Placing and Acquisition

RNS Number : 1768W

Pelatro PLC

30 July 2018

 

30 July 2018

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR ANY OF ITS TERRITORIES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA OR ANY OTHER STATE OR 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 PELATRO PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION (EU) 596/2014. ON PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Pelatro Plc

("Pelatro" or the "Company")

Conditional Acquisition of certain assets from the Danateq Group

and

Placing of up to 8,219,179 new ordinary shares by way of an accelerated bookbuild to raise approximately £6.0m

Pelatro Plc (AIM: PTRO), the global precision marketing software specialist, is pleased to announce it has entered into an agreement to acquire the business and certain assets of Danateq Pte and Danateq Limited ("Danateq") for a proposed sum of US$7.0 million in cash with deferred consideration of up to US$5.0 milllion (the "Acquisition"). The Acquisition will involve the placing of up to 8,219,179 new ordinary shares at a price of 73 per ordinary share of 2.5p each ("Ordinary Share") by way of an accelerated bookbuild to raise approximately £6.0 million (the "Placing").

Highlights

·     Agreement for the acquisition of the business and certain assets of Danateq for an initial cash consideration of $7.0m to be satisfied from the proceeds of the Placing

·     Up to a further $5.0m is payable, in cash, depending on the acquired assets delivering against certain agreed performance criteria

·     Subscriber base covered doubles from 160 million to 325 million and the number of customers increases from 8 to 12

·     The Acquisition will be immediately earnings enhancing

·     Immediate entry into Central Europe and expected to accelerate entry into Western Europe over the next 18-24 months

·     Broadens product suite by the addition of two complementary products that can be sold into the existing customer base of Pelatro accelerating the Group's product development

·     Positions Pelatro as a credible player in the new "Multi Channel Marketing Hub" space

·     "Multi Channel Campaign Management" is evolving into "Multi Channel Marketing Hub" which orchestrates a company's communications with and offers to customer segments across multiple channels

Notice of General Meeting

Pelatro Plc announces that a Circular convening a General Meeting has been posted to shareholders today and is also available on the Company's website at www.pelatro.com

The Company confirms that the General Meeting will be held at 10.30 a.m. on 15 August 2018 at the offices of finnCap Limited, 60 New Broad Street, London EC2M 1JJ.

Commenting on the Acquisition, Subash Menon, Managing Director of Pelatro, said:

"Since our IPO in December we have continued to execute on our strategy resulting in a strong first half of organic growth, including our biggest ever contract win. I am delighted with the opportunity to acquire certain assets of Danateq and believe that this will represent a superb strategic acquisition for Pelatro which will build on our existing organic growth.

Not only does it expand our footprint into Central Europe it helps significantly expand our customer base while bringing strong recurring revenues. We are an active disruptor in the telecoms sector and view the future with considerable optimism."

Enquiries:

Pelatro Plc Subash Menon, Managing Director Nic Hellyer, Finance Director	C/O IFC
finnCap Ltd (Nominated Adviser and Broker) Adrian Hargrave / Kate Bannatyne (Corporate Finance) Stephen Norcross / Nikita Jain (Corporate Broking)	[phone]
IFC Advisory Limited (Financial PR & IR) Tim Metcalfe / Miles Nolan / Zach Cohen	[phone]

Notes to Editors

Pelatro provides precision marketing software for use by its customers in B2C applications, with a current focus on providing multi channel campaign management software to Telcos that provides a contextualised, relevant and personalised solution for end users.

Pelatro's precision marketing solution, mViva, uses Big Data analytics to study growing end user data to reveal patterns, trends, associations and key behavioural traits.  mViva then applies algorithms to analyse this data and to identify patterns for each end user. Based on this analysis, relevant offers (which can include additional services or customised campaigns) are made to end users through a variety of channels like SMS, email and apps. mViva allows customers to generate smaller relevant segments of end users, which can be as small as one end user. By using mViva's targeted approach, Pelatro's customers have experienced an increase of up to 5 per cent. of annual incremental revenue per end user through the upselling of products.

Conditional Acquisition of certain assets from the Danateq Group

and

Placing of up to 8,219,179 new ordinary shares by way of an accelerated bookbuild to raise approximately £6.0m

1.         Introduction

The Company announces today the proposed acquisition of certain assets of Danateq Pte and Danateq Limited for an initial consideration of $7.0 million with further payments of up to $5.0 million, depending on certain targets being met (the "Acquisition").

To finance the Acquisition and general working capital to integrate the Acquisition, the Board also announced today that it proposes to raise approximately £6.0 million (before expenses) by way of a Placing through finnCap, nominated adviser and broker to the Company with new and existing investors at a price of 73 pence per share. Following the passing of the Resolutions, the Company proposes to (i) allot (conditional on, inter alia, EIS/VCT Admission) 2,108,899 EIS/VCT Placing Shares and (ii) allot (conditional on, inter alia, Admission) 6,110,280 General Placing Shares.

The Placing is conditional, inter alia, on the passing of the Resolutions by the Shareholders at the General Meeting. The Acquisition is conditional, inter alia, on General Admission and is expected to complete on 17 August 2018.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. In accordance with the conditions of the Placing, subject to the terms of the Placing Agreement, it is expected that admission to trading on AIM and dealings in the EIS/VCT Placing Shares will commence on or around 16 August 2018; it is expected that Admission to trading on AIM and dealings in the General Placing Shares will commence on or around 17 August 2018.

The Issue Price represents a discount of approximately 14.6 per cent. to the closing mid-market price of 85.5 pence per Ordinary Share on 27 July 2018 (being the last practicable date prior to the announcement of the Placing). 

2.         Background to and reasons for the Acquisition and Placing

Pelatro provides precision marketing software for use by its customers in Business to Consumer ("B2C") applications, with a current focus on providing multi-channel campaign management software to Telcos that provides a contextualised, relevant and personalised solution for end users.

Pelatro's precision marketing solution, mViva, uses Big Data analytics to study growing end user data to reveal patterns, trends, associations and key behavioural traits. mViva then applies algorithms to analyse this data and to identify patterns for each end user. Based on this analysis, relevant offers (which can include additional services or customised campaigns) are made to end users through a variety of channels like SMS, email and apps. mViva allows customers to generate smaller relevant segments of end users, which can be as small as one end user. By using mViva's targeted approach, Pelatro's customers have experienced an increase of up to 5 per cent. of annual incremental revenue per end user through the upselling of products.

Pelatro joined AIM on 19 December 2017 following a successful placing which saw which saw strong demand from a number of institutional investors, and raised a total of £4.6 million. As part of its expansion plans the Company has been assessing a number of potential targets and believes that the acquisition of certain assets of Danateq will provide a strong fit to allow Pelatro to augment its future growth.

3.         Information on Danateq and the Acquisition

The Danateq Group was founded by entrepreneurs with backgrounds in robotics, telecom control systems and defence who came together to develop LINK™, a real-time self-learning "cognitive"​ analytics platform, with the vision of enabling enterprises to implement continuously improving automated business processes through cognitive loops. Their initial vertical was the Telco industry where they enabled leading operators to create 360 degree customer views as the first step to a cognitive enterprise. The Danateq Group uses data analytics to provide campaign management solutions to Telcos over a range of geographies. In addition to Danateq's campaign management solution, the Danateq Group also offers two additional complementary products, loyalty management and notification platform, as well as  separate products that do not form part of the Acquisition. Danateq's precision marketing technology products include: Campaign Management Solution, Loyalty Management Solution and Notification Platform.

Through the Acquisition, Pelatro will acquire certain assets from the Danateq Group, including contracts and sales staff. Additionally, certain members of the Danateq Group, including staff of a development centre in Nizhy Novgorod, Russia, which is home to developers, architects and data scientists who currently develop and manage Danateq's analytics products will transfer to the Group. This transfer of employees is expected to occur after Completion and in order to ensure continuity of service in relation to the Acquisition Assets, the Group has entered into the TSA. As well as this, the Group will be acquiring IP of Danateq; further information on the acquisition of IP can be found below.

Pelatro will also acquire contracts from the Danateq Group pursuant to which it currently provides software and services to Globe and certain operating companies ("OpCos") within the Telenor Group pursuant to the Global Framework Agreement ("GFA") with Telenor. The GFA was signed in 2016 for 5 years and since that time the Danateq Group has entered into contracts with 3 OpCos of the Telenor Group in Bulgaria, Myanmar and Bangladesh, where it trades as Grameenphone ("Contracts"). The Contracts cover 90 million subscribers, with the potential to win 8 further OpCo contracts across Central Europe and Asia, covering a further 85 million subscribers. The Danateq Group has also provided software and services since 2013 to Globe through a re-seller agreement. This contract, which renews automatically on an annual basis, is a maintenance and managed services contract covering 75 million subscribers across the Philippines. As well as these, there are two re-seller agreements which will also be transferred to the Company. The re-seller agreements with Ericsson and Wireless Services Asia were originally signed on 3 year terms. In addition, the Group and the Danateq Group have identified a pipeline of opportunities built up by the Danateq Group.

The assets to be purchased pursuant to the Acquisition achieved revenue of $2.9m and profit before tax of $1.4m in 2017.

4.            Reasons for the Acquisition

The Directors believe that the Acquisition will add significant value to the Group. The key benefits outlined by the Directors are as follows:

·      The Group's subscriber base covered will double from 160 million to 325 million;

·      The Group's number of customers increases from 8 to 12;

·      The Acquisition brings the addition of a large recurring revenue (US$ 0.73m) contract with Globe, Philippines - annual revenue of about US$ 1.5m;

·      Immediate entry into Central Europe;

·      Expected to accelerate entry into Western Europe over the next 18-24 months, particularly through the Telenor GFA;

·      Broadens product suite by the addition of two products already sold to Danateq Group as customers  that can be sold into the existing customer base of Pelatro and which the Group no longer needs to develop internally;

·      Immediately earnings enhancing; and

·      Positions Pelatro as a credible player in the new "Multi Channel Marketing Hub" space.

This final part is increasingly relevant as the "Multi-Channel Campaign Management" identified at the time of IPO is evolving into "Multi Channel Marketing Hub" which orchestrates a client company's communications with and offers to customer segments across multiple channels.  The Directors believe the additional products acquired in the Acquisition will substantially alter the Group to position itself within this category.

5.         Terms of the Acquisition

The Company and the Danateq Group entered into the BSA on 30 July 2018 in order to transfer the Acquired Assets to the Group. The key terms and provisions of the BSA are as follows.

Pursuant to the BSA, the Group will pay an initial cash consideration of $7.0 million to the Vendors at Completion. In addition, the Vendors could be paid additional cash considerations of up to $5.0 million on the following basis:

·     $2.0 million payable should the Acquired Assets generate revenue of $2.25 million in the first twelve month period following Completion, with an additional $1.0 million payable should the Acquired Assets generate in excess of $4.5 million during the same period; and

·     $1.0 million payable should the Acquired Assets generate revenue of $2.9 million in the second twelve month period following Completion, with an additional $1.0 million payable should the Acquired Assets generate in excess of $5.8 million during the same period

Provided always that if the minimum target revenues (of $2.25 million and $2.9million) are not met, then no additional consideration shall be payable to the Vendors.

Under the BSA, on Completion, the Company and Danateq Pte Ltd shall enter into the IP Agreement, pursuant to which the LINK^TM Platform shall be transferred into the joint ownership of the Company and Danateq Pte Ltd. Post Completion, any development and/or modification and/or enhancements made to the LINK^TM Platform by either the Company or the Vendor(s) will be owned exclusively by the party which performs the development and/or modification and/or enhancement.

On Completion, Danateq Pte Ltd and Pelatro Pte Ltd shall also enter into the TSA through which Pelatro Pte Ltd will outsource certain services to Danateq Pte Ltd (to be carried out by the Danateq TSA Team) until the incorporation of RusCo and upon such incorporation the employment of the Russia Employees will be transferred to RusCo.

The employment of the Singapore Employees will transfer to Pelatro Pte Ltd on Completion.

Under the terms of the BSA, the Vendors are providing certain standard warranties and indemnities to the Company in respect of the Acquired Assets. The Warranties are given at the date of entering into the BSA and shall be deemed to be repeated on each day between such date and up to and including Completion, by reference to the circumstances subsisting at the time of repetition.

Further, certain Warranties which relate to the Russia Employees, which are given at the date of entering into the BSA, and so far as they relate to Russia Employees, shall be deemed to be repeated on each day up to and including the Service Termination Date, by reference to the circumstances subsisting at the time of repetition. The Warranties are given subject to the matters which have been disclosed to the Company in a disclosure letter.

Under the BSA, the Vendors are giving the Company certain restrictive covenants, including, inter alia, an undertaking not to carry on a business in competition with the Business, an undertaking not to canvass solicit or approach any customers of the previous 12 months of the Business and an undertaking not to solicit or entice away from the Business any employees of the previous 12 months.

As further consideration for the Company entering into the BSA, the Guarantors will jointly and severally guarantee to the Company the due and punctual performance by the Vendors of all their obligations contained in the BSA and undertake to jointly and severally hold the Company fully and completely indemnified on demand against any Losses and Expenses (as such terms are defined in the BSA) incurred by the Company arising from any failure of the Vendors to perform their obligations under the BSA.

6.         Details of the Placing

The Company proposes to raise approximately £6.0 million (before expenses) through the issue and allotment, conditional on Admission, of the Placing Shares. The Issue Price represents a discount of approximately 14.6 per cent. to the closing mid-market price of 85.5 pence per Ordinary Share on 27 July 2018 (being the last practicable date prior to the announcement of the Placing and Acquisition). The Placing Shares will represent approximately 25.3 per cent. of the Company's Enlarged Issued Share Capital (assuming all the Placing Shares are issued) and will rank pari passu with the Existing Ordinary Shares. The Placing is not being underwritten.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Conditional upon, inter alia, the passing of the Resolutions, in accordance with the conditions of the Placing and Subscription, subject to the terms of the Placing Agreement, it is expected that admission to trading on AIM and dealings in the EIS/VCT Placing Shares will commence on or around 16 August 2018; it is expected that Admission to trading on AIM and dealings in the General Placing Shares will commence on or around 17 August 2018.

Shareholders should note that it is possible that EIS/VCT Admission occurs but General Admission and therefore completion of the Acquisition does not occur. If any Admission does not occur then the Company will not receive the relevant net proceeds in respect of such Admission and the Company may not be able to finance the activities referred to in this announcement.

The EIS/VCT Placing is conditional, inter alia, upon:

i.     the Placing Agreement becoming unconditional in all respects in relation to the EIS/VCT Placing (save for EIS/VCT Admission) and not having been terminated;

ii.    the Resolutions being passed at the General Meeting; and 

iii.   EIS/VCT Admission becoming effective by not later than 8.00 a.m. on 16 August 2018 or such later date (being not later than 8.00 a.m. on 17 September 2018) as the Company and finnCap may agree.

The General Placing is conditional, inter alia, upon:

i.     the Resolutions being passed at the General Meeting;

ii.    EIS/VCT Admission becoming effective by not later than 8.00 a.m. on 16 August 2018 or such later date (being not later than 8.00 a.m. on 17 September 2018) as the Company and finnCap may agree;

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

iv.   General Admission becoming effective by not later than 8.00 a.m. on 17 August 2018 or such later date (being not later than 8.00 a.m. on 18 September 2018) as the Company and finnCap may agree.

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 Issue Price; 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 Acquisition 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 they may incur in respect of the Placing and the Acquisition.

finnCap may terminate the Placing Agreement in certain circumstances (including for breach of warranty at any time prior to EIS/VCT Admission and/or General 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 or material adverse change occurring at any time prior to EIS/VCT Admission and/or General Admission.

7.            Use of Proceeds

The proceeds of the Placing will be used as follows:

·         The Acquisition                                                                              £4.5 million (c.$5.9 million)

·         Working capital                                                                              £1.5 million (c.$2.0 million)

The Acquisition will be funded both through the proceeds received by the Company pursuant to the General Placing, together with the Group's existing cash resources.

The net proceeds of the EIS/VCT Placing, included above, will be used to fund the working capital of the Group.

8.         Pelatro's current trading

The Company continues to execute the plan it set out at its IPO in December 2017, namely to help further the Company's international expansion plans. Since the IPO, progress has been made with product innovation and new sales and marketing hires. In addition, the Company continues to build revenue from its existing customers in the form of change requests and contract changes.

In April 2018, the Company won a major contract with a Central Asian subsidiary of a Western European Telco with more than 6 million customers. This contract is the largest contract entered into by the Company to date and worth approximately $1.7 million (which is mainly to be booked in the second half of the financial year). As such, the Company expects revenue of around $1.8 million in the first half of the financial year and a gross cash position of $2.1 million as at 30 June 2018 with $0.475 million in working capital facilities in the Company's Indian subsidiary. The Company has continued to collect the majority of the receivables outstanding as at 31 December 2017 and the cash position as at the end of the half year (to 30 June 2018), reflects the timing of revenues and therefore accumulated receivables during the first half of the year.

The Directors believe that the Company is on track to at least meet market expectations for 2018, driven by revenue visibility from existing contracts and on-going customer change requests and work. The Company's pipeline of new opportunities also continues to be strong and will be enhanced by the Acquisition.

9.         EIS/VCT

The following information is based upon the laws and practice currently in force in the UK and may not apply to persons who do not hold their Ordinary Shares as investments.

The Company has in the past obtained advance assurance from HMRC that shares in the Company represented a qualifying investment for a VCT and were capable of qualifying for EIS tax reliefs. The Company has also received advance assurance from HMRC that the shares to be issued pursuant to the previous EIS/VCT placing in December 2017 ranked as 'eligible shares' and were capable of being a 'qualifying holding' for the purposes of investment by VCTs and that the Company can issue EIS 3 'compliance certificates' for the purposes of EIS.

Potential shareholders or Shareholders of the Company who are in any doubt as to their tax position or who are subject to tax in jurisdictions other than the UK are strongly advised to consult their own independent financial adviser immediately.

These details are intended only as a general guide to the current tax position under UK taxation law and are not intended to be exhaustive. Investors who are in any doubt as to their tax position or who are subject to a tax jurisdiction, other than the UK, are strongly advised to consult their professional advisers. Companies can raise up to £5 million under the combined VCT, EIS, SEIS, social investment tax relief or any other State aid risk capital investment in any 12 month period.

10.         EIS

The Company intends to operate so that it qualifies for the taxation advantages offered under EIS. The main advantages are as follows:

i.       Individuals can claim a tax credit of 30 per cent. of the amount invested in the Company against their UK income tax liability, (provided they have a sufficient tax liability to reclaim this amount), thus reducing the effective cost of their investment to 70 pence for each £1 invested. However, there is an EIS subscription limit of £1,000,000 in each tax year and, to retain the relief, the EIS/VCT Placing Shares must be held for at least three years.

ii.      UK investors (individuals, beneficiaries and trustees of or certain trusts) may defer a chargeable gain by investing the amount of the gain in the Company. There is no limit to the level of investment for this purpose and, therefore, to the amount of gain which may be deferred in this way. Note that the deferred gain will come back into charge when the EIS shares are disposed (other than to a spouse or civil partner) of, if the taxpayer becomes non-resident for UK tax purposes or if the Company ceases to qualify as an EIS company within the three year qualifying period.

iii.     There is no tax on capital gains made upon disposal of shares in an EIS qualifying company after the three year period ("Qualifying Period") but income tax relief must have been given and not withdrawn.

iv.      If a loss is made on disposal of the Placing Shares at any time, the amount of the loss (after allowing for any income tax relief initially obtained) can be set off against either the individual's gains for the tax year in which the disposal occurs, or, if not so used, against capital gains of a subsequent tax year, or against the individual's income of the tax year of the disposal or of the previous tax year.

v.      Provided a Shareholder has owned Placing Shares in the Company for at least two years and certain conditions are met at the time of transfer, 100 per cent. business property relief should be available, which could reduce the inheritance tax liability on the transfer of (or other chargeable event related to the) EIS/VCT Placing Shares to nil.

The amount of relief an investor may gain from an EIS investment in the Company will depend on the investor's individual tax circumstances.

Qualifying Period

In order to retain the EIS reliefs, an investor must hold their shares for at least three years. A sale or other disposal (other than an inter-spousal gift or a transfer on death) will result in any income tax relief that has been claimed being clawed back by HMRC. Additionally, any capital gains deferred will come back into charge and the capital gains tax exemption will be lost. It is the investor's responsibility to disclose a disposal to HMRC.

An individual can only be eligible for EIS relief on the purchase of shares if all shares held by that investor are either risk based shares (that is shares for which an EIS 3 compliance statement has been issued) or subscriber shares.

Additionally, if the Company ceases to meet certain qualifying conditions within three years from the date of the share issue, the tax reliefs will be lost. This will be shown as the "Termination Date" on the EIS3 certificate which the Company will issue to investors following formal approval of the share issue by HMRC.

Advance Assurance of EIS Status

In order for investors to claim EIS reliefs relating to their shares in the Company, the Company has to meet a number of rules regarding the kind of company it is, the amount of money it can raise, how and when that money must be employed for the purposes of the trade, and the trading activities carried on. The Company must satisfy HMRC that it meets these requirements and is therefore a qualifying company.

Although the Company currently expects to satisfy the relevant conditions for EIS investment, neither the Directors nor the Company gives any warranty or undertaking that relief will be available in respect of any investment in the EIS/VCT Placing Shares.

11.         VCT

The Company has applied for and obtained advance assurance from HMRC that the Ordinary Shares issued pursuant to the placing in December 2017 were 'eligible shares' for the purposes of investment by VCTs. The status of the Placing Shares as a qualifying holding for VCTs will be conditional, inter alia, upon the Company continuing to satisfy the relevant requirements. Although the Company currently expects to satisfy the relevant conditions for VCT investment, neither the Directors nor the Company gives any warranty or undertaking that tax relief will be available in respect of any investment in the EIS/VCT Placing Shares.

As the rules governing EIS and VCT reliefs are complex and interrelated with other legislation, if Shareholders and potential shareholders are in any doubt as to their tax position, require more detailed information than the general outline above, or are subject to tax in a jurisdiction other than the United Kingdom, they should consult their professional adviser.

12.          Forward-looking statements

This announcement may contain forward-looking statements relating to the Company's expected operations that are based on management's current expectations, estimates and projections. Words such as "expects", "intends", "plans", "projects", "believes", "estimates" and similar expressions are used to identify such forward-looking statements. These statements are not warranties or guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although the Company believes the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, many of which are beyond the control of the Company, which could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements.

Expected Timetable of Principal Events

2018

Announcement of the Placing and Acquisition                                                                                                            30 July

Publication and posting of the circular and Form of Proxy                                                                                       30 July

Latest time and date for receipt of completed Forms of Proxy                                                10.30 a.m. on 13 August

General Meeting                                                                                                                                10.30 a.m. on 15 August

Announcement of result of General Meeting via Regulatory Information Service                                         15 August

Admission and dealings in the EIS/VCT Placing Shares to commence on AIM                          8.00 a.m. on 16 August

Admission and dealings in the General Placing Shares to commence on AIM                         8.00 a.m. on 17 August

Completion of the Acquisition                                                                                                                                  17 August

CREST accounts expected to be credited for the EIS/VCT Placing Shares in                                                    16 August

uncertificated form

CREST accounts expected to be credited for the General Placing Shares in                                                    17 August

uncertificated form

Certain of the events in the above timetable are conditional upon, inter alia, the approval of the Resolutions to be proposed at the General Meeting.

Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service. References to time in this announcement are to London time.

APPENDIX I

Terms and Conditions of the Placing ("Terms and Conditions")

Pelatro PLC

Conditional placing by finnCap of up to 8,219,179 million new Ordinary Shares at a price of 73 pence per share to raise approximately £6.0 million before expenses for the Company.

Ordinary Shares ISIN: GB00BYXH8F66     Ticker: PTRO                       

IMPORTANT INFORMATION REGARDING THE PLACING FOR PLACEES ONLY

The distribution of the Announcement and the offering of the Placing Shares in certain jurisdictions may be restricted or prohibited by law or regulation. Persons distributing the Announcement must satisfy themselves that it is lawful to do so.  No action has been taken by the Company or finnCap that would permit an offering of such shares or possession or distribution of the Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession the Announcement comes are required by the Company and finnCap to inform themselves about, and to observe, such restrictions.

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

The Placing Shares to be issued pursuant to the Placing will not be admitted to trading on any stock exchange other than the AIM market operated by the London Stock Exchange.

Each Placee should consult with its own advisers as to legal, tax, business and related aspects of an investment in Placing Shares.

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, the Announcement.

Eligible participants

The 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 or any of its territories, Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction in which such release, publication or distribution would be unlawful.

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, as amended from time to time, and includes any relevant implementing directive measure in any member state) (the "Prospectus Directive"); and

 b)  in the United Kingdom, qualified investors who are persons who (i) have professional experience in matters relating to investments falling within article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) are persons falling 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 in (a) and (b) together being referred to as "relevant persons").

The Company and finnCap will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgments and undertakings. finnCap do not make any representation to the proposed Placees regarding an investment in the Placing Shares referred to in this Announcement.

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, finnCap note that: the price of Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, finnCap will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

The proposed Placees have such knowledge and experience in financial, business and tax matters as to be capable of evaluating the merits and risks of its investment in the Placing Shares and it is able to bear the economic risks and complete loss of such investment in the Placing Shares.

This Announcement, Appendix and these Terms and Conditions must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this Announcement, 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.

The 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.

Bookbuild

finnCap will immediately following the Announcement commence a bookbuild process to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in the prospective Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

finnCap and Pelatro shall be entitled to effect the Placing by such alternative method to the Bookbuild as it may, in its sole discretion, determine.

Participation in, and principal terms of, the Placing  

1.    finnCap is acting as bookrunner for and agent of Pelatro.

2.    Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by finnCap. finnCap is itself entitled to enter bids in the Bookbuild as principal.

3.    The Bookbuild will establish the number of Placing Shares to be issued and the allocation of Placing Shares will be agreed between finnCap and Pelatro following completion of the Bookbuild. The Placing Price is 73 pence per Placing Share. The number of Placing Shares will be announced on a Regulatory Information Service following the completion of the Bookbuild.

4.    To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at finnCap. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Placing Price. Bids may be scaled down by finnCap on the basis referred to in paragraph 9 below.

5.    The Bookbuild is expected to close no later than 4.30 p.m on 30 July 2018 but may be closed earlier or later at the discretion of finnCap. Pelatro may, in agreement with finnCap, accept bids that are received after the Bookbuild has closed. Pelatro reserves the right (upon the agreement of finnCap) to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.

6.    Each prospective Placee's allocation will be confirmed orally by finnCap as agent of Pelatro following the close of the Bookbuild. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) in favour of finnCap and Pelatro to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix (a copy of this Appendix having been provided to the prospective Placee prior to or at the same time as such confirmation) and in accordance with the Articles.

7.    Each prospective Placee's allocation and commitment will be evidenced by a confirmation note issued to such Placee by finnCap. The terms of this Appendix will be deemed to be incorporated in that confirmation note.

8.    Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Pelatro and finnCap as agent of Pelatro, to pay to finnCap (or as it may direct) in cleared funds, an amount equal to the product of the Placing Price and the number of Placing Shares allocated to such Placee as confirmed to it by finnCap.

9.    finnCap may choose to accept bids, either in whole or in part; and may scale down any bids on such basis as it may determine. finnCap may also, notwithstanding paragraphs 4 and 5 above, (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time. The Company, in consultation with finnCap, also reserves the right to reduce or seek to increase the amount to be raised pursuant to the Placing.

10.  A bid in the Bookbuild will be made on these Terms and Conditions and will be legally binding on the prospective Placee on behalf of whom it is made, and except: (i) as regards allocation (as referred to in paragraph 9 of these Terms and Conditions); and (ii) with the consent of finnCap, when made, will not be capable of variation or revocation after the time at which it is submitted.  Each Placee will be deemed to have read and consented to the Terms and Conditions set out in this Appendix in their entirety.

11.  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 on the basis explained below under "CREST delivery-versus-payment". finnCap reserves the right to require settlement for and/or delivery to any Placee of any Placing Shares by such other means as it may deem appropriate if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in the Announcement.

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

13.  By submitting a bid in the Bookbuild, each Placee agrees 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.

14.  To the fullest extent permissible by law, finnCap shall not have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, finnCap shall not have any liability (including, to the fullest extent permissible by law, any fiduciary duties) in respect of finnCap conduct of the Bookbuild or of such alternative method of effecting the Placing as finnCap and Pelatro may agree.

15.  A Placee whose Placing Shares are to be delivered to a custodian or settlement agent should ensure that the written confirmation is copied and delivered promptly to the appropriate person within that organisation.

 Conditions of the Placing

The obligations of finnCap under the Placing Agreement are conditional on, amongst other things:

·           the passing of the Resolutions at the General Meeting of the Company to be convened at the offices of finnCap on 15 August 2018 at 10.30am;

·        EIS/VCT Admission taking place by 8.00 a.m. (London time) on 16 August 2018 and General Admission taking place by 8.00 a.m. (London time) on 17 August 2018 (or such later time and/or date as Pelatro and finnCap may otherwise agree, being no later than 18 September); and

·           the Placing Agreement becoming unconditional in all other respects.

If any of the conditions contained in the Placing Agreement in relation to the Placing are not fulfilled, or waived by finnCap, by the respective time or date where specified (or such later time and/or date as Pelatro and finnCap may agree), the Placing will not proceed. 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 discretion and upon such terms as it thinks fit, waive compliance by Pelatro with the whole or any part of any of Pelatro's obligations in relation to the conditions in the Placing Agreement, save that the conditions in the Placing Agreement relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in these Terms and Conditions.

None of (i) finnCap, (ii) the Company, (iii) any of their affiliates, agents, directors, officers or employees, (iv) to the extent not contained within (i), (ii) or (iii), any person connected with finnCap or the Company as defined in the FSMA ((iii) and (iv) being together "affiliates" and individually an "affiliate" of finnCap or the Company), (v) any person acting on behalf of finnCap or the Company, shall have any liability (including to the extent permissible by law, any fiduciary duties) to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of finnCap and the Company.

The Placing Agreement may be terminated by finnCap at any time prior to Admission in certain circumstances including, among other things, following a breach of the Placing Agreement by the Company or the occurrence of certain force majeure events.

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

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 they need not make any reference to Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

Agreement to subscribe Placing Shares

Conditional on:

 ·        EIS/VCT Admission taking place by 8.00 a.m. (London time) on 16 August 2018 and General Admission taking place by 8.00 a.m. (London time) on 17 August 2018 (or such later time and/or date as Pelatro and finnCap may otherwise agree, being no later than 18 September);

·     the Placing Agreement becoming otherwise unconditional in all respects and not having been terminated on or before Admission (or such later time and/or date, not being later than 18 September as finnCap and the Company may agree); and

·     finnCap confirming to Placees their allocation of Placing Shares,

a Placee agrees to become a member of the Company and agrees to subscribe for those Placing Shares allocated to it by finnCap at the Placing Price.

To the fullest extent permitted by law, each Placee acknowledges and agrees severally, and not jointly nor jointly and severally, that it will not be entitled to exercise any remedy of rescission at any time. This does not affect any other rights the Placee may have.

Contract

Following oral acceptance of a firm Placing participation, Placees will receive a confirmation note following closing of the Bookbuild and prior to Admission of the Placing Shares notifying them of the number of Placing Shares they will receive, together with a request for such Placee's CREST participant details and contact details. Dealings in the Placing Shares will not be permitted prior to Admission.

Oral acceptance of a Placing participation, on the terms and subject to the conditions of these Terms and Conditions and the Announcement (and subject to the Articles), will constitute a legally binding contract, inter alia, to subscribe for that Placing participation at the Placing Price.

Payment for Placing Shares

Each Placee must pay the Placing Price for the Placing Shares allocated to the Placee in the manner and by such time as directed by finnCap. If any Placee fails to pay as so directed and/or by the time required by finnCap, the relevant Placee's application for Placing Shares may, at the discretion of finnCap, be rejected.

Background

Shareholder approval is required to give the Directors of the Company authority to allot and issue the Placing Shares and the Consideration Shares and the Company is today dispatching the Circular containing a notice of General Meeting at which the Resolutions will be put to the Shareholders.

It is expected that, subject to the passing of the Resolutions at the General Meeting, EIS/VCT Admission will become effective and that dealings in the EIS/VCT Placing Shares on AIM will commence at 8.00 a.m. 16 August 2018 and General Admission will become effective and that dealings in the General Placing Shares on AIM will commence at 8.00 a.m. 17 August 2018.

Please note that all references to times and dates in these Terms and Conditions are references to UK time. Terms and expressions defined in the Announcement (unless expressly provided to the contrary) have the same meaning in these Terms and Conditions.

Placing Agreement

finnCap as AIM nominated adviser and broker (as defined under the AIM Rules) to the Company, has entered into the Placing Agreement with the Company whereby finnCap has agreed, as agent for and on behalf of the Company, to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price conditionally upon, inter alia:

·     the Placing Agreement becoming unconditional and not being terminated by finnCap in accordance with its terms;

·     Admission of the EIS/VCT Placing Shares becoming effective by not later than 8.00 a.m. on 16 August 2018 (or such later time and/or date as finnCap and the Company may agree, but not later than 8.00 a.m. 17 September 2018 and Admission of the General Placing Shares becoming effective by not later than 8.00 a.m. on 17 August 2018 (or such later time and/or date as finnCap and the Company may agree, but not later than 8.00 a.m. 18 September 2018; and

·     Completion of the Acquisition.

finnCap may in its absolute discretion waive the conditions referred to above, other than that relating to Admission.

Under the Placing Agreement, certain warranties have been given by the Company to finnCap concerning, inter alia, the accuracy of the Announcement, the Circular and the presentation to potential investors, the affairs of the Company and certain taxation and other matters, and certain indemnities have been given by the Company in relation to finnCap's involvement in the Placing and Admission.

The Placing Agreement will be capable of being terminated by finnCap at its absolute discretion at any time before Admission if, inter alia, (i) any statement in the Placing Documents has become untrue, inaccurate or misleading or matters have arisen which would, if the Placing Documents were issued at that time, constitute an omission from them; or (ii) there has been a breach of any of the warranties in the Placing Agreement; or (iii) there have occurred certain events, as specified in the Placing Agreement which would render any of the warranties materially untrue or incorrect, and certain other force majeure events which in the reasonable opinion of finnCap is or will or is likely to have an adverse effect on the financial or trading position or the business or prospects of the Company and its subsidiaries which is material in the context of the Group as a whole or which renders the Placing impracticable or inadvisable.

For the avoidance of doubt, finnCap is not underwriting the Placing.

Placing participation

Each Placee which confirms its agreement to finnCap (acting as agent on behalf of the Company) to purchase Placing Shares will be bound by these Terms and Conditions and will be deemed to have accepted them severally, and not jointly nor jointly and severally.

Placing Shares are subscribed subject to these Terms and Conditions and on the basis of the Announcement and the Articles. Placing Shares are subscribed at the Placing Price (free of commission) payable in cleared funds in full and in accordance with the settlement obligations set out below.

A Placee's participation in the Placing is conditional upon, inter alia, the Placing Agreement becoming unconditional in all respects and not being terminated by finnCap in accordance with its terms. In the event that the Placing Agreement does not become unconditional in all respects or is terminated, the Placing will not proceed and all funds delivered by a Placee pursuant to these Terms and Conditions will be returned to the Placee at the Placee's risk, without interest.

No commissions are payable to Placees in respect of their participation in the Placing.

A Placee's Placing participation is expected to be free of stamp duty and stamp duty reserve tax in accordance with the paragraph entitled "Stamp Duty" below.

Dealings and Admission to trading on AIM

Application will be made to London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Subject to the fulfilment of the conditions of the Placing Agreement, it is expected that Admission of the EIS/VCT Placing Shares will become effective and that dealings in the EIS/VCT Placing Shares will commence at 8.00 a.m. on 16 August 2018 (or such later time and/or date as the Company and finnCap may agree, not being later than 17 September 2018) and it is expected that Admission of the General Placing Shares will become effective and that dealings in the General Placing Shares will commence at 8.00 a.m. on 17 August 2018 (or such later time and/or date as the Company and finnCap may agree, not being later than 18 September 2018).

As applicable, it is expected that, in relation to a Placee's Placing participation, CREST accounts will be settled with EIS/VCT Placing Shares on a delivery-versus-payment basis on 16 August 2018 and with General Placing Shares on 17 August 2018.

The Placing Shares will be issued fully paid and, when issued, will rank pari passu in all respects with the existing Ordinary Shares of the Company in issue immediately prior to Admission, and will rank in full for any dividends and other distributions declared, paid or made on the Enlarged Share Capital of the Company after Admission.

Conditions and Termination

These Terms and Conditions, which are legally binding, confirm the Placing Price and the terms and conditions on which each Placee confirms its agreement to finnCap on behalf of the Company to participate in the Placing.

finnCap will have the right to terminate the Placing Agreement, exercisable at any time prior to Admission, in certain circumstances, including if any warranties given by the Company in the Placing Agreement are untrue, inaccurate or misleading in any material respect.

A Placee's rights and obligations under the Placing are not conditional (except that the allotment and issue of the Placing Shares are subject to the passing of certain resolutions at the General Meeting) and will not be capable of termination or rescission by a Placee in any circumstances, save in respect of fraud.

Each Placee severally, and not jointly nor jointly and severally, irrevocably confirms its agreement with finnCap and the Company on the terms and subject to the conditions set out herein and subject to the Announcement, the Placing Agreement and the Articles, to subscribe for those Placing Shares allocated to it by finnCap at the Placing Price and to comply with these Terms and Conditions.

Each Placee's individual and separate agreement to subscribe for Placing Shares also constitutes an acknowledgment that its commitment has been made solely on the basis of the information contained in the Announcement and these Terms and Conditions and that accordingly none of the Company, its Directors, or any person acting on behalf of any of them shall have any liability to a Placee for any information or representation, other than as is contained in the Announcement and these Terms and Conditions.

Each Placee's participation in the Placing is conditional upon, inter alia, the Placing Agreement being executed and becoming or being declared unconditional in all respects and not being terminated by finnCap in accordance with its terms.

If Placees do not provide any CREST details or if Placees provide insufficient CREST details for the delivery of Placing Shares to their CREST account, their Placing participation will be delivered in certificated form provided payment has been made in terms satisfactory to finnCap and all other conditions in relation to the Placing have been satisfied or waived.

The right is reserved to issue Placing Shares in certificated form should finnCap or the Company consider this to be necessary or desirable. This right is only likely to be exercised in normal circumstances in the event of any interruption, failure or breakdown of CREST or any part of CREST or on the part of the facilities and/or system operated by the Company's registrars in connection with CREST.

The person named for registration purposes (which term shall include the holder of the relevant CREST account) must be: 

(a)          the person procured by the Placee to subscribe for or acquire the relevant Placing Shares; or

(b)          the Placee itself; or

(c)           a nominee of any such person, as the case may be.

Settlement - CREST delivery-versus-payment

Settlement will be effected on a matching delivery-versus-payment basis within CREST from finnCap's settlement agent's CREST account FKCLT.

Stamp Duty

Whilst finnCap does not believe there to be any liability to stamp duty or stamp duty reserve tax in respect of the issue of Placing Shares, should any such stamp duty or stamp duty reserve tax be payable it will be entirely for the Placee's account and neither the Company nor finnCap will have any liability in respect thereof.

Money Laundering

To ensure compliance with the Money Laundering Regulations 2007, the money laundering provisions of the Criminal Justice Act 1993, the Anti-Terrorism Crime and Security Act 2001 and the Proceeds of Crime Act 2002 (together with the provisions of the Money Laundering Sourcebook of the Financial Conduct Authority and the manual of guidance produced by the Joint Money Laundering Steering Group in relation to financial sector firms), all together "Relevant Anti-Money Laundering Procedures", finnCap may, in its absolute discretion, require verification of a Placee's identity to the extent that the Placee has not already provided the same. Pending the provision to finnCap of evidence of identity, Placing Shares may be retained and/or delivery may be delayed at finnCap's absolute discretion. If within a reasonable time after a request for verification of identity finnCap's has not received evidence satisfactory to it, it may, at its absolute discretion, terminate a Placing participation in which event the monies payable on acceptance of the subscription will, if paid, be returned without interest to the account of the drawee bank from which they were originally debited.

Alternatively, if Placing Shares have already been allotted to a Placee, finnCap may (at its discretion) sell them on the Placee's behalf and hold the proceeds of sale (net of expenses) or an amount equal to the original payment (whichever is the lower) on trust for the Placee. In these circumstances neither finnCap nor the Company shall (save in the event of fraud or wilful default) be responsible for, or have any liability for, any loss or damage arising as a result.

Representations and Warranties

finnCap is acting exclusively for the Company and no-one else in connection with the Placing and Admission and will not regard itself as owing duties under the rules and regulations of the Financial Conduct Authority to any other person or regard any other person as its client.

By agreeing to subscribe for Placing Shares, each Placee which enters into a contract with finnCap to subscribe for Placing Shares will (for itself and any person(s) procured by it to subscribe for Placing Shares and any nominee(s) for any such person(s)) be deemed to represent and warrant severally, and not jointly nor jointly and severally, to finnCap and the Company that:

•          it has read and understood the Announcement in its entirety and it agrees to and accepts all the Terms and Conditions set out in this Appendix;

•       its application for Placing Shares is irrevocable and its rights and obligations in respect of the Placing will terminate only in the circumstances referred to in this Appendix and will not be subject to rescission or termination by it in any circumstances;

•          it is not relying, or entitled to rely, on any information (including, without limitation, any information contained in any investor presentation given in relation to the Placing) other than that contained in the Announcement;

•          it may lawfully acquire Placing Shares;

•          it is not relying, or entitled to rely, on any information (including, without limitation, any information contained in any management presentation given in relation to the Placing) other than that contained in the Announcement (including the Terms and Conditions);

•          it has not received a prospectus or other offering document in connection with the Placing and acknowledges that no prospectus or other offering document is required under the Prospectus Directive or has been or will be prepared in connection with the Placing;

•          it is subscribing for the Placing Shares for its own account, it does not have any contract, understanding or arrangement with any person to sell, pledge, transfer, or grant a participation therein to such person or any third person with respect to any Placing Shares; save that if it is a private client stockbroker or fund manager it confirms that in acquiring the Placing Shares it is acting under the terms of one or more discretionary mandates granted to it by private clients and is not acting on an execution only basis or under specific instructions to acquire the Placing Shares for the account of any third party;

•          it is not a national, citizen or resident of the US, Canada, Australia, Republic of South Africa or Japan or any other jurisdiction in which this offer is or would be unlawful, and that it has not, and will not offer, sell, renounce or deliver as principal or agent, directly or indirectly, Placing Shares in, into or within the US, Canada, Australia, Republic of South Africa or Japan or any other jurisdiction in, into or within which such action is or would be unlawful, or to or for the benefit of any person who is a citizen of, or taxpayer to, or is resident in any of those territories or to any person purchasing such shares with a view to their re-offer, sale or transfer in or into any such territory;

•          it is: if in the UK (i) a person who having professional experience in matters relating to investments, is deemed sufficiently expert or sufficiently substantial to understand the risks involved and as such falls within the definition of investment professionals as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (ii) a high net worth company, partnership or the trustees of high value trusts or unincorporated associations as defined in Article 49(2)(a) to (d) of that Order, or (iii) it is a person who may lawfully receive these Terms and Conditions and the Announcement (each a "Relevant Person"); or a person who is a "Qualified Investor" within the meaning of the Prospectus Directive (Directive 2003/71/EC and amendments thereto, including Directive 2010/73/EU, to the extent implemented in the relevant member state of the EEA) and any implementing measure in each relevant member state of the European Economic Area. Any investment or investment activity to which these Terms and Conditions relate is only available to and will only be engaged in with (i) in the UK, Relevant Persons; and (ii) in any other member state of the EEA, Qualified Investors. Each Placee severally, and not jointly nor jointly and severally, represents and warrants that it is either a Relevant Person or a Qualified Investor;

•          it is entitled to subscribe for the Placing Shares comprised in its Placing participation under the laws of all relevant jurisdictions which apply to it, that it has fully observed and will fully observe such laws and has obtained all governmental and other consents which may be required thereunder and complied with all necessary formalities and it has paid any issue, transfer or other taxes due in connection with its acceptance in any jurisdiction and that it has not taken any action or omitted to take any action which will or may result in finnCap or the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal and regulatory requirements of any jurisdiction in connection with the Placing or the Placee's acceptance of the Placing participation;

•          it has not relied on, and will not rely on, any information given or any representations, warranties or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares or otherwise, other than the information contained in the Announcement and these Terms and Conditions; and that in making its application under the Placing it will be relying solely on the information contained in the Announcement and these Terms and Conditions;

•          it will pay the full subscription sum at the Placing Price as and when required in respect of all Placing Shares for which it is required to subscribe under its Placing participation and will do all things necessary on its part to ensure that payment for such shares and their delivery to it or at its direction is completed in accordance with the standing CREST instructions (or, where applicable, standing certificated settlement instructions) that it has in place with finnCap or puts in place with finnCap;

•          its obligations under the Placing are valid, binding and enforceable and that it has all necessary capacity, consents and authority, and has obtained all necessary consents and authorities to enable it to commit to participation in the Placing and to perform its obligations in relation thereto and will honour its obligations;

•          it does not expect finnCap to have any duties or responsibilities towards it for providing protections afforded to finnCap's clients under the rules set out in The Financial Conduct Authority Handbook (the "FCA Handbook") or under the regulatory system (as defined in the Glossary to the FCA Handbook) (the "Rules") or advising it with regard to the Placing Shares and that it is not a client of finnCap as defined by the Rules. It agrees that any payment by it will not be treated as client money governed by the Rules;

•          any exercise by finnCap of any right to terminate the Placing Agreement shall be within finnCap's absolute discretion in accordance with its terms and that finnCap shall not have any liability to it whatsoever in relation to any decision to exercise or not to exercise such right;

•          it is in finnCap's absolute discretion to agree to extend the time or waive the requirement for the satisfaction of all or any of the conditions of the Placing Agreement in accordance with its terms and otherwise to adjust the timetable for implementation of the Placing and finnCap shall have no liability or duty to Placees whatsoever in connection with such extension or waiver. All times and dates referred to in these Terms and Conditions or in the accompanying Announcement are therefore subject to adjustment in accordance with that reservation;

•          it does not expect finnCap to have any duty to it similar or comparable to the "best execution", "suitability" and "risk warning" rules in the Rules and that it is not relying on finnCap to advise whether or not the Placing Shares are in any way a suitable investment for it;

•          it is not relying on any representations, warranties, statements or agreements by finnCap or the Company or by any director, employee or agent of finnCap or the Company or any other person except as set out in the Announcement or these Terms and Conditions;

•          it will (or will procure that its nominee will), if applicable, make notification to the Company of the interest in its ordinary shares in accordance with the Companies Act 2006 and Chapter 5 of the Disclosure Guidance and Transparency Rules made under the Financial Services and Markets Act 2000;

•          it is not (and is not applying on behalf of) a person who falls within the special charge to stamp duty reserve tax (broadly, persons or nominees or agents for persons, whose business is or includes using depository receipts or the provision of clearance services) nor who attracts a higher rate of stamp duty (including, without limitation, under section 67, 70, 93 or 96 of the Finance Act 1986);

•          it is liable for all and any stamp duty or stamp duty reserve tax and any related costs, fines, penalties and interest arising in respect of the delivery and settlement in respect of the Placing Shares comprised in its Placing participation;

•          these Terms and Conditions and any contract which may be entered into between a Placee and finnCap pursuant hereto shall be governed by and construed in accordance with the laws of England and that it submits to the exclusive jurisdiction of the English Courts as regards any claim, dispute or matter arising out of or relating to these Terms and Conditions or any such contract;

•          it has complied with its obligations under the Relevant Anti-Money Laundering Procedures and it acknowledges that it is a term of its Placing participation that, to ensure compliance with all the Relevant Anti-Money Laundering Procedures, finnCap may, in its absolute discretion, require verification of a Placee's identity. Pending the provision to finnCap of evidence of identity, definitive certificates for the Placing Shares may be retained at finnCap's absolute discretion;

•          it is aware of its obligations in connection with the Criminal Justice Act 1993 and the Market Abuse Regulation (EU)596/2014 and it has complied and will comply with those obligations;

•          time is of the essence as regards its obligations under this Appendix;

•          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;

•          it is an institution or other investor 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 and 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;

•          all notices, remittances and documents of title are sent to it or its agent at its own risk;

•          it acknowledges and agrees that finnCap is entitled to exercise any of its rights under the Placing Agreement or any other right in its absolute discretion without any liability to Placees; and

•          it irrevocably appoints any director of finnCap or the Company as its agent for the purpose of executing and delivering to the Company and/or its registrars any and all documents, and taking such other action, on its behalf necessary to enable it to be registered as the holder of any Placing Shares in its Placing participation.

The above warranties, representations, confirmations, acknowledgements and agreements will survive completion of the Placing. finnCap shall be entitled to exercise any of its rights under the Placing Agreement or any other right in its absolute discretion without any liability to Placees including, without limitation, the extension of any time limit, waiver in full or in part of any condition or term in the Placing Agreement or the termination of the Placing Agreement if any condition therein has not been satisfied.

To the extent that a Placee fails to pay finnCap the subscription monies relating to its participation in the Placing in accordance with the settlement arrangements set out above, then finnCap shall be entitled to:

a)    delete its name from the list of Placees; or

b)    notify the Placee that its Placing participation will remain on such list but will be sold by finnCap on its behalf and finnCap shall proceed immediately to sell such shares at such price as finnCap may determine (which may be less than the Placing Price), in which event the sale proceeds received, net of costs of sale (including any taxes), shall be paid to finnCap. To the extent that such net proceeds are less than the aggregate Placing Price in relation to its final Placing participation, a Placee shall continue to be liable for such difference and finnCap may demand and seek payment of the same from it. By a Placee's acceptance of these Terms and Conditions, it hereby appoints finnCap as its agent to sign all documents required to give effect to this paragraph.

Neither the Announcement nor these Terms and Conditions constitute an offer to sell, or the solicitation of an offer to buy, Placing Shares in any jurisdiction in which such an offer or solicitation is unlawful. The Placing Shares have not been and will not be registered or qualified for sale under the securities laws of the US or any of its states or possessions, Canada, Australia, the Republic of South Africa or Japan. Accordingly, the Placing Shares may not be offered or sold, directly or indirectly, in, into or within the US or to US Persons (as defined below) or within or to persons in or resident in or citizens of, or taxpayers to, the US, Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction in or into which such actions are or would be unlawful, and neither the Announcement nor these Terms and Conditions may be distributed in or into or within the US, Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction in which such distribution is or would be unlawful, except in the case of the US, pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act of 1933, as amended. By making an oral confirmation of a firm Placing participation, a Placee confirms, represents and warrants severally, and not jointly nor jointly and severally, that it is not a US Person or a person resident in Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction in which this offer is or would be unlawful, and it is not acquiring Placing Shares on behalf of, or with a view to re-sale directly or indirectly to any US Person or a person resident in Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction in which such actions are or would be unlawful, or to any other person whom it has reason to believe is purchasing or subscribing for such Placing Shares for the purposes of such re-offer or re-sale. "US Person" means a citizen or resident of the US, a citizen or partnership or other entity created or organised in or under the laws of the US or any sub-division thereof or therein and any estate or trustee which is subject to US federal income taxation regardless of its source.

Any decision in connection with any proposed purchase of Placing Shares must be made solely on the basis of the information contained in the Announcement and these Terms and Conditions. Any presentation materials supplied to Placees were for their own information and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purposes whatsoever. In particular, they must not be distributed to any person with an address in the US, its territories or possessions, or Canada, Australia, the Republic of South Africa or Japan or to any national or resident of the US, Canada, Australia, the Republic of South Africa or Japan or any corporation, partnership, or other entity created or authorised under the laws of the US, Canada, Australia, the Republic of South Africa or Japan. Any such distribution could result in a violation of the laws of the US, Canada, Australia, the Republic of South Africa or Japan.

Any presentation and accompanying materials distributed by the Company were directed solely at persons who are either Relevant Persons and/or Qualified Investors and it is not intended that they should be acted upon in any way and nor should they be disclosed in any way to any person who is not a Relevant Person or a Qualified Investor.

No offering document, prospectus or admission document has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in the Announcement and these Terms and Conditions released by Pelatro today and any information previously published by the Company by notification to a Regulatory Information Service, and subject to the further terms set forth in the confirmation note to be provided to individual Placees.

Any forward looking statements, including any projections, contained in any presentation and presentation materials are for the internal planning purposes of the Company and its senior management only, have not been commented or reported on by the Company's auditors and accordingly may not necessarily be on a basis that is consistent with the Company's accounting policies. Actual results may differ substantially from figures used for planning purposes only and, accordingly, any such forward looking statements or projections should not be relied on in any manner whatsoever.

finnCap confirms that, in relation to the arrangements referred to herein, it is acting in the provision of corporate finance services to the Company for its own account, within the meaning of the Rules, and finnCap is an authorised person for the purposes of the Financial Services and Markets Act 2000 (as amended).

finnCap is acting as broker and bookrunner to the Company in relation to the Placing and Admission. finnCap will receive a fee and a commission in relation to its services to the Company in the Placing. As stated above, a Placee will not be treated as a client of finnCap in respect of transactions entered into under these Terms and Conditions. The value of shares and the income derived therefrom may go down as well as up. Past performance of investments is not a guarantee of future returns. An investment will be made on the basis of the contents of these Terms and Conditions and the Announcement.

All times and dates in these Terms and Conditions and the Announcement may be subject to amendment. finnCap shall notify Placees of any changes.

APPENDIX II 

DEFINITIONS

"Act"	the Companies Act 2006 (as amended from time to time)
"Acquired Assets"	the assets to be acquired from Danateq Pte Ltd and Danateq Limited by the Company pursuant to the BSA
"Acquisition"	the acquisition of certain assets of Danateq Pte Ltd and Danateq Limited
"Acquisition Agreements"	the BSA, IP Agreement and the TSA
"Admission"	EIS/VCT Admission in the case of the EIS/VCT Placing Shares General Admission in the case of the General Placing Shares
"AIM"	the market of that name operated by London Stock Exchange
"AIM Rules"	the rules for companies with a class of securities admitted to AIM and their nominated advisers governing the admission to and operation of AIM as published by London Stock Exchange from time to time
"Business"	the business of licensing, supplying, implementing, supporting, hosting and operating CVM, PNM and Loyalty, and related activities (including code design), as carried on by the Vendors immediately prior to the exchange of the BSA
"Business Day"	a day not being a Saturday or a Sunday or a bank or public holiday in England on which clearing banks are open for business in the City of London
"Business Sale Agreement" or "BSA"	the conditional shares purchase agreement, dated 30 July 2018, between, inter alia, the Company and Danateq Pte and Danateq Limited relating to the Acquisition
"Circular"	the circular to be sent later today to shareholders in connection with the Placing
"Company" or "Pelatro"	Pelatro plc, a company incorporated in England and Wales with registered number 10630166
"Completion"	the completion of the sale and purchase of the Business pursuant to the BSA
"CREST"	the Relevant System (as defined by the CREST Regulations) for the paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which Euroclear is the Operator (as defined by the CREST Regulations)
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (as amended) (SI 2001/3755)
"Danateq Group"	Danataq Limited and Danateq Pte Ltd
"Danateq Limited"	a company registered in Hong Kong under number 1700564 whose registered office is at 3905 Two Exchange Square, Connaught Place Central, Hong Kong
"Danateq Pte Ltd"	a company registered in Singapore under number 201001162M whose registered office is at 47 Kallang Pudding Road #11-09 The Crescent @ Kallang, Singapore 349318
"Danateq TSA Team"	those individuals who will be engaged by Danateq Pte Ltd to carry out services for Pelatro Pte Ltd under the TSA
"Directors" or "Board"	the directors of the Company whose names are set out on page 4 of the Circular, or any duly authorised committee thereof
"EIS"	the Enterprise Incentive Scheme under Part 5 of the Income Tax Act 2007
"EIS/VCT Admission"	admission of the EIS/VCT Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules
"EIS/VCT Placing"	the conditional placing of the EIS/VCT Placing Shares to the Placees pursuant to the Placing Agreement
"EIS/VCT Placing Shares"	the 2,108,899 New Ordinary Shares to be issued, conditional on EIS/VCT Admission, in connection with the EIS/VCT Placing
"Enlarged Issued Share Capital"	the Company's issued share capital immediately after completion of the Placing
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST
"Existing Ordinary Shares"	the 24,313,252 existing Ordinary Shares at the date of this announcement
"FCA"	the Financial Conduct Authority
"Financial Promotion Order"	the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (as amended)
"finnCap"	finnCap Ltd, nominated adviser and broker to the Company
"Form of Proxy"	the form of proxy enclosed with the Circular for use by Shareholders in connection with the General Meeting
"General Admission"	admission of the General Placing Shares and Subscription Shares to trading on AIM becoming effective in accordance with the AIM Rules
"General Meeting"	the general meeting of the Company convened for 10.30 a.m. on 15 August 2018 at the offices of finnCap, 60 New Broad Street, London, EC2m 1JJ
"General Placing"	the conditional placing of the General Placing Shares to the Placees pursuant to the Placing Agreement
"General Placing Shares"	the 6,110,280 New Ordinary Shares to be issued, conditional on, inter alia, Admission, in connection with the General Placing
"Globe"	Globe Telecom, Inc.
"Group"	the Company, its subsidiaries and its subsidiary undertakings
"Guarantor"	the guarantors under the BSA, being Cody E. Martinson, Sergei Popov and Thomas E. Martinson whose details are set out fully therein
"HMRC"	Her Majesty's Revenue & Customs
"IP Agreement"	the deed of assignment of intellectual property rights and license back, dated 30 July 2018, between Danateq Pte and the Company relates to use of intellectual property rights following the Acquisition
"Issue Price"	the price of 73 pence per New Ordinary Share
"LINK Platform"	a software platform developed by the Vendors and described as the "LINK Platform", that enables the creation of high-performance analytical streaming applications, use cases and solutions
"London Stock Exchange"	London Stock Exchange plc
"New Ordinary Shares"	the new Ordinary Shares to be issued and allotted pursuant to the Placing
"Notice of General Meeting"	the notice of the General Meeting, which is set out at the end of the
"Ordinary Shares"	the ordinary shares of 2.5 pence each in the capital of the Company
"Pelatro Pte Ltd"	a company registered in Singapore under number 201631740H whose registered office is at One Raffles Place, #10-62 Tower 2, Singapore 048616
"Placees"	subscribers for Placing Shares pursuant to the Placing Agreement
"Placing"	the conditional placing of the EIS/VCT Placing Shares and General Placing Shares to the Placees pursuant to the Placing Agreement
"Placing Agreement"	the conditional agreement dated 30 July 2018 between the Company and finnCap relating to the Placing
"Placing Shares"	the 2,108,899 New Ordinary Shares to be issued, conditional on EIS/VCT Admission, in connection with the EIS/VCT Placing and the 6,110,280 New Ordinary Shares to be issued, conditional on General Admission, in connection with the General Placing
"Prospectus Rules"	the Prospectus Rules published by the FCA
"Resolutions"	the resolutions set out in the Notice of General Meeting
"RusCo"	a company to be incorporated and registered in the Russian Federation, at the direction of the Company, following Completion
"Russia Employees"	those individuals (whether employed or engaged as employees, workers, contractors, independent entrepreneurs or otherwise) whose employment or engagement shall be transferred to RusCo upon its incorporation
"Service Termination Date"	the date that the Company notifies in writing to Danateq Pte Ltd that the Russia Employees will or have been fully transitioned to RusCo
"Shareholders"	holders of Ordinary Shares
"Singapore Employees"	those individuals (whether employed or engaged as employees, workers, contractors or otherwise) whose employment or engagement shall be transferred to Pelatro Pte Ltd on Completion, such list of individuals being subject to modification as agreed in writing between the Company (on behalf of Pelatro Pte Ltd a subsidiary of the Company) and Danateq Pte Ltd in the period between the date of signing the BSA and Completion
"Telenor"	Telenor Global Shared Services AS
"Telenor Group"	Telenor, its subsidiaries and its subsidiary undertakings
"Transactional Service Agreement" Or "TSA"	the transitional services agreement, dated 30 July 2018, entered into between Danateq Pte Ltd, Danateq Limited and Pelatro Pte Ltd, a subsidiary of the Company relating to services to be performed by staff members of Danateq Pte Ltd following the Acquisition
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"U.S."	the United States of America, each state thereof, its territories and possessions, and all areas subject to its jurisdiction
"VCT"	a Venture Capital Trust under Part 6 of the Income Tax Act 2007
"Vendor"	Danateq Pte Ltd and Danateq Limited
"Warranties"	The warranties being given by the Vendors to the Company under terms of the BSA
"£" and "p"	pounds and pence sterling, respectively, the lawful currency of the United Kingdom
"$" and "USD"	US dollars, the lawful currency of the United States of America

 

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