Source - RNS
RNS Number : 2827M
Walker Greenbank PLC
12 October 2016
 

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

 

12 October 2016

 

WALKER GREENBANK PLC

("Walker Greenbank" or the "Company")

 

Proposed Acquisition of Clarke & Clarke and Placing to raise £17.0 million

 

Walker Greenbank PLC (AIM: WGB), the luxury interior furnishings group whose brands include Sanderson, Morris & Co., Harlequin, Zoffany, Scion and Anthology, is pleased to announce that it has entered into a conditional agreement with the shareholders of Globaltex 2015 Limited, the parent company of Globaltex Limited, a UK-based designer and worldwide distributor of quality interior fabrics and wallcoverings (trading as "Clarke & Clarke"), to acquire the entire issued share capital of Globaltex 2015 Limited (the "Acquisition").

 

The initial consideration will be £25.0 million in cash on a debt free/cash free basis payable at completion of the Acquisition ("Completion") with further performance related earn-out consideration payable to the selling shareholders of Clarke & Clarke by issue of new ordinary shares of £0.01 each in the capital of the Company ("Ordinary Shares") ("Consideration Shares") of up to 10.0 million Consideration Shares or such number of Consideration Shares which do not exceed, in aggregate, £17.5 million in value.

 

The initial consideration is to be funded in part as to £17.0 million by way of a placing of 8,947,369 new Ordinary Shares at 190.0 pence per share (the "Placing Shares") representing a 6.6 per cent. discount to the closing middle market price of 203.5 pence per share on 11 October 2016 (being the last practicable date prior to the date of this announcement) (the "Placing"). The remaining £8.0 million of the cash element of the consideration is being met through drawdown under the Company's existing bank facilities and the Company's existing cash resources. The Placing is being underwritten by Investec.

 

Highlights

·      Clarke & Clarke is a UK-based designer and worldwide distributor of quality interior fabrics and wallcoverings sold under two distinct brands - Clarke & Clarke and Studio G;

·      Clarke & Clarke's brands are complementary to the Group's brands in terms of market positioning, design and product offering;

·      Clarke & Clarke has a track record of strong revenue and profit growth. For the financial year ended 31 December 2015, Clarke & Clarke generated revenue of £22.4 million and adjusted EBITDA of £3.8 million;

·      Strong strategic rationale for the Acquisition delivering the following benefits to the Enlarged Group:

increasing the Group's scale of operations and accelerating the Group's market penetration through a broader product offering and customer base;

enhancing the Group's international reach, including in the US;

strengthening the Group's sourcing capabilities and increasing buying power;

creating revenue growth opportunities through the Enlarged Group;

·      Directors believe that the Acquisition will be materially earnings enhancing in the year ending 31 January 2018. This earnings accretion is also expected to enhance the Group's future dividend capacity;

·      Gross proceeds of the Placing of approximately £17.0 million to be used to part fund the Acquisition; and

·      Completion conditional, inter alia, on passing of resolutions to authorise the Directors to allot the Placing Shares and the Consideration Shares and to disapply pre-emption rights in respect of the Placing Shares and the Consideration Shares ("Resolutions") and admission of the Placing Shares to trading on AIM ("Admission") taking place no later than 31 October 2016.

 

John Sach, Chief Executive of Walker Greenbank, said: "We are delighted to acquire Clarke & Clarke and to welcome its two brands into our brand portfolio. Clarke & Clarke will add significantly to our product offering, customer base and US presence and also create collaborative opportunities. Clarke & Clarke has a strong track record of growth and its acquisition will be materially enhancing for Walker Greenbank in its first full financial year."

 

A circular, extracts of which are set out below, containing a notice of General Meeting of the Company (the "Circular"), convened for 11.00 a.m. on 28 October 2016, will be sent to Shareholders today, outlining the terms of the Acquisition and the Placing and convening the General Meeting at which the Resolutions will be tabled.  A copy of the Circular will also be made available on the Company's website, www.walkergreenbank.com.

 

Analyst meeting

A meeting for analysts will be held at 10.00 a.m. today, 12 October 2016, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. For further details, contact Buchanan on 020 7466 5000.

 

This announcement contains inside information

 

For further information, please contact:

 

Walker Greenbank plc

+44 (0)844 543 4668

John Sach, Chief Executive Officer

Mike Gant, Chief Financial Officer

 


Investec (Nomad and Broker)

+44 (0)20 7597 4000

Garry Levin / David Anderson / Alex Wright

Henry Reast - Corporate Broking

 


PwC (Financial Adviser)

+44 (0)20 7583 5000

Rick Jones / Amit Aggarwal

 


Buchanan

+44 (0)20 7466 5000

Mark Court / Sophie Cowles / Catriona Flint


 

 

About Walker Greenbank

Walker Greenbank is a luxury interior furnishings company that designs, manufactures and markets wallpapers and fabrics together with a wide range of ancillary interior products. The Company's brand portfolio - comprising Sanderson, Morris & Co, Harlequin, Zoffany, Scion and Anthology - spans heritage and contemporary design and its products are sold in more than 85 countries worldwide. The Company derives significant licensing income from the use of its designs in lifestyle products such as bed linen, rugs and tableware.

The Company employs more than 600 people and has showrooms in London, New York, Paris, Amsterdam and Dubai along with partnership showrooms in Moscow and in Shenzhen, China. Its UK manufacturing base, which includes a wallpaper factory in Loughborough and a fabric printing factory in Lancaster, manufactures product both for the Company together with its subsidiaries (the "Group") and for other wallpaper and fabric brands. Continued investment in manufacturing has allowed the Group to offer a wide range of printing techniques.

Walker Greenbank trades on the AIM market of the London Stock Exchange under the ticker symbol WGB.

For further information please visit: www.walkergreenbank.com/

 

 

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

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

 

IMPORTANT NOTICES

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

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

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

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or by any of its respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

PricewaterhouseCoopers LLP ("PwC"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Walker Greenbank in relation to the Acquisition and for no-one else in connection with the Acquisition or matters referred to in this announcement and will not be responsible to any person other than Walker Greenbank for providing the protections afforded to clients of PwC, nor for providing advice in relation to the Acquisition nor to matters referred to herein. Neither PwC nor any of its members owes, accepts or assume any duty of care, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of PwC in connection with the matters referred to in this announcement, or otherwise.

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

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

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



 

 

Proposed Acquisition of Clarke & Clarke and Placing to raise £17.0 million 

Introduction

The Company today announces that it has entered into a conditional agreement with the shareholders of Globaltex 2015 Limited, the parent company of Globaltex Limited, a UK-based designer and worldwide distributor of interior fabrics typically used for home furnishing (trading as "Clarke & Clarke"), to acquire the entire issued share capital of Globaltex 2015 Limited.

 

The initial consideration will be £25.0 million in cash on a debt free/cash free basis payable at Completion ("Initial Consideration") with further performance related earn-out consideration payable to Lee Clarke and Emma Clarke, the selling shareholders of Clarke & Clarke (the "Sellers"), by issue of new Ordinary Shares ("Consideration Shares") in the Company. The actual number of Consideration Shares issued by way of earn-out will be dependent on the financial performance of Clarke & Clarke over a four year period following Completion. The earn-out consideration is capped at the lower of 10.0 million new Ordinary Shares or such number of new Ordinary Shares as do not exceed, in aggregate, £17.5 million in value.

 

The Board believes that Clarke & Clarke is a good strategic fit with Walker Greenbank and that, inter alia, the Acquisition:

 

·      will enhance the Group's scale of operations and accelerate the progression of the Group's market penetration through a broader product offering and customer reach;

·      will enhance the Group's international reach; and

·      together with the Placing, is expected to be materially earnings enhancing in the financial year ending 31 January 2018.

 

The Initial Consideration for the Acquisition is to be adjusted by way of completion accounts so that the Company acquires Clarke & Clarke on a cash free/debt free basis and with a normalised level of working capital at Completion. The completion accounts adjustment is subject to a maximum cap of £6.0 million. A further potential cash payment may also be due to the Sellers subject to Clarke & Clarke obtaining certain tax reliefs from HMRC, which is capped at approximately £0.3 million.

 

The Acquisition is to be funded in part by way of the Placing of 8,947,369 new Ordinary Shares to raise approximately £17.0 million, before expenses, with the remaining £8.0 million of the cash element of the consideration being met through drawdown under the Bank Facilities (the Company having exercised its rights in respect of £5.0 million of its existing accordion facility thereunder for these purposes) and from the Company's existing cash resources. The Placing is being underwritten by Investec. If the financial targets for the earn-out are met, this will be wholly satisfied by the issue of up to 10.0 million Consideration Shares or such number of Consideration Shares which do not exceed, in aggregate, £17.5 million in value.

 

The Placing is conditional, inter alia, upon the Company obtaining approval from Shareholders to grant the Board authority to allot the Placing Shares and the Consideration Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares and the Consideration Shares. The Placing, which has been underwritten by Investec, is also conditional, inter alia, upon (i) the conditional sale and purchase agreement in relation to the Acquisition entered into between the shareholders of Clarke & Clarke and the Company on 12 October 2016 ("SPA") having been entered into and not having been terminated; and (ii) Admission. In the event that the Company does not receive authority to allot the New Ordinary Shares at the General Meeting, the Placing will not proceed, the Placing Shares will not be issued and the Acquisition will not complete.

 

Information on Clarke & Clarke

 

Overview

 

Founded in 1999 by Lee and Emma Clarke, Clarke & Clarke is a UK-based designer and worldwide distributor of quality interior fabrics and wallcoverings used for home furnishing applications, including curtains, sofas and chairs and décor sold under two distinct retail fabric brands: Clarke & Clarke and Studio G. The Clarke & Clarke brand operates in the mid to value end of its market, and is used predominantly by consumers and interior designers, with many key customers based in the UK. It occupies an attractive position in the market, offering a broad range of contemporary, high quality designs across an affordable range of price points, with particular strength in the £20-£60 per metre price group. In addition to its retail offering, Clarke & Clarke supplies a contemporary range of fabrics for the commercial market. Clarke & Clarke is also one of the few mid-market designers to offer a comprehensive range of contemporary and traditional designs. Studio G, which launched in January 2015, operates at a lower price point to increase Clarke & Clarke's offering for younger customers and to generate higher sales volumes. Operating at the below £20 per metre price group, Studio G represents a new target price point for the Company. Both brands operate a subscription based pattern "book club" in the UK, Ireland and Italy, and have developed a reputation for value, quality and customer service.

 

Headquartered in a purpose built warehouse in Haslingden, Lancashire, with a separate dedicated design studio in Mobberley, Cheshire, Clarke & Clarke distributes its fabrics and wallcoverings globally, typically via third party distributors, to over 80 countries under its retail and commercial fabric brands and on a white label basis. Clarke & Clarke has an extensive and diversified customer base including home furnishing stores, interior designers and major UK chains. Clarke & Clarke's fabrics include, among other things, prints, jacquard weaves, plains, embroideries, velvets and silks. Clarke & Clarke creates its designs in the UK and sources its fabric from the UK, Europe, India, Turkey and China. The sales of fabrics represented approximately 91 per cent. of Clarke & Clarke's overall sales in the financial year ended 31 December 2015.

 

Clarke & Clarke recently diversified its offering to include the supply of readymade products such as cushions.

 

These readymade products are now being sold into UK retail stores, gift shops and garden centres.

 

In addition to its branded retail offering, Clarke & Clarke sells unbranded fabric rolls to a leading UK home furnishing retailer and its range of readymade home furnishings to other UK retail stores.

 

In 2014, Clarke & Clarke successfully introduced a direct sales model in Ireland, which it is proposing to roll out across other European countries, such as France, Germany and Spain.

 

In the United States, Clarke & Clarke has an exclusive distribution arrangement with Duralee, one of the largest wholesale fabric distributors in the US, selling to a significant number of US customers from 12 corporate showrooms, approximately 70 agent showrooms and 45 "on-the-road" sales representatives.

 

Financial Information

 

Clarke & Clarke has a track record of strong revenue and profit growth. Since 31 December 2013, Clarke & Clarke has increased its turnover from approximately £18.1 million to £22.4 million* for its financial year ended 31 December 2015, representing a compound annual growth rate of approximately 11.3 per cent. and for its financial year ended 31 December 2015, generated adjusted EBITDA** of approximately £3.8 million. As at 31 December 2015, the business held approximately £6.0 million of gross stock across 13,500 individual stock keeping units. Gross profit margins have remained strong and stable since the financial year ended 31 December 2012 at approximately 38 per cent. with an adjusted EBITDA** margin of approximately 17 per cent. for the financial year ended 31 December 2015. Clarke & Clarke has consistently demonstrated strong cash conversion with an operating cash conversion rate of approximately 64.3 per cent. for the financial year ended 31 December 2015. For its financial year ended 31 December 2015, Clarke & Clarke reported profit before taxation of approximately £3.7 million and net assets of £10.2 million*.

 

For the financial year ended 31 December 2015, Clarke & Clarke's revenue was derived from the following areas:

 

·      UK - 54 per cent.;

·      United States - 18 per cent.;

·      Europe - 12 per cent.; and

·      Rest of the world - 16 per cent.

 

*           Figures include US business (Clarke & Clarke LLC)

**         Adjusted EBITDA: Reported EBITDA including adjustments to align accounting policies between the legacy UK and US businesses and show consistent application of accounting policies over the historical period

 

Background to and reasons for the Acquisition and the Placing 

 

Walker Greenbank continues to make good progress with the implementation of its five pillar strategy (international expansion, market penetration, lifestyle product extension, British manufacturing capability and acquisitions) and the Directors consider that the acquisition of Clarke & Clarke presents a highly attractive opportunity to accelerate this strategy.

 

The Directors believe that Clarke & Clarke is a good strategic fit with Walker Greenbank. Clarke & Clarke is a growing business with a largely complementary brand, design and product offering which the Directors believe will strengthen the Group's market positon. In addition, the Directors believe that there is a strong strategic rationale for the Acquisition and that it will deliver the following benefits to the Group and Globaltex 2015 Limited together with its subsidiaries (the "Enlarged Group"):

 

·      an increase in the Group's scale of operations and accelerated progression of the Group's market penetration through a broader product offering and customer reach;

·      an enhancement of the Group's international reach, including in the US;

·      a strengthening of the Group's sourcing expertise and capabilities and an increase in buying power;

·      an opportunity to acquire a standalone business unit which will require limited integration; and

·      revenue growth opportunity through the Enlarged Group.

 

The Directors believe that the Acquisition presents the opportunity to add two further brands, both of which are at the affordable end of the quality fabrics market, to the Group's portfolio thereby complementing the Group's existing brands. The mid-market segment is comparatively less saturated in terms of competitive coverage, with a greater proportion of consumers buying at that price point.

 

Furthermore, the Directors believe that the Acquisition will be materially earnings enhancing in the year ending 31 January 2018. This earnings accretion is also expected to enhance the Group's future dividend capacity.

 

Following the Acquisition, Walker Greenbank intends to build on Clarke & Clarke's strengths, continuing to operate it as an independent business with its current brands and propositions targeting growth in its core geographic markets of the UK, Europe and the US.

 

The current management team, including Lee Clarke, are expected to remain with the business and be augmented with additional senior appointments.

 

Principal terms of the Acquisition

 

Walker Greenbank is to conditionally acquire the entire issued share capital of Clarke & Clarke for (i) initial consideration of £25.0 million payable in cash on Completion on a debt free/cash free basis and (ii) the earn-out element of the consideration for the Acquisition which is dependent on the financial performance of Clarke & Clarke for the four year period following Completion ("Earn-Out") and which shall be satisfied by the issue of the lower of up to 10.0 million Consideration Shares or such number of Consideration Shares which do not exceed, in aggregate, £17.5 million in value. The Earn-Out consideration has been structured in such a way as to constitute cash consideration which is being satisfied with the issue of Consideration Shares. Therefore, the Consideration Shares are declared to be issued for cash and the pre-emption provisions in section 561 of the Companies Act 2006 (the "Act") applies to the issue of the Consideration Shares.

 

The Initial Consideration for the Acquisition is to be adjusted by way of completion accounts so that the Company acquires Clarke & Clarke on a cash free/debt free basis and with a normalised level of working capital at Completion. The completion accounts adjustment is subject to a maximum cap of £6.0 million. A further potential cash payment may also be due to the Sellers subject to Clarke & Clarke obtaining certain tax reliefs from HMRC, which is capped at approximately £0.3 million.

 

The Earn-Out is to be staged over four financial periods, each ending on Walker Greenbank's financial year end, 31 January, with the first period ending on 31 January 2017 (each an "Earn-Out Period"). The amount of consideration payable pursuant to the Earn-Out is variable with the Sellers being able to achieve additional performance related Earn-Out consideration based on a target EBITDA in each Earn-Out Period ("Variable EBITDA Target") and the amount of Earn-Out consideration payable is adjustable up or down depending on the actual EBITDA achieved in that Earn-Out Period.

 

All payments due pursuant to the Earn-Out will be satisfied by the issue of Consideration Shares. There is a cash alternative available only in circumstances whereby Walker Greenbank ceases to be listed on a stock exchange but not otherwise. The Earn-Out has an aggregate cap of the lower of 10.0 million Consideration Shares or such number of Consideration Shares which does not exceed, in aggregate, £17.5 million in value. Therefore, on a debt free/cash free basis, the total maximum consideration payable to the Sellers is £42.5 million based on financial performance over a four-year period.

 

The SPA contains warranties and indemnities which are customary for a transaction of this nature as well as a tax covenant.

 

Lee Clarke and Emma Clarke will at Completion each enter into a lock in agreement in relation to any Consideration Shares which are issued to them pursuant to which they agree not to sell any of their Consideration Shares for a period of 12 months following issue of the relevant Consideration Shares and following such period be subject to orderly market provisions, for a further 12 months thereafter.

 

Lee Clarke will remain with the Clarke & Clarke business and will enter into a new employment agreement at the same time as the Acquisition.

 

Financing of the Acquisition

 

The Acquisition will be funded:

·      as to £17.0 million from the proceeds of the Placing;

·      as to £8.0 million from the Company's existing accordion tranche of its Bank Facilities and the Company's existing cash resources; and

·      as to the Earn‑Out of the lower of up to 10.0 million Consideration Shares or such number of Consideration Shares which do not exceed, in aggregate, £17.5 million in value.

Therefore, on a debt free/cash free basis, the total maximum consideration payable to the Sellers is £42.5 million based on financial performance over a four-year period.

The total cost and expenses associated with the Acquisition and the Placing are expected to be approximately £2.5 million.

Interim Results and Current Trading

 

Today, the Company announced its interim results for the six months ended 31 July 2016. Highlights included the following:

 

As expected, trading in the six months to 31 July 2016 was impacted by the flood in December 2015 at Standfast & Barracks, the Company's fabric printing business in Lancaster. The financial effect of the flood has been mitigated by the Company's insurance policy and, as at 11 October 2016 (being the latest practicable date prior to the publication of this announcement), the Company has received, in aggregate, £12.05 million in insurance payments; with ongoing discussions in relation to future insurance receipts to be applied to loss of profits for the Company's brands business.

 

In the six months to 31 July 2016, the Company has recognised £7.9 million of insurance reimbursements. The reimbursement constitutes a £4.6 million payment for exceptional costs, along with a £3.3 million payment as a contribution to loss of profits and exceptional gains for plant and equipment replacement. Full production has since been restored at the Standfast & Barracks factory, which is benefitting from new replacement printing machines, including faster, higher capacity digital printers.

 

Total sales have decreased by 8.7 per cent. to £41.8 million compared with sales of £45.8 million for the six month period ended 31 July 2015 ("H1 2015"). Meanwhile, adjusted profit before tax* has increased by 2.7 per cent. to £3.78 million compared with £3.68 million for H1 2015.

 

Earnings per share increased by 62.1 per cent. to 6.55 pence per share compared with 4.04 pence per share for H1 2015. Adjusted earnings per share* have decreased 13.6 per cent. to 4.62 pence per share compared with 5.35 pence per share for H1 2015. The interim dividend was increased by 25.0 per cent. to 0.55 pence per Ordinary Share compared with 0.44 pence per Ordinary Share for H1 2015, reflecting the Board's confidence in the business.

 

The Company continued to make progress with its market penetration strategy during the first six months ended 31 July 2016 through the launch of the fourth collection from the Anthology brand, which for the first time includes an extensive range of woven fabrics. The Company also successfully launched new product collections such as Sanderson's Woodland Walk and Morris & Co's Pure.

 

Licensing income in the period increased by 16.3 per cent. in reportable currency, 6.5 per cent. in constant currency, to £1.11 million. The Company is also making progress in licensing with the recent launch of the first footwear range from a licensing agreement between Sanderson and the well-known US brand Sperry. This, together with recently signed bed linen licensing agreements in the US and in China is a very positive step in the Company's licensing strategy and continues to take its brands further into lifestyle products and geographic territories.

 

The Company also recently strengthened its management team with the appointment of Paul Mullan to the new role of MD of Manufacturing in March 2016 and Fiona Holmes joining the Board as Brands Director on 31 October 2016.

 

Outlook

 

The Group's fabric printing factory is back to full production, and sales of printed fabrics are on an improving trend though the effects of the flood remain evident in current trading. These effects will be mitigated by the Company's insurance policy.

 

Brand sales in the first nine weeks of the second half of the financial year increased by 0.7 per cent. in reportable currency (a decrease of 3.7 per cent. in constant currency terms**) compared with the same period last year. Subject to the key Autumn selling period and anticipated insurance payments, the Board remains confident of delivering its pre-flood expectations for the full year.                                                                   

 

*           Adjusted for accounting charges relating to share-based incentives, defined benefit pension charge and exceptional gain on property, plant and equipment

**         Assuming currency exchange rates remained the same from one period to another

 

The Placing

 

The Company has conditionally raised approximately £17.0 million (before expenses) by way of a proposed placing of 8,947,369 new Ordinary Shares at a placing price of 190.0 pence per Ordinary Share. The Placing Shares will represent approximately 12.9 per cent. of the entire issued share capital of the Company immediately following Admission (assuming no exercise of share options) (the "Enlarged Share Capital"). The Placing Price represents a discount of approximately 6.6 per cent. to the closing middle market price of 203.5 pence per Ordinary Share on 11 October 2016 (being the latest practicable date prior to the date of this announcement).

 

Upon Admission, the Company's Enlarged Share Capital will comprise 69,551,678 Ordinary Shares with one voting right per share. The Company does not hold any shares in treasury. Therefore, this figure of 69,551,678 Ordinary Shares may be used by Shareholders following Admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of Walker Greenbank under the FCA's Disclosure Guidance and Transparency Rules.

 

The New Ordinary Shares will 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 on the Ordinary Shares after Admission, except for the interim dividend of 0.55 pence per Ordinary Share as announced by the Company today and to be paid on 18 November 2016 to all Shareholders on the register of members of the Company on 21 October 2016, which is prior to the expected date of Admission of the Placing Shares.

 

The Placing Agreement

 

Pursuant to the terms of the Placing Agreement, Investec has agreed to act as underwriter and agent for the Company to use its reasonable endeavours to place the Placing Shares with institutional investors. The Placing is being underwritten by Investec.

 

The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting, completion of the Acquisition and Admission becoming effective on or before 8.00 a.m. on 31 October 2016 (or such later time and/or date as the Company and Investec may agree, but in any event by no later than 8.00 a.m. on 12 January 2017). If any of the conditions are not satisfied, the Placing Shares will not be issued and all monies received from the placees will be returned to them (at the placees' risk and without interest) as soon as possible thereafter.

 

The Placing Agreement contains certain warranties and indemnities from the Company in favour of Investec in relation to, inter alia, the accuracy of the information in this announcement, certain financial information and other matters relating to the Group and its business. The Placing Agreement is not subject to any right of termination after Admission.

 

Settlement and dealings

 

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur and dealings will commence at 8.00 a.m. on or around 31 October 2016 on which date it is also expected that the Placing Shares will be enabled for settlement in CREST.

 

Directors' participation in the Placing

The following Directors have agreed to subscribe, in aggregate, for 52,630 Placing Shares pursuant to the Placing as follows:

Name

 

Role

Number of Placing Shares subscribed for

Number of Ordinary Shares held following Admission

Percentage shareholding of Enlarged Share Capital

John Sach

Chief Executive Officer

17,105

1,939,820

2.79%

Mike Gant

Chief Financial Officer

17,105

17,105

0.02%

Terry Stannard

Non-executive Chairman

10,526

80,526

0.12%

Fiona Goldsmith

Non-executive Director

7,894

52,894

0.08%

 

Irrevocable Undertakings

 

The Company has received irrevocable undertakings from each of the Directors who are Shareholders who have irrevocably undertaken to vote in favour of the Resolutions in respect of their own beneficial holdings amounting to, in aggregate, 3,286,150 Ordinary Shares and representing approximately 5.4 per cent. of the issued ordinary share capital of the Company.

 

Recommendation

 

The Board considers that the Placing, the Acquisition including the potential allotment of Consideration Shares and the passing of the Resolutions are in the best interests of the Company and Shareholders as a whole.

 

Accordingly, the Board unanimously recommends that the Shareholders vote in favour of the Resolutions as they have irrevocably undertaken to do in respect of their beneficial holdings, amounting, in aggregate, to 3,286,150 Ordinary Shares, representing approximately 5.4 per cent. of the issued ordinary share capital of the Company.

 

Placing Statistics

Number of Ordinary Shares in issue before the Placing

60,604,309

Number of Placing Shares to be issued pursuant to the Placing

8,947,369

Placing Price

190.0 pence

Gross proceeds of the Placing

£17.0 million

Estimated expenses of the Acquisition and the Placing

£2.5 million

Number of Ordinary Shares in issue immediately following the Placing*

69,551,678

Placing Shares as a percentage of the Enlarged Share Capital

12.9 per cent.

Total maximum number of Consideration Shares which could be issued

10,000,000

Number of Ordinary Shares in issue if all Consideration Shares are issued*

79,551,678

Consideration Shares as a percentage of the Post Acquisition Share Capital*

12.6 per cent.

 

* Assuming that the Placing has completed and that no further Ordinary Shares have been issued other than the Placing Shares and no share options have been exercised.

 

Expected Timetable of Principal Events


2016

Anticipated date of posting the Circular

12 October

Last time and date for receipt of Proxy Forms and CREST Proxy Instructions

 11.00 a.m. on 26 October

General Meeting

11.00 a.m. on 28 October

Admission and dealings in the Placing Shares expected to commence on AIM

8.00 a.m. on 31 October

Where applicable, expected date for CREST accounts to be credited for Placing Shares in uncertificated form

31 October

Expected date of completion of the Acquisition

31 October

Where applicable, expected date for despatch of definitive share certificates in respect of Placing Shares in certificated form

by 14 November

 

 

Notes:

1.        References to times are to London times unless otherwise stated.

2.        The dates and times given in this announcement are based on the Company's current expectations and may be subject to change.

3.        Any changes to the timetable set out above will be announced via a Regulatory Information Service.



 

 

APPENDIX

 

TERMS AND CONDITIONS OF THE PLACING

 

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

 

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

 

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT: (A) PERSONS IN RELEVANT MEMBER STATES OF THE EEA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED ("QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF DIRECTIVE 2003/71/EC AS AMENDED, INCLUDING BY THE 2010 PROSPECTUS DIRECTIVE AMENDING DIRECTIVE (DIRECTIVE 2010/73/EC) AND TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) (INVESTMENT PROFESSIONALS) 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 TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

 

THIS ANNOUNCEMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

 

THIS ANNOUNCEMENT IS NOT AN OFFER FOR SALE OR SUBSCRIPTION FOR, ANY SECURITIES IN THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, JAPAN, NEW ZEALAND OR IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN ANY SUCH JURISDICTION.

 

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE, OR SOLICITATION OF AN OFFER TO PURCHASE SECURITIES, IN THE UNITED STATES. THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "US SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES UNLESS THE PLACING SHARES ARE REGISTERED UNDER THE US SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT, IN EACH CASE IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE US SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR ELSEWHERE. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED. PERSONS RECEIVING THIS ANNOUNCEMENT (INCLUDING CUSTODIANS, NOMINEES AND TRUSTEES) MUST NOT FORWARD, DISTRIBUTE, MAIL OR OTHERWISE TRANSMIT IT IN, INTO OR FROM THE UNITED STATES, DIRECTLY OR INDIRECTLY, IN CONNECTION WITH THE PLACING. THE PLACING SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

 

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES. THE DISTRIBUTION OF THIS ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS, AND ANY PERSON INTO WHOSE POSSESSION THIS ANNOUNCEMENT, ANY PART OF IT OR ANY INFORMATION CONTAINED IN IT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, SUCH RESTRICTIONS.

 

This Announcement has been prepared and issued by the Company and is and will be the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or any of its Affiliates, branches or advisers or any other person as to or in relation to, the accuracy or completeness of the Announcement or any other written or oral information made available to or publicly available to any Placee, any person acting on such Placee's behalf or any of their respective advisers, and any liability therefor is expressly disclaimed.

 

This Announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this Announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. While the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this Announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this Announcement.

 

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.

 

No action has been taken by the Company, Investec or any of their respective Affiliates 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.

 

All offers of the Placing Shares will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus. In the UK, this Announcement is being directed solely at persons in circumstances in which section 21(1) of FSMA does not apply.

 

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

 

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

 

By participating in the Placing, each subscriber of Placing Shares (the "Placees"), will be deemed to have read and understood this Announcement in its entirety and to be participating, making an offer for and acquiring Placing Shares on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings, contained in this Appendix. In particular, each such Placee represents, warrants, undertakes, agrees and acknowledges (amongst other things) that:

 

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

 

·       in the case of a Relevant Person in a member state of the EEA which has implemented the Prospectus Directive (each, a "Relevant Member State") who acquires any Placing Shares pursuant to the Placing:

 

a.   it is a Qualified Investor within the meaning of Article 2(1)(e) of the Prospectus Directive; and

 

b.   in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive:

 

i.    the Placing Shares acquired by it in the Placing have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than Qualified Investors or in circumstances in which the prior consent of Investec has been given to the offer or resale; or

 

ii.    where Placing Shares have been acquired by it on behalf of persons in any Relevant Member State of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and

 

iii.   it is acquiring the Placing Shares for its own account or is acquiring the Placing Shares for an account with respect to which it exercises sole investment discretion and has the authority to make and does make the representations, warranties, indemnities, acknowledgements, undertakings and agreements contained in this Announcement; and

 

iv.   it understands (or if acting for the account of another person, such person has confirmed that such person understands) the resale and transfer restrictions set out in this Appendix; and

 

v.    except as otherwise permitted by the Company and subject to any available exemptions from applicable securities laws, it (and any account referred to in paragraph (iii) above) is outside the United States acquiring the Placing Shares in offshore transactions as defined in and in accordance with Regulation S under the US Securities Act.

 

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

 

Details of the Placing

 

The Company has entered into an agreement dated today with Investec (the "Placing Agreement") under which, on the terms and subject to the conditions set out in the Placing Agreement, Investec, as agent for and on behalf of the Company, has agreed to use its reasonable endeavours to procure Placees for the Placing Shares at the Placing Price. In accordance with the terms of the Placing Agreement, Investec agrees to make payment (on behalf of subscribers procured by it) of an amount equal to the product of the Placing Shares at the Placing Price (less the commissions, VAT (if any) and expense reimbursements).

 

The Placing is conditional, inter alia, upon the approval by Shareholders of the Resolutions to be proposed at the General Meeting (which will grant authority to the directors of the Company to allot the Placing Shares and disapply pre-emption rights in respect of the Placing Shares) and on the Acquisition Agreement having been entered into, not having lapsed or terminated and having become unconditional in all respects and having been completed in accordance with its terms.

 

The Placing Shares will, when issued, be subject to the articles of association of the Company, be credited as fully paid and rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive any dividends and other distributions declared or made in respect of the Ordinary Shares following Admission, except for the interim dividend of 0.55 pence per Ordinary Share.

 

The Placing Agreement contains certain undertakings, warranties and indemnities given by the Company for the benefit of Investec. Investec has absolute discretion as to whether or not to bring an action against the Company for breach of these undertakings, warranties and indemnities.

 

Investec has the right to terminate the Placing Agreement in certain circumstances, details of which are set out below.

 

This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing.

 

No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

 

Application for admission to trading

 

Application will be made to the London Stock Exchange for Admission.

 

It is expected that Admission will become effective at 8.00 am on 31 October 2016 and that dealings in the Placing Shares will commence at that time.

 

Participation in, and principal terms of, the Placing

 

1.   Each Placee will be deemed to have read and understood this Appendix in its entirety, to be participating, making an offer and subscribing for Placing Shares upon the terms and subject to the conditions contained in this Appendix and to be providing the representations, warranties, agreements, acknowledgements and undertakings, in each case as contained in this Appendix.

 

2.   Investec is acting as nominated adviser and broker to the Placing and as agent for and on behalf of the Company in relation to the Placing. Investec is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the FCA, is acting exclusively for the Company and no one else in connection with the matters referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Investec or for providing advice in relation to the matters described in this Announcement.

 

3.   Participation in the Placing will only be available to persons who may lawfully be, and are, invited by Investec to participate. Investec and any of its Affiliates are entitled to participate in the Placing as principal.

 

4.   The price per Placing Share is fixed at 190.0 pence and is payable to Investec by all Placees. No fee or commission will be paid to Placees or by Placees in respect of any Placing Shares.

 

5.   Each Placee's allocation will be determined by Investec in its absolute discretion following consultation with the Company and will be confirmed orally to such Placee by Investec, as agent of the Company ("Oral Confirmation") and an order acknowledgement will be despatched as soon as possible thereafter. The Oral Confirmation will constitute an irrevocable, legally binding commitment upon that person (who at that point will become a Placee) in favour of the Company and Investec to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the articles of association of the Company. Except with Investec's consent, such commitment will not be capable of variation or revocation after the time at which it is submitted.

 

6.   Each Placee's allocation and commitment will be evidenced by an order acknowledgement issued to such Placee by Investec which will confirm the number of Placing Shares allocated, the Placing Price and the aggregate amount owed by such Placee to Investec.

 

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

 

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

 

9.   All obligations under the Placing will be subject to fulfilment or (where applicable) waiver of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing Agreement".

 

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

 

11.  To the fullest extent permitted by law and applicable FCA rules, none of Investec or any of its Affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) to Placees or to any person other than the Company in respect of the Placing. In particular, none of Investec or any of its Affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of Investec's conduct of the Placing or of such alternative method of effecting the Placing as Investec and the Company may agree. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and Investec shall have no liability to the Placees for the failure of the Company to fulfil those obligations.

 

Conditions of the Placing

 

The obligations of Investec under the Placing Agreement are, and the Placing is conditional, inter alia, upon:

 

1.   the Company complying with its obligations and having satisfied all conditions under the Placing Agreement which fall to be performed or satisfied prior to or on Admission;

 

2.   none of the warranties in the Placing Agreement being untrue, inaccurate or misleading at the date of the Placing Agreement and none of the warranties in the Placing Agreement having ceased to be true and accurate or having become misleading at any time following the date of the Placing Agreement up to and including the time of Admission with reference to the facts and circumstances which shall then exist;

3.   prior to Admission, there having been, in the opinion of Investec (acting in good faith), no Material Adverse Change;

4.   the Circular having been posted to the Company's Shareholders by 5.00pm on the first Business Day following the date of the Placing Agreement;

5.   the Announcement having been released through the Regulatory News Service by 7:30am on the date of the Placing Agreement;

 

6.   the Acquisition Agreement having become (i) unconditional in all respects and having been completed in accordance with its terms, and (ii) not having lapsed or been terminated;

7.   the Resolutions being duly passed (without amendment);

 

8.   the Placing Shares having been allotted, subject only to Admission;

 

9.   Admission occurring no later than 8.00 am on 31 October 2016, or such later time and/or date, being no later than 8.00 am on 12 January 2017, as the Company and Investec may agree,

 

(all conditions to the obligations of Investec included in the Placing Agreement being together, the "conditions").

 

Certain conditions may be waived in whole or in part by Investec in its absolute discretion and upon such terms as it thinks fit, save that the condition relating to the allotment of the Placing Shares, subject only to Admission, may not be waived. Investec may also agree in writing with the Company to extend the time for satisfaction of any condition in accordance with the Placing Agreement. Any such extension or waiver will not affect Placees' commitments as set out in this Appendix.

 

If any of the conditions set out in the Placing Agreement are not fulfilled or, where permitted, waived in accordance with the Placing Agreement within the stated time periods (or such later time and/or date as Investec may agree in writing with the Company), or the Placing Agreement is terminated in accordance with its terms, the Placing will lapse and the Placee's rights and obligations under this Announcement shall cease and terminate at such time and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof.

 

Neither Investec nor any of its Affiliates shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision any of them 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 any of them may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Investec.

 

Termination of the Placing Agreement

 

Investec may terminate the Placing Agreement at any time on or before Admission if, inter alia:

 

1.   there has been a breach of any provision in the Acquisition Agreement by any party to it which would enable the Company to terminate the Acquisition Agreement; or

 

2.   in the sole judgement of Investec (acting in good faith), there has been a Material Adverse Change since the date of the Placing Agreement; or

 

3.   in the sole judgement of Investec (acting in good faith), there has been a material breach by the Company of any of its obligations under the Placing Agreement or with the requirements of any laws or regulations in relation to the Placing, or there has been a breach of or there has taken place or arisen any event rendering untrue or incorrect in any respect any of the warranties set out in the Placing Agreement; or

 

4.   in the sole judgement of Investec (acting in good faith), if any of the warranties contained in the Placing Agreement would, if repeated at Admission (by reference to the facts and circumstances then existing), be untrue, inaccurate or misleading in any respect; 

 

5.   a matter or circumstance has arisen which would be likely to give rise to an indemnity claim pursuant to the Placing Agreement; or

 

6.   subsequent to the execution of the Placing Agreement, a circumstance or event has arisen which in the sole judgement of Investec (acting in good faith) would be likely to prejudice the success of the Placing, or which makes it, in the sole judgement of Investec, impractical to proceed with the Placing and/or Admission and/or to market the Ordinary Shares on the terms and in the manner set out in the Placing Documents; or

 

7.   any statement contained in any of the Placing Documents is or has become untrue, inaccurate, incomplete in any material respect or misleading or any matter has arisen which would, if the Placing was made at that time, constitute an omission from the Placing Documents.

 

By participating in the Placing, each Placee agrees with Investec that the exercise by Investec of any right of termination or any other right or other discretion under the Placing Agreement shall be within the absolute discretion of Investec (and not the Placee or any prospective Placee at any time or in any circumstances) and that Investec does not need to make any reference to such Placee and that neither Investec nor any of its Affiliates shall have any liability to such Placee (or to any other person whether acting on behalf of a Placee or otherwise) whatsoever in connection with any such exercise. Placees will have no rights against Investec, the Company or any of their respective Affiliates under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended).

 

By participating in the Placing, each Placee agrees with the Company and Investec that its rights and obligations terminate only in accordance with the Placing Agreement and will not be capable of rescission or termination by it after the Oral Confirmation.

 

No prospectus

 

No prospectus or other offering document has been or will be submitted to be approved by the FCA in relation to the Placing or the Placing Shares and Placees' commitments will be made solely on the basis of the information contained in this Announcement and any information publicly announced through a Regulatory Information Service (as defined in the AIM Rules) by or on behalf of the Company on or prior to the date of this Announcement (the "Publicly Available Information").

 

Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Publicly Available Information), representation, warranty or statement made by or on behalf of Investec or the Company or any other person and none of Investec, the Company or any other person acting on such person's behalf nor any of their Affiliates has or shall have any liability for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

 

Registration and settlement

 

Investec will act as settlement agent in respect of the Placing.

 

Settlement of transactions in the Placing Shares (ISIN: GB0003061511) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. Investec reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees in certificated form if, in Investec's opinion, delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in any Placee's jurisdiction.

 

Each Placee allocated Placing Shares in the Placing will be sent an order acknowledgement in accordance with the standing arrangements in place with Investec, stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to Investec and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions that it has in place with Investec.

 

The Company will deliver the Placing Shares to a CREST account operated by Investec as agent for the Company and Investec will enter its delivery (DEL) instruction into the CREST system. Investec will hold any Placing Shares delivered to this account as nominee for the Placees. The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

 

Settlement through CREST will be on a T+2 basis unless otherwise notified by Investec and is expected to occur at 8.00 am on 31 October 2016 in accordance with the instructions set out in the order acknowledgement.

 

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above, in respect of either CREST or certificated deliveries, at the rate of two percentage points above LIBOR as determined by Investec.

 

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

 

By communicating a bid for Placing Shares, each Placee confers on Investec all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Investec lawfully takes in pursuance of such sale.

 

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the order acknowledgement is copied and delivered immediately to the relevant person within that organisation.

 

Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to United Kingdom stamp duty, stamp duty reserve tax or securities transfer tax.

 

Placees will not be entitled to receive any fee or commission in connection with the Placing.

 

Representations and warranties

 

By participating in the Placing, each Placee (and any person acting on such Placee's behalf) acknowledges, undertakes, represents, warrants and agrees (as applicable, and amongst other things) with Investec (for itself and as agent on behalf of the Company) that (save where Investec expressly agrees in writing to the contrary):

 

1.   it has read and understood the Announcement and any other Placing Document in its entirety and its subscription of the Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, indemnities, acknowledgements, agreements, undertakings and other information contained herein and that it has not relied on, and will not rely on, any information given or any representations, warranties, or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares or otherwise, other than the information contained in this Announcement and Publicly Available Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares;

2.   it may not place the same degree of reliance on this Announcement as it may otherwise place on a prospectus or admission document;

 

3.   (i) it has made its own assessment of the Placing Shares and has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing; (ii) neither Investec, the Company nor any of their respective Affiliates or any person acting on its or their behalf has provided, or will provide, it with any material regarding the Placing Shares or the Company in addition to this Announcement or Publicly Available Information; and (iii) it has not requested Investec or the Company nor any of their respective Affiliates or any person acting on its or their behalf to provide it with any such information;

 

4.   no prospectus or other offering document has been prepared in connection with the Placing and it has not received and will not receive a prospectus or other offering document in connection with the Placing nor is any prospectus or other offering document required under the Prospectus Directive;

 

5.   the content of this Announcement and the Publicly Available Information has been prepared by and is exclusively the responsibility of the Company and neither Investec nor any person acting on behalf of it nor any of its respective Affiliates has or shall have any liability for any information, representation or statement contained in this Announcement, Publicly Available Information or any information previously, concurrently published by or on behalf of the Company, any representation, warranty or undertaking relating to the Company, or any matter arising out of Investec's role as placing agent or otherwise in connection with Placing, nor will they be liable for any Placee's decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement or Publicly Available Information or otherwise. Where any such liability nevertheless arises as a matter of law, Placees will immediately waive any claim against any of such persons which they may have in respect thereof;

 

6.   none of Investec or the Company nor any of their respective Affiliates or any person acting on its or their behalf has made any representations to it, express or implied, with respect to the accuracy, completeness or adequacy of any Publicly Available Information, nor have they provided advice in relation to the Placing nor in respect of any representations, warranties, acknowledgements, agreements, undertakings, or indemnities contained in the Placing Agreement nor the exercise or performance of any of Investec's rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right, and each of them expressly disclaims any liability in respect thereof (save that nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation);

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

8.   it has the funds available to pay for the Placing Shares for which it has agreed to subscribe and acknowledges, agrees and undertakes that it will pay the total subscription amount to Investec in accordance with the terms and conditions of this Announcement on the due time and date set out herein or in the relevant order acknowledgement, failing which the relevant Placing Shares may be placed with other Placees or sold at such price as Investec determines in its sole discretion and the Placee will remain liable and indemnify Investec on demand for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty, stamp duty reserve tax or security transfer tax (together with any interest or penalties due pursuant to the terms set out or referred to in this Announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;

9.   it and/or each person on whose behalf it is participating:

(i)         is entitled to subscribe for the Placing Shares under the laws and regulations of all relevant jurisdictions;

(ii)         has fully observed such laws and regulations;

(iii)        has the capacity and authority and is entitled to enter into and to perform its obligations as a subscriber for Placing Shares and will honour such obligations; and

(iv)        has obtained all necessary consents and authorities (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix) under those laws or otherwise and complied with all necessary formalities to enable it to enter into the transactions contemplated hereby and to perform its obligations in relation thereto and, in particular, if it is a pension fund or investment company it is aware of and acknowledges it is in full compliance with all applicable laws and regulations with respect to its subscription for Placing Shares;

10.  the Placing Shares have not been registered or otherwise qualified, and will not be registered or otherwise qualified, for offer and sale nor will a prospectus be cleared or approved in respect of any of the Placing Shares under the securities laws of the United States, or any state or other jurisdiction of the United States, Australia, Canada, Republic of South Africa, Republic of Ireland, New Zealand or Japan and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within those jurisdictions or other country or jurisdiction where any such action for that purpose is required;

11.  it is not, and any person who it is acting on behalf of is not, and at the time the Placing Shares are subscribed will not be, a resident of, or with an address in, or subject to the laws of, Australia, Canada, Japan, the Republic of South Africa, the Republic of Ireland or New Zealand, and it acknowledges and agrees that the Placing Shares have not been and will not be registered or otherwise qualified under the securities legislation of Australia, Canada, Japan, the Republic of South Africa, the Republic of Ireland or New Zealand and may not be offered, sold, or acquired, directly or indirectly, within those jurisdictions;

 

12.  (i) the Placing Shares have not been, and will not be, registered under the US Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority;

(ii) it (and any account for which it is purchasing) is not acquiring the Placing Shares with a view to any offer, sale, resale or delivery, directly or indirectly, of any Placing Shares in or into the United States other than pursuant to an effective registration under the US Securities Act or in a transaction exempt from, or not subject to, the registration requirements thereunder and in compliance with any applicable securities laws of any state or other jurisdiction of the United States and no representation is being made as to the availability of any exemption under the US Securities Act for the reoffer, resale, pledge or transfer of the Placing Shares; and

(iii) it and the beneficial owner of the Placing Shares is, and at the time the Placing Shares are subscribed will be, outside of the United States, not acting on a non-discretionary basis for the account or benefit of a person located within the United States at the time the undertaking to acquire the Placing Shares is given and is otherwise acquiring the Placing Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S under the US Securities Act;

(iv) it acknowledges and agrees that it is not taking up or acquiring the Placing Shares as a result of any directed selling efforts (as defined in Regulation S under the US Securities Act).

13.  it will not distribute, forward, transfer or otherwise transmit this Announcement or any part of it, or any other presentational or other materials concerning the Placing, in or into or from the United States (including electronic copies thereof) to any person, and it has not distributed, forwarded, transferred or otherwise transmitted any such materials to any person;

14.  the Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM, which includes a description of the nature of the Company's business, the Company's most recent balance sheet and profit and loss account and the Company's announcements and circulars published in the past 12 months and the Placee is able to obtain or access such information or comparable information concerning any other publicly traded company without undue difficulty;

15.  it is a person of a kind described in (i) Article 19(5) (Investment Professionals) and/or 49(2) (High net worth companies etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, and/or an authorised person as defined in section 31 of FSMA; and (ii) section 86(7) of FSMA ("Qualified Investor"), being a person falling within Article 2.1(e) the Prospectus Directive. For such purposes, it undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;

16.  it has only communicated or caused to be communicated, and will only communicate or cause to be communicated, any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person and it acknowledges and agrees that Investec has not approved this Announcement in its capacity as an authorised person under section 21 of FSMA and it may not therefore be subject to the controls which would apply if it was made or approved as financial promotion by an authorised person;

17.  it has complied and it 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 FSMA in respect of anything done in, from otherwise involving the United Kingdom);

18.  it will not make any offer to the public of the Placing Shares and it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom or elsewhere in the EEA prior to Admission, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in the United Kingdom for the purposes of section 85(1) of FSMA or an offer to the public in any other member state of the EEA within the meaning of the Prospectus Directive (which includes any relevant implementing measure in any Relevant Member State of the EEA);

19.  where it is acquiring Placing Shares for one or more managed accounts, it is authorised in writing by each managed account: (a) to acquire the Placing Shares for each managed account; (b) to make on its behalf the representations, warranties, acknowledgements, undertakings and agreements in this Appendix and the Announcement of which it forms part; and (c) to receive on its behalf any investment letter relating to the Placing in the form provided to it by Investec;

20.  if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive (including any relevant implementing measure in any Relevant Member State), the 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 a Relevant Member State of the EEA which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the express prior written consent of Investec has been given to the offer or resale;

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

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

 

23.  no action has been or will be taken by any of the Company, Investec or any of their respective Affiliates or any person acting on their behalf that would, or is intended to, permit a public offer of the Placing Shares in the United States or in any country or jurisdiction where any such action for that purpose is required;

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

25.  it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, the Market Abuse Regulation (596/2014) and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;

26.  in order to ensure compliance with the Money Laundering Regulations 2007, Investec, (as agent on behalf of the Company) or the Company's registrars may, in its absolute discretion, require verification of its identity. Pending the provision to Investec, or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at Investec's absolute discretion or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at Investec's or the Company's registrars', as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity Investec (for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, Investec and/or the Company may, at its absolute discretion, terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;

27.  the allocation, allotment, issue and delivery to it, or the person specified by it for registration as a holder of Placing Shares, will not give rise to a stamp duty or stamp duty reserve tax liability under (or at a rate determined under) any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that no instrument under which it subscribes for Placing Shares (whether as principal, agent or nominee) would be subject to stamp duty or the increased rates referred to in those sections and that it, or the person specified by it for registration as a holder of Placing Shares, is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;

28.  it, or the person specified by it for registration as a holder of the Placing Shares, 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), if any, payable on acquisition of any of the Placing Shares or the agreement to subscribe for the Placing Shares and acknowledges and agrees that none of Investec nor the Company nor any of their respective Affiliates or any person acting on behalf of them will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing, and agrees to indemnify the Company and Investec on an after-tax basis in respect of the same, on the basis that the Placing Shares will be allotted to the CREST stock account of Investec who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

29.  its participation in the Placing is on the basis that it is not and will not be a client of Investec and Investec does not have any duties or responsibilities to it for providing the protections afforded to its clients or customers under the rules of the FCA, for providing advice in relation to the Placing, in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of its rights and obligations thereunder, including any rights to waive or vary any conditions or exercise any termination right. In addition, any payment by it will not be treated as client money governed by the rules of the FCA;

 

30.  Investec and its Affiliates, acting as an investor for its or their own account(s), may bid or subscribe for and/or purchase Placing Shares and, in that capacity, may retain, purchase, offer to sell or otherwise deal for its or its own account in the Placing Shares, any other securities of the Company or other related investments in connection with the Placing or otherwise. Accordingly, references in this Announcement to the Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by, Investec and/or any of its respective Affiliates acting as an investor for its or their own account. None of Investec or the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;

31.  this Appendix and all documents into which this Appendix are incorporated by reference or otherwise validly form a part and/or any agreements entered into pursuant to these terms and conditions and all agreements to subscribe for shares pursuant to the Placing will be governed by and construed in accordance with English law and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Investec in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

32.  the Company and Investec (including each of their respective Affiliates) will rely upon the truth and accuracy of the foregoing agreements, acknowledgements, representations, warranties and undertakings which are given to Investec, on its own behalf and on behalf of the Company, and are irrevocable;

33.  it irrevocably appoints any duly authorised officer of Investec as its agent for the purpose of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares for which it agrees to subscribe or purchase upon the terms of this Appendix;

 

34.  (i) it has knowledge and experience in financial, business and international investment matters and is required to evaluate the merits and risks of subscribing for the Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with, the Placing; and (iii) it has relied upon its own examination and due diligence of the Company and its associates, taken as a whole, and the terms of the Placing, including the merits and risks involved;

 

35.  if it is acquiring the Placing Shares as a fiduciary or agent for one or more investor accounts, it has full power and authority to make, and does make, the foregoing representations, warranties, acknowledgements, agreements and undertakings on behalf of each such accounts;

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

37.  any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to Investec;

38.  it will be bound by the terms of the articles of association of the Company;

39.  the Placing Shares will be issued subject to the terms and conditions of the Placing Agreement and this Appendix;

40.  its commitment to subscribe for Placing Shares on the terms set out in this Appendix and in the order acknowledgement will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that it will have no right to be consulted or require that their consent be obtained with respect to the Company's or Investec's conduct of the Placing;

41.  by participating in the Placing, each Placee (and any person acting on such Placee's behalf)  agrees to indemnify on an after-tax basis and hold the Company, Investec and their respective Affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings given by the Placee (and any person acting on such Placee's behalf) in this Appendix or incurred by the Company, and Investec and each of their respective Affiliates arising from the performance of the Placee's obligations as set out in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

42.  acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreement shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter (including non-contractual matters) arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Investec in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; and

43.  to the fullest extent permitted by law, it acknowledges and agrees to the disclaimers contained in the Announcement.

The agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the United Kingdom relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct by the Company. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement related to any other dealings in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event, the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax and neither the Company nor Investec shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and they should notify Investec accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares and each Placee, or the Placee's nominee, in respect of whom (or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such non-United Kingdom stamp, registration, documentary, transfer or similar taxes or duties undertakes to pay such taxes and duties, including any interest and penalties (if applicable), forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Investec in the event that either the Company and Investec have incurred any such liability to such taxes or duties.

 

The representations, warranties, acknowledgements and undertakings contained in this Appendix are given to Investec for itself and on behalf of the Company and are irrevocable, will survive completion of the Placing and shall not be capable of termination in any circumstances. Each Placee, and any person acting on behalf of the Placee, acknowledges and agrees that Investec does not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings, acknowledgements, agreements or indemnities in the Placing Agreement. 

 

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

 

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.

 

All times and dates in this Announcement are to London time and may be subject to amendment.

 

The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

 

The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than the London Stock Exchange.

 

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

 

DEFINITIONS

 

In addition to the terms previously defined, the following definitions apply throughout this Appendix unless the context otherwise requires:

 

"Acquisition" the conditional acquisition by the Company of the entire issued share capital of Globaltex 2015 Limited on the terms of the Acquisition Agreement;

 

"Acquisition Agreement" the share purchase agreement entered into on 12 October 2016 between the Company and the Sellers in relation to the Acquisition;

 

"Admission" the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules;

 

"Affiliates" any of either the Company or Investec's affiliates, agents, directors, officers, employees or consultants, but in respect of Investec only, also includes any person connected with Investec as defined in FSMA;

 

"AIM" AIM, a market operated by the London Stock Exchange;

 

"AIM Rules" the AIM Rules for Companies, incorporating guidance notes, published by the London Stock Exchange as at the date of this Announcement;

 

"Appendix" this appendix to the Announcement;

 

"Business Day" a day (excluding Saturdays, Sundays and public holidays in the United Kingdom) on which banks are generally open for normal banking business in the City of London;

 

"Circular" the circular to be sent to the Shareholders on the date of this Announcement, containing details of, inter alia, the Acquisition and the Placing, and containing the notice of the General Meeting;

 

"Company" Walker Greenbank PLC, a company incorporated and registered in England and Wales under the Companies Act 2006 (as amended) with registered number 61880;

 

"EEA" European Economic Area;

 

"FSMA" the Financial Services and Markets Act of 2000 (as amended);

 

"General Meeting" the general meeting of the Company to be held on 28 October 2016 (or any adjustment thereof) at which the Resolutions will be proposed;

 

"Group" the Company and its respective subsidiary undertaking and associates (as defined in s345 of the Companies Act 2006) from time to time;

 

"Investec" Investec Bank plc, a company incorporated in England and Wales with registered number 489604;

 

"London Stock Exchange" London Stock Exchange plc;

 

"Material Adverse Change" any adverse change in, or any development or event reasonably likely to result in an adverse change in, or affecting, the condition (financial, operational, legal or otherwise), earnings, business, management, financial position, properties, assets, rights, results of operations, net asset value, funding position, liquidity, solvency, prospects or general affairs of the Group which is material in the context of the Group as a whole, whether or not arising in the ordinary course of business;  

 

"Ordinary Shares" ordinary shares of £0.01 each in the capital of the Company;

 

"Placing" the conditional placing of the Placing Shares with certain institutional investors at the Placing Price pursuant to the terms of the Placing Agreement;

 

"Placing Agreement" the conditional agreement dated 12 October 2016 between the Company and Investec relating to the Placing;

 

"Placing Documents" together the Presentation, this Announcement, the Circular and these terms and conditions;

 

"Placing Price" 190.0 pence per Placing Share;

 

"Placing Shares" 8,947,369 new Ordinary Shares to be issued pursuant to the Placing;

 

"Presentation" the presentation by the Company in the marketing of the Placing to institutional investors;

 

"Regulatory News Service" the electronic information dissemination service operated by London Stock Exchange's Company Announcements Office, or any alternative (primary information provider service) which the Company has selected for the purpose of making regulatory announcements in accordance with the AIM Rules;

 

"Resolutions" the resolutions to be proposed at the General Meeting and to be set out in the notice of the General Meeting;

 

"Shareholder" holder of Ordinary Share(s);

 

"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;

 

"United States" United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction; and

 

"US Securities Act" the US Securities Act of 1933, as amended.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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