News Archive

Conditional Placing and Notice of General Meeting

17 May 2018

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

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN ANGLO AFRICAN OIL & GAS PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY INVESTMENT DECISION IN RESPECT OF ANGLO AFRICAN OIL & GAS PLC.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014 ("MAR").

Anglo African Oil & Gas plc (AIM: AAOG), an independent oil and gas developer, is pleased to announce that it has conditionally raised total gross proceeds of approximately £7.4 million by the conditional placing of 92,551,459 New Ordinary Shares (the "Placing") at an issue price of 8 pence per New Ordinary Share (the "Issue Price") to new and existing institutional and other investors.

Highlights

  • Placing to new and existing institutional and other investors to raise gross proceeds of approximately £7.4 million;
  • The Placing has been undertaken to enable AAOG to fund the entire cost of drilling the multi-horizon TLP-103 well at its 56% owned Tilapia field ("Tilapia") in the Republic of the Congo, including its partner SNPC's share of drilling and workover costs - not budgeted for on listing (c.US$4 million)
    • SNPC's unpaid costs are recoverable from production revenue
  • The Directors believe that it would be potentially transformational for AAOG if it could complete the drilling programme on the TLP-103 well, and successfully commence extracting oil from the Mengo Sands and the Djeno Sands, two deeper horizons which are both prolific producers on nearby fields;
  • The Placing is subject to the passing of an ordinary resolution, at the General Meeting;
  • Sister Holding SAS ("Sister") has made clear that it does not support the proposed Placing. For the avoidance of doubt, the Board wishes to make clear that it has examined, and discussed in detail, numerous alternative funding options and is convinced that an equity fundraise represents the best solution for the benefit of all its Shareholders. Sister has been offered the chance to participate in any equity fundraising on several occasions. Sister has requested anti-dilution protection for its shareholding and the Company has refused to provide this. Sister has declined to participate in the proposed Placing; and
  • A circular to Shareholders in respect of the Placing (the "Circular") is expected to be posted later today giving notice of the General Meeting to be held on 4 June 2018 at 11.00 a.m. at the offices of finnCap Ltd. A copy of the Circular will be available on the Company's website at www.aaog.co

David Sefton, Executive Chairman of AAOG, said:

"The level of support received from existing and new investors validates our view that Tilapia is a valuable asset for the Company. By having the flexibility to bear, if needed, the entire cost of TLP-103, we can now move forward and drill this new well over the summer, continuing the positive operational momentum generated in recent months following the arrival of the new CEO, James Berwick, and his team. Success at TLP-103 will be transformational for the Company."

Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meanings as defined in the Circular, an extract of which is included below.

 

Enquiries

For further information please visit www.aaog.co or contact:

Anglo African Oil & Gas plc Tel: c/o St Brides Partners
+44 20 7236 1177
David Sefton, Executive Chairman
James Berwick, Chief Executive Officer
 
   
finnCap Ltd (Nominated Adviser and Broker) Tel: +44 20 7220 0500
Christopher Raggett, Giles Rolls, Anthony Adams (Corporate Finance)  
Emily Morris (Corporate Broking)  
   
St Brides Partners (Financial PR) Tel: +44 20 7236 1177
Frank Buhagiar, Hugo de Salis  

 

Notes to Editors

Anglo African Oil & Gas (AAOG) is an AIM-listed independent oil and gas company that owns a 56% stake in the producing Tilapia oil field in the Republic of the Congo. The Company boasts a low-cost production story in a prolific hydrocarbon region with significant exploration upside, differentiating it substantially from its E&P peers. Additionally, management's remuneration is tied to hitting production milestones, reflecting their strong focus on cost control.

Tilapia has an excellent address, being located close to multi-billion-barrel fields that include the ENI-operated Litchendjili field and the 5,000bopd Minsala Marine field. Tilapia currently produces approximately 38 bopd from two near-surface intervals. It has an undeveloped discovery in the lower Mengo sands with gross contingent resources of 8.1m barrels and a deeper exploration prospect, with gross prospective resources of 58.4m barrels, in the productive Djeno interval from which the adjacent Minsala field produces. 

IMPORTANT NOTICES

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

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via regulatory news service this inside information is now considered to be in the public domain.

This announcement does not constitute a prospectus for the purposes of the Prospectus Rules of the Financial Conduct Authority, nor does it comprise an admission document prepared in accordance with the AIM Rules. Accordingly, this announcement has not been approved by or filed with the Financial Conduct Authority.

finnCap, which is authorised and regulated in the United Kingdom by the FCA, is acting as broker and nominated advisor to the Company for the purposes of the AIM Rules exclusively for the Company and no one else and will not be responsible to any other person for providing protections afforded to their customers nor for providing advice in relation to the contents of this announcement. No representation, warranty, express or implied, is made by finnCap for the accuracy of any information or opinions contained in this announcement or the omission of any material information, nor has finnCap authorised the contents of this announcement for any purpose and no liability whatsoever is accepted by finnCap. finnCap expressly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement.

Forward-Looking Statements

This announcement contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement. No statement in this announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward-looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.

KEY STATISTICS

Issue Price 8 pence
Number of Existing Ordinary Shares 69,504,565
Number of Placing Shares to be issued pursuant to the Placing 92,551,459      
Enlarged Ordinary Share Capital following completion of the Placing 162,056,024
Percentage of Enlarged Ordinary Share Capital represented by the Placing Shares 57.1%
Gross proceeds of the Placing £7.4 million
Estimated net proceeds of the Placing receivable by the Company £6.6 million
£:US$ exchange rate used in this announcement 1.35

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

  Time and/or Date(1) (2) (3)
Announcement of the Placing 17 May 2018
Posting of this circular and the Form of Proxy 17 May 2018
Latest time and date for receipt of Forms of Proxy from Shareholders 11.00 a.m. on 31 May 2018
General Meeting 11.00 a.m. on 4 June 2018
Expected time of announcement of results of the General Meeting 12.00 a.m. on 4 June 2018
Admission effective and dealings in the Placing Shares expected to commence on AIM 5 June 2018
Expected date for crediting of the Placing Shares in uncertificated form to CREST stock accounts 5 June 2018
Expected date of dispatch of share certificates in respect of the Placing Shares 27 June 2018

Notes

(1) All times shown are London times unless otherwise stated

(2) Each of the above times and/or dates is based on the Company's current expectation but may be subject to change

(3) If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

The following text is extracted from the proposed Circular:

DEFINITIONS

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

"Act" the Companies Act 2006;
"Admission" the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules;
"AIM" the AIM Market, a market operated by the London Stock Exchange;
"AIM Rules" the rules for companies governing admission to and the operation of AIM, published by the London Stock Exchange;
"AIM Rules for Nominated Advisers" the rules for nominated advisers, published by the London Stock Exchange;
"AOGC" Africa Oil and Gas Corporation;
"Articles" the articles of association of the Company;
"Board" the board of directors of the Company for the time being or a duly constituted committee thereof;
"Business Days" any day on which banks are open in London for normal banking business and the London Stock Exchange is open for trading;
"CGC" the UK Corporate Governance Code published by the Financial Reporting Council;
"Closing Price" the closing middle market price of an Existing Ordinary Share as derived from the AIM Appendix to the Daily Official List of the London Stock Exchange;
"Company" or "AAOG" Anglo African Oil & Gas plc, registered number 04140379 whose registered office is at 27/28 Eastcastle Street, London W1W 8DH;
"CPR" the Competent Person's Report prepared on behalf of the Company in connection with Admission, a copy of which is set out in Part III of the Company's AIM admission document;
"CREST" the relevant system (as defined in the CREST Regulations) for the paperless settlement of share transfers and the holding of uncertificated shares operated by Euroclear UK & Ireland Limited;
"CREST Manual" the compendium of documents entitled "CREST Manual" issued by Euroclear from time to time;
"CREST Regulations" the Uncertificated Securities Regulations 2001 (S.I. 2001 No 3755) (as amended);
"Directors" the directors of the Company as at the date of this announcement whose names are set out below and "Director" means any one of them;
"Djeno" Djeno sands formation beneath the Mengo sands;
"Enlarged Ordinary Share Capital" the issued Ordinary Shares following the Placing comprising the Existing Ordinary Shares and the Placing Shares;
"Executive Directors" David Sefton, James Berwick and James Cane;
"Existing Ordinary Shares" the 69,504,565 Ordinary Shares in issue as at the date of this announcement;
"FCA" the Financial Conduct Authority;
"finnCap" finnCap Ltd, a company registered in England and Wales with registered number 06198898;
"Form of Proxy" the form of proxy accompanying the Circular relating to the General Meeting;
"FSMA" the Financial Services and Markets Act 2000, as amended;
"General Meeting" the general meeting of the Company, notice of which is set out at the end of the Circular, and including any adjournment(s) thereof;
"Group" the Company and its subsidiaries;
"HMRC" HM Revenue and Customs;
"IFRS" International Financial Reporting Standards;
"Independent Directors" David Sefton, James Berwick, James Cane, Phil Beck and Sarah Cope;
"IPO" the admission of the Existing Ordinary Shares to trading on AIM which occurred on 6 March 2017;
"ISIN" the International Securities Identification Number;
"Issue Price" 8 pence per new Ordinary Share issued pursuant to the Placing;
"JerseyCo" a company to be incorporated in Jersey for the purposes of facilitating the proposed cashbox placing;
"London Stock Exchange" London Stock Exchange plc;
"Mengo" Mengo Formation or Mengo Sands, a sandstone interval located beneath the Tilapia Pointe Indienne R1/R2 reservoirs;
"New Licence" has the meaning given in paragraph 2 below; 
"Official List" the official list of the FCA;
"Ordinary Shares" ordinary shares of £0.05 each in the capital of the Company;
"PK" Petro Kouilou S.A.;
"Placing" the conditional placing of the new Ordinary Shares by finnCap pursuant to the Placing Agreement and the conditional share subscription by Brian Moritz and Nick Butler described in paragraph 4 below;
"Placing Agreement" the conditional agreement dated 17 May 2018 between finnCap and the Company relating to the Placing, further details of which are set out in paragraph 4 below;
"Placing Shares" The 92,551,459 new Ordinary Shares to be issued by the Company pursuant to the Placing;
"Prospectus Rules" the prospectus rules of the FCA made pursuant to section 73A of FSMA;
"SNPC" Société Nationale des Pétroles du Congo;
"Restricted Jurisdictions" the United States, Canada, Australia, the Republic of South Africa, the Republic of Ireland, Japan or any other country outside the United Kingdom where the distribution of the Circular may lead to a breach of any applicable legal or regulatory requirements;
"Resolution" the resolution to be proposed at the General Meeting as more particular described in paragraph 10 of part I of the Circular;
"SEDOL" the Stock Exchange Daily Official List Identification Number;
"Shareholder" a holder of an Ordinary Share;
"SOCO" SOCO International plc;
"Takeover Code" the City Code on Takeovers and Mergers;
"Tilapia" the Tilapia field, which is located offshore Republic of the Congo, close to the coast. The surface facilities are located onshore and most of the wells are drilled deviated from the onshore location;
"Tilapia Licence" the hydrocarbons permit in relation to Tilapia initially granted to Prestoil Kouilou on 18 July 2005 for a period of 10 years (prior to its transfer to PK), and subsequently extended to 18 July 2020;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
"US" or "United States" the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;
"US Persons" a US person as defined in Regulation S promulgated under the US Securities Act; and
"US Securities Act" the United States Securities Act of 1933 (as amended).

GLOSSARY OF TECHNICAL TERMS

The following meanings and interpretations of terms applying to the oil & gas industry shall apply throughout this announcement unless the context requires otherwise:

"API gravity" a specific gravity scale developed by the American Petroleum Institute for measuring the relative density of various petroleum liquids, expressed in degrees
"bbl" barrel
"bopd" barrels of oil per day
"Brent crude oil" a major trading classification of sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide
"bscf" billion standard cubic feet
"contingent resources" those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies
"E&P" oil & gas exploration and production
"GDP" gross domestic product
"hydrocarbons" naturally occurring organic compound comprising hydrogen and carbon such as natural gas, oil and coal
"mmstb" million stock tank barrels
"probable reserves" reserves which, based on the available evidence and taking account technical and economic factors, have at least a 50 per cent. chance of being produced
"prospective resources" those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations
"proved reserves" reserves which, based on the available evidence and taking into account technical and economic factors, have at least a 90 per cent. chance of being produced
"recovery" the fraction of hydrocarbons that can or has been produced from a well, reservoir or field
"reserves" those quantities of petroleum which are anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions, reference should be made to the full PRMS definitions for the complete definitions and guidelines
"reservoir" an underground porous and permeable formation where oil & gas have accumulated
"resources" contingent and prospective resources, unless otherwise specified
"workover" the process of performing major maintenance or remedial treatments on an oil or gas well.

 

1. INTRODUCTION

The Company announces that, through a conditional placing from new and existing institutional and other investors, it had raised approximately £7.4 million before expenses, by the issue of 92,551,459 Placing Shares at a price of 8 pence per Ordinary Share.

The Placing has been undertaken to enable the Company to fund the cost of drilling the multi-horizon TLP-103 well at Tilapia. The Directors believe that it would be potentially transformational for the Company if it could complete the drilling programme on the TLP-103 well, and successfully commence extracting oil from the deeper horizons (the Mengo sands and the Djeno sands). Further details on the specific work programme planned by the Company and the rationale for the Placing are set out in paragraph 4.

The Placing is conditional, inter alia, upon the passing of the Resolution by Shareholders at the General Meeting, notice of which is set out at Part II of the Circular.

Admission of the Placing Shares to trading on AIM is expected to occur no later than 8.00 a.m. on 5 June 2018 or such later time(s) and/or date(s) as finnCap and the Company may agree. The Placing has not been underwritten.

The purpose of this announcement is to outline the reasons for, and to explain the terms of, the Placing, to explain why the Board considers the Placing to be in the best interests of the Company and Shareholders as a whole and to seek your approval to the Resolution at the forthcoming General Meeting, to be held at the offices of finnCap Ltd, 60 New Broad Street, London, EC2M 1JJ on 4 June 2018 at 11.00 a.m.

2. BACKGROUND TO TILAPIA

2.1 The Tilapia Licence

The Tilapia Licence is held by PK, which is a 100 per cent. owned subsidiary of the Company. Tilapia is 1.8 kilometres offshore of the Republic of the Congo, located in the Lower Republic of the Congo Basin and adjacent to one-billion-barrel fields. The Republic of the Congo is a supportive jurisdiction with established oil and gas legislation and infrastructure.

Tilapia is drilled from onshore and has its production and storage facilities onshore. It is a 45-minute drive from Pointe-Noire and 17 kilometres from the nearest refinery. Production can be trucked to the refinery throughout the year.

2.2 Tilapia

Tilapia is host to three main horizons or sands (with a fourth, the Vandji, unexplored):

  • R1/R2 Sands: The shallowest reservoir from which the Company currently produces about 25 bopd of 39-41 API light sweet crude oil. The Company considers that this horizon is a strong candidate for enhanced oil recovery to extend field life and production and that such interventions have the potential to increase production to between 185 and 250 bopd from the two existing producing wells on the Tilapia Licence.
  • Mengo sands: The second shallowest reservoir from which high volumes of resource and presence of hydrocarbons has been confirmed at conventional flow rates. The Mengo sands are in production for other operators in the Congo basin but were not brought into production on Tilapia when originally discovered because technology for one-off stimulation to commence production was not available in the area at the time. The Company expects that this can produce up to 500 bopd per well.
  • Djeno sands: The deepest reservoir currently targeted at Tilapia, which has been producing in neighbouring fields since 2013 at prolific oil flow rates driven by lower lying high-pressure gas. The Company's technical work and analogous well control in neighbouring fields gives the Company confidence that the presence of hydrocarbons in the Djeno sands at Tilapia is probable.

3. PROGRESS SINCE IPO

The Company's intention at IPO was to complete workovers on two existing producing wells, TLP-101 and TLP-102, so as to increase production and cashflow prior to drilling the multi-horizon TLP-103 well. Despite completing the acquisition of PK on 4 August 2017, thereby giving the Company control of PK's 56 per cent. interest in Tilapia, progress on the intended work programme has been slower than anticipated. On 26 May 2017, the Company attempted the first of its workovers on the TLP-102 well and, although it reperforated the well and confirmed the presence of hydrocarbons and pressure within the well, the Company did not achieve any oil flow. The Company has also experienced delays to the drilling of the TLP-103 well due to extended negotiations with rig contractors and the Board changes referenced below in paragraph 3.1.

However, the Company has taken significant steps forward in recent months and the Board is confident that Tilapia remains a significant growth opportunity.

3.1 The new Board

Since the IPO, the Company has strengthened the skills and experience available to it through its Board. In particular, in January 2018 the Company appointed James Berwick as Chief Executive Officer responsible for setting the overall direction and strategy of the Company. James has considerable experience in West Africa and beyond, having held several senior executive positions within leading oil and gas operators including Impact Oil & Gas and Ophir Energy plc. James's network of contacts within the industry, his technical experience and his dynamism have already had a positive impact on the Company and its efforts to improve cash flow.

In addition, the Board has strengthened its non-executive function through the appointments of Phil Beck, a geologist and petroleum engineer, Nick Butler, a senior policy adviser on energy matters and Sarah Cope, a highly experienced investment banker. Their range of complementary skills have assisted the Company in developing its plans for Tilapia and in the execution of the Placing.

3.2 Current Operations

Led by James Berwick, the operational team in the Republic of the Congo has moved forward with the workovers of the TLP-101 and TLP-102 wells, and the preparations for the drilling of the TLP-103 well.

TLP-101

On 17 April 2018, the Company announced that the flow lines and all associated topside equipment to the TLP-101 well had been successfully cleaned and reassembled to receive oil flow. The Company tested production for a period of five days via the annulus to compare flow against the previously restricted flow lines in order to provide a baseline prior to reverting back to the coiled tubing.

The Company has re-directed production from the annulus through the coiled tubing. Production at the TLP-101 well has currently been dropped to 25 bopd to stabilise pressure before the Company attempts to increase pressure and therefore production in the short term. The Directors anticipate that this increase in pressure will result in the TLP-101 well significantly increasing the 38 bopd production rate that it was achieving prior to IPO.

TLP-102

Also on 17 April 2018, the Company announced that Schlumberger has conducted a successful intervention focused on the integrity of the perforations on the TLP-102 well. Oil and gas samples were taken at the surface and sent to Total's laboratory in Pointe Noire for testing which confirmed that the TLP-102 well is now in contact with the reservoir. The Company is currently testing the well to see whether oil will flow unassisted. During this test period, TLP-102 produced between 80-90 bopd, which represented an increase in production of 120 per cent. when compared to the flow rate prior to the workover. However, the Company still expects that achieving optimum flow rates from the TLP-102 well will, as originally planned, require mechanical assistance. The Company has on site a downhole pump that was procured for this purpose. Its insertion requires the use of equipment readily available in Pointe-Noire and does not need a drilling rig on site. 

TLP-103

On 3 May 2018, the Company confirmed that drilling operations had commenced ahead of mobilisation of the rig.

The Company has already spent $1.2 million on long-lead items such as casing, site preparation and improved infrastructure in anticipation of increased production. The TLP-103 well will cost in the region of a further $7.0 million to drill. Société de Maintenance Pétrolière, a French drilling company with a depot in Gabon, has agreed, subject to final contract, commercial terms to supply the drilling rig and the bulk of other services will be provided by Schlumberger.

The TLP-103 well is expected to take 60-70 days to drill. Further details on the drilling of the TLP-103 well is set out at paragraph 4 of this Part I.

3.3 The New Licence

On 7 February 2018, SNPC requested that the government of the Republic of the Congo award a new production hydrocarbons permit in respect of Tilapia, to come in to effect on proclamation for a period of 20 years ("New Licence"). Completion of the New Licence still requires formal approval by the Director General of Hydrocarbons, the Minister and the Conseil des Ministres. The Director General of Hydrocarbons recently despatched a delegation to Tilapia to confirm the factual basis of the application for the New Licence. The delegation completed its work on 20 April 2018 having carried out all necessary verification. The Company expects the process to conclude with the formal proclamation of the New Licence, at which stage it will become effective immediately, in the coming months. 

The formal terms of the production-sharing agreement and joint operating agreement which relate to the New Licence are in the process of being finalised, but it is proposed that the revenue generated in relation to the New Licence shall be shared as follows:

  • PK shall retain its role as operator and will retain its 56 per cent. share of the net revenues generated pursuant to the New Licence.
  • A Congolese private company, AOGC, shall be entitled to a 25 per cent. share of the net revenues generated pursuant to the New Licence. AOGC is a large private group in the Republic of the Congo and is partnered with Total and ENI on their new fields in the Republic of the Congo. The AOGC group has interests in all aspect of the energy industry and owns the AFric petrol station chain. The Company believes that AOGC is financially capable of meeting its share of future development costs.
  • SNPC shall be entitled to a 19 per cent. share of the revenues generated pursuant to the New Licence.

The New Licence includes a commitment to drill a new well, the TLP-103 well, but is on the same financial terms with the same profit sharing arrangements as the Tilapia Licence and incurs no signing bonus.

It is anticipated that the TLP-103 well will be drilled under the terms of the existing Tilapia Licence, but it should be noted that both the Tilapia licence and the New Licence allow for the Company to recoup any capital expenditure in excess of the Company's pro-rata share from future oil revenues.

In short, given the progress detailed above and with an oil price in excess of US$70/bopd, the Board believes that the Company represents an even more compelling investment opportunity than at IPO.

4. FUTURE WORK PROGRAMME

The Company's strategy is to increase the value of Tilapia through a planned production development programme.

The principal part of this work programme is to drill a new well, the TLP-103 well. This is expected to commence in June 2018 and will be financed by the proceeds of the Placing. The TLP-103 well is designed to penetrate the R1, R2 and Mengo and then be drilled further down to test the deeper Djeno.

If hydrocarbons of a commercial volume are discovered, the Mengo will be tested and stimulated before being put into production. A similar process will then take place in the Djeno. The Directors believe that production, if from the Mengo, could be increased by approximately 500 bopd and the Company is targeting combined production of 750 bopd from the R1, R2 and Mengo sands. Success at the Djeno could add up to 5,000 bopd.

The Directors believe that there is little exploration risk in drilling the Mengo as the data from earlier drilling show that producible hydrocarbons are present and the reservoirs are charged. The Company's technical work and analogous well control give the Company confidence that the presence of hydrocarbons in the Djeno at Tilapia is probable.

If the Company is successful in producing from the TLP-103 well, as set out above, the Company will then develop a full development plan for the field, which will involve the drilling of further wells.

The total cost of drilling the TLP-103 well is expected to be in the region of $8 million. Of this approximately $1.2 million has already been spent on long-lead items and work to the site in preparation for drilling. 

Pursuant to the terms of the agreements governing the TLP-103 well, the Company, through PK, is only liable for a share of the costs equal to its share in the revenues, namely 56 per cent. However, the existing production-sharing agreement provides that SNPC can require the Company to pay the entirety of such costs in advance, with recovery being made from SNPC's share of subsequent revenues. On this basis, the Company has decided that it is prudent to raise sufficient capital to ensure that it can meet the entire costs of drilling on its own. As a direct result, the Company has decided to proceed with the Placing.

5. USE OF PROCEEDS

The Company is proposing to raise up to £7.4 million before expenses pursuant to the Placing at the Issue Price of 8 pence per new Ordinary Share.

Approximate gross proceeds of the Placing will be used as follows:

Use $('000)
TLP-103 net drilling budget (including contingency) 7,000
Further costs on TLP-102 and TLP-103 300
Additional working capital budget during drilling 1,567
TOTAL 8,867

The current drilling budget for the TLP-103 well prepared by the Company is as follows:

Use $('000)
Cost of rig 2,250
Services 2,050
Staff 720
Materials 640
Support services 600
Drilling tools 350
Logistics 240
Civil Works 50
Environmental Survey 40
Sub-Total 6,940
Less  
Already paid: (1,200)
Net Balance 5,740
Contingency 1,000
TOTAL 6,740

6. DIVIDEND POLICY

The Company's dividend policy remains to distribute free cash to Shareholders through regular dividends once production reaches a sustained level of 1,000 bopd and provided that oil prices are not less than US$30/bbl. In such circumstances, the level of the dividend will be at least 50 per cent. of net profits (subject to the availability of distributable reserves).

If production reaches 5,000 bopd and provided that oil prices are not less than US$30/bbl, the level of the dividend will be at least 75 per cent. of net profits (subject to the availability of distributable reserves).

Should the workovers and drilling programme not be successful, there can be no guarantee that a dividend will ever be paid.

7. MANAGEMENT INCENTIVE SCHEME

A management incentive scheme was adopted at IPO to incentivise the Executive Directors and align their interests with Shareholders. The scheme enables employees and directors of the Group to receive options over Ordinary Shares equal to no more than 15 per cent. of the fully diluted ordinary share capital of the Company. Since the IPO, the Company has agreed to grant options to the Executive Directors at a price of £0.20 per Ordinary Share, exercise of which is subject to the achievement of certain specified production targets.

8. DETAILS OF THE PLACING

The Company has conditionally raised £7.4 million (US$10 million) by way of a placing of the Placing Shares at the Issue Price.

The Placing Shares represent approximately 133.2 per cent. of the Company's issued share capital as at 16 May 2018 (being the latest practicable date prior to the publication of this announcement) and will represent approximately 57 per cent. of the Enlarged Ordinary Share Capital assuming no other issuances of Ordinary Shares prior to Admission. The Issue Price represents a discount of approximately 15.8 per cent. to the Closing Price of 9.5 pence per Ordinary Share on 16 May 2018, the last practicable date prior to the announcement of the Placing.

In order to broaden the Company's institutional shareholder base and to minimise the time and transaction costs of the Placing, the Placing Shares have been placed by finnCap with only a limited number of existing and new institutional and other shareholders. The Placing Shares are not being made available to the public. The Directors consider that the potential long-term value creation benefit to Shareholders arising from the application of the Placing proceeds (less those expenses incurred in connection with the Placing) outweighs the dilutive effects of the Placing.

The issue of the Placing Shares is to be effected by way of a cashbox placing. The Company will allot and issue the Placing Shares on a non-pre-emptive basis to the placees in consideration for finnCap transferring its holdings of redeemable preference shares in JerseyCo to the Company.

Placing Agreement

On 17 May 2018, the Company and finnCap entered into the Placing Agreement, pursuant to which the Company appointed finnCap as the Company's agents to use their reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing is not being underwritten by finnCap. The Company has agreed to pay finnCap certain commissions and fees in connection with their appointments.

The Placing is conditional, amongst other things, on:

  • the passing of the Resolution to be proposed at the General Meeting;
  • the Placing Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and
  • Admission of the Placing Shares occurring on or before 8.00 a.m. on 5 June 2018 (or such later time and/or date as the Company and finnCap may agree, being not later than 8.00 a.m. on 5 July 2018).

The Placing Agreement contains certain customary warranties given by the Company concerning the accuracy of information given in this announcement and the announcement made by the Company in respect of the Placing as well as other matters relating to the Group and its business. The Placing Agreement is terminable by finnCap in certain circumstances prior to Admission, including for force majeure or in the event of a material adverse change to the business of the Company or the Group. The Company has also agreed to indemnify finnCap against all losses, costs, charges and expenses which they may suffer or incur as a result of, occasioned by or attributable to the carrying out of their duties under the Placing Agreement in respect of the Placing Shares.

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

Miton Asset Management ("Miton") has agreed to subscribe for 13,981,677 Placing Shares as part of the Placing. Miton is a related party of the Company for the purposes of the AIM Rules by virtue of their status as a substantial shareholder of the Company. The Directors consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Placing with such related party are fair and reasonable insofar as the Company's shareholders are concerned.

Brian Moritz and Nick Butler have agreed to subscribe for 625,000 and 312,500 new Ordinary Shares respectively as part of the Placing. Each of them is a related party of the Company for the purposes of the AIM Rules by virtue of their status as Directors of the Company. The Independent Directors consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Placing with such related parties is fair and reasonable insofar as the Company's Shareholders are concerned.

9.  ADMISSION, SETTLEMENT AND CREST

Application will be made to the London Stock Exchange for Admission of the Placing Shares to trading on AIM. It is expected that, subject to the passing of the Resolution at the General Meeting, Admission will become effective at 8.00 a.m. on 5 June 2018 (or such later date as the Company and finnCap may agree, being not later than 8.00 a.m. on 5 July 2018) and that dealings in the Placing Shares will commence at that time.

The Articles permit the Company to issue shares in uncertificated form. CREST is a computerised paperless share transfer and settlement system which allows shares and other securities to be held in electronic rather than paper form. The Existing Ordinary Shares are already admitted to CREST and therefore the Placing Shares will also be eligible for settlement in CREST. CREST is a voluntary system and subscribers of the Placing Shares who wish to retain certificates will be able to do so upon request. The Placing Shares due to uncertificated holders are expected to be delivered in CREST on 5 June 2018.

10. GENERAL MEETING

A notice convening a General Meeting of the Company, to be held at the offices of finnCap Ltd, 60 New Broad Street, London, EC2M 1JJ at 11.00 a.m. on 4 June 2018 is set out at the end of the Circular. At the General Meeting, the following resolution will be proposed:

  1. an ordinary resolution to grant authority to the Directors to allot up to 92,551,459 Placing Shares or to grant rights to subscribe for or convert any security into shares in the capital of the Company pursuant to section 551 of the Act, being up to an aggregate nominal amount of £4,627,572.95. The Directors will limit this authority to the allotment of Placing Shares pursuant to the Placing and the authority will expire on 31 October 2018.

11. ACTIONS TO BE TAKEN IN RESPECT OF THE GENERAL MEETING

You can vote in respect of your shareholding by attending the General Meeting or by appointing one or more proxies to attend the meeting and vote on your behalf.

You will find enclosed with the Circular a Form of Proxy for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, it is important that you complete and sign the enclosed Form of Proxy in accordance with the instructions printed thereon and return it to the Registrars, using the reply-paid envelope provided or by hand (during normal business hours only) to Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR, as soon as possible, to arrive by 11.00 a.m. on 31 May 2018 at the latest. Completing and returning the Form of Proxy will not preclude you from attending the General Meeting and voting in person should you wish to do so.

12. RECOMMENDATION

The Directors unanimously believe that the Placing is in the best interests of the Company and its Shareholders as a whole and recommend Shareholders to vote in favour of the Resolution, as they intend to do in respect of their own beneficial holdings of 861,634 Ordinary Shares, representing approximately 1.2 per cent. of the current issued share capital of the Company.

APPENDIX - TERMS AND CONDITIONS OF THE PLACING

TERMS AND CONDITIONS - IMPORTANT INFORMATION 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, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.

EACH PURCHASER SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN SHARES IN THE COMPANY.

MEMBERS OF THE PUBLIC ARE NOT ENTITLED TO TAKE PART IN THE PLACING AND THIS ANNOUNCEMENT IS COMMUNICATED TO THEM FOR THE PURPOSES OF INFORMATION ONLY AND IS DIRECTED ONLY TO: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC (AS AMENDED BY DIRECTIVE 2010/73/EC) AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE BEEN SELECTED BY FINNCAP AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE "INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19 (5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AS AMENDED) (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"). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS HEREIN MUST NOT BE RELIED ON, ACTED ON OR RESPONDED TO BY PERSONS WHO ARE (I) NOT RELEVANT PERSONS; OR (II) NOT US PERMITTED PERSONS (AS SUCH TERM IS DEFINED BELOW). PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. 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 APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. IF YOU ARE IN ANY DOUBT AS TO WHETHER YOU ARE A RELEVANT PERSON YOU SHOULD CONSULT A PROFESSIONAL ADVISER FOR ADVICE.

No action has been taken by the Company, finnCap or any of their respective affiliates, agents, directors, officers or employees that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required.

Persons who are invited to and who choose to participate in the Placing (as such term is defined in paragraph 1.1 below) by making an oral or written offer to subscribe for Placing Shares (as such term is defined in paragraph 1.1 below), including any individuals, funds or others on whose behalf a commitment to acquire Placing Shares is given, will be deemed to have read and understood this Announcement in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, undertakings and agreements contained in this Appendix. In particular, each such prospective Purchaser (as defined in paragraph 2.4(a)) represents, warrants and acknowledges that:

1. it is a Relevant Person and undertakes that it will acquire, hold, manage or dispose of any Placing Shares (as such term is defined below) that are allocated to it for the purposes of its business;

2. if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, any Placing Shares acquired 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 circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA which has implemented the Prospectus Directive to Qualified Investors, or in circumstances in which the prior consent of finnCap Limited ("finnCap") has been given to each such proposed offer or resale; and

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; (c) it is otherwise acquiring the Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the U.S. Securities Act; or (d) it is a "qualified institutional buyer" (a "QIB") (as defined in Rule 144A under the U.S. Securities Act) and it has duly executed an investor letter in a form provided to it and delivered the same to finnCap or its affiliates (3(b), 3(c) and 3(d) together "US Permitted Persons").

The Company and finnCap will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgments and undertakings. finnCap does not make any representation to the Purchasers 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, Distributors should 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 Offer. 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.

Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.

This Announcement does not constitute, and may not be used in connection with, an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction, including, without limitation, the United Kingdom, the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa. No public offer of securities of the Company is being made in the United Kingdom, United States or elsewhere. This Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa or in any other jurisdiction in which such publication or distribution is unauthorised or unlawful. Any person (including, without limitation, custodians, nominees and trustees) into whose possession this Announcement may come, are required by the Company to inform themselves about and to observe any restrictions on transfer of this Announcement.

In particular, the Placing Shares referred to in this Announcement have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any State or other jurisdiction of the United States, and the Company has not been registered as an investment company under the US Investment Company Act of 1940, as amended. None of the Circular, the Placing Shares, nor any document related to the Circular or the Placing Shares, have 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. No public offering of the Placing Shares or any other securities is being made in the United States. No money, securities or other consideration from any person inside the United States is being solicited pursuant to this Announcement, the Placing, or the Book-build and, if sent in response to the information contained in the Announcement, will not be accepted. This Announcement is not an offer of securities for sale into 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 relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with and/or registered by, the Australian Securities and Investments Commission, the Financial Markets Authority of New Zealand or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares, and the Placing Shares have not been, and nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, 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 or otherwise transferred, directly or indirectly, in or into the United States, Australia, Canada, New Zealand, Japan, the Republic of South Africa or any other jurisdiction outside the United Kingdom.

The price of securities and the income from them may go down as well as up and investors may not get back the full amount of their investment on disposal of the securities.

Any indication in this Announcement of the price at which ordinary shares of £0.05 each in the capital of the Company have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

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

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

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.

1. PLACING

1.1 Anglo African Oil & Gas plc (company number 04140379) (the "Company"), intends to conduct a placing to raise gross proceeds of approximately £7.4 million. The new ordinary shares of £0.05 nominal value each ("Placing Shares") will be issued to existing and new investors (the "Placing") at an issue price ("Issue Price") as determined by finnCap and the Company subject to shareholder approval. The issue of the Placing Shares is to be effected by way of a cashbox placing. The Company will allot and issue the Placing Shares on a non-pre-emptive basis to the Placees in consideration for finnCap transferring its holdings of redeemable preference shares and ordinary subscriber shares, which are to be issued in a newly incorporated Jersey company, which is to be incorporated following the date of this announcement for the purposes of facilitating the Placing ("JerseyCo") to the Company. Accordingly, instead of receiving cash as consideration for the issue of the Placing Shares, at the conclusion of the Placing, the Company will own all of the issued ordinary and redeemable preference shares of JerseyCo whose only asset will be its cash reserves, which will represent an amount approximately equal to the net proceeds of the Placing.

1.2 The Company has appointed finnCap as placing agent and broker in respect of the Placing. 

1.3 The terms and conditions set out in this Appendix apply to persons making an offer to subscribe for Placing Shares under the Placing. Each Purchaser shall be deemed to have read the Announcement, and this Appendix, in its entirety.

2. ALLOCATION AND CONDITIONS TO PLACING

2.1 The Placing Shares under the Placing will be issued on the Closing Date (as defined below).

2.2 Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by finnCap.

2.3 The number of Placing Shares to be issued and the Issue Price will be finally agreed between finnCap and the Company following completion of the book-build being conducted by finnCap to determine demand for participation in the Placing and the Issue Price (the "Book-build"). The number of Placing Shares which have been placed and the Issue Price will be announced following the completion of the Book-build.

2.4 Acceptances of the Placing and allocations of Placing Shares (including the subscription amount payable) will be as:

(a) confirmed (orally or in writing) with prospective purchasers who are in the United Kingdom (or as finnCap and Company may agree, in any other jurisdiction) by finnCap (or its broker dealers or their agents as agent of the Company). That confirmation constitutes an irrevocable legally binding commitment of that person (who will at that point become a purchaser ("Purchaser")) to subscribe for the number of Placing Shares allocated to it on the terms and conditions set out in this Appendix (a copy of this Appendix having been provided to the Purchaser prior to or at the same time as such confirmation) and in accordance with the Company's articles of association; or

(b) (unless paragraph 2.4(a) applies) by the completion and return of such letter of confirmation and registration or other forms as finnCap or its agents may in their absolute discretion require and in that event the terms and conditions set out in such letter of confirmation and registration or other form shall apply to the exclusion of this Appendix.

2.5 The Book-build is expected to close no later than 4.30 pm on 17 May 2018 but may be closed earlier or later at the discretion of finnCap. finnCap may, in agreement with the Company, accept bids that are received after the Book-build has closed. The Company reserves the right to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.

2.6 finnCap may choose to allocate Placing Shares at its discretion (in agreement with the Company) and may scale down any bids for Placing Shares made by prospective Purchasers for this purpose on such basis as they may determine. finnCap may also, notwithstanding paragraph 2.5 above, subject to the prior consent of the Company (a) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time; and (b) allocate Placing Shares after the Book-build has closed to any person submitting a bid after that time.

2.7 For the avoidance of doubt, a bid in the Book-build will be made on the terms and subject to the conditions in the Announcement and this Appendix and will be legally binding on the prospective Purchaser on behalf of which it is made and, except with the consent of finnCap, will not be capable of variation or revocation after the time at which it is submitted. Any acceptance of the Placing constitutes a Purchaser's irrevocable legally binding agreement, subject to the Placing Agreement (as defined below) not having been terminated, to pay the aggregate settlement amount of the Placing Shares regardless of the total number of Placing Shares (if any) subscribed for by any other investor(s).

2.8 By participating in the Book-build, each Purchaser agrees that its rights and obligations in respect of the Placing will terminate only in the circumstances described in paragraph 4 below, and will not be capable of rescission or termination by the Purchaser.

2.9 In making an investment decision, Purchasers must rely on their own examination of the Company and its prospects and the terms of the Placing, including the merits and risks involved in investing in the Placing Shares.

2.10 Irrespective of the time at which a Purchaser'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."

2.11 Settlement will occur on a date to be advised but expected to be on or around 5 June 2018 ("Closing Date").

2.12 To the fullest extent permissible by law and applicable FCA rules, none of (a) finnCap, (b) any of their affiliates, agents, directors, officers, employees, (c) to the extent not contained within (a) or (b), any person connected with finnCap as defined in the FSMA ((b) and (c) being together "affiliates" and individually an "affiliate" of finnCap), (d) any person acting on behalf of finnCap, shall have any liability (including to the extent permissible by law, any fiduciary duties) to any Purchaser or to any other person whether acting on behalf of a Purchaser or otherwise. In particular, neither finnCap nor any of its affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of their conduct of the Placing or of such alternative method of effecting the Placing as finnCap and the Company may agree.

3. SHARES AND QUOTATION

3.1 The Placing Shares will be issued fully paid and will rank equally, from the date of issue, in all respects with the Company's existing issued ordinary shares, including the right to receive all dividends and other distributions declared, made or paid in respect of such ordinary shares after the date of issue of the Placing Shares.

3.2 Application will be made to the London Stock Exchange plc for admission to trading of the Placing Shares on AIM ("Admission"). It is anticipated that Admission will become effective on or around 5 June 2018 and that dealings in the Placing Shares will commence at that time.

4. PLACING AGREEMENT

4.1 On 17 May 2018, the Company and finnCap entered into a placing agreement in connection with the Placing (the "Placing Agreement"). Pursuant to the Placing Agreement, finnCap has agreed to use its reasonable endeavours to place the Placing Shares with prospective Purchasers. 

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

(a) shareholder approval of the resolution necessary to issue the Placing Shares pursuant to the Placing ("Resolution");

(b) none of the warranties contained in the Placing Agreement being untrue, inaccurate or misleading as at the date of the Placing Agreement and at all times before and at the date of Admission;

(c) the publication of this Announcement through a Regulatory Information Service by no later than 8.00 a.m. on the date of the Placing Agreement or such other time and/or date as may be agreed in writing between the Company and finnCap;

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

(f) Admission taking place not later than 8.00 a.m. on 5 June 2018 or such later date as the Company and finnCap may otherwise agree but not being later than 8.00 a.m. on 5 July 2018; and

(g) there having been since the date of the Placing Agreement no development or event which will or is likely to have a material adverse effect on the Company (or of its subsidiaries).

4.3 If: (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived (if capable of being waived) by finnCap by the respective time or date where specified (or such later time or date as the Company and finnCap may agree); (ii) any of such conditions becomes incapable of being fulfilled; or (iii) the Placing Agreement is terminated in the circumstances specified below, the Placing in relation to the Placing Shares will lapse and the Purchaser's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Purchaser agrees that no claim can be made by the Purchaser in respect thereof.

4.4 finnCap may, at its absolute discretion and upon such terms as it thinks fit, waive, or extend the period 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 conditions relating to Admission, the issue of the circular and application form, the allotment and issue of the Placing Shares (subject only to Admission) and shareholder approval may not be waived. Any such extension or waiver will not affect Purchasers' rights and obligations under the terms and conditions set out in this Appendix.

4.5 Neither finnCap nor the Company shall have any liability to any Purchaser (or to any other person whether acting on behalf of a Purchaser 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 Purchaser agrees that any such decision is within the absolute discretion of finnCap.

4.6 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 breach of the warranties given to finnCap in the Placing Agreement, the failure of the Company to comply with obligations under the Placing Agreement or an event has occurred which, in the opinion of finnCap (acting in good faith), constitutes or is likely to cause a material adverse change. Following Admission, the Placing Agreement is not capable of rescission or termination.

4.7 The rights and obligations of the Purchasers shall terminate only in the circumstances described in these terms and conditions and will not be subject to termination by the Purchaser or any prospective Purchaser at any time or in any circumstances. By participating in the Placing, Purchasers 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 Purchasers and that it shall have no liability to Purchasers whatsoever in connection with any such exercise.

5. OFFER PERSONAL

The offering of Placing Shares and the agreement arising from acceptance of the Placing is personal to each Purchaser and does not constitute an offering to any other person or to the public. A Purchaser may not assign, transfer, or in any other manner, deal with its rights or obligations under the agreement arising from the acceptance of the Placing, without the prior written agreement of finnCap in accordance with all relevant legal requirements.

6. NO PROSPECTUS

6.1 No offer document or prospectus has been or will be delivered to the Financial Conduct Authority ("FCA") in relation to the Placing, and a Purchaser's commitments will be made solely on the basis of the information contained in the Announcement released by the Company today which this Appendix forms part of.

6.2 Each Purchaser, by making an offer to subscribe for Placing Shares, agrees that the content of this Announcement (including this Appendix) is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or finnCap or any other person and neither the Company nor finnCap nor any other person will be liable for any Purchaser's decision to participate in the Placing based on any other information, representation, warranty or statement which Purchasers 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 Purchaser 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 make any undertaking or warranty to any Purchaser regarding the legality of any investment in the Placing Shares by such Purchaser under any legal, investment or similar laws or regulations. Each Purchaser should not consider any information in this Announcement to be legal, tax or business advice. Each Purchaser 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.

7. REGISTRATION AND SETTLEMENT

7.1 Settlement of transactions in the Placing Shares will, unless otherwise agreed, take place on a delivery versus payment basis within the CREST system administered by Euroclear UK and Ireland Limited ("CREST").

7.2 The Company will procure its Transfer Agent (as defined in paragraph 9(k) below) to deliver the Placing Shares to CREST accounts operated by finnCap for the Company and finnCap will enter its delivery (DEL) instructions into the CREST system. The input to CREST by each Purchaser of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Purchaser against payment.

7.3 Each Purchaser allocated Placing Shares in the Placing will be sent a conditional trade confirmation stating the number of Placing Shares and the subscription amount payable to be allocated to it and will be required to provide finnCap with funds sufficient to purchase such securities prior to the Closing Date.

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

7.5 Subject to the passing of the Resolutions, it is expected that settlement will take place on or about 5 June 2018 in CREST in accordance with the instructions set out in the conditional trade confirmation. Settlement will be through finnCap against CREST ID Crest 601 A/c: FKCLT.

7.6 The Company reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to any Purchaser in any form it requires if, in finnCap's or the Company's opinion, delivery or settlement is not possible or practicable within CREST or would not be consistent with the regulatory requirements of the Purchaser's jurisdiction.

7.7 Each Purchaser agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the applicable registration and settlement procedures, including if applicable, CREST rules and regulations and settlement instructions that it has in place with finnCap.

7.8 If Placing Shares are to be delivered to a custodian or settlement agent, Purchasers should ensure that the conditional trade confirmation is copied and delivered immediately to the relevant person within that organisation. Each Purchaser shall ensure that, insofar as Placing Shares are registered in a Purchaser's name or that of its nominee or in the name of any person for whom a Purchaser is contracting as agent or nominee, such person shall not be a person who is or may be liable to any UK stamp duty or stamp duty reserve tax or securities transfer tax.

7.9 Interest is chargeable daily on payments to the extent that value is received after the due date at the rate per annum of 4 percentage points above the Barclays Bank plc base rate.

8. REPRESENTATIONS AND WARRANTIES

8.1 Each Purchaser and prospective Purchaser (and each person acting on its behalf) represents, warrants, acknowledges and undertakes for the benefit of the Company, finnCap and the respective officers, employees and advisers of the Company and of finnCap, and any person acting on behalf of any of them (each a "Beneficiary" and together the "Beneficiaries") as follows:

(a) if it is a Purchaser in the United Kingdom it:

(i) is a Qualified Investor; and

(ii) is also a person falling within one or more of the categories of persons referred to in article 19 (investment professionals) or 49 (high net worth companies, etc) of the Order or is a person to whom the Placing may otherwise be made or to whom the Placing Shares may otherwise be directed without an approved prospectus having been made available to the public in the UK before the Placing Shares are offered and without making an unlawful financial promotion; and

(iii) understands, recognises and acknowledges that no prospectus has been or will be approved in connection with the Placing by the FCA in the United Kingdom under section 87A of Financial Services and Markets Act 2000 (the "FSMA"); or

(iv) if it is not in the United Kingdom but is acting for the account of a Purchaser in the United Kingdom, that each of subparagraphs (i), (ii) and (iii) applies in respect of each such Purchaser;

(b) if it is a Purchaser in or otherwise subject to the laws of a member state of the EEA (other than, for the avoidance of doubt, the UK), (i) it is a Qualified Investor acting as a principal for its own account to whom an invitation or Placing to subscribe for Placing Shares in the manner contemplated by this agreement and any communication or correspondence in connection therewith is permitted by the laws of that member state or (ii) if it is not in any such member state but are acting for the account of such person then (i) applies in respect of each such Purchaser;

(c) 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. For the avoidance of doubt, the Purchaser has not made and will not make any offer to the public of the Placing Shares for the purposes of section 102B FSMA;

(d) if it is in a jurisdiction outside the United States, the United Kingdom, or other member states of the EEA, it is a person to whom the Placing or an invitation to subscribe for the Placing Shares in the manner contemplated by this Appendix and any communication or correspondence therewith is permitted by the laws of the jurisdiction in which it is situated or from where the Purchaser submitted its bid to subscribe for Placing Shares and it is a person to whom the Placing Shares can lawfully be offered and issued under all applicable laws, without the need for any approval, registration, filing or lodgement of any kind, including a prospectus or other disclosure document;

(e) it understands that the Placing and sale to it of the Placing Shares has not been and will not be registered under the U.S. Securities Act or the laws of any state of the United States. Therefore, it agrees that it will not offer, sell or pledge any Placing Shares in the United States unless and until the Placing Shares are registered under the U.S. Securities Act (which it acknowledges the Company has no obligation to do) or unless the Placing Shares are offered, sold or pledged in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and the laws of any state of the United States;

(f) the Purchaser acknowledges that it has not acquired the Placing Shares as a result of any general solicitation or general advertising (as these terms are used in Regulation D under the U.S. Securities Act), including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio, Internet or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

(g) unless otherwise specifically agreed in writing with finnCap, neither it nor the beneficial owner of such Placing Shares is or will be a resident of, or subject to the laws of, the United States, Australia, Canada, Japan, New Zealand or the Republic of South Africa;

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

(i) the Purchaser consents to the Company making a notation on its records or giving instructions to any registrar and transfer agent of the Placing Shares in order to implement the restrictions on transfer set forth and described above;

(j) if required by applicable securities laws or as otherwise reasonably requested by the Company, the Purchaser will execute, deliver and file and otherwise assist the Company in filing reports, questionnaires, undertakings and other documents with respect to the issue of the Placing Shares;

(k) the Purchaser has 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;

(l) the Purchaser has not received or requested, nor does it have any need to receive, any offering memorandum or any other document describing the business and affairs of the Company in order to assist it in making an investment decision to subscribe for the Placing Shares;

(m) it is purchasing the Placing Shares for its account or for the account of one or more persons for investment purposes only and not with the purpose of, or with a view to, the resale, transfer or distribution or granting, issuing or transferring of interests in, or options over, the Placing Shares and, in particular, neither the Purchaser nor any other person for whose account it is purchasing the Placing Shares has any intention to distribute either directly or indirectly any of the Placing Shares in the United States;

(n) it has such knowledge and experience in financial and business matters and expertise in assessing credit and all other relevant risks that it is capable of evaluating independently, and has evaluated independently and conducted an in-depth detailed analysis on, the merits and risks of a purchase of the Placing Shares for itself and each other person, if any, for whose account it is acquiring any Placing Shares, and it has determined that the Placing Shares are a suitable investment for itself and each other person, if any, for whose account it is acquiring any Placing Shares, both in the nature and the number of the Placing Shares being acquired;

(o) if applicable, it is, or any beneficial Purchaser for whom it is contracting is, acquiring the Placing Shares pursuant to and in compliance with an exemption from the prospectus requirements of securities laws of the jurisdiction of residence and will provide the Company and finnCap, on request, whether before or after the Closing Date, with evidence of such compliance;

(p) it has had access to all information that it believes is necessary or appropriate in connection with, and for an adequate time prior to, its purchase of the Placing Shares. It acknowledges and agrees that it will not hold finnCap responsible for any misstatements in, or omissions from, any publicly available information concerning the Company;

(q) it has made and relied entirely upon its own assessment of the Company, and has conducted its own independent investigation with respect to the Placing Shares and the Company;

(r) it shall obtain its own advice regarding the tax consequences in any jurisdiction of purchasing, owning or disposing of any Placing Shares;

(s) it has not relied on any investigation that any Beneficiary may have conducted with respect to the Placing Shares or the Company. No Beneficiary has made any representation to it, express or implied, with respect to the Placing Shares or the Company;

(t) it acknowledges that the Placing does not constitute a securities recommendation or advice in relation to any securities, and that no securities recommendation or advice has been made or given to you by any Beneficiary in relation to the Placing;

(u) it acknowledges that an investment in the Placing Shares involves a degree of risk;

(v) except to the extent that liability cannot by law be excluded, it acknowledges that none of the Beneficiaries accept any responsibility in relation to the Placing or for the accuracy or completeness of any information given to it in connection with the Placing;

(w) it acknowledges and agrees that it will accept the decisions and actions of finnCap and/or the Company in respect of the Placing and the acceptance of any Placing of Placing Shares does not oblige finnCap and/or the Company to consult with it as to any matter or qualify the exercise or non-exercise of rights arising under or in relation to the Placing;

(x) it has been independently advised as to any resale restrictions under applicable securities laws in its own jurisdiction;

(y) it acknowledges and agrees that if finnCap takes title to the Placing Shares it does so only as agent for the Purchaser for the purposes of effecting settlement and it agrees to release finnCap from any liability incurred by it in acting in such capacity (whether arising out of any act or omission by the Company in relation to the Placing or to the Placing Shares or otherwise);

(z) if it is acquiring any Placing Shares for an account of one or more persons, it has full power to make the acknowledgements, representations, warranties and agreements hereunder on behalf of each such person and it will take reasonable steps to ensure that each such person will comply with its obligations hereunder;

(aa) it acknowledges that the Beneficiaries will rely upon the truth and accuracy of the foregoing acknowledgements, representations, warranties and agreements in conducting and undertaking the Placing;

(bb) it has read this Announcement, including this Appendix, in its entirety and its subscription of the Placing Shares is subject to and based upon only the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein;

(cc) the exercise by finnCap of any right of termination or any right of waiver exercisable by them contained in the Placing Agreement, without limitation, the right to terminate the Placing Agreement, is within its absolute discretion and finnCap will have no liability to any Purchaser whatsoever in connection with any decision to exercise or not exercise any such rights;

(dd) if (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived), or (ii) the Placing Agreement is terminated or does not otherwise become unconditional in all respects prior to the admission of the Placing Shares, the Placing will lapse and its rights shall cease and determine at such time and no claim shall be made by any Purchaser in respect thereof;

(ee) no offer document or prospectus has been, or will be, prepared in connection with the Placing and it represents and warrants that it has not received a prospectus or other offer document in connection therewith;

(ff) the ordinary shares of £0.05 each in the capital of the Company are (and the Placing Shares issued pursuant to the Placing will be) admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other AIM quoted company, without undue difficulty;

(gg) neither finnCap nor the Company nor any of their affiliates nor any person acting on behalf of any of them has provided, and will not provide it, with any material regarding the Placing Shares or the Company or any other person other than this Announcement; nor has it requested either finnCap or the Company nor any of their affiliates or any person acting on behalf of any of them to provide it with any such information;

(hh) the content of this Announcement is exclusively the responsibility of the Company and neither finnCap nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously published by or on behalf of the Company (except for any information or statements relating solely to finnCapand furnished by finnCap specifically for use in such documents) and will not be liable for any Purchaser's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. Each Purchaser further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Purchaser has relied in committing itself to subscribe for the Placing Shares is contained in this Announcement and any information previously published by the Company, 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 either finnCap or the Company and neither finnCap nor the Company will be liable for any Purchaser's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Purchaser 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;

(ii) in subscribing for Placing Shares, it has consented to receive "inside information" for the purposes of the Market Abuse Regulation (EU) No.596/2014 ("MAR"), and it agrees not to deal in any securities of the Company until such time as the inside information of which it has been made aware has been made public for the purposes of MAR or it has been notified by finnCap or the Company that the proposed Placing will not proceed and any unpublished price sensitive information of which the Purchaser is aware has been publicly announced, and, other than in respect of its knowledge of the proposed Placing, it has neither received nor relied on any confidential price sensitive information concerning the Company or the Placing Shares;

(jj) if in the United Kingdom, it has complied with its obligations in connection with the Criminal Justice Act 1993, money laundering and terrorist financing under the Anti Terrorism Crime and Security Act 2001, the Proceeds of Crime Act 2002, the Terrorism Act 2003, MAR, the Terrorism Act 2006, the Money Laundering Regulations 2007, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and Part VIII of the Financial Services and Markets Act 2000 (the "Regulations"), including identifying its clients in accordance with 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. If within a reasonable time after a request for verification of identity finnCap has not received such satisfactory evidence, finnCap may, in its absolute discretion, reject an application for Placing Shares in which event all funds delivered by such Purchaser to finnCap (if any) will be returned without interest to the account of the drawee bank from which they were originally debited;

(kk) if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, any Placing Shares acquired 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 circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of EEA which has implemented the Prospectus Directive to Qualified Investors, unless finnCap has given prior consent to such proposed offer or resale;

(ll) it has complied and will comply with all applicable laws with respect to anything done by it or on its behalf in relation to the Placing Shares (including all relevant provisions of the FSMA in respect of anything done in, from or otherwise involving the United Kingdom);

(mm) it will (or will procure that its nominee will), if applicable, make notification to the Company of the interest in the Company's ordinary shares in accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules;

(nn) it and any person acting on its behalf is entitled to subscribe for and purchase the Placing Shares under the laws of all relevant jurisdictions which would apply to it, and that it and any person acting on its behalf is in compliance with applicable laws in the jurisdiction of its residence, the residence of the Company, or otherwise;

(oo) it (and any person acting on its behalf) will make or procure 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 and the Company may in their absolute discretion determine and without liability to such Purchaser, and it will remain liable for any shortfall below the net 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 in these terms and conditions) which may arise upon the placing or sale of such Purchaser's Placing Shares on its behalf;

(pp) 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, and 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 Purchaser and any person acting on behalf of such Purchaser 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 account of finnCap who will hold them as nominee on behalf of such Purchaser until settlement in accordance with its standing settlement instructions;

(qq) the Company and 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 each of finnCap on its own behalf and on behalf of the Company and are irrevocable;

(rr) it will indemnify and hold the Company and finnCap and their respective affiliates, agents, directors, officers and employees harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Announcement or incurred by the Company, finnCap or their respective affiliates, agents, directors, officers and employees arising from the performance of the Purchaser's obligations as set out in this Announcement, and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

(ss) its commitment to subscribe for Placing Shares on the terms set out herein will continue notwithstanding any amendment that may in future be made to the terms of the Placing and the Purchaser will have no right to be consulted or require that its consent be obtained with respect to the Company's conduct of the Placing. The foregoing representations, warranties and confirmations are given for the benefit of the Company and finnCap. The agreement to settle a Purchaser's subscription (and/or the subscription of a person for whom such Purchaser is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes, and is based on the warranty above from each Purchaser, that neither it, nor the person specified by it for registration as holder, of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax in excess of 0.5% under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event the Purchaser agrees that it shall be responsible for such stamp duty or stamp duty reserve tax, and neither the Company nor finnCap shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Purchaser should seek its own advice and notify finnCap accordingly;

(tt) 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 offering of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

(uu) it 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 United Kingdom 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;

(vv) finnCap or any of its affiliates may, at their absolute discretion, agree to become a Purchaser in respect of some or all of the Placing Shares;

(ww) when a Purchaser or person acting on behalf of the Purchaser is dealing with finnCap, any money held in an account with finnCap on behalf of the Purchaser and/or any person acting on behalf of the Purchaser will not be treated as client money within the meaning of the rules and regulations of the FCA made under FSMA;

(xx) it acknowledges that the money will not be subject to the protections conferred by the client money rules and as a consequence, this money will not be segregated from the finnCap's money in accordance with the client money rules and will be used by the finnCap in the course of its own business; and the Purchaser will rank only as a general creditor of finnCap;

(yy) it acknowledges that all times and dates in this Announcement may be subject to amendment and finnCap shall notify the Purchasers and any person acting on behalf of the Purchasers of any changes;

(zz) that past performance is no guide to future performance and persons needing advice should consult an independent financial adviser;

(aaa) all obligations entered into by the Purchaser pursuant hereto with finnCap are entered into with them as agent for the Company and are therefore enforceable directly by the Company;

(bbb) if a company, it is a valid and subsisting company and has all the necessary corporate capacity and authority to execute its obligations in connection with the Placing participation;

(ccc) it is not presently acting in concert, as defined in the City Code on Takeovers and Mergers, with any existing shareholder or other Purchaser;

(ddd) it irrevocably appoints any director of finnCap as its agent for the purposes of executing and delivering to the Company's and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares offered to it; and

(eee) time shall be of the essence as regards obligations pursuant to this Appendix.

The Purchaser agrees that the Company and finnCap will rely upon the truth and accuracy of the foregoing confirmations, representations, warranties, acknowledgments, undertakings and agreements which are given by each Purchaser (or persons acting on their behalf) and are irrevocable.

9. ENTIRE AGREEMENT

The terms set out in this Appendix and the allocation of Placing Shares (including the subscription amount payable) as confirmed to a Purchaser, constitute the entire agreement to the terms of the Placing and a Purchaser's participation in the Placing to the exclusion of prior representations, understandings and agreements between them. Any variation of such terms must be in writing.

10. GOVERNING LAW AND JURISDICTION

The agreement arising out of acceptance of the Placing and any dispute or claim arising out of or in connection with the Placing or formation thereof (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of England. Each Purchaser irrevocably agrees to submit to the exclusive jurisdiction of the courts of England to settle any claim or dispute that arises out of or in connection with the agreement arising out of acceptance of the Placing or its subject matter or formation (including non-contractual disputes or claims).

 

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