Source - LSE Regulatory
RNS Number : 6319Q
Lamprell plc
28 October 2021
 

This Announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (as it forms part of the laws of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended from time to time) (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, AND ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) (THE UNITED STATES), AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OF SECURITIES IN ANY JURISDICTION. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT

 

 

 

 

28 October 2021

LAMPRELL PLC
("Lamprell" and together with its subsidiaries the "Group")

Proposed placing through an accelerated bookbuild and subscription to raise approximately $30.1 million (£21.9 million)

Introduction

Lamprell plc (LON: LAM) ("Lamprell" or the "Company", and together with its subsidiaries, the "Group"), is pleased to announce its intention to carry out a non-pre-emptive placing (the "Placing") of ordinary shares of £0.05 each ("Ordinary Shares") in the capital of the Company (the "Placing Shares").

The Placing is being conducted through an accelerated bookbuild process (the "Bookbuild") which will be launched immediately following this announcement and is subject to the terms and conditions set out in Appendix 1 to this announcement (together with Appendices 2 and 3, the "Announcement").

In conjunction with the Placing, certain directors of the Company intend to subscribe for new ordinary shares in the capital of the Company pursuant to the direct subscription with the Company (the "Subscription Shares", and together with the Placing Shares, the "New Ordinary Shares") at the Placing Price (the "Subscription", and together with the Placing, the "Capital Raising"). It is anticipated that the total proceeds of such participation will amount to approximately $0.2 million (£0.15 million).

The Company intends to raise total proceeds of approximately $30.1 million (£21.9 million) through the Placing and the Subscription (as defined below). Together, the total number of Placing Shares and Subscription Shares will not exceed 68,345,313 New Ordinary Shares, representing approximately 19.99 per cent. of the Company's existing issued share capital.

Investec Bank plc ("Investec") is acting as global co-ordinator and sole bookrunner (the "Global Co-ordinator and Sole Bookrunner") to the Company in connection with the Placing, as well as sponsor to the Company in connection with any potential related party transactions.

The price at which the New Ordinary Shares are to be placed or subscribed for, as applicable is 32.0 pence per share (the "Placing Price").

Summary and Highlights

·    Over the past five years the current management team have transformed Lamprell, pursuing a growth strategy aligned to the energy transition, which included:

Primary focus on diversification and expansion of end markets to capture opportunities in the growing renewables industry and secure an entry into the Saudi oil and gas market; 

 

Developing a strong position in the offshore wind supply chain and a track record as one of the leading fabricators of wind-turbine generator foundations to the renewables industry;

 

Transformation from a regional oil and gas rig builder to a global energy partner with significant exposure to the renewables industry and a developing offering of commercial digital solutions.

 

·    Since the beginning of the year, the Group's addressable markets have demonstrated significant growth and recovery, with the Group bid pipeline increasing by 26% to $7.6 billion, whereby the renewables component, at $3.9 billion, has grown to just over 50% of the total for the first time and the Board of directors of Lamprell (the "Directors" and together, the "Board") believe the Group's target addressable market in the renewables sector could add in excess of $6 billion by 2022 to the Group's bid pipeline.

 

·    The Group anticipates that approximately $4.1 billion of current pipeline opportunities will be due for award before end of 1H 2022.

 

·    Against the backdrop of these strategic opportunities, the Group has been seeking new debt and/or equity funding arrangements in order to strengthen its balance sheet and deliver the next phase of its growth:

 

A $45 million initial working capital facility for the two IMI rigs was announced on 28 October 2021, subject to fulfilment of certain conditions precedent;

 

Drawdown of the facility is conditional on, amongst other things, the Group successfully completing the Capital Raising;

 

A second facility of $45 million is expected to be agreed and made available to the Group in Q1 2022, in line with project working capital requirements.

 

The Capital Raising is required in order to address the Group's near-term working capital needs, strengthen the Group's balance sheet and to take advantage of the significant accessible opportunities which the Board believes are available to the Group in its addressable markets.

 

·    It will enable the Group to draw the critical working capital debt facility for the successful delivery of the two IMI jackup rigs.

 

·    The Board believes that if the Capital Raising completes, such that the initial working capital facility is accessible, and the second facility becomes available as anticipated, the Group will have a stronger platform from which to deliver its "Lamprell Reimagined" strategy.

 

·    Timing and quantum of new awards will continue to have a significant influence on the future capital requirements and funding strategy of the Group. Against this backdrop, the Group continues to look at the most appropriate mix of financing alternatives which will be required in 1H 2022 and include additional equity, project-specific financing and hybrid facilities.

 

The Company will also look to secure new Group facilities when the improvement in its financial position permits.

·    The Group will continue to explore financing opportunities within the Kingdom of Saudi Arabia.

The Capital Raising is subject to the approval by the Company's shareholders of the resolutions to be proposed at an extraordinary general meeting of the Company (the "Resolutions"). The Company expects to publish a circular in connection with the Capital Raising in the next few days (the "Circular"). 

 

Christopher McDonald, Chief Executive Officer of Lamprell plc, said:

 

Lamprell has undergone a major strategic transformation over the recent past. We are one of the few former oilfield services companies with demonstrable credentials in fully aligning our strategy with the energy transition. We have successfully broadened our addressable markets and are currently bidding on USD 7.6 billion of prospective projects, with a continuously improving outlook in both our end markets of renewables and oil and gas. Despite the challenges of the COVID-19 restrictions over the past 18 months, our operations demonstrated agility and reliability and we continued to make incremental investments in our yard to achieve further capacity and capability improvements.

 

The recently announced debt facility and today's announcement of the proposed placing mark good progress with our short-term funding strategy as we seek to strengthen our balance sheet and take advantage of the growing opportunity set in the global energy markets.

 

Capitalised terms used in this Announcement and not defined elsewhere in it are defined in Appendix 3 to this Announcement.

 

 

For further information, please contact:

 

Lamprell plc

Maria Babkina, Investor Relations:                                                     +44 (0) 7852 618 046

 

Investec Bank plc (Global Co-ordinator and Sole Bookrunner)

Chris Sim / Henry Reast / Ben Farrow                                               +44 (0) 20 7597 5970

 

Tulchan Communications, London                                                +44 (0) 207 353 4200

Martin Robinson / Martin Pengelley / Guy Bates

 

This announcement contains inside information and for the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055 (as it forms part of the laws of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended from time to time), the Person responsible for arranging for the release of this Announcement on behalf of the Company is Maria Babkina, Investor Relations.

 

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

 

Expected Timetable of Principal Events

 

Announcement of the Capital Raising

28 October 2021

Announcement of the results of the Capital Raising

29 October 2021

Publication and despatch of the Circular (including the notice of the Extraordinary General Meeting)

1 November 2021

Latest time and date for receipt of Forms of Proxy or submission of proxy votes electronically

5:00 p.m. (UAE time) on 19 November 2021

Extraordinary General Meeting

5:00 p.m. (UAE time) on 23 November 2021

Announcement of the results of the Extraordinary General Meeting

23 November 2021

Admission and commencement of dealings in New Ordinary Shares

8.00 a.m. on 25 November 2021

New Ordinary Shares credited to CREST accounts (uncertificated holders only)

8.00 a.m. on 25 November 2021

Expected despatch of definitive share certificates in respect of New Ordinary Shares in certificated form

on or around 2 December 2021

Notes

The times and dates set out in the expected timetable of principal events above and mentioned throughout this Announcement are indicative only and may be adjusted by the Company. In the event of such change, the revised time and/or dates will be notified to Shareholders by an announcement through a RIS.

Background to and reasons for the transaction

Over the past five years the current management team have transformed Lamprell, pursuing a growth strategy aligned to the energy transition from oil and gas to renewables and significantly expanding the opportunities for the business. In 2016, Lamprell was a regional rig builder which generated approximately 99 per cent of its revenue from its customers in the United Arab Emirates ("UAE"), with no direct exposure to Saudi Arabian Oil Company ("Saudi Aramco") and a bid pipeline of approximately $2.5 billion comprising few renewables opportunities. Since 2016 and following the collapse of the global market for new build jackup rigs, the Group has taken significant steps to diversify and transform its business, establishing a strong position in the offshore wind supply chain and a track record as one of the leading fabricators of wind-turbine generator ("WTG") foundations to the renewables industry, as well as developing various digital initiatives which have the potential to improve the Group's productivity and generate new revenue streams. As a leading fabricator of foundations for offshore wind, the Board believes that the Group is well positioned to take advantage of the rapid growth in the renewables sector as part of the broader transition to a greener, more digitised energy mix:

·              Step change in renewables opportunity: Lamprell has a rapidly growing global opportunity set in an industry which the Board believes is well positioned for significant growth, with multiple large-scale projects in the US and Asia expected to join the Group's existing European offshore wind expansion. The offshore wind component of the Group's bid pipeline is growing, with over $6 billion of new, publicly announced renewables projects expected to enter the Group's bid pipeline in the next 12 months. The Board believes that there is scope for the bid pipeline to increase significantly in the short to medium term, with fully commissioned global offshore wind capacity expected to grow from 33GW to over 200GW by 2030.

·              Compelling proposition in a capacity-constrained market: Lamprell has established itself as a leading fabricator of critical infrastructure to the offshore wind industry, having delivered or being in the process of delivering close to 150 jacket foundations for leading UK projects in recent years. The Board believes that the Group's experience, geographic positioning, quality and cost competitiveness will increasingly make Lamprell a partner of choice in a market where current fabrication capacity is expected to be insufficient for the rapid scale up in activity forecast over the next decade.

·              Opportunity to increase renewables throughput and improve profitability: In the coming years, the Board believes that Lamprell has an opportunity to increase significantly its renewables activities by building its capacity to execute more and larger projects, broadening its focus into adjacent base structures for floating offshore wind and central platforms, and continuing to move up the renewables value chain. In recent years, investments in the Group's Hamriyah yard, which has direct access to the deep water sea port of Hamriyah, have turned it into a leading renewables fabrication facility. The Board believes that further targeted investments will increase its renewables project margins through greater throughput efficiencies and automation in the execution of large scale renewable projects.

In addition to the Group's continued focus on the opportunities available to it in the renewables sector, the Group has taken significant steps in recent years to:

·              Benefit from premium exposure to low cost oil majors: The Group is consolidating its traditional oil and gas business unit, pivoting towards a stronger presence in the Kingdom of Saudi Arabia ("Saudi Arabia") and developing important revenue streams through its International Maritime Industries ("IMI") joint venture, a potentially transformational project. The IMI is a purpose built yard being constructed in Saudi Arabia as part of its strategic "Vision 2030" reform programme and is the largest full-service maritime facility in the region. Lamprell is a 20 per cent. shareholder in the joint venture, alongside Saudi Aramco which owns approximately 40 per cent. of the shares in the joint venture, and has the role of the lead technical partner for the fabrication, refurbishment and conversion of rigs. Since 2018, Lamprell also holds a coveted place on Saudi Aramco's Long-term Agreement ("LTA") programme, which affords the business the opportunity to bid on a wide range of sizeable offshore EPCI projects open to an exhaustive list of just nine pre-selected LTA contractors. In 2021, Lamprell has been awarded two projects under the LTA and the Board believes that the pipeline of new prospects under the LTA continues to be strong.

·              Create and unlock value from digitisation in the energy industry: Lamprell's digital strategy leverages the increased opportunities resulting from the growing demand for digitisation across the energy industry. Following the announcement of key partnerships with Injazat/G42 and Akselos, which the Board believes will enable the Group to continue to enhance its digital platform, the Group is seeking to create a standalone digital business with the ability to offer distinct commercial solutions to the energy and other industries.

Against the backdrop of these strategic opportunities, the Company has been seeking new debt and/or equity funding arrangements in order to strengthen its balance sheet and deliver the next phase of its growth. On 28 October 2021, the Company announced that, subject to fulfilment of certain conditions precedent, it had secured the $45 million revolving trade loan facility entered into by Lamprell Energy Limited as borrower, backed by the UAE Export Credit Agency and secured by the proceeds of the Group's two IMI rigs currently under fabrication in the Group's Hamriyah facility (the "IMI Rig Facility") pursuant to the AED 165,285,000 (approximately $45 million) revolving trade loan facility agreement dated 28 October 2021. As part of the terms of the IMI Rig Facility, there is an option of a further $45 million accordion funding arrangement subject to the provision of additional security to the banks similar to that of the IMI Rig Facility (the "Second Tranche"). The Second Tranche is expected by the Company to be agreed and made available to the Group in Q1 2022 (with the IMI Rig Facility and the Second Tranche being together the "Project Finance Facilities").

The drawdown of the IMI Rig Facility will be conditional on, amongst other things, the Group successfully completing the Capital Raising. In addition, the conditions precedent also include customary conditions and a limited number of other conditions, all of which the Company expects to be satisfied prior to Admission. The Capital Raising is intended to strengthen the Group's balance sheet, enabling the Group to successfully deliver ongoing major projects and take advantage of the significant opportunities which the Board believes are available to the Group in the markets in which it operates. The funding arrangements will provide the Group with a stronger and more sustainable capital structure, paving the way for structural growth and the continued delivery of its "Lamprell Reimagined" strategy.

The Board, having carefully considered the available alternatives, believes that the Capital Raising is the best solution to address the Group's current liquidity position and advance its renewed strategic potential. As explained in more detail below, failure to pass the Resolutions will materially and adversely affect the Group's business, results of operations, financial condition and prospects.

Lamprell Reimagined

Since 2016, Lamprell has transformed the way it operates to become one of the early movers in the energy transition and the Directors believe that there is significant scope to further evolve its fabrication capacity, its EPCI capabilities and in its strategic investments to maintain its status as one of the leading players in the global energy supply chain. With this aim in mind, in January 2021, Lamprell launched "Lamprell Reimagined", a strategic reorganisation of its business with a view to increase the Group's focus on renewables and the energy transition, improve its alignment with customers and enable the Group to take full advantage of the significant opportunities in its core markets.

Lamprell Reimagined has resulted in a reorganisation into three distinct business units of Renewables, Oil and Gas and Digital. Each of these units is strongly linked with the energy transition, however they differ in opportunity sets, operational and bidding process and capital requirements.

The Directors believe that the "Lamprell Reimagined" strategy is the best way for Lamprell to realise opportunities in its core and complimentary markets, and the Capital Raising is the first step towards achieving these aims. The Directors will continue to review and seek to optimise the capital structure of the Group's businesses in order to satisfy the demands of its renewed strategic potential. Against this backdrop, the Group continues to look at the most appropriate mix of financing alternatives which will be required in 1H 2022 and include additional equity, project specific financing and hybrid facilities. The Company will also look to secure new Group facilities when the improvement in its financial position permits.

The Board

In addition, Lamprell is in the process of refreshing the composition of the Board to be further aligned with the Lamprell Reimagined strategy. On 14 September 2021, Lamprell announced the appointment of Motassim Almaashouq as an independent Non-Executive Director and his extensive experience and expertise in the global energy industry and in Saudi Arabia will complement the capabilities of the current Board in driving Lamprell's strategy forward both in the near and long-term.

The Board composition will continue to evolve to ensure that the Group has the appropriate experience and skills to support its strategy and operations. In this regard, a search is under way for an independent Non-Executive Director with renewables experience. In addition, the Board intends to a make a further appointment to the Board which will be a representative of Blofeld Investment Management (which currently holds 25.16 per cent. of the current issued share capital of Lamprell). The Board expects this appointment to provide additional relevant experience and skills to the Board.

Lamprell Renewables

Renewables Market Overview

The share of renewables in the global energy mix has been rising over the past decade, with the International Energy Agency forecasting an all-time high of 30 per cent. for 2021. Wind is set to demonstrate the highest growth in renewables generation with a 17 per cent. output increase from 2020. The trend is sent to accelerate in the near and medium term as in order to meet global climate change goals, the share of renewables in electricity generation would need to reach almost 50 per cent. by 2030.

It is anticipated that global offshore wind capacity will grow from approximately 33GW fully commissioned capacity as at the date of Announcement to in excess of 200GW by 2030. New annual installations are expected to surpass 20GW in 2025 and 30GW in 2030. The offshore wind market is expected to show an average annual growth rate of 18.6 per cent. in 2024 and 8.2 per cent in 2030. This is expected to be reflected in increased opportunities for the energy services industry as the industry matures to deliver larger scale and more complex projects.

Europe currently leads the offshore wind market accounting for over 70 per cent. of currently installed global capacity. The region is expected to maintain steady growth, with North America and Asia rapidly ramping up in the next decade. To date Lamprell has delivered over 100 foundations for UK's largest wind farms and, through this experience and gained expertise, it is well positioned to access opportunities in other rapidly growing geographies including the United States and Asia.

The rapid acceleration in installed capacity will command a shift in technology, requiring larger, more complex structures capable of operating in deeper water. To address this demand, the Group is reviewing a number of options of increasing its product market share. To date, the Group has focused on the serial fabrication of jacket foundations and transition pieces for deep water wind farms and is now looking to access floating as well as fixed foundation market, with projects worth over half a billion US dollars already in the bid pipeline. It is also positioning to bid for high voltage direct current ("HVDC") and high voltage alternating current ("HVAC") platforms in the medium term whilst assessing ways of participating in the offshore hydrogen supply chain. 

Lamprell Renewables Opportunity

The renewables business unit comprises the Group's existing projects to build WTG foundations for offshore wind projects. Since 2016, Lamprell has established a track record as one of the leading fabricators of WTG foundations to the renewables industry, built on a 40-year track record in its traditional oil and gas market. Since 2017, the Group has built over 100 WTG foundations for the UK's flagship offshore wind farms, with serial production for renewables projects becoming a core area of expertise and differentiation for Lamprell.

Since winning its first major renewables foundations project in 2016 (East Anglia One), the Group has been awarded two further contracts of similar scope: Moray East and Seagreen. Working on each of these projects has enabled the Group to evolve and develop a better understanding of serial fabrication for offshore wind and deliver improvements in cost, efficiency and quality. The Board believes that this has enabled Lamprell to develop its reputational standing in the industry as a high quality, safe, reliable and cost competitive contractor. The Board believes that, in light of its extensive recent experience, the Group is now well placed to capitalise upon the opportunities available to it in the renewables sector. Renewables opportunities currently make up $3.9 billion (approximately 51 per cent.) of the Group's bid pipeline. Since January 2021, the Group added over $1 billion of new offshore wind opportunities to its pipeline, recording a clear increase in the scale and value of individual projects coming to the market. The Board believes that the Group's target addressable market in the renewable sector in the next ten years has the potential to increase to up to $50 billion of opportunities and by 2022 could add in excess of $6 billion to the Group's bid pipeline.

Much of the recent pipeline increase is attributable to US renewables and floating wind projects. The Group has taken proactive steps for early engagement with potential US renewables partners to capture the rapidly developing market through its distinctive experience with UK offshore wind projects.

The current bid pipeline represents only a fraction of the opportunity set in the global offshore renewables market and Lamprell expects to see continued strong growth in renewables opportunities in the coming years, driven by the rapid expansion in core markets and by the commercialisation of floating wind, which is expected to provide significant opportunities mid-decade onwards. Lamprell's experience, expertise and central geographic location provides the Group with a strong competitive position to access the expansion of offshore wind globally, an industry forecast to require over $300 billion of capex in the next five years alone.

Lamprell Renewables will also explore opportunities for the Group to collaborate with others in the UAE and in its core geographic markets in order to increase its production capacity and support the local content objectives of its clients, as well as to move up the renewables value chain over time, consistent with the Group's strategic focus on EPC(I). As such, Lamprell may consider investing alongside others in both the UK and US and set up final completion and/or integration facilities in locations where there is certainty of award.

Balance sheet strength is critical for Lamprell's ability to take on larger fabrication and higher value projects.  The Directors believe it will need to deploy binding bond facilities to support the higher value contracts and use appropriate working capital facilities to support the execution and significant cash flows in these large lump sum contracts, which are expected to have values of significantly in excess of $200 million. As noted above, the Directors expect to continue to keep under review the optimal capital structure of the Group with a view to ensuring it is well-placed to satisfy the demands of its renewed strategic potential.

Lamprell Oil and Gas

Oil and Gas Market Overview

Crude oil prices have historically been volatile, dependent upon the balance between supply and demand and particularly sensitive to OPEC production levels and, in recent years, the rapid increase in US shale oil output. Oil prices collapsed in 2014, causing a general distress in the oil and gas industry. Prices and activity had not yet recovered when the COVID-19 pandemic broke out spiralling energy demand into new lows. Dated Brent crude oil averaged $41.96 per barrel in 2020, compared to $64.30 per barrel in 2019, and reached a twenty year low in April that year. Since that low point, oil prices began to recover through the remainder of 2020 and into the first half of 2021. In October 2021, the natural gas crisis propelled brent crude prices to above $80/bbl, the highest level in three years with further upward pressure forecast on the back of the widening supply demand deficit. The Board believes the accelerated oil price recovery may translate into increased capital expenditure in the medium term, reversing some of the negative effects of underinvestment in exploration and production for the oilfield services supply chain.

Longer term, even though the energy transition to low-carbon is well underway, it is expected that the hydrocarbon industry will remain an integral part of the energy supply for many years, and the Group's core customers Saudi Aramco and Abu Dhabi National Oil Company ("ADNOC") are expected to continue to invest and build facilities in the Middle East for a few decades, driven by low cost of production and the sale of oil and gas products underpinning their respective national government spending programmes. ADNOC previously announced a five-year capital expenditure programme in excess of $120 billion, with Saudi Aramco's 2021 spend expected to be approximately $35 billion.

Lamprell Oil and Gas Opportunity

Lamprell Oil and Gas recognises the continuing role of hydrocarbon development during the energy transition and seeks to build on its core relationships with low cost oil producers in the MENA region. The oil and gas business comprises the Group's traditional activities in rig fabrication, rig refurbishment, onshore EPC and other services, as well as the Group's planned expansion into offshore EPCI through its position on Saudi Aramco's highly selective LTA programme for offshore production maintenance. Central to the Group's oil and gas strategy is Lamprell's differentiated positions in the UAE and Saudi Arabia, where Lamprell operates in close proximity to key players in the industry and the Group's core customers.

Lamprell is committed to the IMI joint venture (where Lamprell is a 20 per cent. shareholder alongside Saudi Aramco, which owns approximately 40 per cent. of the shares in the joint venture), which provided the Group with a contract for two newbuild jackup rigs in 2020 as well as an engineering design contract for further rigs, supporting its commitment to fleet expansion over the next decade. An additional 18 rigs are contractually committed to IMI through an offtake agreement with Saudi Aramco. This will continue to underpin the commitment of $140 million that Lamprell is making in IMI (out of which $85 million have already been invested) to complete the construction of the yard in Saudi Arabia's Ras Al-Khair, which and is expected to start commissioning in 2022. Once completed, the Ras Al-Khair yard is expected to be able to construct four offshore rigs per year.

The IMI investment has provided the Group with a highly competitive and differentiated position in the Saudi Arabia through the Group's strong "In Kingdom Total Value Add" score and has helped facilitate its acceptance as one of the few partners on Saudi Aramco's LTA programme. The programme covers engineering, procurement, construction, transportation and installation contracts to support Saudi Aramco's annual offshore production maintenance. In 2021 the Group was awarded two contracts as part of the programme, where Lamprell is taking on the full scope of transportation and installation for this project and intends to do the same for future projects awarded under Saudi Aramco's LTA programme, which in turn is expected to maximise the Group's revenue and income opportunities over and above its traditional fabrication scope. Lamprell intends to continue to bid extensively for projects under Saudi Aramco's LTA programme and whilst participation in Saudi Aramco's LTA programme does not guarantee a project will be won, it does increase the Group's bidding pipeline by approximately $3 billion per year. As the Group intends to take on larger revenue opportunities, the Group would need to support the contracts with appropriate performance bonds as well as use an appropriate working capital facility to manage the cash flows for lump sum work.

The Group also maintains strong relationships with its customers in the UAE, where the Group has over 40 years' experience delivering high quality projects to the energy industry. The Group's UAE strategy is underpinned by its strong "In Country Value" score, which the Board believes is critical to its ability to continue to win work from key customers including ADNOC, particularly in the context of lucrative rig refurbishment opportunities.

Oil and gas remains a significant part of the Group's bidding pipeline in 2021, with oil and gas opportunities making up $3.7 billion of opportunities (approximately 49 per cent. of the Group's bid pipeline). Multiple CRPO packages have been added in October 2021 and higher specification upgrade and refurbishment projects are starting to enter the pipeline as the industry accelerates spending. With the majority of these opportunities stemming from Saudi Arabia, Lamprell is currently assessing a number of options to maximise the value of the Oil and Gas business unit by pivoting towards a stronger presence in Saudi Arabia, including a potential listing on Tadawul, the Saudi Stock Exchange. 

Lamprell Digital

Digital Market Overview

Digital technologies are rapidly transforming the energy industry. The internet of things, machine learning and artificial intelligence have the potential to drive significant cost efficiencies, provide new revenue opportunities and transform business models. Recent research suggests that digitising asset information and interactions can provide up to 30 per cent. improvement in cost, making the provision of digital solutions a core requirement for the energy services supply chain.

The oil and gas industry lags significantly behind many other industries in the adoption of digitisation, but digital spend in upstream oil and gas and the wind market is expected to grow faster than their capital expenditure. The COVID-19 pandemic with its increased remote working restrictions will also accelerate this growth. In 2023, a spend of approximately $23 billion is expected within the areas of non-destructive testing ($12 billion) and in asset integrity management ($11 billion) for which our solutions are being developed.

Lamprell Digital Opportunity

The Group's digital ventures provide further opportunities for the Group to address demand for data integration in the energy industry. The Group benefits from decades of experience in asset fabrication and is well-placed to translate this expertise into data-driven solutions aimed at delivering significant improvement in oil and gas and renewables asset efficiencies.  Lamprell Digital encompasses a dual focus approach, aiming to develop solutions that enhance its own operations and revenue generating solutions that enable its clients to achieve cost efficiencies. The Group has successfully implemented a range of technologies in the Group's yards, such as the deployment of adaptive robotic welding, facial recognition technology and a proprietary digital quality management system.

In 2021 the Group entered a joint venture with Injazat/G42, which is considered to be one of the region's leading digital developer backed by Mubadala Investment Company. The joint venture, AiFlux, will focus on incubating a number of ventures in asset integrity, engineering design, smart non-destructive testing, predictive maintenance. The Group also signed an exclusive distribution agreement with Akselos, a leading developer of simulation technologies, which the Group considers as strategically important to be able to benefit from the UAE's government's drive to turn the country into a leading hub for digital innovation.

Lamprell Digital will continue to advance proprietary technologies for industrial application, in areas such as asset integrity, engineering design, smart non-destructive testing, predictive maintenance and robotics with the aim of improving productivity and execution efficiency, as well as the safety and risk profiles of projects. By combining the Group's in-depth knowledge of engineering and construction processes with cutting edge technology development, Lamprell Digital aims to provide a differentiated digital offer applicable to clients in its core markets and beyond. These technologies are at the early stage of commercialisation with proven application in the Group's yards. The next step is to complete the commercialisation of these technologies through further investment alongside the Group's partners Injazat/G42 and Akselos so that the Group can expand their use in its own yards and to market and sell these products and services to third parties. The Group's intends to progressively increase its digital product offering based on strategic relationships with major customers and aiming to satisfy specific needs from such customers or the energy industry more broadly.

Current trading and prospects

Lamprell published its results for the six months ended 30 June 2021 on 28 October 2021 and made the following statement regarding its current trading and prospects:

Lamprell continues to see strongly improving fundamentals across all of its end markets and its current bid pipeline is around $7.6 billion (31 December 2020: $6 billion). In renewables, Lamprell has seen a sharp increase in bidding opportunities since the beginning of the year - approximately $1.6 billion has been added to the pipeline in the period from January to September 2021, and, for the first time since diversifying into this growing industry, the proportion of renewables opportunities in the Group's pipeline is higher than in oil and gas. The oil and gas pipeline is also made up from $3.7 billion of high quality active bids, mostly from its key target market of Saudi Arabia. Bidding activity is at the highest level since Lamprell took a new strategic direction five years ago. Lamprell expects decisions on some of the projects in the pipeline to commence in Q4 2021. These are likely to be preliminary awards awaiting final investment decisions in 2022.

Secured revenue for 2021 is approximately $400 million, a reduction on previously reported figures due to project scheduling impacts of COVID-19 and the resulting rescheduling of payments into 2022. Backlog for 2022 is currently $217 million.

The impact of COVID-19 and the associated supply chain bottlenecks and the minimal margins on the IMI rig projects caused Lamprell to incur negative EBITDA in 1H 2021. Lamprell expects EBITDA for 2H 2021 to be broadly breakeven and therefore that full year EBITDA will be held at a similar level reported in H1 2021. 

Much of its current backlog consists of minimal and low margin projects, which benefited the Group's liquidity by monetising significant equipment held in inventory and provided an entry into strategic markets. As the Company looks at the continuously growing pipeline in renewables and a stronger footing in Saudi Arabia, Lamprell expects to see a noticeable improvement in margin performance with new contract awards into 2022 and beyond. Lamprell will continue to demonstrate uncompromising cost discipline and in particular we will introduce further process and throughput improvements in renewables fabrication that we believe will translate into an improved financial performance for the Group.

Use of proceeds

It is intended that the net proceeds of the Capital Raising will be applied by the Group for general corporate purposes, allowing the Group to:

·    demonstrate its increased financial capacity to clients, providing a competitive advantage in the markets in which it operates where contractual counterparties and suppliers are increasingly scrutinising their partners' balance sheets;

·    meet certain of the near-term working capital requirements of the IMI rig projects; and

·    take advantage of strategic growth opportunities in the Group's core business units.

The Board believes that the Capital Raising, together with the additional $45 million of financing expected to be available under the IMI Rig Facility will build a more resilient and more appropriate balance sheet and provide additional liquidity headroom, which the Board expects will, in turn, allow the Group to seek to deliver on its growth strategy around the Group's three core business units.

Details of the Placing

Investec is acting as Global Co-ordinator and Sole Bookrunner in connection with the Placing. The Placing is subject to the terms and conditions set out in the Appendix to this Announcement. Investec will commence the Bookbuild in respect of the Placing immediately following the release of this Announcement. The timing of the closing of the Bookbuild and allocations are at the absolute discretion of Investec and the Company.

In accordance with the Placing Agreement, Investec has agreed to use reasonable endeavours to procure, as agent for the Company, Placees to subscribe for the Placing Shares at the Placing Price.

Subject to completion of the Bookbuild and entry into a pricing agreement with the Company, Investec have agreed to, to the extent that any Placee procured through the Bookbuild defaults in paying the Placing Price in respect of any Placing Shares allocated to it, to subscribe for such Placing Shares at the Placing Price as principal, on the terms and subject to the conditions in the Placing Agreement.

The Placing Price of 32.0 pence per share represents a discount of approximately 6.5 per cent. to the volume weighted average of the Company's Ordinary Shares in the 20 trading days prior to 28 October 2021 (being the last Business Day prior to the announcement of the Capital Raising). The Placing Price (and the discount) has been set by the Directors following their assessment of the prevailing market conditions and demand for the New Ordinary Shares. The Board, having taken appropriate advice from its advisors, believes that the Placing Price (including the discount) is appropriate in the circumstances.

The Company acknowledges that it is seeking to issue the New Ordinary Shares on a non-pre-emptive basis and therefore consulted where possible with the Company's major shareholders ahead of the announcement of the Capital Raising. The Directors have concluded that the Capital Raising is in the best interests of Shareholders as a whole as the structure of the Capital Raising minimises cost, time to completion and use of management time in a period of significant balance sheet uncertainty for the Group.

Potential related party transactions

Certain shareholders of the Company have indicated a possible intention to participate in the Capital Raising, although no binding commitments have been received. By virtue of such shareholders' existing substantial shareholdings or directorships in the Company, actual commitments (if any) may constitute related party transactions (or smaller related party transactions) depending on the size of the participation of the relevant shareholder (the "Potential Related Party Transactions"). Further details of any related party transactions will be set out in the Placing Results Announcement (as defined below).

Importance of vote

Completion of the Capital Raising is conditional and dependent upon, amongst other things, Admission taking place, which is in turn conditional and dependent upon, amongst other things, the Resolutions being duly approved by the Shareholders entitled to vote.

On 29 June 2021, the Group published its audited consolidated financial statements for the year ended 31 December 2020 and announced details of a requirement for the Group to complete a new debt and/or equity funding arrangement of $120 million to $150 million by the end of September 2021 in order to maintain sufficient liquidity to continue trading. The auditor's report on the Group's audited consolidated financial statements was unqualified, but contained a material uncertainty in respect of going concern to which the auditor drew attention by way of emphasis without modifying their report.

The Group subsequently announced on 31 August 2021 that it was in detailed discussions with three regional banks on $90 million of credit agency backed working capital facilities for the completion of the two IMI rigs, and that it was evaluating alternative ways of monetising existing assets and investments to minimise the size of any potential equity raise.

On 28 October 2021, the Company announced that it had secured the IMI Rig Facility. The IMI Rig Facility, drawdown of which is conditional upon, amongst other things, completion of the Capital Raising, is expected to reduce the severity of the Group's short term liquidity constraints. However, unless and until the Second Tranche is secured, the Project Finance Facilities will represent less than the $90 million anticipated at the time of publication of the Group's audited consolidated financial statements for the year ended 31 December 2020. Further, there continue to be significant capital requirements to enable the Group to execute its current projects and support future strategic investment. The Company is therefore proposing to raise gross proceeds of approximately $30.1 million (£21.9 million) pursuant to the Capital Raising to strengthen the Group's balance sheet and provide access to strategic opportunities in its addressable markets. Completion of the Capital Raising is conditional and dependent upon, amongst other things, Admission taking place. The Board believes that if the Capital Raising completes and the Second Tranche becomes available as anticipated, the Group will have a stronger platform from which to seek to deliver its "Lamprell Reimagined" strategy.

If the Resolutions are not passed at the Extraordinary General Meeting (as defined below) and the Capital Raising does not proceed, the Company's Project Finance Facilities will not be available and the Group will not have sufficient working capital for its present requirements, that is, for at least 12 months from the date of publication of Announcement. Shareholders are therefore asked to vote in favour of the Resolutions at the Extraordinary General Meeting.

The Group's projections indicate that on a "reasonable worst case" scenario, if the Capital Raising does not proceed such that the Project Finance Facilities do not become available, the Group would experience a working capital shortfall of $165 million in May 2022. Even on a "base case" scenario (which reflects current expectations of future trading), if the Capital Raising does not proceed, the Group would experience a working capital shortfall of $120 million in February 2022. In these circumstances, the Group would need to take various mitigating actions in the period up to such dates to ensure that it has sufficient liquidity to continue to fund its operations. Such mitigating actions, which may need to be severe, are likely to include: (i) seeking to negotiate accelerated milestone payments with key contractual counterparties, in particular in relation to the two IMI rigs; (ii) seeking to secure alternative equity funding; (iii) selective disposals of assets; (iv) further deferrals of creditor payments, (v) delaying planned contributions to the Group's IMI joint venture, (vi) deferring implementation of the "Lamprell Reimagined" strategy, and/or (vii) other cost-saving measures such as deferring capital expenditure and cutting overheads.

Should these circumstances arise, the Board would look to take all such actions that it considers are appropriate and in the best interests of the Group to ensure it has sufficient liquidity to continue to fund its operations and believes that, if required, it is likely that the Group could implement one or more of such mitigating actions at the required scale and within the necessary timeframe to limit the effects of not proceeding with the Capital Raising. However, in order to mitigate the effects of not proceeding with the Capital Raising to the full extent, the Group would be dependent upon agreements being reached with third parties, which is ultimately outside of its control. If the Capital Raising does not proceed (such that the Project Finance Facilities do not become available to the Group) and sufficient mitigating actions cannot be carried out within the requisite timeframe, the Group's "reasonable worst case" and "base case" projections indicate that the Group would not have sufficient liquidity to continue to fund its operations beyond May 2022 and February 2022, respectively. The Group would therefore be dependent upon the reaction of key suppliers, employees and creditors, which is outside of the Group's control and gives rise to a significant risk that the Group would be unable to meet its contractual obligations as they fall due, which could ultimately result in the Group being forced into bankruptcy or liquidation.

If the Resolutions are not passed at the Extraordinary General Meeting (as defined below), then the Capital Raising will not proceed and there will be severe adverse implications for the Group as outlined above, including ultimately that the Group may enter administration or become subject to other insolvency proceedings, and Shareholders may lose all or a substantial portion of their investment.

The Circular will, following publication, be sent to shareholders and made available on the Company's website www.lamprell.com.

Application for Admission

Application will be made for the New Ordinary Shares to be admitted to listing on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that admission of the New Ordinary Shares will become effective and dealings in the New Ordinary Shares will commence at 8.00 a.m. on or around 25 November 2021 ("Admission").

The New Ordinary Shares proposed to be issued pursuant to the Capital Raising will, on Admission, rank pari passu in all respects with the existing Ordinary Shares and will rank in full for all dividends and other distributions thereafter declared, made or paid on the share capital of the Company.

Directors' participation in the Capital Raising

Certain directors have indicated they wish to subscribe for New Ordinary Shares for an aggregate number of 445,000 New Ordinary Shares.

Important Notice

Members of the public are not entitled to participate in the Capital Raising.

No prospectus has been or will be submitted to the FCA (or any other authority) in relation to the Capital Raising or Admission and no such prospectus is required (in accordance with the Prospectus Regulation) to be published.

Circular and Extraordinary General Meeting

Completion of the Capital Raising is conditional upon, inter alia, the approval by Shareholders of certain resolutions to be proposed at a general meeting of the Company (the "Extraordinary General Meeting"). Notice of the Extraordinary General Meeting will be set out in the Circular.

Risk factors

Your attention is drawn to the risk factors set out in Appendix 1 to this Announcement.

IMPORTANT NOTICES

Neither this Announcement nor any copy of it, nor the information contained in it, is for publication, release, transmission, distribution or forwarding, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction in which publication, release or distribution would be unlawful (or to any persons in any of those jurisdictions), subject to certain limited exceptions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.

 

The Placing Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. Subject to certain exceptions, the Placing Shares are being offered and sold only outside of the United States in "offshore transactions" within the meaning of, and in accordance with, Regulation S under the 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. The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of any proposed offering of the Placing Shares, or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

 

This Announcement is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended ("FSMA") by, a person authorised under FSMA. This Announcement is being distributed and communicated to persons in the United Kingdom only in circumstances in which section 21(1) of FSMA does not apply.

 

Placees' commitments will therefore be made solely on the basis of this Announcement and the information set out in the placing results announcement expected to be published by the Company on a Regulatory Information Service on or around 29 October 2021 confirming the results of the Placing following completion of the Bookbuild (the "Placing Results Announcement" and, together with this Announcement (the "Disclosure Package") and the terms and conditions set out in the Appendix to this Announcement. No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the EU Prospectus Regulation and the UK Prospectus Regulation) to be published.

 

Members of the public are not eligible to take part in the placing. All offers of the Placing Shares in the European Economic Area will be made pursuant to an exemption under the EU Prospectus Regulation and the UK Prospectus Regulation from the requirement to produce a prospectus.

 

This Announcement is for information purposes only and are directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and are: (a) if in a member state of the European Economic Area ("EEA"), qualified investors ("EU Qualified Investors") within the meaning of Article 2(e) of Regulation (EU) 2017/1129 (as supplemented by Commission Delegated Regulation (EU) 2019/980 and Commission Delegated Regulation (EU) 2019/979 (the "EU Prospectus Regulation"); or (b) if in the United Kingdom who are qualified investors within the meaning of Article 2(e) of the EU Prospectus Regulation as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 as amended (the "UK Prospectus Regulation") and who are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, (the "Order"); (ii) persons who are high net worth companies, unincorporated associations and other persons falling within article 49(2)(a) to (d) of the Order (only where the conditions contained in those articles have been, or will at the relevant time be, satisfied); or (iii) persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons"); (c) persons in Switzerland or residents of Switzerland (i) who are "professional clients" (the "Swiss Qualified Investors") as defined in article 4 paragraph 3 of the Federal Act of Financial Services of 15 June 2018 ("FinSA").

 

 

This Announcement must not be acted on or relied on by persons in a member state of the EEA who are not EU Qualified Investors or by persons in the United Kingdom 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, and will be engaged in only with, EU Qualified Investors and/or Relevant Persons (as applicable). This Announcement does not itself constitute an offer for sale or subscription of any securities in the Company.

 

This Announcement has been issued by, and the Disclosure Package will be issued by, and each of them are the sole responsibility of, the Company. No responsibility or liability is or will be accepted by, and no undertaking, representation or warranty or other assurance, express or implied, is or will be made or given by Investec, or by any of its affiliates or by any of its or their respective partners, directors, officers, employees, advisers or consultants as to, or in relation to, the accuracy, fairness or completeness of the information or opinions contained in this Announcement or to be contained in the Disclosure Package or any other written or oral information made available to or publicly available to any interested person or its advisers, and any liability therefore is expressly disclaimed. The information in this Announcement is subject to change.

 

Investec, which is authorised by the Prudential Regulatory Authority ("PRA") and regulated in the UK by the PRA and the FCA, is acting as Global Co-ordinator and Sole Bookrunner to the Company in connection with the Capital Raising and as Sponsor to the Company in connection with the Potential Related Party Transactions (if required) only. Investec is acting exclusively for the Company and no one else in connection with the Capital Raising the Potential Related Party Transactions (if required). Investec will not regard any other person as a customer or client in connection with the Capital Raising and the Potential Related Party Transactions (if required), and will not be responsible to any such person for providing the protections afforded to its customers or clients or for the giving of advice, in each case, in relation to the Potential Related Party transactions (if required), Capital Raising or Admission or any transaction, matters or arrangements referred to herein.

 

None of the information in this Announcement and/or the Disclosure Package when issued has been or will be, as applicable, independently verified or approved by Investec or any of its affiliates or any of its or their respective partners, directors, officers, employees, advisers or consultants. Save for any responsibilities or liabilities, if any, imposed on Investec by FSMA or by the regulatory regime established under it, no responsibility or liability whatsoever whether arising in tort, contract or otherwise, is accepted by Investec or any of its affiliates or any of its or their respective partners, directors, officers, employees, advisers or consultants whatsoever for the contents of the information contained in this Announcement and/or the Disclosure Package (including, but not limited to, any errors, omissions or inaccuracies in the information or any opinions) or for any other statement made or purported to be made by or on behalf of Investec or any of their respective affiliates or any of its or their respective partners, directors, officers, employees, advisers or consultants in connection with the Company, the New Ordinary Shares, the Capital Raising or the Potential Related Party Transactions (if required) or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this Announcement and/or the Disclosure Package or its contents or otherwise in connection with this Announcement and/or the Disclosure Package or from any acts or omissions of the Company in relation to the Capital Raising. Investec and its affiliates or any of its or their respective, directors, officers, employees, advisers and consultants accordingly disclaim all and any responsibility and liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) in respect of any statements or other information contained in this Announcement and/or the Disclosure Package and no representation or warranty, express or implied, is made by Investec or any of its affiliates or any of its or their partners, directors, officers, employees, advisers or consultants as to the accuracy, fairness, completeness or sufficiency of the information contained in this Announcement and/or the Disclosure Package.

 

In connection with the Placing, Investec and any of its affiliates may take up a portion of the Placing Shares in the Placing as a principal position and in that capacity may retain, purchase, sell, offer to sell for the own accounts or otherwise deal for their own account in such Placing Shares and other securities of the Company or related investments in connection with the Placing or otherwise. Accordingly, references in this Announcement to Placing Shares being offered, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or acquisition, placing or dealing by, Investec and any of its affiliates acting in such capacity. In addition, Investec and any of their affiliates may enter into financing arrangements (including swaps, warrants or contracts for difference) with investors in connection with which Investec and any of their respective affiliates may from time to time acquire, hold or dispose of such securities of the Company, including the Placing Shares. Investec does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

 

This Announcement and the Disclosure Package contains (or may contain) certain forward-looking statements with respect to the Company and certain of its goals and expectations relating to its future financial condition and performance which involve a number of risks and uncertainties. No forward-looking statement is a guarantee of future performance and actual results could differ materially from those contained in any forward-looking statements. All statements, other than statements of historical facts, contained in this Announcement, including statements regarding the Group's future financial position, business strategy and plans, business model and approach and objectives of management for future operations, are forward-looking statements. Generally, the forward-looking statements in this Announcement use words such as "aim", "anticipate", "target", "expect", "estimate", "plan", "goal", "believe", "will", "may", "could", "should", "future", "intend", "opportunity", "potential", "project", "seek" and other words having a similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of changes in interest rates and foreign exchange rates, changes in legislation, changes in customer habits and other factors outside the control of the Company, that may cause actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements contained in this Announcement are based upon information available to the directors at the date of this Announcement and the publication of this Announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date. The forward-looking statements in this Announcement are based on the relevant directors' beliefs and assumptions and information only as of the date of this Announcement, and the forward-looking events discussed in this Announcement might not occur. Accordingly, Shareholders should not place any reliance on any forward-looking statements. Except as required by the FCA, the London Stock Exchange, the Listing Rules, the Market Abuse Regulation, the Disclosure Guidance and Transparency Rules or other applicable law or regulation, neither the Directors nor Investec undertakes any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future earnings or otherwise.

 

Recipients of this Announcement and/or the Disclosure Package, when issued, who are considering acquiring Placing Shares pursuant to the Placing are reminded that they should conduct their own investigation, evaluation and analysis of the business, data and property described in this Announcement and/or the Disclosure Package. The price and value of securities can go down as well as up and past performance is not a guide to future performance. The contents of this Announcement and/or the Disclosure Package, when issued, are not to be construed as legal, business, financial or tax advice. Each investor should consult with his or her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice. Investing in the Placing Shares involves a substantial degree of risk. The contents of this Announcement have not been reviewed by any regulatory authority in the United Kingdom or elsewhere. Each Recipient or prospective Placee is advised to exercise caution in relation to the Capital Raising.

 

No statement in this Announcement or the Disclosure Package, when issued, is intended to be a profit forecast or estimate, and no statement in this Announcement or the Disclosure Package, when issued, 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.

 

References in this Announcement or in the Disclosure Package, when issued, to other reports or materials, such as a website address, have been provided to direct the reader to other sources of information on the Company which may be of interest. 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 and/or the Disclosure Package.

 

The Placing Shares to be issued pursuant to the Placing and the Subscription Shares to be issued pursuant to the Subscription will not be admitted to trading on any stock exchange other than the London Stock Exchange's main market for listed securities.

 

Information to Distributors

 

THE DISTRIBUTION OF THIS ANNOUNCEMENT AND THE OFFERING OF THE PLACING SHARES IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. NO ACTION HAS BEEN TAKEN BY THE COMPANY, INVESTEC OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE PLACING SHARES OR POSSESSION OR DISTRIBUTION OF THIS ANNOUNCEMENT OR ANY OTHER OFFERING OR PUBLICITY MATERIAL RELATING TO THE PLACING SHARES IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT COMES ARE REQUIRED BY THE COMPANY AND INVESTEC TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, SUCH RESTRICTIONS.

 

Persons distributing this Announcement must satisfy themselves that it is lawful to do so. Persons (including without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this Announcement (or any part thereof) should seek appropriate advice before taking any action.

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

 

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

 

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

 

UK Product Governance

 

Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any 'manufacturer' (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in Chapter 3 of the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all permitted distribution channels (the "UK target market assessment"). Notwithstanding the UK target market assessment, 'distributors' (for the purposes of the UK Product Governance Requirements) should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Placing Shares offer no guaranteed income and no capital protection; and an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The UK target market assessment is without prejudice to any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the UK target market assessment, Investec will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the UK target market assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapters 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase or take any other action whatsoever with respect to the Placing Shares.

 

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

 

Market Abuse Regulation

This Announcement contains inside information for the purposes of EU MAR and UK MAR (together, "MAR"). In addition, market soundings (as defined in MAR) were taken in respect of the matters contained in this Announcement, with the result that certain persons became aware of such inside information as permitted by MAR. That inside information is set out in this Announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of both EU MAR and UK MAR. Upon the publication of this Announcement, the inside information is now considered to be in the public domain and such persons shall therefore cease to be in possession of inside information in relation to the Company and its securities.

 

APPENDIX 1: TERMS AND CONDITIONS OF THE PLACING

Terms and Conditions - Important Information for Placees Only Regarding the Placing

THIS ANNOUNCEMENT (TOGETHER WITH ITS APPENDICES, THE "ANNOUNCEMENT") AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, OR ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. ALL OFFERS OF THE PLACING SHARES IN THE EUROPEAN ECONOMIC AREA ("EEA") WILL BE MADE PURSUANT TO AN EXEMPTION UNDER THE EU PROSPECTUS REGULATION (AS DEFINED BELOW) AND THE UK PROSPECTUS REGULATION (AS APPLICABLE) FROM THE REQUIREMENT TO PRODUCE A PROSPECTUS.

THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EEA, QUALIFIED INVESTORS ("EU QUALIFIED INVESTORS") WITHIN THE MEANING OF ARTICLE 2(E) OF REGULATION (EU) 2017/1129 (AS SUPPLEMENTED BY COMMISSION DELEGATED REGULATION (EU) 2019/980 AND COMMISSION DELEGATED REGULATION (EU) 2019/979 (THE "EU PROSPECTUS REGULATION"); OR (B) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF THE EU PROSPECTUS REGULATION AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED (THE "UK PROSPECTUS REGULATION") AND WHO ARE (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"), (II) PERSONS WHO ARE HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS AND OTHER PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER (ONLY WHERE THE CONDITIONS CONTAINED IN THOSE ARTICLES HAVE BEEN, OR WILL AT THE RELEVANT TIME BE, SATISFIED), OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"); OR (C) IF IN SWITZERLAND PROFESSIONAL CLIENTS ("SWISS QUALIFIED INVESTOR") WITHIN THE MEANING OF ARTICLE 4 PARAGRAPH 3 OF THE FEDERAL ACT ON FINANCIAL SERVICES OF 15 JUNE 2018 ("FINSA").

THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. SUBJECT TO CERTAIN EXCEPTIONS, THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE OF THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE. The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of any proposed offering of the Placing Shares, or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States.

THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS IN A MEMBER STATE OF THE EEA WHO ARE NOT EU QUALIFIED INVESTORS OR BY PERSONS IN THE UNITED KINGDOM 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 AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY IN MEMBER STATES OF THE EEA TO EU QUALIFIED INVESTORS AND IN THE UNITED KINGDOM TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH EU QUALIFIED INVESTORS AND/OR RELEVANT PERSONS (AS APPLICABLE). THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE CONTENTS OF THIS ANNOUNCEMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN THE UNITED KINGDOM OR ELSEWHERE. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE PLACING. EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES.

Neither the Company nor Investec Bank plc ("Investec"), nor any of their respective affiliates, agents, directors, officers, consultants, employees or any person acting on its or their behalf, makes any representation or warranty (whether express or implied) to persons who are involved in and who choose to participate in the non-pre-emptive placing (the "Placees") of new ordinary shares in the capital of the Company (the "Placing") of nominal value of £0.05 each (the "Placing Shares") regarding an investment in the securities referred to in this Announcement under the laws applicable to such Placees. For the purpose of this Announcement, references to Investec shall also include Investec Europe Limited (trading as Investec Europe), acting as agent on behalf of Investec in certain jurisdictions in the EEA.

By participating in the Placing, Placees will be deemed to have read and understood this Announcement in its entirety and to be participating in the Placing on the terms and conditions, and to be providing the representations, warranties, acknowledgements and undertakings, contained in this Appendix. In particular, each Placee represents, warrants and acknowledges that:

(1)      if it is in the United Kingdom it is a Relevant Person, if it is in a member state of the EEA it is a EU Qualified Investor and if it is in Switzerland it is a Swiss Qualified Investor and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

(2)      it is and, at the time the Placing Shares are acquired, will be either (a) outside the United States and acquiring the Placing Shares in an "offshore transaction" in accordance with Regulation S under the Securities Act ("Regulation S") or (ii) a "qualified institutional buyer" ("QIB") as defined in Rule 144A under the Securities Act and a "Major US Institutional Investor" as defined in Rule 15a-6 under the United States Securities Exchange Act of 1934, as amended who has duly executed a US investor letter in the form provided to it and delivered the same to the Company and Investec;

(3)      if it is a financial intermediary, as that term is used in Article 5(1) of the EU Prospectus Regulation and the UK Prospectus Regulation, that it understands the resale and transfer restrictions set out in this Announcement and that any Placing Shares acquired by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA to EU Qualified Investors or in the United Kingdom to Relevant Persons, or in circumstances in which the prior consent of Investec has been given to each such proposed offer or resale; and

(4)      the Company and Investec will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and agreements.

The Placing Shares are, subject to certain exceptions (in which case the investor will be required to sign a US investor letter in a form satisfactory to the Company and Investec), being offered and sold outside the United States in accordance with Regulation S under the Securities Act in an offshore transaction (as such term is defined in Regulation S under the Securities Act).

The distribution of this Announcement and the Placing or issue of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, Investec or any of its 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. Persons into whose possession this Announcement comes are required by the Company and Investec to inform themselves about and to observe any such restrictions. This Announcement may not be forwarded or distributed to any other person and the information contained therein may not be reproduced in any manner whatsoever. Any forwarding, distribution, dissemination, reproduction, or disclosure of this Announcement in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions. Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of the Announcement of which it forms part should seek appropriate advice before taking any action.

Bookbuild

Following this Announcement, Investec will commence a bookbuilding process (the "Bookbuild") to determine demand for participation in the Placing by Placees at a price of 32.0 pence per New Ordinary Share, as defined below (the "Placing Price"). No commissions will be paid to Placees or by Placees in respect of any Placing Shares. The book will open with immediate effect and will close at the discretion of the Company and Investec. Members of the public are not entitled to participate in the Placing. This Announcement gives details of the terms and conditions of, and the mechanics of participation in, the Placing.

Investec and the Company shall be entitled to effect the Placing by such alternative method as they may, in their absolute discretion, determine.

Details of the Placing Agreement and the Placing Shares

The Company and Investec have today entered into the Placing Agreement under which, subject to the terms and conditions set out therein, Investec has agreed to (i) use reasonable endeavours, as agent of the Company, to procure subscribers for the Placing Shares and (ii) to the extent that any Placee fails to pay the Placing Price in respect of any of the Placing Shares which have been allocated to it in the Placing, to subscribe for such Placing Shares as principal at the Placing Price. The final number of Placing Shares will be decided at the close of the Bookbuild following the execution of the pricing agreement by the Company and Investec (the "Pricing Agreement"). The timing of the closing of the book and allocations are at the discretion of the Company and Investec. Details of the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuild.

The Placing is conditional upon the Placing Agreement becoming unconditional in all respects, including, inter alia, Admission occurring not later than 8.00 a.m. (London time) on 25 November 2021 (or such later date as may be agreed between the Company and Investec), the execution of the Pricing Agreement, and the warranties in the Placing Agreement not being, in the opinion of Investec, untrue, inaccurate or misleading in any respect when made nor becoming untrue, inaccurate or misleading, save in any respect which, in the good faith opinion of Investec, is not material in the context of the Placing, by reference to the facts and circumstances existing at the time.

In conjunction with the Placing, certain directors of the Company intend to subscribe for new ordinary shares in the capital of the Company pursuant to the direct subscription with the Company (the "Subscription Shares", and together with the Placing Shares, the "New Ordinary Shares") at the Placing Price (the "Subscription").

The New Ordinary Shares will, when issued, be credited as fully paid and rank pari passu in all respects with the existing ordinary shares of £0.05 each in in the capital of the Company (the "Ordinary Shares") and will rank in full for all dividends and other distributions thereafter declared, made or paid on the share capital of the Company.

Together, the total number of Placing Shares and Subscription Shares will not exceed 68,345,313 New Ordinary Shares, representing approximately 19.99 per cent. of the Company's existing issued share capital. As part of the Placing, the Company has agreed with Investec that it will not, and will procure that no group company will, for a period of 90 days after the date of Admission, (i) enter into, or incur any obligation to make, any commitment or agreement, or put itself in a position where it is obliged to announce that any commitment or agreement may be entered into or made, which in either case is or might be material in the context of the Placing or (ii) provide any public statement or commentary regarding the Placing Shares, the Placing, the Subscription or any potential Related Party Transaction (as defined below) or make any other announcement through a Regulatory Information Service ("RIS") relating to the Group or its business or any event, which in either case is or might be material in the context of the Placing or any potential Related Party Transaction, in each case without the prior written approval of Investec.

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

The Placing, including the issue and allotment of the New Ordinary Shares by the Company, requires the approval by Shareholders of the Company at the proposed extraordinary general meeting expected to be convened for 23 November 2021 (the "Extraordinary General Meeting"). A circular containing, among other things, a notice convening the extraordinary general meeting (the "Notice of the Extraordinary General Meeting") and details of the resolutions to be proposed at the Extraordinary General Meeting (the "Resolutions") is intended to be published by the Company as soon as practicable following completion of the Bookbuild (the "Circular").

Applications for Admission

Applications will be made for the New Ordinary Shares to be admitted to the premium segment of the Official List of the Financial Conduct Authority ("FCA") and to trading on the main market for listed securities of the London Stock Exchange plc (the "Main Market"). Subject to the passing of the Resolutions at the Extraordinary General Meeting, it is expected that Admission will take place at 8.00 a.m. (London time) on 25 November 2021 (or such later date as may be agreed between the Company and Investec) and that dealings in the New Ordinary Shares will commence at that time.

Participation in, and principal terms of, the Placing

1.   Investec is acting as sole global co-ordinator, bookrunner and agent of the Company in connection with the Placing and as the Company's sponsor as required by the Listing Rules in connection with any potential related party transaction under Listing Rule 11 (the "Related Party Transaction"),and issue of the Circular. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Investec.

2.   Investec and its affiliates and/or their agents are each entitled to participate in the Placing as principal.

3.   The Placing shall be conducted by way of the Bookbuild to establish the number of Placing Shares to be allocated to Placees. The final number of the Placing Shares will be agreed between the Company and Investec following completion of the Bookbuild and the Placing Price will be payable to Investec by the Placees in respect of the Placing Shares allocated to them. The final number of Placing Shares to be issued will be announced by the Company on a RIS following completion of the Bookbuild.

4.   To bid in the Bookbuild, prospective Placees should communicate their bid by telephone and/or in writing to their usual sales contact at Investec. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Placing Price. Bids may also be scaled down by Investec on the basis referred to in paragraph 6 below.

5.   A bid in the Bookbuild will be made on the terms and subject to the conditions in this Appendix and will be legally binding on the Placee on behalf of which it is made and except with Investec's consent will not be capable of variation or revocation after the time at which it is submitted. Each prospective Placee's allocation in the Bookbuild ("Placing Participation") will be determined by the Company and Investec in their sole discretion. Their Placing Participation will be confirmed orally and/or via written correspondence by Investec as agent of the Company following close of the Bookbuild and a trade confirmation will be despatched thereafter. That oral and/or written confirmation from Investec constitutes an irrevocable legally binding commitment upon that person (who will at that point become a Placee) in favour of Investec and the Company 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.

6.   The Bookbuild will open with immediate effect on release of this Announcement and will close as soon thereafter as Investec determine. Allocations will be determined by Investec following agreement of the same with the Company. Investec may, in agreement with the Company, accept bids that are received after the Bookbuild has closed. Investec reserves the right to scale back the number of Placing Shares to be subscribed by any Placee in the event the Placing is oversubscribed. Investec also reserves the right not to accept offers for Placing Shares or to accept such offers in part rather than in whole.

7.   Each Placee also has an immediate, separate, irrevocable and binding obligation, owed to Investec, each as agent of the Company, to pay in cleared funds in Sterling at the relevant time in accordance with the requirements set out below under "Registration and Settlement", an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe and the Company has agreed to allot and issue to that Placee, conditional upon Admission becoming effective.

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

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

10.  All obligations under the Bookbuild and completion of the Placing will be subject to the fulfilment or (where applicable) waiver of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated by Investec on the basis referred to below under "Termination of the Placing Agreement". In the event that the Placing Agreement does not become unconditional in any respect or is terminated, the Placing will not proceed. 

11.  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, and is not subject to any further conditions or requirements other than those set out in this Announcement or Placing Agreement.

12.  To the fullest extent permissible by law, neither Investec nor the Company nor any of their affiliates, agents, directors, officers, consultants, employees nor any person acting on their behalf shall have any responsibility to liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise) in connection with the Placing, the Placing Shares or the Bookbuild. In particular, neither Investec nor any of its affiliates, agents, directors, officers, consultants or employees shall have any liability (including to the extent permissible by law, any fiduciary duties) in respect of Investec's conduct of the Bookbuild (including Investec entering or not entering into the Pricing Agreement) or of such alternative method of effecting the Placing as Investec and the Company may agree.

 

Conditions of the Placing

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

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

(a)      the New Debt Facility being in full force and effect, capable of drawdown subject only to completion of the placing and any outstanding conditions precedent to the New Debt Facility, and not being terminated, with each of the parties thereto being in full compliance with its obligations thereunder and no ground existing which constitutes (or with the effluxion of time will constitute) a ground on which such agreement may be terminated by either party thereto;

(b)      the Circular being formally approved by the FCA in accordance with the Listing Rules;

(c)      the posting of the Circular to the shareholders of the Company and such other persons (if any) entitled to receive the Notice of the Extraordinary General Meeting;

(d)      each of the warranties in the Placing Agreement not being, in the opinion of Investec, untrue, inaccurate or misleading save in any respect which, in the good faith opinion of Investec is not material in the context of the Placing, the Subscription and/or any potential Related Party Transaction, in each case when made nor becoming untrue, inaccurate or misleading in any respect by reference to the facts and circumstances existing at the time;

(e)        Investec and the Company entering into the Pricing Agreement;

(f)         the passing of the Resolutions without amendment at the Extraordinary General Meeting of the Company to be convened pursuant to the Notice of Extraordinary General Meeting and those Resolutions remaining in force;

(g)      the Company allotting, prior to and conditional only on Admission, the New Ordinary Shares; and

(h)      Admission taking place not later than 8.00 a.m. (London time) on 25 November 2021 or such later date and/or time as Investec may determine acting in good faith.

If (i) any of the conditions contained in the Placing Agreement have not been fulfilled or waived by Investec by the applicable time or date where specified (or such later time and/or date as the Company and Investec may agree), (ii) any of the conditions contained in the Placing Agreement becomes incapable of being satisfied or (iii) the Placing Agreement is terminated in accordance with their terms (as summarised below), the Placing will lapse and the Placees' rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

Investec may, in its absolute discretion and upon such terms as it thinks fit, waive fulfilment, in whole or in part, of any or all of the conditions in the Placing Agreement (to the extent permitted by law or regulations), other than the condition relating to Admission, by giving notice in writing to the Company. Any such waiver will not affect Placees' commitments as set out in this Announcement.

None of Investec, the Company or any other person shall have any liability whether in contract, tort or otherwise, to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally or for entering or not entering into the Pricing Agreement, and by participating in the Bookbuild and Placing each Placee agrees that any such decision is within the absolute discretion of Investec and the Company. Placees will have no rights against Investec, the Company or any of their respective members, directors or employees under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended) or otherwise. 

Termination of the Placing Agreement

Investec is entitled, at any time before Admission and in accordance with its terms, to terminate the Placing Agreement by giving notice to the Company if, inter alia:

(a)  any of the warranties given by the Company in the Placing Agreement are, in the opinion of Investec (acting in good faith), untrue, inaccurate or misleading in any respect when made or have become untrue, inaccurate or misleading in any respect by reference to the facts and circumstances existing from time to time in any respect which Investec considers to be material in the context of the Placing and/or Admission and/or any potential Related Party Transaction;

(b)  the Company breaches any of its obligations under the Placing Agreement which Investec considers (in good faith) to be material in the context of the Placing and/or Admission and/or any potential Related Party Transaction;

(c)  in the opinion of Investec (acting in good faith), any statement in this Announcement, the Placing Agreement, the Circular or the management presentation is or becomes untrue, inaccurate or misleading in any respect or any matter arising which would, if such documents were to be published at that time, constitute an omission from such documents (or any amendment or supplement to it) which in each case Investec considers to be material in the context of the Placing and/or Admission and/or any potential Related Party Transaction;

(d)  in the opinion of Investec (acting in good faith) there has been a material adverse change in or any development or event reasonably likely to involve a prospective material adverse change in or affecting, the operations, the condition (financial, operational, legal or otherwise) or the earnings, business affairs or business prospects of the Group taken as a whole, whether or not foreseeable as at the date of the Placing Agreement and whether or not arising in the ordinary course of business;

(e)  a significant change affecting any matter contained in the Circular or a significant new matter arising requiring a supplementary circular, in each case the effect of which Investec considers in its absolute discretion (acting in good faith and following consultation with the Company to the extent reasonably practicable) to be likely to have a material adverse effect on the financial or trading position of the business or prospects of the Group and/or be likely to prejudice Investec's name or reputation as a result of Investec continuing to act as the Company's sponsor under the Listing Rules or otherwise impair or operate to prevent Investec from complying with its legal and regulatory obligations, including (without limitation) any obligations owed to the FCA in its capacity as sponsor;

(f)   the cancellation or suspension by the FCA or the London Stock Exchange of trading in the Company's securities;

(g)  the failure by the Company to obtain Shareholder approval for the Resolutions at the General Meeting;

(h)  any of the applications for Admission are withdrawn or refused by the FCA or the London Stock Exchange; or

(i)   there has been: (i) the suspension of trading in securities generally on the London Stock Exchange, the New York Stock Exchange or any other securities exchange in the EEA, or trading being materially limited or minimum prices established on any such exchange; (ii) the declaration of a banking moratorium in London, any EEA member state or by the US federal or New York State authorities or any material disruption to commercial banking or securities settlement or clearance services in the US or the UK; (iii) any material adverse change, or development involving a prospective material adverse change, in national or international financial, economic, political, industrial or stock market conditions or currency exchange rates or exchange controls, or any incident of terrorism or outbreak or escalation of hostilities or any declaration by the UK or the US or the any EEA member state of a national emergency or war or any other calamity or crisis (including, without limitation, a significant escalation of any pandemic or epidemic) and whether or not foreseeable at the date of the Placing Agreement; or (v) any adverse change or prospective adverse change since the date of the Placing Agreement in UK taxation, in each case which (either singly or together with any other event referred to in this paragraph (i)) is such as to make it, in the good faith judgment of Investec impracticable or inadvisable to proceed with the Placing and/or Admission.

Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement and the Placing will not proceed.

By participating in the Placing, Placees agree that the exercise or non-exercise by Investec of any right of termination or any other discretion under the Placing Agreement, shall be within the Investec's absolute discretion and that it need not make any reference to Placees and that it and its affiliates, agents, members, directors, officers or employees shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

Lock-up

The Company has undertaken to Investec that, between the date of the Placing Agreement and 90 calendar days from the date of Admission, it will not (without the prior written consent of Investec) offer, issue, sell, pledge, contract to sell or issue or grant any Ordinary Shares or enter into certain transactions involving or relating to the Ordinary Shares, subject to certain customary carve-outs agreed between Investec and the Company.

By participating in the Placing, Placees agree that the exercise by Investec of any power to grant consent to waive the undertaking by the Company of a transaction which would otherwise be subject to the lock-up under the Placing Agreement shall be within the absolute discretion of Investec and that they need not make any reference to, or consultation with, Placees and that they shall have no liability to Placees whatsoever in connection with any such exercise of the power to grant consent.

No Prospectus

The Placing Shares and the Subscription Shares will not be offered in such a way as to require a prospectus in the United Kingdom or elsewhere. No offering document or prospectus (or equivalent document) has been or will be submitted to be approved by the FCA in relation to the Placing or the Subscription and Placees' commitments will be made solely on the basis of the information contained in this Announcement and any information publicly released to a RIS by or on behalf of the Company on or prior to the date of this Announcement and subject to any further terms set forth in the trade confirmation to be provided to the individual prospective Placees.

Each Placee, by accepting a participation in the Bookbuild and Placing, agrees that the content of this Announcement (including this Appendix) is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or Investec or any other person and neither the Company nor Investec nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. No Placee should consider any information in this Announcement to be legal, tax or business advice. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in participating in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and Settlement

The Placing

Settlement of transactions in the Placing Shares (ISIN: GB00B1CL5249) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"). Settlement will be on a delivery versus payment basis. However, in the event of any difficulties or delays in the admission of the Placing Shares to CREST or the use of CREST in relation to the Placing, the Company and Investec may agree that the Placing Shares should be issued in certificated form.

Investec and the Company reserve the right to require settlement for and delivery of the Placing Shares (or any portion thereof) to Placees in certificated form or by such other means as they deem necessary if delivery or settlement to Placees is not possible or practicable within the CREST system or would not be consistent with regulatory requirements in a Placee's jurisdiction.

Following the close of the Bookbuild, each Placee allocated Placing Shares in the Placing will be sent an trade confirmation stating the number of Placing Shares to be allocated to it at the Placing Price, the aggregate amount owed by such Placee to Investec and settlement instructions. Each such Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions as set out in the trade confirmation.

The Company will deliver such Placing Shares to the 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 to be delivered to its account as nominee for the Placees until settlement. 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.

General provisions

It is expected that settlement will be on 25 November 2021 in accordance with the instructions set out in the trade confirmation unless otherwise notified by Investec.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at prevailing market rates as determined by Investec.

Each Placee is deemed to agree that, if it does not comply with these obligations, Investec may without limiting any other rights it may have, and subject to the provisions of the Placing Agreement, sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for its own account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for and shall indemnify Investec on demand for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (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 undertakes in pursuance of such sale.

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that trade confirmation is forwarded 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 or United Kingdom stamp duty reserve tax. If there are any other circumstances in which any stamp duty or stamp duty reserve tax or other similar taxes (and/or any interest, fines or penalties relating thereto) is payable in respect of the allocation, allotment, issue or delivery of the Placing Shares (or for the avoidance of doubt if any stamp duty or stamp duty reserve tax is payable in connection with any subsequent transfer of or agreement to transfer Placing Shares), neither Investec nor the Company shall be responsible for the payment thereof.

Placees (or any nominee or other agent acting on behalf of a Placee) will not be entitled to receive any fee or commission in connection with the Placing from the Company or Investec.

Representations and Warranties

By participating in the Placing each Placee (and any person acting on such Placee's behalf) irrevocably represents, warrants, undertakes, acknowledges, confirms and agrees (as the case may be) with the Company and Investec, in each case as a fundamental term of its application for Placing Shares, that:

1.   it has carefully read and understood this Announcement in its entirety and that its acquisition of the Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained in this Announcement and undertakes not to redistribute or duplicate this Announcement and that it has not relied on any information, representation, warranties or statements other than those contained in the Announcement. It further agrees that these terms and conditions represent the whole and only agreement between each Placee, the Company and Investec in relation to each Placee's participation in the Placing and supersede any previous agreement between any of such parties in relation to such participation. Accordingly, all other terms, conditions, representations, warranties and other statements which would otherwise be implied (by law or otherwise) shall not form part of these terms and conditions. It agrees that neither of the Company or Investec, nor any of their respective officers or directors, will have any liability for any such other information or representation and irrevocably and unconditionally waives any rights it may have in respect of any such other information or representation;

2.   none of Investec, the Company nor any of their respective affiliates, agents, directors, officers, consultants or employees or any person acting on behalf of any of them has provided, nor will they provide, it with any material regarding the Placing Shares or the Company or any other person other than the information contained in this Announcement, including this Appendix; nor has it requested Investec or the Company, any of their affiliates or any person acting on behalf of any of them to provide it with any such material or information;

3.   the exercise by Investec of any right of termination or any right of waiver exercisable by Investec contained in the Placing Agreement including, without limitation, the right to terminate the Placing Agreement and/or to enter into or refrain from entering into the Pricing Agreement, is within the absolute discretion of Investec and Investec will not have any liability to any Placee whatsoever in connection with any decision to exercise or not exercise any such rights;

4.   if (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived), or (ii) the Placing Agreement is terminated, or (iii) the Pricing Agreement is not executed by Investec and the Company, or (iv) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will lapse and its rights (save as to return of funds) and obligations hereunder shall cease and determine at such time and no claim shall be made by any Placee in respect thereof;

5.   no offering document or prospectus has been, or will be, prepared in connection with the Placing or is required under the EU Prospectus Regulation, UK Prospectus Regulation or the FinSA and represents and warrants that it has not received a prospectus or other offering document in connection therewith;

6.   the Ordinary Shares are (and the Placing Shares will be) admitted to the Official List and to trading on the Main Market, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the Main Market and applicable legislation, and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other Main Market listed company, without undue difficulty;

7.   (i) subject to certain exceptions, it is not and, if different, the beneficial owner of the Placing Shares is not, and at the time the Placing Shares are acquired will not be, a resident of the United States of America, Australia, Japan, Canada or the Republic of South Africa or a citizen, resident or national of any other state or jurisdiction in which it is unlawful to make or accept an offer to acquire the Placing Shares (each a "Restricted Territory") and (ii) that the Placing Shares have not been and will not be registered or otherwise qualified, for offer and sale nor will an offering document or prospectus be cleared or approved in respect of any of the Placing Shares under the securities legislation of a Restricted Territory and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, in or into those jurisdictions;

8.   the Placing Shares have not been and will not be registered under the Securities Act or with any State or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, and further acknowledges that, subject to certain exceptions (in which case the investor shall be required to sign a US investor letter in a form satisfactory to the Company and Investec), the Placing Shares are being offered and sold only outside the United States pursuant to Regulation S under the Securities Act in an "offshore transaction" (as such terms are defined in Regulation S under the Securities Act);

9.   it will not distribute, forward, transfer or otherwise transmit this Announcement or Appendix, or any other presentational or other materials concerning the Placing in or into a Restricted Territory (including electronic copies thereof) to any person, and it has not distributed, forwarded, transferred or otherwise transmitted any such materials to any person;

10.  it is not acting on a non-discretionary basis for the account or benefit of any person located within the United States or any other Restricted Territory at the time the undertaking to subscribe for Placing Shares was given and it is not acquiring the Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any Placing Shares into the United States or any other Restricted Territory; 

11.  it has not relied on any of Investec or any person affiliated with Investec in connection with any investigation of the accuracy of any information contained in this Announcement;

12.  unless it has signed a US investor letter in a form satisfactory to the Company and Investec, it is outside of the United States and is acquiring the Placing Shares in an offshore transaction for its own account or for the account of a person outside of the United States or it is a dealer or other professional fiduciary in the United States acquiring Placing Shares in reliance upon Regulation S under the Securities Act acting on a discretionary basis for the benefit of a person (other than an estate or trust) outside of the United States (all such terms as defined in Regulation S);

13.  it is not acquiring any of the Placing Shares as a result of any form of "directed selling efforts" within the meaning of Regulation S;

14.  except as otherwise permitted by the Company in writing, it is not an ERISA Entity or using the assets of an ERISA Entity to purchase the Placing Shares. "ERISA Entity" shall mean any person that is (i) an "employee benefit plan" as defined in Section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is subject to Title I of ERISA; or (ii) a "plan" as defined in Section 4975 of the United States Internal Revenue Code of 1986, as amended (the "Code"), including an individual retirement account or other arrangement that is subject to Section 4975 of the Code; or (iii) an entity which is deemed to hold the assets of any of the foregoing types of plans, accounts or arrangements that is subject to Title I of ERISA or Section 4975 of the Code; or (iv) any governmental, church, non-US or other employee benefit plan that is subject to any federal, state, local or non-US law that is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code whose purchase, holding, and disposition of the Placing Shares could constitute or result in a non-exempt violation of any such substantially similar law;

15.  (i) it has made its own assessment of the Company, the Placing Shares and the terms of the Placing based on this Announcement and any information publicly announced to a RIS by or on behalf of the Company on or prior to the date of this Announcement; (ii) the Company's Ordinary Shares are admitted to trading on the London Stock Exchange and that the Company is therefore required to publish certain business and financial information in accordance with UK MAR and the rules and practices of the London Stock Exchange and/or the FCA (collectively and together with the information referred to in (i) above, the "Exchange Information"), which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account, and similar statements for preceding financial years and that it has reviewed such Exchange Information and that it is able to obtain or access such Exchange Information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded company, without undue difficulty; and (iii) it has had access to such Exchange Information concerning the Company, the Placing and the Placing Shares as it has deemed necessary in connection with its own investment decision to acquire any of the Placing Shares and has satisfied itself that the information is still current and relied on that investigation for the purposes of its decision to participate in the Placing;

16.  the content of this Announcement is exclusively the responsibility of the Company and that neither Investec nor any of its affiliates, agents, directors, officers, consultants or employees nor any person acting on its behalf has or shall have any liability, in contract, tort or otherwise for any information, representation or statement contained in this Announcement, any misstatement in or omission from any publicly available information relating to the Company, or any information previously or subsequently published by or on behalf of the Company, including, without limitation, the Exchange Information, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or any information published prior to or on the date of this Announcement by or on behalf of the Company or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for the Placing Shares is contained in this Announcement and any information previously or contemporaneously published by the Company by notification to a RIS, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by Investec or the Company and neither Investec nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and has received and reviewed all information that it believes is necessary or appropriate in connection with its purchase of Placing Shares and has made its own assessment and has satisfied itself concerning the relevant tax, legal, regulatory, currency and other economic considerations relevant to its investment in the Placing Shares. Neither Investec, the Company nor any of their respective affiliates has made any representations to it, express or implied, with respect to the Company, the Placing and the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information, and each of them expressly disclaims any liability in respect thereof. Nothing in this paragraph or otherwise in this Announcement excludes the liability of any person for fraudulent misrepresentation made by that person;

17.  neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the UK Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Placing Shares into a clearance service;

18.  it has complied with its obligations under the Criminal Justice Act 1993 (the "CJA"), the Market Abuse Regulation (Regulation (EU) No. 596/2014) ("EU MAR"), EU MAR as amended and transposed into the laws of the United Kingdom pursuant to the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 ("UK MAR"), and in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Anti-Terrorism Crime and Security Act 2001, the Terrorism Act 2006, the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the "Regulations") and the Money Laundering Sourcebook of the FCA and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations, and its application is only made on the basis that it accepts full responsibility for any requirement to verify the identity of its clients and other persons in respect of whom it has applied and recorded by it to verify the identity of the third party as required by the applicable law;

19.  if in a member state of the EEA, unless otherwise specifically agreed with Investec and the Company in writing, it is an EU Qualified Investor and, to the extent applicable, any funds on behalf of which it is acquiring the Placing Shares that are located in a member state of the EEA are each such an EU Qualified Investor;

20.  if in the United Kingdom, it is a Relevant Person and if in Switzerland, it is a Swiss Qualified Investor;

21.  if it is a financial intermediary, as that term is used in Article 5(1) of the EU Prospectus Regulation or UK Prospectus Regulations, as applicable, that 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 member state of the EEA other than EU Qualified Investors or in the United Kingdom other than to Relevant Persons, as applicable, or in circumstances in which the prior consent of Investec has been given to each such proposed offer or resale, the offer the Placing Shares will not be treated under the EU Prospectus Regulation or the UK Prospectus Regulation has having been made to such persons;

22.  it has not offered or sold and, prior to the expiry of a period of 6 months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, 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 and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 ("FSMA");

23.  that any offer of Placing Shares may only be directed at persons in member states of the EEA who are EU Qualified Investors and in the United Kingdom who are Relevant Persons and in Switzerland who are Swiss Qualified Investors and represents, warrants and undertakes that it has not offered or sold and will not offer or sell any Placing Shares to persons in the EEA or the United Kingdom prior to Admission except to EU Qualified Investors or Relevant Persons or Swiss Qualified Investors (as applicable) or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the EEA or the United Kingdom or Switzerland within the meaning of the EU Prospectus Regulation (including any relevant implementing measure in any member state) or UK Prospectus Regulations or the FinSA, as applicable, except in circumstances which do not result in any requirement for the publication of a prospectus pursuant to Article 3 of the EU Prospectus Regulation or the UK Prospectus Regulation or the FinSA;

24.  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 agrees that this Announcement has not been approved by Investec 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;

25.  it has complied and will comply with all applicable laws (including all relevant provisions of FSMA) with respect to anything done by it in relation to the Placing Shares from or otherwise involving, the United Kingdom companies, securities and financial and intermediary services laws and regulations, complied with all requisite formalities and that it has not taken any action or omitted to take any action which will or may result in Investec, the Company or any of their respective directors, officers, agents, employees or advisers acting in breach of the legal or regulatory requirements of any territory in connection with the Placing;

26.  that it is acting as principal only in respect of the Placing or, if it is acting for any other person: (i) it is duly authorised to do so and has full power to make, and does make, the acknowledgments, representations and agreements herein on behalf of each such person; (ii) it exercises sole investment discretion as to each such person's account; and (iii) it is and will remain liable to Investec and the Company 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);

27.  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;

28.  it understands that any investment or investment activity to which this Announcement relates is available only in member states of the EEA to EU Qualified Investors and in the United Kingdom to Relevant Persons and in Switzerland to Swiss Qualified Investors and will be engaged in only with EU Qualified Investors and/or Relevant Persons and/or Swiss Qualified Investors (as applicable), and further understands that this Announcement must not be acted on or relied on by persons who are not, if in a member state of the EEA, EU Qualified Investors and, if in the United Kingdom, Relevant Persons and, if in Switzerland, to Swiss Qualified Investors;

29.  it and any person acting on its behalf is entitled to subscribe for and purchase the Placing Shares under the laws of all relevant jurisdictions which would apply to it, and that it and any person acting on its behalf is in compliance with applicable laws in the jurisdiction of its residence, the residence of the Company, or otherwise (including all relevant provisions of UK MAR, FSMA and the Financial Services Act 2012 in respect of anything done in, from or otherwise involving the United Kingdom);

30.  it (and any person acting on its behalf) will make or procure payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein or as directed by Investec against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other subscribers or sold as Investec may in its discretion determine and without liability to such Placee, who will remain liable for any amount by which the net proceeds of such sale falls short of the product of the relevant Placing Price and the number of Placing Shares allocated to it and may be required to bear any stamp duty, stamp duty reserve tax or other similar taxes (together with any interest or penalties) which may arise upon the sale of such Placee's Placing Shares;

31.  its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to subscribe for, and that Investec may call upon it to subscribe for a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;

32.  neither Investec, nor any of its affiliates, nor any person acting on its behalf, is making any recommendations to it, advising it or providing intermediary services regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of Investec and that Investec has no duties or responsibilities to it for providing the protections afforded to its clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

33.  the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be; or (iii) a person for whom it is contracting as agent or nominee. None of Investec nor the Company, any of their respective affiliates or any person acting on behalf of any 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 it agrees to indemnify the Company and Investec in respect of the same (together with any and all costs, losses, claims, liabilities, penalties, interest, fines and expenses (including legal fees and expenses)) on an after-tax basis 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, in accordance with the provisions for registrations and settlement set out in this Announcement;

34.  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 agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the 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;

35.  the Company and Investec and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, acknowledgements and undertakings which are given to Investec on their own behalf and on behalf of the Company and are irrevocable and it agrees that if any of the representations or warranties made or deemed to have been made by its subscription of the Placing Shares are no longer accurate, it shall promptly notify Investec and the Company. It irrevocably authorises Investec and the Company to produce this Announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein;

36.  it shall indemnify on an after-tax basis and hold the Company and Investec and their respective affiliates and any person acting on their behalf harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

37.  it acknowledges that due to anti-money laundering requirements and the countering of terrorist financing, Investec and the Company may require proof of identity and verification of the source of the payment before the application can be processed and that, in the event of delay or failure by the applicant to produce any information required for verification purposes, Investec and the Company may refuse to accept the application and the subscription monies relating thereto. It holds harmless and will indemnify Investec and the Company against any liability, loss or cost ensuing due to the failure to process such application, if such information as has been requested has not been provided by it in a timely manner;

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

39.  unless paragraph 40 below applies, it has neither received nor relied on any inside information (for the purposes of EU MAR, UK MAR and section 56 of the CJA) in relation to its participation in the Placing;

40.  if it has received any inside information (for the purposes of EU MAR, UK MAR and section 56 of the CJA) in relation to the Company and its securities, it confirms that it has received such information within the marketing soundings regime provided for in Article 11 of UK MAR and associated delegated regulations and it has not: (i) dealt (or attempted to deal) in the securities of the Company; (ii) encouraged, recommended or induced another person to deal in the securities of the Company; or (iii) unlawfully disclosed inside information to any person except as permitted by UK MAR, prior to the information being made publicly available;

41.  the Company may be a passive foreign investment company ("PFIC") for US federal income tax purposes, and it could be a PFIC in future years and acknowledges that if the Company is a PFIC, then US taxable investors may be subject to adverse US tax consequences in respect of their investment in the Placing Shares, whether or not they are resident in the United States;

42.  if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with applicable laws and regulations;

43.  it irrevocably appoints any director or authorised signatory of Investec as its agent for the purposes of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Placing;

44.  the Placing Shares will be allotted and issued subject to the terms and conditions of this Appendix, the Placing Agreement and the memorandum and articles of association of the Company in force from time to time;

45.  its commitment to acquire Placing Shares on the terms set out therein and in the trade confirmation will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or Investec's conduct of the Placing;

46.  it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to its participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement) and will honour such obligations, and that its acquisition of the Placing Shares will be in compliance with applicable laws and regulations in the jurisdiction of its residence, the residence of the Company, or otherwise. It has paid any issue, transfer or other taxes due in connection with its participation in any territory. It has not taken any action which will or may result in the Company, Investec or any of their affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing. Each Placee agrees that this paragraph 45 shall survive the resale of the Placing Shares by or on behalf of any person for whom it is acting;

47.  it acknowledges that where it is subscribing for the Placing Shares as a fiduciary or agent for one or more discretionary, advisory or investor accounts, that it is authorised in writing for each such account: (i) to subscribe for the Placing Shares; (ii) to make, and does make, the foregoing representations, warranties, acknowledgements, agreements and undertakings on such account's behalf; and (iii) to receive on behalf of each such account any documentation relating to the Placing (as applicable) in the form provided by the Company and/or Investec. It agrees that the provisions of this paragraph shall survive any resale of the Placing Shares by or on behalf of any such account;

48.  it acknowledges that, in connection with the Placing, Investec and any of its affiliates acting as an investor for its own account may take up Placing Shares in the Company and in that capacity may retain, purchase or sell for its own account such Placing Shares in the Company and any securities of the Company or related investments and may offer or sell such securities or other investments otherwise than in connection with the Placing. Investec does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so;

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

50.  where it is acquiring the Placing Shares for one or more managed accounts, it is authorised in writing by each managed account to acquire the Placing Shares for each managed account and it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account;

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

52.  time is of the essence as regards its obligations under this Appendix, including to settle payment for the Placing Shares.

The foregoing acknowledgements, agreements, undertakings, representations, warranties and confirmations are given for the benefit of the Company and Investec and are irrevocable. Each Placee and any person acting on behalf of the Placee acknowledges that neither the Company nor Investec owes any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

Miscellaneous

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

Each Placee should seek its own advice as to whether any of the above tax liabilities arise and notify Investec accordingly.

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that Investec and any of its affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares. When a Placee or person acting on behalf of the Placee is dealing with 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. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Investec 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.

Each Placee acknowledges and is aware that Investec is receiving fees in connection with their roles in respect of the Placing as detailed in the Placing Agreement.

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

All references to time in this Announcement are to London time unless otherwise stated. All times and dates in this Announcement may be subject to amendment, and Placees' commitments, representations and warranties are not conditional on any of the expected times and dates in this Announcement being achieved. Investec shall notify their respective Placees and any person acting on behalf of the Placees of any changes.

The rights and remedies of Investec and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise or partial exercise of one will not prevent the exercise of others.

In this Announcement, "after-tax basis" means in relation to any payment made to the Company, Investec or their respective affiliates, agents, directors, officers and employees pursuant to this Announcement where the payment (or any part thereof) is subject to any withholding tax and/or chargeable to any tax, a basis such that the amount so payable shall be increased so as to ensure that after taking into account any withholding tax arising and/or any tax chargeable (or which would arise and/or be chargeable but for the availability of any relief unrelated to the loss, damage, cost, charge, expense or liability against which the indemnity is given on such amount (including on the increased amount)) there shall remain a sum equal to the amount that would otherwise have been so payable.

In the case of a joint agreement to subscribe for Placing Shares under the Placing, references to a Placee in these terms and conditions are to each of the Placees who are a party to that joint agreement and their liability is joint and several.

 

 

 



 

APPENDIX 2

RISK FACTORS

 

Prior to making any decision to vote in favour of the Resolutions or to invest in the Ordinary Shares, Shareholders should carefully consider all the information contained in this Announcement, including, in particular, the specific risks and uncertainties described below.

The risks set out below are those risks which the Directors consider to be material to the Capital Raising as at the date of this Announcement, but do not necessarily comprise all those risks associated with an investment in the Ordinary Shares or the Company and are not intended to be presented in any assumed order of priority. There may be additional risks that the Directors do not currently consider to be material or of which the Directors are not aware, which may affect the Group's financial condition, performance, prospects, results and/or the price of Ordinary Shares.

The risks and uncertainties described below are not intended to be exhaustive and are not the only ones that face the Group.

1.         RISKS RELATING TO THE GROUP'S BUSINESS AND INDUSTRY

1.1       Without the proceeds of the Capital Raising, the IMI Rig Facility will not be capable of drawdown and the Group will not have sufficient working capital for its present requirements, that is for at least 12 months from the date of publication of this Announcement. Therefore, if the Capital Raising does not complete, the Group would be required to seek alternative financing arrangements on an expedited basis, which it may not be able to do on attractive terms or at all.

On 29 June 2021, the Group published its audited consolidated financial statements for the year ended 31 December 2020 and announced details of a requirement for the Group to complete a new debt and/or equity funding arrangement of $120 million to $150 million by the end of September 2021 in order to maintain sufficient liquidity to continue trading. The auditor's report on the Group's audited consolidated financial statements was unqualified, but contained a material uncertainty in respect of going concern to which the auditor drew attention by way of emphasis without modifying their report.

The Group subsequently announced on 31 August 2021 that it was in detailed discussions with three regional banks on $90 million of credit agency backed working capital facilities for the completion of the two IMI rigs, and that it was evaluating alternative ways of monetising existing assets and investments to minimise the size of any potential equity raise.

On 28 October 2021, the Company announced that it had secured the IMI Rig Facility. The IMI Rig Facility, drawdown of which is conditional upon completion of the Capital Raising, is expected to reduce the severity of the Group's short term liquidity constraints. However, unless and until the Second Tranche is secured, the Project Finance Facilities will represent less than the $90 million anticipated at the time of publication of the Group's audited consolidated financial statements for the year ended 31 December 2020. Further, there continue to be significant capital requirements to enable the Group to execute its current projects and support future strategic investment. The Company is therefore proposing to raise gross proceeds of approximately $30.1 million (£21.9 million) pursuant to the Capital Raising to strengthen the Group's balance sheet and provide access to strategic opportunities in its addressable markets. Completion of the Capital Raising is conditional and dependent upon, amongst other things, Admission taking place. The Board believes that if the Capital Raising completes and the Second Tranche becomes available as anticipated, the Group will have a stronger platform from which to seek to deliver its "Lamprell Reimagined" strategy.

The drawdown of the IMI Rig Facility will be conditional on, amongst other things, the Group successfully completing the Capital Raising. In addition, the conditions precedent to the drawdown of the IMI Rig Facility also include customary conditions and a limited number of other conditions, all of which the Company expects to be satisfied prior to Admission. While it is the Company's expectation that these conditions will be satisfied prior to Admission, there can be no guarantee that all of these conditions will be satisfied. If these conditions are not satisfied, the drawdown of the IMI Rig Facility would not happen. If the Resolutions are not passed at the Extraordinary General Meeting and the Capital Raising does not proceed, the Company's Project Finance Facilities will not be available and the Group will not have sufficient working capital for its present requirements, that is, for at least 12 months from the date of publication of this Announcement. Shareholders are therefore asked to vote in favour of the Resolutions at the Extraordinary General Meeting.

The Group's projections indicate that on a "reasonable worst case" scenario, if the Capital Raising does not proceed such that the Project Finance Facilities do not become available, the Group would experience a working capital shortfall of $165 million in May 2022. Even on a "base case" scenario (which reflects current expectations of future trading), if the Capital Raising does not proceed, the Group would experience a working capital shortfall of $120 million in February 2022. In these circumstances, the Group would need to take various mitigating actions in the period up to such dates to ensure that it has sufficient liquidity to continue to fund its operations. Such mitigating actions, which may need to be severe, are likely to include: (i) seeking to negotiate accelerated milestone payments with key contractual counterparties, in particular in relation to the two IMI rigs; (ii) seeking to secure alternative equity funding; (iii) selective disposals of assets; (iv) further deferrals of creditor payments, (v) delaying planned contributions to the Group's IMI joint venture, (vi) deferring implementation of the "Lamprell Reimagined" strategy, and/or (vii) other cost-saving measures such as deferring capital expenditure and cutting overheads.

Should these circumstances arise, the Board would look to take all such actions that it considers are appropriate and in the best interests of the Group to ensure it has sufficient liquidity to continue to fund its operations and believes that, if required, it is likely that the Group could implement one or more of such mitigating actions at the required scale and within the necessary timeframe to limit the effects of not proceeding with the Capital Raising. However, in order to mitigate the effects of not proceeding with the Capital Raising to the full extent, the Group would be dependent upon agreements being reached with third parties, which is ultimately outside of its control. If the Capital Raising does not proceed (such that the Project Finance Facilities do not become available to the Group) and sufficient mitigating actions cannot be carried out within the requisite timeframe, the Group's "reasonable worst case" and "base case" projections indicate that the Group would not have sufficient liquidity to continue to fund its operations beyond May 2022 and February 2022, respectively. The Group would therefore be dependent upon the reaction of key suppliers, employees and creditors, which is outside of the Group's control and gives rise to a significant risk that the Group would be unable to meet its contractual obligations as they fall due, which could ultimately result in the Group being forced into bankruptcy or liquidation.

1.2       The Group operates in a highly competitive industry and its ability to compete successfully depends on its ability to provide and service high quality products and services

Contracts for the Group's services and products are generally awarded following a competitive process. The Group competes with a number of multi-national and regional competitors in the markets in which the Group operates, some of which are significantly larger than the Group with greater financial resources and capital at their disposal. Conversely, smaller regional competitors typically have substantially lower overheads than the Group, providing a competitive advantage in pricing contracts and/or projects. The competitive environment in the markets in which the Group operates may become more challenging in the future, particularly with greater consolidation in the industry, leading to greater market power and "economies of scale" by such market players, which may translate into an ability to offer greater cost savings to its customers.

While service quality and performance and personnel, as well as reputation and experience, are considered in customer decisions, price and other financial terms are nonetheless significant factors in most tender awards, if not the most significant as levels of spending have and continue to contract (see risk titled "Demand for the Group's Products and services may be adversely impacted by a fall in the levels of expenditure by companies involved in the renewable energy and oil and gas industries"). The Group's industry has frequently been, and continues to be, subject to price competition. In particular, the continuing competition from Asian players, including Chinese shipyards, which are able to offer very competitive financial terms to clients, and some of which have the advantage of strong financial backing. If price competition were to continue and/or intensify in the future or if competitors are able to offer better financial terms to customers than those which the Group is able or prepared to offer (including but not limited to the price, the timing of payments on achieving milestones or the financial guarantee package offered to the customer), the number of tenders meeting the Group's current margin criteria or its future margin criteria could decline and the Group's financial condition and results of operations may be adversely affected. This risk is exacerbated in highly competitive markets, such as the offshore wind projects, meaning that the Group's margins in these markets are under constant pressure.

Further, if low cost competitors are able to gain the confidence of and/or creditability with the Group's potential customers, or if current competitors, new entrants to the market or alternative users are able to secure appropriate sites, including but not limited to quayside access, they may be able to gain market share or otherwise effectively restrict the Group's ability to grow. There can be no assurance that the Group's current or new competitors will not develop or be able to offer more advanced and more suitable products and services nor that such development or offering by competitors will not adversely affect the market position, financial condition, results of operations and prospects of the Group.

1.3       The Group is dependent on a relatively small number of contracts at any given time, some of which are for the same customers

Due to the size of many of its projects, a significant proportion of the Group's revenue in any year may be derived from a relatively small number of contracts. Seven of the Group's 17 refurbishment projects in 2020 came from the Company's longstanding client, ADNOC. The Group's revenue stream in Saudi Arabia, for instance, is reliant on its continuing strong relationship with Saudi Aramco, demonstrated by the Group's ascension to the LTA programme in 2018 as well as its participation in the IMI joint venture. Alongside the LTA, the IMI joint venture provides the Company with access to a number of revenue-generating opportunities: the Group signed two contracts with the IMI in early 2020 for the fabrication and delivery of two jackup drilling units and in 2021, the Group received two project awards from Saudi Aramco as part of the LTA programme.

The Group's concentrated contract portfolio means that its profitability is likely to be more significantly affected by any disruption to the performance and/or revenue streams realised by it pursuant to such contracts than would be the case if it had a more diversified contract portfolio. If the Group is unable to maintain strong relationships with a core group of customers or fails to offer them high levels of service, including with respect to the quality of the products and services provided and their timely delivery, the business, financial condition, results of operations and prospects of the Group may be adversely affected. The loss of any of these or similar customers would reduce the availability of repeat business on which the Group depends for its future business. There can be no assurance that further projects will be won from the Group's existing customers, or that new projects will be won from new customers. Additionally, irrespective of the quality of the products and services supplied by the Group, the Group may also be restricted from growing its revenue in relation to existing customers if existing customers' demand for such products and services has been satisfied at the relevant time.

The Group's strong and stable relationships with its customers, a factor which is of particular significance for customers based in the Middle East, has been recently evidenced through the continued support which the Group has received from its loyal customer base, despite the Group's recent operational difficulties. However, there can be no assurance that the Group's strong relationships with its customers will be maintained or that strong relationships with new customers will be established, particularly in light of the fact regional market dynamics can evolve quickly. There is also a risk that the Group's competitors may develop stronger connections with its customers, which may adversely affect the demand for the Group's products and services. In the event that the Group is unable to establish or maintain strong customer relationships, the Group's business, financial condition and results of operations could be materially adversely affected.

1.4       Demand for the Group's products and services may be adversely impacted by a fall in the levels of expenditure by companies involved in the renewable energy and oil and gas industries

A renewable energy project or the development of facilities for the exploration, development, production and refining of crude oil and natural gas represents a substantial investment for the Group's customers. Demand for the Group's products and services is therefore dependent on their appetite for spending on these types of projects, which is impacted by global, national and local macroeconomic conditions.

In the renewables industry, spending has increased significantly in recent years, with the Group's bid pipeline for such projects almost doubling over the last three years. This is characterised by a favourable regulatory climate and increasing global consensus to tackle climate change, with many leading economies adopting net zero emissions targets and volumes of green and sustainability linked financing growing substantially. The ongoing demand for renewable energy and access to project finance or other financing have a significant influence on whether (and when) the Group's customers will proceed with the development of renewables projects, and therefore utilising the Group's products and services. For example, difficult credit conditions, reduced governmental subsidies and uncertainty with respect to the ongoing impact of the COVID-19 global pandemic have led to companies, including the Company, working to conserve cash and protect themselves against the global economic deterioration caused by COVID-19. Any significant fall in the level of expenditure by customers may adversely affect the demand for the Group's products and services, or the prices which the Group can charge for its products and services, and in turn may have a material adverse effect on the Group's business, financial condition and results of operations. These conditions and consequences may be particularly acute with respect to the Group's customers in the oil and gas sector, whose level of spending may be further affected by volatility in oil prices and lack of support by lenders and investors for the development of new hydrocarbon projects.

Worldwide drilling and production activity, including the construction and refurbishment of facilities, is highly sensitive to oil and gas prices and is generally dependent upon the industry's view of oil and gas prices, which have historically been characterised by significant volatility. Fluctuations in the oil and gas prices have historically impacted the demand for the Group's products and services and continuing volatility may lead to customers re-assessing how and when to sanction capex on new projects and project awards being significantly delayed and/or cancelled, which in turn impacts the use of the Group's products and services and the Group's financial condition, results of operations and prospects.

Further, the rapidly evolving energy transition as society moves to a more sustainable low-carbon future is also affecting the level of investment and support in hydrocarbon projects. The UAE's Expo 2020 Vision and Saudi Arabian 2030 Vision of the Kingdom of Saudi Arabia, for instance, focus on (among other things) economic diversification policies and reducing the dependence on hydrocarbon resources as a source of income. While traditional hydrocarbons remain part of the energy mix, increasing negative sentiment towards hydrocarbon projects may affect customers' access to funding and limit their appetite in awarding new projects, which may have an adverse effect on the Group's financial condition, results of operations and prospects.

1.5       The Group's visible order book, revenues and cash flows can fluctuate significantly

The nature of the Group's business means that its order book, revenues and cash flows typically fluctuate significantly during the course of each financial year and the Directors expect that this trend will continue to vary due to a number of factors, such as long lead times for obtaining contract awards and the delivery of large projects, and delays in obtaining financing.

Although the Group has greater order book visibility in relation to the construction of (among other things) jackup rigs and offshore wind substructures as a result of existing EPCI contracts and other contracts which it has secured, the period of notice given to the Group by its customers for changes to requirements in respect of ongoing projects, particularly in the case of upgrade and refurbishment work, can often be relatively short. The tender period from issue to award of new projects also vary significantly depending on the nature of the projects, with six to nine months typically expected for "contract release purchase orders" projects and 18 months or longer for offshore wind projects. These fluctuations directly impact the visibility of the order book. Additionally, the scope of work can vary in size and contract length. The Group operates on a project-by-project basis for material new build contracts, and whilst the Group has been successful in establishing a core group of customers who regularly bring repeat business, it does not have long-term commitments with the majority of its customers. As a consequence, the order book, particularly the conversion of bid pipelines to contract awards, and/or the timing of when revenue can be recognised on a particular project, can fluctuate significantly over the course of a financial period, making it difficult for management to accurately predict, and report on, future revenues on any given projects of the Group. Further, the Group's cash flows fluctuate in line with cash payments made at particular milestones. Delays in the completion of milestones and/or mechanical completion due to project delays, irrespective of whether any such delays are within the Group's control may cause revenue, the related profit margins on projects and cash inflows to be deferred from one year to the next year. In addition, a large portion of the Group's operating expenses are fixed costs which cannot be adjusted according to short-term fluctuations in business activities. Any and all of these matters may have a material adverse effect on the Group's business, results of operations and financial condition.

1.6       On most projects, the Group operates on the basis of lump sum and fixed price contracts and is therefore subject to financial risk if it fails to operate within budget or events occur which prevent the Group from achieving its budgeted costs

On most projects, particularly new build jack-up drilling rig and offshore wind foundation projects, contracts are typically charged on a lump sum basis whereby the contractor assumes the risk of increased expenditure on labour or materials, unless this is specifically catered for in the contract or agreed to by the customer. Given the timescales of the projects undertaken by the Group and the fact that the budget estimations for the lump sum portions of such projects are undertaken at the outset of the process with limited opportunity for passing on increases in costs to customers, if the cost of materials, labour or equipment hire should rise, or if costs are incurred as a result of project delays, whether or not such delays occur as a result of changes requested by customers, the profitability of an individual project, in addition to the financial condition and results of operations of the Group, may be adversely affected. Whilst the Group has risk assessment procedures in place, the Group may be unable to predict expenditure on a given project accurately or it may underestimate the size of allowances or provisions needed in respect of any such delays and as a consequence, its business, financial condition, results of operations and prospects may be adversely affected.

1.7       The Group is subject to counterparty credit risk

The Group provides its products and services to a variety of contractual counterparties and is therefore subject to the risk of non-payment for products provided and services rendered or non-reimbursement of costs incurred. Clients may impose onerous payment terms or even stop payments because of their own cashflow issues. This may adversely impact Lamprell's revenues, particular if it requires Lamprell to source working capital from its own balance sheet, as well as increase risks of disputes with suppliers who are exposed to liquidity issues. The entire supply chain is under immense pressure and there is an increased risk of companies taking on contracts at poor margins or not delivering to the required standards. This risk is heightened in a market where all parties are working to conserve cash and/or the cash flows of counterparties have been adversely impacted by the COVID-19 pandemic. While the Group aims to enter into new client contracts based on cashflow neutral payment terms for the entirety of the project execution, these contracts may require significant expenditure prior to receipt of relevant payments from the customer and may expose the Group to potential credit risk or may require the Group to use its existing cash flows in order to meet payment obligations. Further, the Group may in the future offer its customers commercial terms which could have the effect of increasing counterparty credit risk to such customers, for example, by agreeing to accept a larger proportion of the purchase price on a given project on delivery and a lesser sum at the outset of the project.

Failure by any contractual counterparty to pay for services or products provided or to reimburse costs incurred by the Group could have a material adverse effect on the Group's cash flows and on the profitability of the relevant contract and, as a result, the financial condition, results of operations and prospects of the Group may be adversely affected.

1.8       The Group is reliant on third parties, including sub-contractors, suppliers, manufacturers and other service providers for the operation of its business

The Group relies on third parties, including sub-contractors, third party equipment suppliers and manufacturers and other service providers, to provide products and services to the Group in order to enable the Group to deliver its projects to its customers. To the extent that the Group cannot engage sub-contractors or acquire equipment or materials according to its plans and budgets, its ability to complete a project by the agreed delivery deadline or at a profit may be impaired. If the amount the Group is required to pay for these products and services exceeds the amount estimated in bidding for lump sum work, the margins on the contracts with customers may decline, or the Group may incur losses under the relevant contracts.

In addition, the Group may appoint a sub-contractor, manufacturer or other service provider that is unable to fulfil its contractual obligations in a timely fashion or at all or up to the requisite standards, whether as a result of insufficient capacity, financial instability or poor management of projects. Any failure by third parties in delivering services, equipment or other materials according to the negotiated terms, on time, or at all, the Group may be required to purchase such services, equipment or materials from another source at a higher price, thereby incurring additional costs. Furthermore, there can be no assurance that the Group will be able to secure alternative supplies of the relevant services, equipment or materials on terms that are acceptable to the Group or at all. If the Group is unable to secure such services, equipment or materials at all or if it experiences delays in obtaining the supply of such equipment, for example, as if the required equipment is highly specific and scarce, there may be a resultant delay under the contracts with customers, which may lead to additional costs being incurred by the Group and have a material adverse effect on the Group's reputation. Whilst the Group has developed close relationships with key suppliers which may allow for early identification of potential problems, including delays, it may not be possible for the Group to identify all such problems in a timely manner or at all.

Moreover, the Group may be required to compensate the project customer for delays under contracts which are indirectly caused by the failures or defaults of third parties. The Group may not be successful in recovering any losses caused by the failure of a sub-contractor to comply with its contractual obligations, if, for instance, the Group has been unable to negotiate back-to-back warranties with the sub-contractor, or if the sub-contractor is unable to satisfy an award of damages made in favour of the Group due to its financial position, thereby requiring the Group to incur expenses relating to replacements and repairs under its warranty obligations. Any financial insolvency or insolvency of sub-contractors also increases the risk that the Group will not be able to recover costs in relation to any defective work performance by such sub-contractor. If the Group is not able to recover any of these costs in all circumstances, this may reduce the profit to be realised by the Group.

1.9       The effects of the COVID-19 pandemic have adversely impacted, and will continue to adversely impact, the Group's business, financial condition and results of operations

Public health outbreaks, epidemics or pandemics, could materially and adversely impact the Group's business. In late 2019, a novel strain of coronavirus, COVID-19 (commonly referred to as coronavirus), was first detected in Wuhan, China and, in March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 pandemic has led to a significant number of adverse effects, both external and internal, on the Group's business and results of operations. With respect to external impacts, governmental authorities around the world have implemented measures to reduce the spread of COVID-19, resulting in a substantial curtailment of the global economy. These measures continue to adversely affect workforces, consumer sentiment and retail sales, economies, financial markets, and, along with decreased consumer spending, have led to an economic downturn in many of the markets in which the Group operates and continues to provide uncertainty.

The global outbreak of COVID-19 and its sudden and significant effects on the economy, including public health directives and orders and the Group's policies, have and will continue to impact the Group and many of its suppliers and customers, including in connection with the potential further "waves" of the pandemic. In particular, the pandemic has caused demand for transportation fuels to decline significantly. As a result, the effects of the COVID-19 pandemic have and will continue to affect the Group for an indeterminable period of time, including the Group's manufacturing and supply chain operations by significantly reducing its output, negatively impacting its productivity and delaying its product development programmes.

In addition, the COVID-19 outbreak has resulted in severe regional lockdowns and global travel restrictions which led to the Group taking an early decision to require all staff to work from home unless they were working on essential business activities, such as Moray East, which was entering a critical phase in early 2020. Whilst the Group was able to implement safeguarding measures (such as increasing social distancing between workers, including securing extra camps, installing disinfection chambers and implementing quarantine measures for employees that felt unwell) and complete the Moray East project on time, there is no guarantee that any further disruption to the Group's operations caused by public health directives or orders will not impair the Group's ability to execute, complete and deliver any of its projects. This risk has become particularly acute for Lamprell's recent operations as the Group typically relies on personnel from outside the UAE and Saudi Arabia, such as India, to execute its projects. The travel restrictions imposed in relation to flights to and from India, for example, has led to a shortage of workers resulting in the Group making force majeure claims in connection with the ARO rigs and the Seagreen projects. Failure of the Group to manage staffing levels efficiently and deliver projects in a timely manner and in accordance with the contractual terms could give rise to costly and time-consuming disputes with contractual counterparties, reduced margins on key contracts and reputational damage, any of which could have a material adverse effect on the Group's operations, business and financial position.

Since the COVID-19 situation is fluid and continues to evolve and because the duration and severity of the pandemic and its negative impact on the economy is unclear, it is difficult to forecast any impacts on the Group's business and future results. So far, the COVID-19 pandemic has impacted and may further impact the Group's supply chain, production capabilities, workforce and project delivery in the markets in which the Group operates. With the global spread of COVID-19, the Group expects the pandemic and its effect to continue to affect the Group's ability to execute its projects and to cause disruption generally, as well as impact the Group's financial condition if it has to incur significant costs to maintain or increase its mitigation measures as a result of such disruption. The extent of the impact of the outbreak on the Group's operational and financial performance will depend on certain developments, including the duration and spread of the pandemic (including the current "wave" and variants of the virus affecting many countries and potential further "waves" and variants), the impact on its customers and its sales, the impact on its employees and the effect on its dealers and suppliers, all of which are uncertain and cannot be predicted. If, among other factors, the adverse impacts stemming from the COVID-19 pandemic, economic, regulatory or other factors, including macro-economic trends, were to cause the Group's results of operations or cash flows to be worse than anticipated, the Group could conclude in future periods that impairment charges are required in order to reduce the carrying values of goodwill or other long-lived assets. The currently ongoing review of the carrying value of specific intangible and tangible assets by the Group's senior management could increase the likelihood of impairment charges and any such impairment charges could be significant.

In addition, the COVID-19 pandemic has also had a significant impact on customer decisions in respect of project awards. Following the collapse of energy prices in the first half of 2020, the Company believes that the Group's major oil and gas clients, including Saudi Aramco, deferred all major contract awards in 2020, preferring to preserve cash and delay projects until the immediate impact of the global pandemic was clearer. The Group submitted multiple bids, however no LTA awards were received in 2020. Whist the Group has won two LTA awards to date in 2021 and anticipates that a number of further LTA projects will be awarded in 2021, there can be no assurance that the Group will be successful in obtaining these awards if they are awarded at all. This may lead to the Group assessing additional corporate actions, organisational change initiatives and cost-cutting measures, including reducing its workforce further, reducing its operating and capital costs or closing one or more of its offices or facilities, and these actions could cause the Group to incur costs and expose the Group to other risks and inefficiencies. Additionally, in the event the Group's business experiences a subsequent recovery, there can be no assurance that it would be able to rehire its workforce or recommence operations at such facilities on commercially advantageous terms, if at all.

Any of the foregoing and other similar outbreaks, epidemics or pandemics could have a material adverse effect on the Group's business, cash flows, profitability, results of operation and financial condition. To the extent the COVID-19 pandemic adversely affects the business and financial results of the Group and the Group's suppliers, dealers and customers, it may also have the effect of heightening many of the other risks described in this "Risk Factors" section.

1.10      Failure to deliver projects in a timely manner and in accordance with the contractual terms may adversely impact the Group's reputation and financial condition

If projects are not executed, managed and delivered in accordance with the project schedule and the contractual terms and conditions, this could adversely affect the contract margins that the Group seeks to achieve and result in additional costs to recover the project, which in turn impacts the Group's reputation, business, results of operations and future revenue streams. The majority of the Group's contracts with its customers, including all major lump sum contracts, contain provisions requiring the Group to pay liquidated damages, in certain circumstances, in relation to any delays in completing projects by agreed delivery deadlines. Notwithstanding the counterparty risks (which are described in further detail in the risk titled "The Group is reliant on third parties, including sub-contractors, manufacturers other service providers, for the operation of its business" above), the Group has previously suffered significant losses and has had to take steps to improve its bidding and estimating processes, including the identification and quantification of risks that must be managed effectively as part of project execution.

Whilst the Group seeks wherever practicable or commercially possible to incorporate liquidated damages provisions in contracts which it enters into with sub-contractors to ensure that the circumstances in which liquidated damages may be payable by the Group under the head contract are partially offset by provisions in the corresponding sub-contract, thereby minimising the exposure of the Group to delays caused by sub-contractors, the Group may not, in certain circumstances, be able to pass over all or any of the risk to the relevant sub-contractor. If delays arise, including delays caused by actions or omissions by sub-contractors, liquidated damages may become payable by the Group to the customer. In such circumstances, the Group will be unable to recover an equivalent amount of liquidated damages from the relevant sub-contractor. The payment of such damages may therefore cause the contract to be less profitable than anticipated or may result in the Group incurring losses and, as a result, the Group's financial condition and results of operations may be adversely affected.

In addition, the profitability of contracts entered into by the Group depends on the contract being secured on favourable terms from the outset, the risks associated with the contract being adequately priced or covered by insurance and the contract being carried out effectively. In order to effectively execute such contracts, the works need to be managed appropriately, delivered defect-free, on time, and with costs controlled. Any weaknesses in the bid estimation, planning, design and engineering stages, deficiencies in the systems in place to support project management in execution cases and limited training for specialist workers may result in poor project execution.

This risk is heightened as the Group diversifies into new markets and product offerings where additional execution risks can arise. For example, the Company may fail to execute the initial project(s) awarded under the LTA programme in accordance with the agreed schedule, within budget and/or compliance with quality standards. This may be caused by a number of factors, including organisational inexperience in executing or supporting offshore elements of EPCI scopes, inefficiency in the initial In-Kingdom ("IK") set up, operation of warehousing, supply of materials and potential deficiency of systems in place to support the EPCI project management in execution or lack of resources to complete the LTA readiness programme. These factors could result in reduced margin of loss and adversely impact the Group's reputation as an LTA contractor, which may in turn lead to unwillingness on the part of Saudi Aramco to award further work to Lamprell.

Any one or more of these events could have a material adverse effect on the Group's business, financial condition and results of operations.

1.11      The Group relies on long term or strategic relationships with joint venture parties, local parties and agents in certain jurisdictions

The Group relies on continuing existing strategic relationships and forming new ones with other entities such as joint venture parties, local partners and agents. Failure to maintain these partner relationships could restrict future businesses or leave Lamprell exposed to additional contractional and execution liability or risks. For example, the success of the IMI joint venture in the Kingdom of Saudi Arabia, where there may be different drivers for each of the four partners, and the LTA project team, where the Group will be heavily reliant on the installation partner, means that the Group is dependent on the continuing cooperation and collaboration between the joint venture partners. In addition, the partnerships with Injazat/G42, which is considered to be the region's leading digital developer backed by Mubadala Investment Company in Abu Dhabi, and Akselos, a leading developer of simulation technologies, are integral to the development of the Lamprell Digital business unit and initiatives.

The terms of any joint venture arrangements may impose certain restrictions on the Group's activities, including not be able to undertake certain activities as a result of opposition from a joint venture partner or experiencing delays in undertaking activities due to the time taken to obtain consent from a relevant joint venture partner. Further, the Group may be unable to achieve its operational and financial objectives for a joint venture if one or more of its joint venture partners is prevented, either temporarily or permanently, by key clients from undertaking works or performing services in target markets, whether for such clients or for third parties.

Lamprell also holds participating interests in joint venture structures. For such assets where Lamprell is not in day-to-day control over the operations of the business of such joint venture, while it may have consultation rights or the right to withhold consent in relation to significant operational matters, it will have limited control over day-to-day management, with the result that any mismanagement by those in control of such day-to-day operations or the joint venture partner or disagreements with such persons as to the most appropriate course of action, may result in loss or increased costs to the Group. Further, Lamprell's participating interests in joint ventures are in some cases capable of dilution in the event that the Group fails to make capital contributions under the terms of the relevant joint venture arrangements.

The Group may be liable for, and suffer reputational damage as a result of, acts and omissions of joint venture partners that cause loss or damage. Although contractual arrangements with such parties may allocate risk between the parties and apportion liability for such matters, unanticipated acts or missions may not be covered by such contractual arrangements. Furthermore, as stated above, the Group may not be able to obtain adequate legal remedies against such persons or such persons may not have the resources to meet any such claims, if awarded. Any such loss or damage caused by a joint venture partner of the Group could have a material adverse effect on the Group's business, financial condition and results of operations.

The Group also depends on its relationships with its local partners and agents in order to facilitate its business operations in the UAE outside the free zones and the Kingdom of Saudi Arabia. In 2018, the Group formed Lamprell Saudi Arabia LLC ("LKSA"), a limited liability company incorporated in the Kingdom of Saudi Arabia, which is a joint venture including Mada Al Sharq Company LLC as the Group's local partner. As LKSA is the contracting entity for the IK works under the LTA projects, it is crucial to maintain a strong and effective working relationship with this local partner, to ensure success on those projects. The success of LKSA as well as IMI above, as illustrated in the Group winning its first LTA in February 2021, with the IK work being performed by LKSA highlights the Group's reliance on its relationship with local partners.

There can be no assurance that the Group's existing relationships will continue to be maintained or that new ones will be successfully formed. Any failure by the Group to maintain existing relationships or form new ones could materially adversely affect the Group's business, results of operations and financial condition.

1.12      The Group faces significant challenges in attracting and retaining sufficient numbers of skilled personnel and managing staff levels efficiently

The Group's future success requires a workforce covering a range of engineering, managerial and trade discipline specialists and, therefore, the Group is dependent on its ability to retain and replace its design, engineering and technical personnel so that the Group is able to carry on its activities. The labour-intensive nature of the Group's business requires an adequate supply of qualified, skilled production workers necessary to maintain the high manufacturing standards of its products. Their existing workforce may also need to be reskilled as the Group expands its digital business unit and adopt new technologies in relation to the execution of its projects. Increased employment competition for skilled individuals from other manufacturers, the inability to hire or retain these skilled employees or effectively reskill the existing workforce or increased labour costs generally, could have a material adverse effect on the Group's ability to control expenses and efficiently conduct its operations. In addition, there is strong competition worldwide, both from within the energy industry and from other sectors, for personnel with the technical skills and industry expertise it requires to sustain and grow its activities.

The operational challenges of recruiting and working in the current COVID-19 environment exacerbates a number of those issues, particularly as the Group typically relies on personnel from outside the UAE and the Kingdom of Saudi Arabia, such that travel restrictions can have an adverse impact on its ability to swiftly scale-up its workforce to meet the demands of its business. Localisation requirements in jurisdictions where the Group operates, for example in the UAE and the Kingdom of Saudi Arabia, also affect the Group's ability to manage its personnel in a cost-efficient manner in light of the variable needs of the business resulting from contract awards from time to time. If the Group is unable to attract, mobilise and retain its workforce or find suitable replacements in a timely manner, its ability to perform its obligations and realise its strategic objectives could be impaired. The Group's ability to realise its strategic objectives could also be impaired if the Group is unable to recruit sufficient numbers of new personnel of the right calibre to support its strategic objectives, any of which could adversely affect the business, financial condition, results of operations and prospects of the Group.

Additionally, the Group's ability to continue to attract, mobilise and retain significant numbers of expatriate workers is subject to a number of uncertainties, including the work permit and residence visa application process and the relativity of potential earnings in the UAE of expatriate workers compared to earnings in their home countries. There can be no assurance that such work permits or residence visas will in the future be granted to the Group's personnel as they are dependent on the consent of the local authorities. If the Group is unable to obtain the necessary permits or residence visas for its personnel, operational difficulties may arise. As a consequence, the business, financial condition, results of operations and prospects of the Group may be adversely affected.

Further, in common with other energy engineering companies, the Group's business depends on the efficient management of staffing levels, particularly in view of the number of its employees and the size of its projects it delivers. The Group may not, however, be able to utilise its employees efficiently. The nature of the Group's projects means that it experiences varying levels of labour requirements at different stages. As operations intensify, the Group is required to increase its workforce in large numbers and ensure that these workers are properly trained, including through the Lamprell Assessment and Training Centre, to maximise productivity levels and efficient execution of its projects. As projects near completion, the personnel required typically decreases significantly, and large numbers of workers may need to be demobilised to their home countries quickly. Whilst the Group has implemented systems and processes to monitor employee utilisation levels, there can be no assurance that the Group will be able to have sufficient visibility of the utilisation of its staff. In the event that the Group fails to deliver a project by the agreed delivery deadline, additional staffing may be needed as a result, which may have a knock-on effect on the staffing requirements for other projects of the Group. Constant high volatility in the number of workers, rather than steady staffing numbers, leads to increasing costs and administration, which in turn may impact the Group's financial condition and results of operation if the Group is unable to efficiently manage staffing levels with project demands and delivery dates.

1.13      The Group relies on certain IT systems and outsources most of its IT functions to a third party, the failure of which to operate effectively may have an adverse impact on the Group's operations

Any failure by the Group or its contractor to properly update, maintain, utilise and protect its IT systems could adversely its impact to serve customers and could cause the Group to incur higher operating costs and experience delays in the execution of its re-organised business plan.

The Group's operations are dependent on a number of IT network and systems to support its business, including the enterprise resource planning software and engineering design software provided by third parties. Whilst most of the Group's data is micro-segmented and stored on the cloud, which helps to contain any attacks, the Group's systems are potentially vulnerable to damage or interruption from various factors, including, but not limited to, power loss, telecommunication failures, data corruption, network failure, human error, computer viruses, security breaches, natural disasters, theft, vandalism or other acts. If the Group's disaster recovery procedures are not sufficient to mitigate the harm that may result from a disaster or disruption to the IT infrastructure that supports the Group's businesses, including loss of data, this could have a material adverse effect on its ability to continue to operate those businesses without interruption, which in turn may affect the Group's financial condition, delivery of projects and reputation.

Moreover, security and cyber threats are becoming increasingly sophisticated and are continually involving. The last few years have seen an increase in cyber-attacks on critical infrastructures and markets in which the Group operates, such as oil and gas companies and power utilities. Multinational companies, including within the oil and gas industry, have seen an increasing number of attacks. In February 2020, a US natural gas compressor facility was forced to shut down for two days following a ransomware attack. 2019 saw a cyberattack on Mexico's Pemex in which less than five per cent. of its computers were affected. This trend, alongside the Group's strategic objective of digitalisation, may increase the Group's exposure to such attacks. If the Group were subject to, or perceived to be subject to, a cyberattack or other cybersecurity threat, it could, among other things, disrupt business operations, lead to unauthorised disclosure of data or damage or destroy IT systems and/or data, each of which could expose the Group to remedial costs and well as litigation or regulatory actions. Moreover, any such cyberattack or other cybersecurity threat could harm the Group's reputation with customers and investors. Any one or more of these events could have a material adverse effect on the Group's business, financial condition and results of operations.

The Group has recently outsourced most of its IT functions to Injazat, Lamprell's digital service partner. This is a new IT infrastructure for the Group and there is no guarantee that the service provider may provide and maintain robust systems up to a standard that can allow the Group to operative effectively, let alone achieve the anticipated cost savings for Lamprell from the outsourcing. Any failure of the new infrastructure may have an adverse effect on the Group's operations and financial position.

1.14      Failure to implement successfully the Group's new strategy may have a material adverse effect on the Group's financial condition and future prospects

The Group's financial performance, future prospects and ability to meet its targets depend on its ability to implement its business plan, including the new "Lamprell Reimagined" strategy. In January 2021, the Group announced a strategic reorganisation of its business to increase the Group's focus on renewables and the energy transition, increase alignment with customers and enable the Group to take full advantage of significant opportunities in its core markets. The three distinctive units, renewables, oil and gas and digital, have different opportunities sets, as well as varying bid processes, and operational and capital requirements. While the Group has varying degrees of an established track record and success in each of these industries, the distinctive units and new strategy has yet to be fully implemented and may fail to produce anticipated results. The Group's ability to achieve the intended benefits of its new strategy, within the expected time frames, is subject to various estimates and assumptions. These estimates and assumptions are subject to significant economic, competitive, legal and other uncertainties, some of which are beyond the Group's control, including:

·      availability of financing;

·      lack of demand for new products or services;

·      unforeseen difficulties in operations, technologies, products, services, accounting and personnel;

·      increased cybersecurity risk;

·      lack of engagement with suppliers/restricted supply of key products; and

·      unanticipated competitive responses.

For example, a disruptive technology or business model deployed by a competitor or new entrant to the markets in which the Group operates (including increased digitisation of services) could impact the Group's ability to compete. The Group has several digital innovations under investigation and proactively monitors the emergency of any new digital entrants, technology or services from competitors. However, if the Group's technology development initiatives fail to be deployed successful or if it fails to adequately diversify its business, core operational services and products in order to limit the threat and impact from disruptive business models and technologies, the Group's results of operations and financial position may be adversely impacted.

Historically, the Group commenced projects that did not realise the anticipated value or profits. For example, the Group continues to market its new state-of-the-art pipeshop, which were costly investments and have demonstrated limited success to date in terms of potential sales. As the Group expands into new territories and embarks on projects where it may have limited experience, there is no assurance that the Group will be able to realise the economic benefit of its strategy in the short term or at all.

1.15      Returns from the business require initial capital investment

In order to fund its re-organised business structure and to stay competitive on new and existing projects, the Group has to invest in its yard processes/layout, IT infrastructure/ operating systems and digital capabilities. Failure to do so may lead to the Group not being able to win new projects or achieve the necessary margins to improve overall profitability to the required group levels. The digital business, for example, represents a new opportunity for the Group to capitalise on its in-depth expertise of engineering and construction processes with cutting edge technology in order develop a digital solutions to its customers. As a new business unit with possible untested digital solutions, failure of the Group to support its development plans may have an adverse impact on the ability of the unit to develop original product lines and strengthen its platform, which in turn may affect the Group's business strategy, results of operations and financial condition.

In addition, the Group operates in a highly competitive industry and any commercial advantage is dependent on the Group's ability to keep pace with developments. This includes proactively identifying gaps in the market as well as scaling up quickly, both of which require capital. For example, failure to adapt new product new lines, such as HVAC/HVDC platforms and floating windfarm turbines, may perpetuate a reliance on a narrow product line range. If the Group is unable to move or move quickly, the Group may be overtaken by peers and become increasingly uncompetitive, which in turn could have a material adverse effect on the Group's financial performance and operations.

The Group may also fail to invest and/or realise projected revenues, values or internal return rates from major capital investments in the timeframe anticipated or at all. This may be due a number of factors, including lack of understanding of the market conditions or projections at the time of investing, changes in market conditions and dynamics or changes in product's specifications or pricing. This may result in the Group missing strategic opportunities or lead to a write-down or impairment for an asset, either of which may negatively impact the financial performance or reputation of the Company in circumstances where it cannot deliver planned returns.

1.16      The Group depends on the performance of, and its ability to retain and motivate, its Directors, senior managers and other essential employees

The Group's business depends on the efforts, expertise and experience of its Directors, senior managers and other essential employees. These individuals are instrumental in setting the Group's strategic direction, operating its business, monitoring systems and the performance of the Group under its contracts and implementing the financial position and prospects procedures referred to above, as well as identifying, recruiting and training key personnel, and identifying business opportunities. Also, within this team, the Group relies on certain individuals for the management of its external relations with customers, governments and other authorities, and other key contacts. The Group has employment agreements with all of its Directors and its senior managers that provide for specified notice periods. In addition, the employment agreements in respect of the Executive Directors and senior managers include non-compete and non-solicit provisions, however, the Group does not maintain key man life insurance policies for its Directors or senior management. The loss of one or more of these individuals could materially impair the Group's business and development.

The Group also provides incentivisation packages for its Directors, senior managers and other essential employees, including performance shares and retention options. However, due to the recent financial and share price performance of the Group, very few LTIPs have vested in the last decade, which reduces the intended impact of the awards. Failure of the Group to sufficiently incentivise its Directors, senior managers and other essential employees may lead to an inability to motivate key personnel and therefore potential departure.

If, for any reason, the services of any member of the management team were to be lost or curtailed, the Group's business and thereafter financial condition, results of operations and prospects could be adversely affected. Moreover, there can be no assurances that the Group could quickly replace these individuals with persons of equivalent experience and capabilities without significant additional cost, or at all.

1.17      The Group's revenues, cash flows and earnings may vary in any period depending on a number of factors, including its performance on major contracts

The Group's revenues from its lump sum contracts are recognised using the percentage-of-completion method of accounting. This involves recognising a proportion of contract revenues and earnings as the contract progresses towards 100 per cent. completion. The revenues and earnings (or losses) are based on estimates of contract costs and may not reflect actual revenues, earnings or losses for the contract. In addition, although revenue and earnings may be recognised, these do not represent cash received and accordingly there may be a difference between revenues and cash flows for any particular reporting period.

In particular, with respect to new build fixed price construction contracts with an expected contract duration of 18 months or greater, profit on such contracts will only be recognised when the contract has progressed to 20 per cent. based on the total estimated cost of the contract and the ultimate outcome can be reliably estimated.

Cancellations of projects or delays in completion of contracts could affect the revenue, cash flow and earnings actually recognised from contracts reflected in the Group's financial statements, and in certain circumstances may result in a reduction, reversal or elimination of previously reported revenues or earnings. Accordingly, there can be no assurance that the revenues described in the Group's financial statements will be realised. In the event of project cancellation, there may be no contractual right to the total revenues reflected in financial statements other than reimbursement for certain costs. If the Group were to experience significant cancellations or delays of projects in its financial statements, its business, financial condition, results of operations and prospects may be adversely affected.

1.18      The Group's debt service obligations and requirements to comply with related covenants, may in the longer term adversely affect its business, financial condition and results of operations

Assuming the Capital Raising completes, the Group's IMI Rig Facility becomes capable of drawdown and/or the Group secures the Second Tranche of the Project Finance Facilities, the Group's leverage, debt service obligations and requirements to comply with related covenants in such agreements could have negative consequences for the Group in the longer term, including the following:

·               limiting the Group's ability to obtain additional financing in the future, including its ability to refinance its debt;

·               limiting the Group's flexibility in planning for, or responding to, changes in its business, technology, customer, demand, competitive pressures and the markets in which it operates; and/or

·               placing the Group at a competitive disadvantage to other, less leveraged competitors or those who are not reliant on external funding,

each of which, alone or in combination, could result in the Group experiencing limited financial flexibility and constraints on implementing its new strategy and pursuing growth opportunities, which in turn may have a material adverse effect on the Group's business, financial condition and results of operations.

1.19      The Group's business may be materially adversely affected if the US dollar/UAE dirham-tied exchange rate were to be removed or adjusted

While the Group's functional currency is UAE dirhams, its financial reporting is in US dollars. Although the US dollar/UAE dirham exchange rate is currently fixed, it may not be so in the future. Any removal or adjustment of the fixed rate could cause the Group's operations and reported results of operations and financial condition to fluctuate due to currency translation effects which could have a material adverse effect on its business, financial condition and results of operations.

1.20      Continued instability and unrest in the MENA region may adversely affect the economies in which the Group does business

Since late 2010, there have been significant civil disturbances and political turmoil affecting several countries in the MENA region, which to date have seen increasing tensions between Iran and western nations as well as have led to the collapse of the political regimes in Tunisia, Egypt, Libya and recently Yemen following the Arab Spring uprisings. There is increased global threat from terrorism, particularly in relation to remote attack by combatants using drones. Such continuing instability and unrest in these region may significantly impact the macroeconomic conditions and economies in which the Group does business, including both the financial markets and the real economy. Such impacts could occur through a lower flow of foreign direct investment into the region, capital outflows or increased volatility in the global and regional financial markets. Although the UAE or the Kingdom of Saudi Arabia has not been directly impacted by the unrest in the broader region to date, it is unclear what impact this unrest may have on the UAE or other countries in which the Group does business in the future. The business, financial condition and results of operations of the Group may be materially adversely affected if, and to the extent, this regional volatility leads to an outflow of expatriate residents or capital, or to potential instability or government change in the UAE or other countries.

1.21      The Group may be subject to work stoppages or other labour disturbances

Work stoppages or other labour disturbances, such as industrial action, with the Group's employees or those of the Group's contractors and suppliers may occur in the future. Lamprell suffered a two-day industrial dispute in May 2020, which involved some workers blocking access to the Group's facilities following the release of certain members of Lamprell's workforce due to COVID-19 concerns and who were unable to be repatriated as a result of travel restrictions in force at that time. There can be no assurance that there will not be future work stoppages or labour disturbances. The occurrence of any of the foregoing could materially adversely affect the Group's business, prospects, financial condition and results of operations.

2.         RISKS RELATING TO LEGAL, REGULATORY AND COMPLIANCE

2.1       The Group may be subject to onerous terms which could impact revenue or earnings as a result of breach or non-compliance

The Group's contracts with customers may contain provisions that are onerous and give rise to increased exposure to liabilities and potentially losses, which may be material. The Group operates in highly competitive industries, which may lead to limited opportunities to negotiate contractual terms. The continuing market downturn may also lead to counterparties adopting an increasingly firm line on contractual terms, such that the Group may be obliged to take on additional risks under contracts. By way of example, contracts may include very high or uncapped liabilities (whether as a result of market practice or by operation of law), uncapped or potentially onerous volume provisions, key performance indicators, remediation or maintenance costs and liability for product defects, faulty workmanship or errors in design. If the Group is unable to properly mitigate any contractual liability in other ways, this could lead to the Group incurring additional costs or losses, which could affect the Group's overall financial performance.

Further, the Group has proactive a quality assurance and quality control departments which set processes and procedures for various aspects of the business based on industry benchmarks such as the ISO, monitor the effective implementation of the suggested processes and procedures, undertake preventive and corrective action, and manage other certified systems, such as the International Standards Organisation, the American Petroleum Institute and OHSAS 18001. This is to mitigate the risks of some of the contractual liabilities mentioned above. However, whilst the Group monitors compliance with industry standards, certain customers insist on compliance with even more exacting standards. For instance, the Group undertakes an extensive programme of qualification testing in order to prove the acceptability of its services and their suitability for operations. The monitoring process often continues after finalisation of a project.

Failure of any of the monitoring, testing and inspection procedures may call into question the fitness for purpose of the particular construction. Further, there can be no assurance that such monitoring will be adequate to detect all defects, or that the Group will properly undertake the monitoring. The services provided (or sub-contracted) by the Group may contain faulty workmanship, errors in design, manufacturing defects or other errors or failures that are not detected by monitoring procedures.

To the extent that the Group incurs substantial claims of this nature in any period or the Group fails to meet any of the onerous obligations in its contracts, its reputation and ability to obtain future business could be materially and adversely affected, which could have a material adverse effect upon the Group's financial condition, results of operations and prospects.

2.2       Liability to customers under warranties may materially and adversely affect earnings

The Group provides warranties for the products and services it supplies and for the proper operation and adherence to specifications of the engineering and construction services equipment it modifies or constructs or, in relation to new build projects and designs.

The Group's warranty obligations for most oil and gas projects extend for a period of one year from delivery and in some cases can extend for up to two years from delivery. Failure of this equipment to operate properly or to meet specifications may increase costs by requiring additional engineering resources and services, or by requiring the Group to replace parts and equipment or provide monetary reimbursement to a customer. Contractual provisions in offshore wind and other renewables projects, for example, often impose significant risks and liabilities on contractors and the supply chain, including a broader scope of warranties and extended warranty periods of up to 10 years.

To the extent that the Group incurs substantial warranty claims in any period (whether or not covered (in whole or in part) by insurance), the Group's reputation, and ability to obtain future business could be materially and adversely affected and, as a result, the financial condition, results of operations or prospects of the Group may be adversely affected.

2.3       The Group may be involved in litigation in the future

The Group is involved in, and may become involved in additional legal, administrative, regulatory and other proceedings, inquiries and investigations that may be costly and may divert management's attention away from the running of the business. Liabilities or financial penalties resulting from any current or threatened legal actions may have a material adverse effect on the Group's financial condition, results of operation and cash flows.

Claims or disputes involving clients, suppliers, sub-contractors and other counterparties may be brought against or by the Group. In particular, the risk of significant claims arising between the Group and its clients relating to breach of contract (or otherwise relating to or arising from the terms and conditions of a contract), programme delays or changes in scope of work is generally considered to be greater in the context of large, complex infrastructure projects as compared to lower value building contracts. This is particularly the case when a project has been subject to significant delay or significant cost overrun.

There can be no guarantee or assurance as to the number or value of any such claims that the Group may bring or be subjected to in the future. Any such claims or disputes brought against or by the Group may take significant time and resource whether internal or external to the Group) and incur significant cost (which may not be recoverable), and it is difficult to predict or forecast accurately the value or outcome of any such claims or how long they will take to resolve. Such claims could have adverse financial consequences for the Group and the Group may not have made adequate reserves for the potential losses associated with litigation, including legal fees and awards of damages. Negative outcomes of litigation in which the Group is involved may also adversely affect the Group's reputation, which could have a material adverse effect upon the business, financial condition, results of operations and prospects of the Group.

2.4       The Group is subject to the legal, economic and political conditions of operating in emerging markets

The legal systems in many of the countries in which the Group operates, including the UAE, the Kingdom of Saudi Arabia and Qatar, for example, are still developing and have undergone significant changes in recent years. The interpretation of, and procedural safeguards relating to, these legal and regulatory systems are also still developing; this has led to uncertainty concerning the actions that are necessary to guarantee compliance with those laws. The Group may not be able to obtain the legal remedies provided for under these laws and regulations in a timely manner, for example, in relation to the enforcement of contracts against sub-contractors, and may also be subject to legal remedies being granted in favour of counterparties. As a result, the Group may not be able to enforce its rights in full or at all and may not therefore be adequately protected. A lack of legal certainty in operating the Group's business may have a material adverse effect on the business, financial condition and results of operations of the Group.

Furthermore, some countries in which the Group operates are in the process of transitioning to a market economy and, as a result, are experiencing changes in their economies and their government policies that could adversely affect the Group's business in these countries. Additionally, changes in investment policies or shifts in the prevailing political climate in any of the countries in which the Group operates, or seeks to operate, could result in the introduction of increased government regulations with respect to, among other things:

·               price controls;

·               export and import controls;

·               foreign ownership restrictions;

·               foreign exchange and currency controls; and

·               labour and welfare benefit policies.

These uncertainties are heightened in markets to which the Group has a significant or increasing exposure. Any unexpected changes in the political, social, economic or other conditions in such countries, or in neighbouring countries, could have a material adverse effect on the business, financial condition and results of operations of the Group.

2.5       The Group conducts its business within an increasingly strict environmental and health and safety regime as well as an evolving regulatory area related to climate change and may be exposed to potential liabilities and increased compliance costs

The Group is subject to laws and regulations governing activities that may have adverse environmental effects, such as discharges to air and water and the handling, storage and disposal of hazardous wastes and substances. It is the nature of such laws and regulations that they are subject to change, and tend to become more stringent over time. The operations of the Group are also subject to various strict health and safety laws and regulations, with potentially high fines or liabilities for non-compliance. Whilst the Group is in material compliance with applicable environmental and health and safety laws, there can be no assurance that breaches by the Group of such laws have not occurred or will not occur or be identified or that such laws will not change in the future in a manner that could materially and adversely affect the Group. See risk titled "The effects of the COVID-19 pandemic have adversely impacted, and will continue to adversely impact, the Group's business, financial condition and results of operations".

Environmental and health and safety laws and regulations may also impose obligations to investigate and remediate, or pay for the investigation and remediation of, environmental pollution or contamination, or pay compensation to public and private parties for related damages. Whilst the Group seeks to comply with such obligations, there can be no assurance that remediation will not be required or that third party claims in respect of pollution or contamination will not arise in future which could have a material adverse effect on the business, financial condition, results of operations and prospects of the Group.

In addition, the energy transition towards a decarbonised environment has meant that the legal and regulatory environment of which the Group operates is constantly evolving. This has created new compliance obligations, including an enhanced disclosure regime set out in, among others, the Taskforce for Climate-Related Financial Disclosures. Failure of Lamprell to adapt to these changes in a timely manner may expose the Group to potential legal and regulatory liabilities and attract shareholder activism, which has seen investors becoming more vocal in tackling climate change. This risk is particularly acute for the Group, which has traditionally operated in the hydrocarbon industry. The impact of any of these events may have a material adverse effect on the Group's business and financial condition.

2.6       Changes in the fiscal regime of the UAE and the Kingdom of Saudi Arabia could adversely impact the financial condition of the Group and tax regimes in certain jurisdictions are subject to differing interpretations and are subject to change

The profitability of the Group is impacted by the levels of direct and indirect taxation levied on its profits and services and on the profits and services of its customers in the locations in which they operate. Historically, the Group has operated in low or no tax areas. For instance, the Group has operations in the Hamriyah Free Zone and the Jebel Ali Free Zone, which has been mothballed in 2020, and has been granted tax holidays in those free zones for periods of 15 years and 50 years, respectively, commencing from 6 November 2006 and 1 February 2002 respectively, being the dates of the relevant Group company's registration in those free zones. Expiry of those tax holidays or the enforcement of the respective tax decrees issued by the Rulers of the Emirates of Dubai or Sharjah, which have not yet been enforced since the date of their promulgation in the late 1960s, could have an adverse impact on the profit that can be achieved by the Group. If enforced, those tax decrees could also have retroactive effect.

Tax regimes in certain jurisdictions in which the Group operates may be subject to legislative change and changes in administrative interpretation. In particular, there has been increased pressure in recent years for taxes to be introduced, including potential corporation taxes. Such changes may be implemented at short notice and also with retrospective effect. There is therefore less assurance in these jurisdictions that the relevant tax code will not be changed in a manner adverse to the stability and predictability of the tax system. In the event of any changes, the Group cannot guarantee that its interpretations of such laws will be accepted by the relevant authorities and there can be no assurance that the tax authorities will not seek to challenge or dispute such interpretations, and the current political climate and recent political media focus on tax optimisation schemes generally increases the risk of discussions or disputes with tax authorities.

Further, the Group's conduct of operations may not be held to be consistent with such changes in interpretation, which could require the Group to change aspects of its operations and which may correspondingly lead to a decline in revenues or profits. Moreover, as the rulers or governments, as the case may be, including in the countries or jurisdictions in which the Group operates, look for ways to increase tax receipts, including through the taxation of operations, activities, ownership of assets or profits arising from business carried on in those countries or jurisdictions, there can be no assurance that new direct and indirect taxes will not be introduced or that the tax rates in respect of existing taxes will not be increased or that any exemptions or reliefs from such taxes currently available to the Group will not be withdrawn or amended in a way which is adverse to the Group. Any such adverse changes in the applicability of tax to the Group could increase the levels of taxation payable by the Group which would have an adverse effect on the Group's business, financial condition, results of operations and prospects. In addition to the possibility of a substantial tax burden being imposed on the Group, these risks and uncertainties complicate the Group's tax planning and related business decisions, which could have a material adverse effect on the Group's business, financial condition, results of operations and prospects.

2.7       The Group faces potential challenges in adapting to the new legal and regulatory environment as it expands in different geographical markets and the digital sector

As part of the strategic reorganisation, Lamprell is actively targeting its addressable market in the renewables industry which continues to grow, with bidding activity in its traditional European markets as well as new geographies including the US and Asia gaining traction. The scale of the US offshore renewables projects is significantly larger than our current and previous experience in Europe, which represents an attractive opportunity for the Group. The Group currently does not have operations, staffing or a history of working in the US or other targeted markets, other than in Europe. Adapting to the legal and regulatory environment of these new markets will be an increasing challenge for the Group as it expands into these territories. The Group may be subjected to requirements for joint ventures with local entities, multiple tax regimes, export and import restrictions, other restrictions on foreign trade or investment sanctions, and the burden of complying with a wide variety of foreign laws and regulations. Further, the Group may be subjected to comply with additional regulations as a result of its expansion of its digital business unit. The Group may not have the expertise, capability or the systems to manage these requirements, which may impact the Group's ability to efficiently operate in these areas and therefore its growth strategy in the long term.

2.8       The Group's insurance and indemnities may not adequately cover all risks or expenses

The Group engineers and constructs large industrial facilities in which an accident or a service failure could cause personal injury, loss of life, damage to property, equipment or the environment, consequential losses and suspension of operations. The Group may also be liable for acts and omissions of sub-contractors or joint venture partners which cause such loss or damage. Insurance and contractual limitations on liability may not adequately protect the Group against liability for such events, including events involving pollution, or against losses resulting from business interruption. In addition, indemnities which the Group receives from such parties may not be easily enforceable because of the unpredictability of legal remedies referred to above, or other reasons, may be for an inadequate amount and therefore valueless or may exceed the amount recoverable from such parties due to their financial position. Moreover, the Group may not be able to maintain insurance at levels that it deems adequate or ensure that every contract contains and has properly incorporated adequate limitations on liabilities. Any claims made under insurance policies are likely to cause premiums to increase. Although the probability of such claims is low, any damage caused by the Group's products or services that is not covered by insurance, is in excess of policy limits, is subject to substantial deductibles or is not limited by the incorporation of adequate contractual limitations of liability, may adversely affect the business, financial condition, results of operations and prospects of the Group.

3.         RISKS RELATING TO THE CAPITAL RAISING AND ORDINARY SHARES

3.1       The market price of the New Ordinary Shares could be subject to volatility

The market price of the New Ordinary Shares could be subject to significant fluctuations due to changes in sentiment in the market regarding these securities. These fluctuations could result from national and global economic and financial conditions, market perceptions of the Group and its industry and various facts and events, including regulatory changes affecting the Group's operations, market appraisal of the Group's strategy, changes to the Group's credit rating, variations in the Group's operating results and/or business developments of the Group and/or its competitors. Furthermore, the Group's operating results and prospects from time to time may be below the expectations of market analysts and investors. Any of these events could result in a decline in the market price of the New Ordinary Shares.

3.2       Shareholders are likely to experience dilution in their ownership of the Company

Shareholders not participating in the Placing will suffer a dilution of approximately 16.7 per cent. to their existing interests in the Company as a result of the Placing. In addition, Shareholders may experience immediate and substantial dilution by further share issuances. Other than pursuant to the Capital Raising, Lamprell has no current plans for an offering of shares apart from possible offerings in relation to employee share plans or scrip dividend schemes. However, it is possible that Directors may decide to offer additional shares in the future. If Shareholders did not take up such offer of shares or were not eligible to participate in such offering, their proportionate ownership and voting interests in Lamprell would be reduced and the percentage that their Ordinary Shares would represent of the total share capital of Lamprell would be reduced accordingly.

3.3       The market price for the Ordinary Shares may decline below the Placing Price

The public trading market price of the Ordinary Shares may decline below the Placing Price. Should that occur prior to Admission, investors who have committed to subscribe for New Ordinary Shares under the Placing will suffer an immediate loss as a result. Moreover, Shareholders may be unable to sell the New Ordinary Shares at a price equal to or greater than the acquisition price for those shares. If the public trading market price of the Ordinary Shares declines below the Placing Price, investors who have acquired any such Ordinary Shares will likely suffer a loss as a result.

3.4       Sufficient liquidity in the market and potential share price volatility

Admission should not be taken as implying that there will be a liquid market for the New Ordinary Shares. There is no guarantee that there will be sufficient liquidity in the Ordinary Shares to sell or buy any number of Ordinary Shares at a certain price level. The Company cannot predict the extent to which an active market for the Ordinary Shares will develop or be sustained, or how the development of such market might affect the market price for Ordinary Shares. An illiquid market for the Ordinary Shares may result in lower trading prices and increased volatility, which could adversely affect the value of any investment.

3.5       Lamprell cannot assure investors that it will make dividend payments in the future

The dividend payments to Shareholders will depend upon a number of factors, including the results of operations, cash flows and financial position, contractual restrictions and other factors considered relevant by the Board. Under Isle of Man law, Lamprell may pay dividends on the Ordinary Shares only out of profits available for distribution determined by the Board.

As a holding company, Lamprell's ability to pay dividends in the future is affected by a number of factors, principally its ability to receive sufficient dividends from subsidiaries. The payment of dividends to Lamprell by its subsidiaries is, in turn, subject to restrictions, including certain regulatory and legal requirements. The ability of these subsidiaries to pay dividends is subject to applicable local laws and other restrictions including, but not limited to, applicable tax laws. These laws and restrictions could limit the payment of future dividends to Lamprell by its subsidiaries, which could restrict Lamprell's ability to pay a dividend to its shareholders.

3.6       A Shareholder or an investor whose principal currency is not pounds sterling is exposed to foreign currency risk

The Ordinary Shares are denominated in pounds sterling. An investment in Ordinary Shares by an investor whose principal currency is not pounds sterling exposes the investor to foreign currency risk, including in relation to any payment of a dividend by Lamprell. Any depreciation of pounds sterling in relation to such foreign currency would reduce the value of the investment in the Ordinary Shares in foreign currency terms, and any appreciation of pounds sterling against such other currency would increase the value in foreign currency terms.

3.7       Admission of the New Ordinary Shares may not occur when expected

Admission is subject to the approval (subject to satisfaction of any conditions which such approval is expressed) of the FCA and Admission will become effective as soon as a dealing notice has been issued by the FCA and the London Stock Exchange has acknowledged that the New Ordinary Shares will be admitted to trading. There can be no guarantee that any conditions to which Admission is subject will be met or the FCA will issue a dealing notice.

3.8       The ability of Overseas Shareholders to bring actions or enforce judgments against the Group or its directors or officers may be limited

The ability of an Overseas Shareholder to bring an action against the Group may be limited under law. Lamprell is a public limited company incorporated in the Isle of Man. The rights of holders of Ordinary Shares are governed by Isle of Man law and the Articles. These rights differ from the rights of shareholders in typical US corporations and some other non-Isle of Man corporations. In particular, Isle of Man law significantly limits the circumstances under which shareholders of Isle of Man companies may bring derivative actions. Under Isle of Man law, in most cases, only the Company can be the proper claimant for purposes of maintaining proceedings in respect of wrongful acts committed against it. Neither an individual shareholder nor any group of shareholders has any right of action in such circumstances. In addition, Isle of Man law does not afford appraisal rights to dissenting shareholders in the form typically available to shareholders in a US corporation.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors and executive officers. The majority of the Directors and executive officers are residents of the United Kingdom. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within that Shareholder's country of residence or to enforce judgments of courts of that shareholder's country of residence based on civil liberties under that country's securities laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than the Isle of Man or the United Kingdom against the Directors or executive officers who are residents of the United Kingdom or countries other than those in which judgment is made. In addition, Isle of Man or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on the foreign securities laws brought against the Company or the Directors in a court of competent jurisdiction in Isle of Man or other countries.

 

APPENDIX 3: DEFINITIONS

 

"£", "GBP", "pounds", "pound sterling" or "sterling", "p", "penny" or "pence" are to the lawful currency of the UK;

"$", "USD", "US Dollars" or "United States Dollars" means the lawful currency of the United States;

"Admission" means the admission of the New Ordinary Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities;

"ADNOC" means the Abu Dhabi National Oil Company;

"Articles" means the articles of association of the Company from time to time;

"Announcement" means this announcement, including the terms and conditions set out herein;

"Board" means the board of Directors of the Company from time to time;

"Bookbuild" means the bookbuilding process to be commenced by Investec to use reasonable endeavours to procure Placees for the Placing Shares, as described in this Announcement and subject to the terms and conditions set out in this Announcement and the Placing Agreement;

"Capital Raising" means the Placing and Subscription;

"Circular" means a circular expected to be published by the Company in connection with the Capital Raising;

"CREST" means the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in the CREST Regulations);

"CREST Regulations" means the UK Uncertified Securities Regulations 2001 (as amended);

"CRPO" means contract release purchase orders;

"Daily Official List" means the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange;

"Directors" means the directors of Lamprell as at the date of this Announcement and "Director" means any one of them;

"Disclosure Guidance and Transparency Rules" means the disclosure guidance and transparency rules of the FCA made pursuant to Part VI of FSMA;

"Disclosure Package" means this Announcement together with the Placing Results Announcement;

"EPCI" or "EPC(I)" means Engineering, Procurement, Construction and Installation;

"EU" means the European Union first established by a treaty made at Maastricht on 7 February 1992;

"EU Prospectus Regulation" means Prospectus Regulation (EU) 2017/1129;

"Euroclear" means Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales;

"EU MAR" means the Market Abuse Regulation (EU) No.596/2014;

"EUWA" means the European Union (Withdrawal) Act 2018, as amended;

"Executive Directors" means the executive directors of the Company from time to time which as at the date of this Announcement are Christopher McDonald and Tony Wright;

"Extraordinary General Meeting" means an extraordinary general meeting of the Company;

"FCA" means the Financial Conduct Authority in the United Kingdom;

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

"Global Co-ordinator and Sole Bookrunner" means Investec;

"Group" means the Company and its subsidiaries from time to time;

"IMI" means International Maritime Industries;

"IMI Rig Facility" means the $45 million revolving trade loan facility entered into by Lamprell Energy Limited as borrower on 28 October 2021, backed by the UAE Export Credit Agency and secured by the proceeds of the Group's two IMI rigs currently under fabrication in the Group's Hamriyah facility;

"Investec" means Investec Bank plc;"Lamprell" or the "Company" means Lamprell plc;

"Latest Practicable Date" means 27 October 2021, being the latest practicable date prior to the publication of this Announcement;

"Listing Rules" means the rules and regulations made by the FCA under FSMA;

"London Stock Exchange" means the London Stock Exchange plc;

"LTA" means Saudi Aramco's long term agreement programme;

"LTIPs" means long term incentive plans;

"MAR" means EU MAR and UK MAR;

"MENA" means the Middle East and North Africa;

"New Ordinary Shares" means the Placing Shares and the Subscription Shares;

"Official List" means the Official List maintained by the FCA;

"OPEC" means the Organisation of Petroleum Exporting Countries;

"Ordinary Shares" means the ordinary shares of 5 pence each in the capital of the Company;

"Placing Shares" means the new shares to be issued by the Company pursuant to the Placing;

"Placee" means a person procured by Investec to subscribe for Placing Shares;

"Placing" means the non-pre-emptive placing, to be conducted by means of an accelerated bookbuilding process with institutional investors, of the Placing Shares pursuant to the terms and conditions of this Announcement, and the Placing Agreement;

"Placing Agreement" means the placing agreement dated 28 October 2021 between Lamprell and Investec;

"Placing Price" means 32.0 pence;

"Placing Results Announcement" means the placing results announcement expected to be published by the Company on a Regulatory Information Service on or around 29 October 2021 confirming the results of the Placing following completion of the Bookbuild;

"Placing Shares" means the new Ordinary Shares to be issued by the Company pursuant to the Placing;

"PRA" or "Prudential Regulation Authority" means the UK Prudential Regulation Authority;

"Project Finance Facilities" means the IMI Rig Facility together with the Second Tranche;

"Regulatory Information Service" means any of the services set out in Appendix 3 of the Listing Rules;

"Saudi Aramco" means the Saudi Arabian Oil Company;

"Second Tranche" means the option of a further $45 million accordion funding arrangement subject to the provision of additional security to the banks similar to that of the IMI Rig Facility;

"Securities Act" means the United States Securities Act of 1933;

"Shareholders" means the holders of Ordinary Shares in the capital of the Company;

"Subscription" means the conditional subscription of for the Subscription Shares by certain Directors;

"Subscription Shares" means the new Ordinary Shares to be issued by the Company pursuant to the Subscription;

"UAE" or "United Arab Emirates" means the Federation of the United Arab Emirates, comprising the Emirates of Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-Khaimah, Sharjah, Umm Al-Quwain;

"UAE Dirhams" or "AED" means the lawful currency of the UAE;

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

"UK MAR" means Market Abuse Regulation (EU) No.596/2014 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020;

"UK Prospectus Regulation" means the EU Prospectus Regulation as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018;

"United States" or "US" means the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction and any political sub-division thereof;

"WTG" means wind-turbine generator.

 

 

 

 

 

- Ends -

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IOEEASEPALAFFFA
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Related Charts