordinary Shares.

The Placing is conditional, inter alia, upon:

i.      the Acquisition Agreement becoming unconditional in all respects (save for Admission) and remaining in full force and effect and having not lapsed or been terminated prior to Admission;

ii.   the Placing Agreement becoming unconditional in all respects (save for Admission) and not having been terminated; and

iii.   admission of the Placing Shares to trading on AIM becoming effective by not later than 8:00 am on 29 April 2016 (or such later time and date as the Company and finnCap may agree, not being later than 8.00 a.m. on 31 May 2016).

The Placing Agreement

i.      Pursuant to the terms of the Placing Agreement, finnCap as agent for the Company, has agreed to use its reasonable endeavours to procure placees for the Placing Shares at the Placing Price;

ii.    The Placing Agreement contains warranties from the Company in favour of finnCap in relation to, inter alia, the accuracy of the information contained in the documents relating to the Placing and certain other matters relating to the Company and its business. In addition, the Company has agreed to indemnify finnCap in relation to certain liabilities that it may incur in respect of the Placing.

The obligations of finnCap under the Placing Agreement in respect of the Placing are conditional upon, amongst other things, Admission becoming effective on or before 8.00 a.m. on 29 April 2016 (or such later date as the Company and finnCap may agree, but not later than 8.00 a.m. on 31 May 2016), and there being prior to Admission no material breach of the warranties given to finnCap.

finnCap may terminate the Placing Agreement in specified circumstances (including for breach of warranty at any time prior to Admission, if such breach is reasonably considered by finnCap to be material in the context of the Placing) and in the event of a force majeure event occurring at any time prior to Admission. If the conditions of the Placing Agreement which apply to the Placing as a whole are not fulfilled on or before the relevant date in the Placing Agreement, subscription monies will be returned to placees without interest as soon as possible thereafter.

In consideration for the services to be provided to the Company by finnCap in connection with Admission and the Placing, the Company has agreed to pay finnCap a corporate broking fee and certain other costs and expenses incidental to Admission and/or the Placing.

Related Party Transactions

Kestrel Partners LLP ("Kestrel") and Hargreave Hale Limited ("Hargreave Hale") are related parties of the Company as defined by the AIM Rules for Companies by virtue of their status as substantial shareholders of the Company.  Kestrel and Hargreave Hale have agreed to subscribe for 454,546 and 572,273 Placing Shares respectively as part of the Placing, conditional on Admission.

Taking into account the related party transactions noted above, the Directors consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Placing are fair and reasonable insofar as the Company's shareholders are concerned.

Total Voting Rights

In accordance with the UK Financial Conduct Authority's Disclosure and Transparency Rule 5.6.1, immediately following Admission the issued share capital of the Company will be 35,999,201 ordinary shares of 25 pence each.  The total number of voting rights in the Company will therefore be 35,999,201 which may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure and Transparency Rules.

Expected timetable of principal events

Completion of the Acquisition	29 April 2016
Trade Date	27 April 2016
Payment Date	28 April 2016
Settlement Date	29 April 2016
Expected date for Admission and commencement of dealings in the Placing Shares on AIM	8:00 am on 29 April 2016
Expected date for CREST accounts to be credited in respect of the Placing Shares to be held in uncertificated form	8:00 am on 29 April 2016
Expected date for the despatch of definitive certificates in respect of the Placing Shares to be held in certificated form	as soon as practicable after 29 April 2016

Admission statistics

Number of Existing Ordinary Shares	31,908,292
Number of Placing Shares	4,090,909
Placing Shares expressed as a percentage of the Current Issued Share Capital	12.8%
Placing Shares expressed as a percentage of the Enlarged Issued Share Capital	11.4%
Placing Price	330 pence
Enlarged Issued Share Capital on Admission	35,999,201
Gross Placing proceeds	£13.5m
Net Placing Proceeds	£12.8m
Market capitalisation of the Company at Admission at the Placing Price	£118.8m
ISIN on Admission	GB00B00P6061
TIDM	KBT

 

Appendix 1 - Terms and conditions of the placing

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX (TOGETHER, THE "ANNOUNCEMENT") AND THE INFORMATION IN IT, IS RESTRICTED, AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED, ("QUALIFIED INVESTORS") BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE"); (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"); (II) FALL WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").  THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. 

THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.  THIS ANNOUNCEMENT HAS BEEN ISSUED BY AND IS THE SOLE RESPONSIBILITY OF THE COMPANY.

THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.  THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER OF OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. 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, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES HAS APPROVED OR DISAPPROVED OF AN INVESTMENT IN THE SECURITIES OR PASSED UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THE CONTENTS OF THIS ANNOUNCEMENT.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES.  THE PRICE OF SHARES IN THE COMPANY AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON DISPOSAL OF SHARES.

Persons who have been invited to and who have chosen to participate in the Placing, by making (or on whose behalf there is made) an oral or written offer to subscribe for Placing Shares (the "Placees"), will be deemed to have read and understood this Announcement, including this Appendix, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in this Appendix. In particular, each such Placee represents, warrants and acknowledges that:

1.             it is a Relevant Person (as defined above) 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;

2.             in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Placing Shares acquired by it have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State of the European Economic Area ("EEA") which has implemented the Prospectus Directive other than Qualified Investors or in circumstances in which the prior consent of finnCap has been given to the offer or resale; or (ii) where Placing Shares have been acquired by it on behalf of persons in any Member State of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and/or

3.             (a) (i) it is not in the United States and (ii) it is not acting for the account or benefit of a person in the United States, (b) it is a dealer or other professional fiduciary in the United States acting on a discretionary basis for a non-US person (other than an estate or trust) in reliance on Regulation S under the Securities Act; or (c) it is otherwise acquiring the Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the Securities Act.

The Company and finnCap will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.

This Announcement does not constitute an offer, and may not be used in connection with an offer, to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. This Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa or in any jurisdiction in which such publication or distribution is unlawful.  Persons into whose possession this Announcement may come are required by the Company to inform themselves about and to observe any restrictions of transfer of this Announcement. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.

In particular, the Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or any laws of, or with any securities regulatory authority of, any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States. The Placing Shares are being offered and sold outside the United States in accordance with Regulation S under the Securities Act.

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia, New Zealand, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Canada, Australia, New Zealand, Japan or the Republic of South Africa or any other jurisdiction outside the United Kingdom.

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

In this Appendix, unless the context otherwise requires, "Placee" means a Relevant Person (including individuals, funds or otherwise) by whom or on whose behalf a commitment to subscribe for Placing Shares has been given.

Details of the Placing

finnCap has entered into the Placing Agreement with the Company under which finnCap has, on the terms and subject to the conditions set out therein, undertaken to use its reasonable endeavours to procure, as agent for the Company, subscribers for the Placing Shares at the Placing Price.

The Placing Agreement contains customary warranties given by the Company to finnCap as to matters relating to the Company and its business and a customary indemnity given by the Company to finnCap in respect of liabilities arising out of or in connection with the Placing.

The Placing is conditional upon Admission becoming effective and the Placing Agreement not being terminated in accordance with its terms.

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

The Company, subject to certain exceptions, has agreed not to allot, issue or grant any rights in respect of its Ordinary Shares in the period of 120 days from the date of Admission without the prior written consent of finnCap (such consent not to be unreasonably withheld or delayed).

Application for admission to trading

Application will be made to the London Stock Exchange for Admission to trading on AIM. Subject to the conditions set out in the Placing Agreement being fulfilled and the Placing Agreement not having been terminated, it is expected that settlement of the Placing Shares and Admission will occur on or around 29 April 2016 and that dealings in the Placing Shares will commence at that time.

Participation in, and principal terms of, the Placing

1.           finnCap (whether through itself or any of its affiliates) is arranging the Placing as placing agent of the Company for the purpose of using reasonable endeavours to procure Placees at the Placing Price for the Placing Shares.

2.             Participation in the Placing will only be available to persons who may lawfully be, and have been invited to participate by finnCap. finnCap, any direct or indirect subsidiary undertakings of finnCap, or any of their respective directors, employees, agents and advisers (the "affiliates") may participate in the Placing as principal.

3.             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.

4.             The Placing Price will be a fixed price of 330 pence per Placing Share.

5.             Each Placee's allocation will be confirmed to Placees by means of a contract note or trade confirmation which will be despatched by finnCap on 25 April 2016. The oral confirmation provided by such Placee constitutes an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of finnCap and the Company, under which it agrees to acquire the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's Articles of Association.

6.             Except as required by law or regulation, no press release or other announcement will be made by finnCap or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.

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

8.             All obligations under the Placing will be subject to fulfilment or (where applicable) waiver of, amongst other things, the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".

9.             By participating in the Placing, 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.

10.          To the fullest extent permissible by law, none of the Company, finnCap or any of their respective affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise of these terms and conditions). In particular, none of the Company, finnCap or any of their respective affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of finnCap's conduct of the Placing. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and finnCap shall have no liability to the Placees for the failure of the Company to fulfil those obligations. 

Conditions of the Placing

finnCap's obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:

(a)           the warranties on the part of the Company contained in the Placing Agreement being true and accurate and not misleading on and as of the date of the Placing Agreement and on the date of Admission, as though they had been given and made on such date by reference to the facts and circumstances then subsisting;

(b)           the performance by the Company of its obligations under the Placing Agreement to the extent that they fall to be performed prior to Admission;

(c)           (i) the acquisition agreement dated 25 April 2016 relating to the acquisition by K3 Retail and Business Solutions Limited, a wholly owned subsidiary of the Company, of the entire issued share capital of DdD (the "Acquisition Agreement") having been entered into by the parties thereto and remaining in full force and effect and having not lapsed or been terminated prior to the satisfaction of the requirement of finnCap receiving from Placees in cleared funds the specified minimum requirement for the purposes of the Acquisition and Admission (the "Admission Condition"), (ii) save for the Admission Condition, so far as the Company is aware, there being no other condition to completion of the Acquisition Agreement which has not been satisfied or waived.; and (iii) no event having arisen at any time prior to satisfaction of the Admission Condition which gives any party to the Acquisition Agreement a right to terminate it;

(d)           the Company allotting, subject only to Admission, the Placing Shares in accordance with the Placing Agreement; and

(e)           Admission taking place not later than 8.00 a.m. on 29 April 2016.

If (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by finnCap by the respective time or date where specified (or such later time or date as the Company and finnCap may agree not being later than 8.00 a.m. on 31 May 2016 (the "Final Date"), or (ii) the Placing Agreement is terminated as described below, the Placing in relation to the Placing Shares will lapse and the Placee's 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.

finnCap may, at its absolute discretion and upon such terms as it thinks fit, waive, or extend the period (up to the Final Date) for, compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement, save that the condition 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.

Neither finnCap nor the Company 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 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 finnCap.

Right to terminate under the Placing Agreement

finnCap is entitled, at any time before Admission, to terminate the Placing Agreement by giving notice to the Company in certain circumstances, including, inter alia:

(a)           in the opinion of finnCap (acting in good faith), the warranties given by the Company to finnCap are not true and accurate or have become misleading (or would not be true and accurate or would be misleading if they were repeated at any time before Admission) by reference to the facts subsisting at the time when the notice referred to above is given, in each case in a way that is material (in the opinion of finnCap acting in good faith) in the context of the Placing; or

(b)           in the opinion of finnCap (acting in good faith), the Company fails to comply with any of its obligations under the Placing Agreement which failure is material in the context of the Placing; or

(c)           in the opinion of finnCap (acting in good faith), there has been a development or event (or any development or event involving a prospective change of which the Company is, or might reasonably be expected to be, aware) which finnCap considers will or is reasonably likely to have a material adverse effect on or affecting the operations, the condition (financial or otherwise), prospects, management, results of operations, financial position, business or general affairs of the Company or of the Company's group (taken as a whole) respectively whether or not foreseeable and whether or not arising in the ordinary course of business, which in each case is material in the context of the Placing; or

(d)           there has been a change in national or international financial, political, economic or stock market conditions (primary or secondary); an incident of terrorism, outbreak or escalation of hostilities, war, declaration of martial law or any other calamity or crisis; a suspension or material limitation in trading of securities generally on any stock exchange; any change in currency exchange rates or exchange controls or a disruption of settlement systems or a material disruption in commercial banking, in each case as would be likely in the opinion of finnCap (acting in good faith) to materially prejudice the success of the Placing.

Following Admission, the Placing Agreement is not capable of termination to the extent that it relates to the Placing of the Placing Shares.

The rights and obligations of the Placees shall terminate only in the circumstances described in these terms and conditions and in the Placing Agreement and will not be subject to termination by any Placee at any time or in any circumstances. By participating in the Placing, Placees agree that the exercise by finnCap of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of finnCap, and that it need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise or decision not to exercise.  Placees will have no rights against finnCap, the Company or any of their respective directors or employees under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended).

No Admission Document or Prospectus

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 an admission document or prospectus in the United Kingdom or in any other jurisdiction. No offering document, admission document or prospectus has been or will be submitted to be approved by the Financial Conduct Authority ("FCA") or submitted to the London Stock Exchange in relation to the Placing, and Placees' commitments will be made solely on the basis of the information contained in the Announcement (including this Appendix) and the Exchange Information (as defined further below).  Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Exchange Information), representation, warranty, or statement made by or on behalf of the Company or finnCap or any other person and neither finnCap nor 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 and, if given or made, such information, representation, warranty or statement must not be relied upon as having been authorised by finnCap, the Company, or their respective officers, directors, employees or agents. 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. Neither the Company, nor finnCap are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. 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: GB00B00P6061) following Admission will take place within CREST provided that, subject to certain exceptions, finnCap reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation or contract note stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to finnCap (as agent for the Company) and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the CREST or certificated settlement instructions that it has in place with finnCap.

It is expected that settlement in respect of the Placing Shares will be on 29 April 2016 on a T+2 basis in accordance with the instructions set out in the trade confirmation.

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 finnCap.

Each Placee is deemed to agree that, if it does not comply with these obligations, finnCap may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for finnCap's account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable and shall indemnify finnCap on demand for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating a bid for Placing Shares, each Placee confers on finnCap all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which finnCap lawfully takes in pursuance of such sale.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation or contract note 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 or securities transfer tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations, warranties and further terms

By participating in the Placing each Placee (and any person acting on such Placee's behalf) makes the following representations, warranties, acknowledgements, agreements and undertakings (as the case may be) to the Company and finnCap, namely that, each Placee (and any person acting on such Placee's behalf):

1.         represents and warrants that it has read and understood the Announcement, including this Appendix, 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 and undertakes not to redistribute or duplicate this Announcement;

2.         acknowledges that no offering document, admission document or prospectus has been prepared in connection with the Placing and represents and warrants that it has not received and will not receive a prospectus, admission document or other offering document in connection therewith;

3.         acknowledges that the Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules for Companies (collectively "Exchange Information"), which includes the Company's most recent balance sheet and profit and loss account and the Company's announcements and circulars published in the past 12 months and that it is able to obtain or access such information without undue difficulty;

4.         acknowledges that none of finnCap, the Company, any of their respective affiliates or any person acting on behalf of any of them has provided it, and will not provide it, with any material regarding the Placing Shares or the Company other than this Announcement; nor has it requested any of finnCap, the Company, their respective affiliates or any person acting on behalf of any of them to provide it with any such information and has read and understood the Exchange Information;

5.         acknowledges that the content of this Announcement is exclusively the responsibility of the Company, and that none of finnCap, its affiliates or any person acting on its or their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously or concurrently published by or on behalf of the Company, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement 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 itself to acquire the Placing Shares is contained in this Announcement 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 neither received nor relied on any other information given or representations, warranties or statements made by finnCap, the Company or any of their respective directors, officers or employees or any person acting on behalf of any of them, or, if received, it has not relied upon any such information, representations, warranties or statements (including any management presentation that may have been received by any Placee or any material prepared by the Research Department of finnCap (the views of such Research Department not representing and being independent from those of the Company and the Corporate Finance Department of finnCap and not being attributable to the same)), and neither finnCap nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it may not place the same degree of reliance on this Announcement as it may otherwise place on a prospectus or admission document. Each Placee further acknowledges and agrees that it has relied solely on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and it will not rely on any investigation that finnCap, its affiliates or any other person acting on its or their behalf has or may have conducted;

6.         represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting this invitation to participate in the Placing;

7.         acknowledges that finnCap does not have any duties or responsibilities to it, or its clients, similar or comparable to the duties of "best execution" and "suitability" imposed by the Conduct of Business Sourcebook in the FCA's Handbook of Rules and Guidance and that finnCap is not acting for it or its clients and that finnCap will not be responsible for providing protections to it or its clients;

8.         acknowledges that none of finnCap, any of its affiliates or any person acting on behalf of it or them has or shall have any liability for the Exchange Information, any publicly available or filed information or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

9.         that, save in the event of fraud on the part of finnCap (and to the extent permitted by the Rules of the FCA), neither finnCap nor its affiliates shall be liable to Placees for any matter arising out of finnCap's role as placing agent or otherwise in connection with the Placing and that where any such liability nevertheless arises as a matter of law Placees will immediately waive any claim against any of such persons which they may have in respect thereof;

10.       represents and warrants that (i) it is not in the United States and (ii) it is not acting for the account or benefit of a person in the United States;

11.       acknowledges that the Placing Shares are being offered and sold only pursuant to Regulation S under the Securities Act in a transaction not involving a public offering of securities in the United States and the Placing Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority, and that the offer and sale of the Placing Shares to it has been made outside of the United States in an 'offshore transaction' (as such term is defined in Regulation S under the Securities Act) and agrees not to reoffer, resell, pledge or otherwise transfer the Placing Shares except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in accordance with any applicable securities laws of any state or jurisdiction of the United States;

12.       unless otherwise specifically agreed in writing with finnCap, represents and warrants that neither it nor the beneficial owner of such Placing Shares is or will be a resident of Canada, Australia, New Zealand, Japan or the Republic of South Africa;

13.       acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of Canada, Australia, New Zealand, Japan or the Republic of South Africa and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within those jurisdictions;

14.       represents and warrants that the issue to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system;

15.       represents and warrants that: (i) it has complied with its obligations under the Criminal Justice Act 1993 and Part VIII of the Financial Services and Markets Act 2000 ("FSMA"); (ii) in connection with money laundering and terrorist financing, it has complied with its obligations under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the Money Laundering Regulations 2007; and (iii) it is not a person: (a) with whom transactions are prohibited under the Foreign Corrupt Practices Act of 1977 or any economic sanction programmes administered by, or regulations promulgated by, the Office of Foreign Assets Control of the U.S. Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations (together, the "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 and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such purchase, and it will provide promptly to finnCap such evidence, if any, as to the identity or location or legal status of any person which finnCap may request from it in connection with the Placing (for the purpose of complying with such Regulations or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by finnCap on the basis that any failure by it to do so may result in the number of Placing Shares that are to be purchased by it or at its direction pursuant to the Placing being reduced to such number, or to nil, as finnCap may decide at its sole discretion;

16.       if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, represents and warrants that 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, or in circumstances in which the prior consent of finnCap has been given to the offer or resale;

17.       represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);

18.       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 the FSMA) relating to the Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person;

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

20.       if in a Member State of the European Economic Area, unless otherwise specifically agreed with finnCap in writing, represents and warrants that it is a Qualified Investor within the meaning of the Prospectus Directive;

21.       if in the United Kingdom, represents and warrants that it is a person (i) who has professional experience in matters relating to investments falling within Article 19(1) of the Order; (ii) falling 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 be lawfully communicated;

22.       represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities and taken any other necessary actions to enable it to commit to this 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;

23.       where it is acquiring Placing Shares for one or more managed accounts, represents and warrants that it is authorised in writing by each managed account: (a) to acquire the Placing Shares for each managed account; (b) to make on its behalf the representations, warranties, acknowledgements, undertakings and agreements in this Appendix and the Announcement of which it forms part;

24.       undertakes 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 finnCap may in its sole discretion determine and without liability to such Placee and it will remain liable and will indemnify finnCap on demand for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax or security transfer tax (together with any interest or penalties due pursuant to or referred to in these terms and conditions) which may arise upon the placing or sale of such Placee's Placing Shares on its behalf;

25.       acknowledges that none of finnCap, any of its affiliates, or any person acting on behalf of any of them, is making any recommendations to it, 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 treated for these purposes as a client of finnCap and that finnCap has no duties or responsibilities to it for providing the protections afforded to their respective 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 their rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

26.       undertakes 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 finnCap nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company and finnCap in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of finnCap who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

27.       acknowledges 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 agreement 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 English courts as regards any claim, dispute or matter (including non-contractual matters) 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 finnCap 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 time shall be of the essence as regards to obligations pursuant to this Appendix;

29.       agrees that the Company, finnCap and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to finnCap on its own behalf and on behalf of the Company and are irrevocable and are irrevocably authorised to produce this Announcement or a copy thereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby;

30.       agrees to indemnify on an after-tax basis and hold the Company, finnCap 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 Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

31.       acknowledges that no action has been or will be taken by any of the Company, finnCap or any person acting on behalf of the Company or finnCap 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;

32.       acknowledges that it is an institution that 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 in this sector and is aware that it may be required to bear, and it, and any accounts for which it may be acting, are able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has relied upon 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;

33.       acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the trade confirmation or contract note 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;

34.       acknowledges that finnCap or any of its affiliates acting as an investor for its own account may take up shares in the Company and in that capacity may retain, purchase or sell for its own account such shares and may offer or sell such shares other than in connection with the Placing;

35.       represents and warrants that, if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with all applicable laws and regulation; and

36.       to the fullest extent permitted by law, it acknowledges and agrees to the disclaimers contained in the Announcement including this Appendix.

The representations, warranties, acknowledgments and undertakings contained in this Appendix are given to finnCap and the Company and are irrevocable and shall not be capable of termination in any circumstances.

The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor finnCap 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 UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and finnCap in the event that any of the Company and/or finnCap has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify finnCap accordingly.

In addition, Placees should note that they will be liable for any 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 subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.

Each Placee, and any person acting on behalf of the Placee, acknowledges that finnCap does not owe 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 finnCap or any of its affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

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

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

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

 

END

 

 

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