K3 Business Technology Group PLC Fundraising & Board Changes (7403H)

TIDMKBT

RNS Number : 7403H

K3 Business Technology Group PLC

12 June 2017

THIS ANNOUNCEMENT (INCLUDING THE APPIX) AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL ("RESTRICTED JURISDICTION"). THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. THE SECURITIES DISCUSSED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMED (THE "US SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE US SECURITIES ACT. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SINGAPORE OR THE REPUBLIC OF SOUTH AFRICA.

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

12 June 2017

K3 Business Technology Group plc

Proposed Placing of 5,353,214 New Ordinary Shares at 140 pence per share

and Open Offer of up to 719,984 New Ordinary Shares at 140 pence per share

Key Points

   --     Placing to raise up to GBP7.5 million before expenses at a price of 140 pence per share 

-- Placing being conducted through an accelerated book build process which will open with immediate effect following this announcement

-- Open Offer to Qualifying Shareholders (with excess application facility) to raise up to GBP1 million at a price of 140 pence per share

-- Proceeds of Placing and Open Offer to be used to strengthen the Group's balance sheet and provide additional working capital whilst the Board conducts its review of Group resources and operations

-- Additional GBP0.7 million cash being invested in K3 through exercise of warrants by Johan Claesson

   --     Board changes also announced today, to take effect following the Placing 

-- Issue Price represents a discount of approximately 9.4 per cent to the closing mid-market price of K3's existing ordinary shares of 154.5 pence on 9 June 2017

-- Placing Shares, assuming full take-up, will represent approximately 14.9 per cent of the Company's existing issued share capital

-- Open Offer Shares, assuming full take-up, will represent approximately 2.0 per cent of the Company's existing issued share capital

   --     The Placing and Open Offer are conditional, inter alia, upon Admission 
   --     Further details of the Placing are set out in the appendix to this announcement 

Adalsteinn Valdimarsson, CEO of K3, commented:

"As we have reported previously, we are now engaged in a review of the Group's resources. The objective of this review is to refocus K3's growth strategy around its cash generating business units and the Group's large SME customer base.

"This proposed placing and open offer to qualifying shareholders will strengthen the Group's balance sheet and provide additional working capital during this review and enables us to operate with full flexibility as we make strategic decisions.

"The Group is undergoing transition but we believe the strategic steps we are taking create a solid platform for future growth. We remain encouraged by the underlying strength and performance of K3's profitable business units which generate significant recurring revenues and cash flows from our large SME customer base. We are also pleased with the pilot project underway for our new cloud-based modular technologies, which we expect to generate opportunities with both new and existing customers.

"We have also announced a number of changes to the composition of K3's board today, including the retirement of Chairman David Bolton and the appointment of Chief Financial Officer, Rob Price, to the Board. We would like to thank David Bolton for his significant contribution and counsel to K3 over almost 20 years. He has shown a high level of commitment and dedication to the Company during this time and we wish him well in his retirement. Non-executive Director, Stuart Darling, will hold the role of Chairman on an interim basis, while the Board undertakes a recruitment process.

"We will report on the results of the placing and open offer in due course."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR").

For further information, please contact:

 
 K3 Business Technology   Adalsteinn Valdimarsson,   T: 0161 876 4498 
  Group plc                CEO 
                           Rob Price, CFO 
 finnCap Limited          Julian Blunt/James         T: 020 7220 0500 
  (NOMAD & Broker)         Thompson (Corporate 
                           Finance) 
                           Emily Morris/Camille 
                           Gochez (Corporate 
                           Broking) 
 KTZ Communications       Katie Tzouliadis/Emma      T: 020 3178 6378 
                           Pearson 
 

Important notice

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

This announcement does not constitute, or form part of, a prospectus relating to the Company, nor does it constitute or contain any invitation or offer to any person, or any public offer, to subscribe for, purchase or otherwise acquire any shares in the Company or advise persons to do so in any jurisdiction, nor shall it, or any part of it form the basis of or be relied on in connection with any contract or as an inducement to enter into any contract or commitment with the Company.

The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). This announcement has been issued by and is the sole responsibility of the Company. The information in this announcement is subject to change.

This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations (a "Prohibited Jurisdiction"). This announcement and the information contained herein are not for release, publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

finnCap Ltd ("finnCap") is authorised and regulated by the Financial Conduct Authority in the United Kingdom. finnCap is acting solely as nominated adviser, broker and bookrunner exclusively for the Company and no one else in connection with the contents of this announcement and will not regard any other person (whether or not a recipient of this announcement) as its client in relation to the contents of this announcement nor will it be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on finnCap by FSMA or the regulatory regime established thereunder, finnCap accepts no responsibility whatsoever, and makes no representation or warranty, express or implied, for the contents of this announcement including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on behalf of it, the Company or any other person, in connection with the Company and the contents of this announcement, whether as to the past or the future. finnCap accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of the contents of this announcement or any such statement.

In connection with the Placing, finnCap and its respective affiliates, acting as investors for their own accounts, may subscribe for or purchase ordinary shares in the Company ("Ordinary Shares") and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Placing or otherwise. Accordingly, references to the Ordinary Shares being offered, subscribed, acquired, placed or otherwise dealt in should be read as including any offer to, or subscription, acquisition, placing or dealing by finnCap and any of its respective affiliates acting as investors for their own accounts. In addition, finnCap or its respective affiliates may enter into financing arrangements and swaps in connection with which it or its affiliates may from time to time acquire, hold or dispose of Ordinary Shares. finnCap has no intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Forward-looking Statements

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. No undue reliance should be placed upon forward-looking statements. These forward looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by applicable law or the AIM Rules for Companies.

K3 Business Technology Group plc

Proposed Placing of 5,353,214 New Ordinary Shares at 140 pence per share

and Open Offer of up to 719,984 New Ordinary Shares at 140 pence per share

   1.            Introduction 

The Company announces today the conditional Placing by finnCap of 5,353,214 new Ordinary Shares at 140p per share to raise GBP7.5 million (before expenses) and an associated Open Offer to raise up to GBP1.0 million. The Placing is being conducted through an accelerated book build process which will be launched with immediate effect following this Announcement. The net proceeds of the Placing and Open Offer, amounting to between GBP7.2 million and GBP8.2 million, will be used to strengthen the Group's balance sheet and to provide additional working capital whilst the Board undertakes its review of the Group's resources, as announced on 16 May 2017. The Company also announces today a number of Board changes, conditional on Admission, details of which are set out below.

The Placing is conditional on, inter alia, the passing of the Resolution at the General Meeting and Admission. The Open Offer is conditional on the Placing becoming unconditional in all respects save for Admission. It is expected that, subject to passing this Resolution, the New Ordinary Shares will be admitted to trading on AIM on 5 July 2017.

The Issue Price represents a discount of approximately 9.4 per cent. to the closing mid-market price of 154.5 pence per Ordinary Share on 9 June 2017 (being the last practical date prior to the announcement of the Placing).

The Directors and certain other Shareholders holding 13,969,555 Ordinary Shares, directly or indirectly, representing approximately 38.8 per cent. of the total voting rights of the Company intend to vote in favour of the Resolution to be proposed at the General Meeting.

   2.            Background to and Reasons for the Placing and Open Offer 

At the time of the appointment of the Group's new Chief Executive, Adalsteinn Valdimarsson, last October we instigated a programme to review the Group's senior management team in order to support the Group's long term growth plans. This process was substantially complete by the announcement of our interim results to 31 December 2016 on 27 March 2017 and included the appointment of Robert Price as the new Chief Financial Officer (in a non-board capacity) as well as a range of changes to the operational management with a view to streamlining the Group's management structure and promoting better cross-selling of products and services across the business. Ongoing annualised cost savings of approximately GBP3 million were achieved as a result of this management and associated operational restructuring. The Board believed that the tighter focus on cross-selling and the simplified organisational structure provided cause for optimism. At the time of the interim results we were able to announce a major new contract with The British Heart Foundation. We also reported a significantly improved pipeline of potential new deals.

Taken together, these factors gave the Board confidence that the Group's prospects were secure and that potential deals, including certain projects delayed earlier in the financial year, would start to come through. As we announced on 16 May 2017, this has not happened in the way we previously envisaged. Whilst some major deals have closed (such as those with The British Heart Foundation, as referred to above), other large contracts were not secured as expected. As a result of this, and despite the normal high seasonality inherent in the Group's fourth quarter trading (June being a key month for closing sales), the Board reduced guidance for the outturn for the year to 30 June 2017.

The Directors believe that a number of factors have contributed to this shortfall including:

l a softening in end market conditions, in particular in the retail sector;

l longer sales cycles inherent in securing larger scale deals;

l the accelerating industry shift to cloud-based consumption; and

l customers trending towards smaller incremental upgrades to existing ERP systems to extend useful life, as an alternative to wholesale new system implementation.

As a consequence of this, the Board has instigated a review to look specifically at the Group's resources and capabilities with the intention of:

l refocusing the growth strategy around the profitable and cash generative business units;

l driving down cost of customer acquisition and maximising client retention through a clear focus on the Group's existing large installed SME customer base;

l increasing the focus on the development and sale of the Group's own intellectual property, with a view to improving operating margin percentages;

l developing multiple "niche" software solutions capable of deployment in a wider range of Enterprise Resource Planning ("ERP") environments;

l increasing the quality of Group earnings through a greater focus on contracted, recurring revenue;

l continuing to migrate earnings away from discrete licence sales towards more "consumption based" revenue streams; and

l further focusing on centralisation and rationalisation of Group costs.

This review process may lead to the Board concluding that certain parts of the Group are non-core and therefore suitable for exit. During the course of this process, and given its inherent uncertainty, the Board has concluded that raising further working capital and strengthening the Group's balance sheet by way of the Placing and Open Offer would help to provide maximum flexibility to the Board when making strategic decisions and avoid circumstances in which decisions have to be made in a manner which is not conducive to maximising value for Shareholders. Further updates on this process will be provided in due course. The Placing is also key in securing certain amendments to the terms of the Group's existing facility agreement with its lending banks, as more fully described below.

   3.     Current Trading and Prospects 

The Board has concluded a thorough review of the Group's trading outlook for the year to 30 June 2017 since the trading update released on 16 May 2017. In the absence of unforeseen circumstances, the Directors now expect to report an operating loss (before exceptional reorganisation costs and impairment charges) of between GBP0.4 million and GBP2.4 million. The broadness of this estimate reflects the range of possible outcomes during June 2017 which remains a key selling month for the Group. Broadly speaking however the Directors expect profitable business units to generate an operating profit in the range of GBP6 million to GBP7 million, with loss-making business units generating operating losses of the same magnitude (after non-recurring write-downs of approximately GBP1.8 million). Exceptional costs are expected to rise to approximately GBP3.5 million from the GBP3.0 million reported on 10 January 2017. In addition, based on the loss-making performance of some of the business units, the Board now expects an impairment charge of approximately GBP2.0 million to write- down the carrying value of goodwill and other intangible assets.

Annualised costs savings of in excess of GBP3 million are expected to accrue as a result of the exceptional spending already incurred, as announced on 10 January 2017. With plans to continue to restructure so as to streamline and centralise activities, the Directors anticipate the run rate profitability of the Group to improve further. The Board also expects to continue investment in the Group's growing, profitable and cash generative business units.

The Group's profitable business units continue to see encouraging progress focused around SME customers. Furthermore, the Company's new cloud-based modular technologies have secured a pilot customer and the products are expected to generate sales opportunities with both new and existing customers.

As previously announced, the Board has taken the decision to change the Company's accounting reference date and financial year-end from 30 June to 30 November. As a result of this change, K3's next published financial information will comprise unaudited second interim results for the six months to 30 June 2017 together with unaudited results for the 12 months to 30 June 2017. These are expected to be announced during September 2017. The Company will then release audited results for the 17 months to 30 November 2017 by no later than 31 March 2018, and thereafter revert to a normal, biannual reporting calendar based on a 30 November year end. The Group intends to adopt IFRS 15 from the start of the new financial year, 1 December 2017, which is expected to assist in aligning reporting operating profits with cash generation in the medium term and in the short term improve reported working capital flows.

In tandem with the Board's review of the Group's trading the Directors have also undertaken a review of K3's financial position including discussion with the Group's senior debt lenders (Barclays Bank plc and HSBC Bank plc (together, the "Banks")) regarding its lending arrangements. In view of the Group's trading during the earlier part of this year, as referred to above, the Group has requested a deferral of the next due banking covenant test date (30 June 2017), at which point a technical breach of covenant would likely occur, until 30 November 2017 (with quarterly testing thereafter, in line with K3's new financial year) as well as relaxation of covenant levels at 30 November 2017 and 28 February 2018. Throughout this process the Banks have been, and remain, fully supportive of the Company and have formally agreed to waive the financial covenant tests at 30 June 2017, subject to Admission. Relaxation of the 30 November 2017 and 28 February 2018 covenant levels (together with bringing the test dates in line with K3's new financial year) remains subject to finalisation and execution of an agreement between the Banks and the Company in terms to be approved by finnCap amending the Group's existing facility agreement ("Facility Amendment Agreement"). This is expected to take place prior to the date of the General Meeting. The Board is confident of a successful outcome to this process and remains in constructive dialogue with its banking partners.

In view of the change of year end and the review process now being embarked upon, the Board does not envisage declaring a final dividend in respect of the 12 months to 30 June 2017. In the absence of unforeseen circumstances however and reflecting the Board's confidence in this process, the Directors anticipate being in a position to declare a final dividend when reporting results for the 17 months to 30 November 2017, although any such dividend will reflect a twelve (rather than 17) month trading period.

   4.            Details of the Placing 

Under the terms of the Placing Agreement entered into today between finnCap and the Company, finnCap has agreed to use its reasonable endeavours to procure persons to subscribe for the Placing Shares at the Issue Price of 140 pence each to raise up to GBP7,494,500 for the Company. The Placing is being conducted through an accelerated book build process which will be launched with immediate effect following this Announcement. The Bookbuild process is expected to close at or before 6.00 p.m. today. A further announcement will be made later today confirming the number of Placing Shares to be issued and the amount to be raised under the Placing.

The Issue Price represents a discount of approximately 9.4 per cent to the closing mid-market price of shares in the Company at 9 June 2017, the latest practicable date prior to the publication of this announcement. The aggregate net proceeds after costs related to the Placing are expected to be GBP7.2 million. If all the Placing Shares are issued, they will represent approximately 14.9 per cent of the Company's existing issued share capital.

The Placing Shares will, following Admission, rank pari passu with the existing issued Ordinary Shares and will have the right to receive all dividends and other distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company following Admission. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 5 July 2017.

The Placing is conditional upon, amongst other things:

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

   (ii)    agreement and execution of the Facility Amendment Agreement; 
   (iii)   the Resolution being passed at the General Meeting; and 

(iv) admission of the Placing Shares to trading on AIM becoming effective by not later than 8.30 a.m. on 5 July 2017 or such later date (being not later than 8.00 a.m. on 31 July 2017) as the Company and finnCap may agree.

The Placing Agreement contains warranties from the Company in favour of finnCap in relation to, inter alia, the accuracy of the information contained in this announcement, the Circular and certain other matters relating to the Company and its business. In addition, the Company has agreed to indemnify finnCap in relation to certain liabilities that it may incur in respect of the Placing. finnCap may terminate the Placing Agreement in specified circumstances (including for breach of warranty at any time prior to Admission, if such breach is reasonably considered by finnCap to be material in the context of the Placing) and in the event of a force majeure event or material adverse change occurring at any time prior to Admission.

   5.     Details of the Open Offer 

The Company considers it important that Qualifying Shareholders have an opportunity (where it is practicable for them to do so) to participate at the same price per Ordinary Share as the Placing and accordingly the Company is making the Open Offer to Qualifying Shareholders. The Company is proposing to raise a maximum of GBP1.0 million (before expenses) (assuming full take up of the Open Offer but being less than the EUR5 million maximum amount permitted without requiring the publication by the Company of a prospectus under the Prospectus Rules) through the issue of up to 719,984 Open Offer Shares.

The Open Offer Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Issue Price of 140 pence per Open Offer Share, payable in full on acceptance. Any Open Offer Shares not applied for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility.

Qualifying Shareholders may apply for Open Offer Shares under the Open Offer at the Issue Price on the following basis:

1 Open Offer Share for every 50 Existing Ordinary Share[s] held by the Qualifying Shareholder on the Record Date

Entitlements of Qualifying Shareholders to apply for Open Offer Shares will be rounded down to the nearest whole number of Open Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be aggregated and made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in the United States or certain other Restricted Jurisdictions, as set out in the Circular.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form. Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Open Offer Entitlements will be credited to CREST on 13 June 2017. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 29 June 2017. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Open Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST applications and payment in respect of the Open Offer is 11.00 a.m. on 29 June 2017. The Open Offer is not being made to certain Overseas Shareholders, as set out in the Circular.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the Open Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment, are set out in the Circular.

The Open Offer is conditional on the Placing becoming unconditional in all respects and not being terminated before Admission (as the case may be). Accordingly, if the conditions to the Placing are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Open Offer Shares will not be issued and all monies received by the Receiving Agent will be returned to the applicants (at the applicants. risk and without interest) as soon as possible, but within 14 days thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Open Offer Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the New Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Kestrel Partners LLP has signed an irrevocable agreement not to take up its Open Offer Entitlements in respect of 139,108 Open Offer Shares in aggregate. These Open Offer Shares will therefore be available to Qualifying Shareholders under the terms of the Excess Application Facility.

   6.     Related Party Transactions 

Mr Valdimarsson, Mr Price and Mr Darling intend to subscribe for 71,429, 50,000 and 14,286 Placing Shares respectively as part of the Placing. Mr Valdimarsson, Mr Price and Mr Darling are related parties of the Company for the purposes of the AIM Rules by virtue of their status as Directors of the Company, or subsidiary companies within the Group. Mr Bolton, Mr Claesson, Mr Manley and Mr Morland (being the independent directors for these purposes) consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Placing with such related parties is fair and reasonable insofar as the Company's Shareholders are concerned.

   7.     Arrangements with Johan Claesson 

Johan Claesson currently holds (through entities directly or indirectly controlled by him) warrants over 1.1 million ordinary shares at exercise prices of between 90p and GBP1.235. Mr Claesson has undertaken to exercise, conditional on the Placing, 700,000 of such warrants which are now exercisable to bring, in addition to the proceeds of the Placing and Open Offer, a further GBP663,500 into the Company. The 700,000 new Ordinary Shares to be so issued are expected to be admitted to AIM at the time as the Placing Shares and the Open Offer Shares.

CA Fastigheter AB, a company controlled by Mr Claesson is also currently owed GBP640,000 by the Company under the terms of a loan advanced by him to the Company in 2004. Under the terms of the Group's banking facilities, conversion or repayment of this loan is subject to approval of the Banks which has now been granted. Mr Claesson therefore intends, conditional on the Placing, to convert this loan into new Ordinary Shares at the Issue Price. The 457,142 new Ordinary Shares to be so issued are expected to be admitted to AIM at the same time as the Placing Shares and the Open Offer Shares.

Following the exercise of warrants referred to above Mr Claesson (through entities directly or indirectly controlled by him) will still hold warrants over a further 400,000 Ordinary Shares exercisable at a price of GBP1.235 subject to K3's share price reaching GBP2.50 per share (300,000 warrants) and GBP3.25 (100,000 warrants). Upon the repayment or conversion of Mr Claesson's loan, as referred to above, these remaining warrants are, absent amendment, automatically cancelled. The Independent Directors (excluding Mr Claesson) consider that in current circumstances it is appropriate that the terms of these remaining warrants be amended such that they are not now cancelled and that Mr Claesson be allowed to continue to hold them for a further five years from Admission. Such amendment is a related party transaction for the purposes of the AIM Rules. The Board (excluding Mr Claesson) considers, having consulted with finnCap that such amendments are fair and reasonable insofar as the Company's shareholders are concerned.

   8.     Board Changes 

It was also announced today that the following Board changes will occur, with effect from Admission:

-- David Bolton has decided to retire from the Board. David has contributed significantly to K3 over almost 20 years and the Board would like to thank him for his high level of commitment, dedication and counsel to the Company over this time, and wishes him well in his retirement.

-- Robert Price will join the Board of K3 as Finance Director. Robert has been Chief Financial Officer to the Company since October 2016, in a non-board capacity. Further details on Robert Price are set out below.

   --      Stuart Darling will become interim Chairman of the Company. 

The Board intends to recruit a suitable Chairman in due course and to establish new management incentivisation packages.

   9.     Effect of the Placing and Open Offer 

Upon Admission, and assuming full take up of the Open Offer Entitlements and no further exercise of options under the Company's share schemes, the Enlarged Issued Share Capital (including the additional shares to be allotted to Johan Claesson as described in paragraph 7 above) is expected to be 43,229,541 Ordinary Shares. On this basis, the New Ordinary Shares will represent approximately 14.0 per cent. of the Company's Enlarged Issued Share Capital.

Following the issue of the New Ordinary Shares pursuant to the Placing and Open Offer, assuming full take up of the Open Offer Entitlements and no further exercise of options under the Company's share schemes, Qualifying Shareholders who do not take up any of their Open Offer Entitlements nor participate in the Placing will suffer a dilution of approximately 16.7 per cent. to their interests in the Company. If a Qualifying Shareholder takes up his Open Offer Entitlement in full, and does not participate in the Placing, he will suffer a dilution of approximately 15.1 per cent. to his interest in the Company.

   10.   General Meeting 

The Circular will contain a notice convening the General Meeting to be held at the offices of finnCap Ltd at 60 New Broad Street, London EC2M 1JJ on 4 July 2017 at 10.00 a.m.. The notice will contain the text of the special Resolution that is to be proposed at the General Meeting to authorise the Directors to allot the Placing Shares under the Placing and to disapply Shareholders' pre-emption rights under the Companies Act 2006 in respect of the Placing Shares. The Placing and Open Offer (by virtue of being conditional on the Placing becoming unconditional in all respects save for Admission) are conditional on the passing of this Resolution.

The Resolution, if passed, will allow the Placing Shares to be issued at a price of 140 pence each (representing a 9.4 per cent discount to the closing middle market price for an Ordinary Share of 154.5 pence for the business day immediately prior to the date of this document) without them first being offered to Shareholders generally in accordance with their statutory pre-emption rights. The Directors have concluded that proceeding with the Placing, alongside the Open Offer, is the most suitable option available to the Company for raising additional funds through the issue of Ordinary Shares and that issuing the Placing Shares at such a discount under the Placing is fair and reasonable so far as all existing Shareholders are concerned. The Issue Price has been set by the Directors following their assessment of market conditions and following discussions with a number of institutional investors.

   11.   Recommendation 

The Directors consider the Resolution to be proposed at the General Meeting to be in the best interests of the Company and the Shareholders as a whole. Consequently, the Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as they intend to do in respect of the 7,014,135 Ordinary Shares held, directly or indirectly, by them representing approximately 19.5 per cent. of the total voting rights of the Company.

In addition to the Board's voting intentions referred to above, the Company has further received an irrevocable undertaking to vote in favour of the Resolution from Kestrel Partners LLP in respect of 6,955,420 Existing Ordinary Shares representing approximately 19.3 per cent. of the total voting rights of the Company.

   12.   Further details on Robert Price 

Save for the following additional directorships of companies within the Group now held by Robert Price, the disclosures made regarding Mr Price in the announcement dated 18 October 2016 remain effective. Save for those disclosures and the directorships set out below, there are no additional disclosures to be made regarding Robert Price for the purposes of Schedule Two paragraph (g) of the AIM Rules for Companies:

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   K3 Syspro Limited                                             Syspro Limited 
   Syspro Europe Limited                                       Syspro (UK) Limited 
   K3 BTG Limited                                                 K3 AX Limited 
   K3 Hosting Limited                                            K3 FDS Limited 
   Sense Enterprise Solutions Limited                     K3 Business Solutions Limited 
   Clarita Support Limited                                       FDS Holdco Limited 
   Fifth Dimension Systems Limited                        Intelligent Solutions Consultancy Limited 
   K3 FD Systems Limited                                     Shine Marketing UK Limited 
   Retail Systems Group Limited                            Retail Computer Maintenance Limited 
   K3 Systems Support Limited                              K3 Retail Solutions Limited 

K3 CRM Limited K3 Retail and Business Solutions Holdco Limited

   K3 Business Systems Holdco Limited                 K3 Managed Services Holdco Limited 
   Retail Technology Limited                                   Starcom Technologies Limited 
   K3 Global Products Limited                                Merac Limited 
   Retail Support International ApS                          DdD Retail A/S 

APPIX

TERMS AND CONDITIONS OF THE PLACING

For Invited Placees only - Important Information

   1.            Introduction 

All the information in this Appendix is directed only at persons ("FSMA Qualified Investors") who are both "qualified investors" as referred to at section 86(7) of the Financial Services and Markets Act 2000 ("FSMA") and are persons at or to whom any private communication relating to the Company that is a "financial promotion" (as such term is used in relation to FSMA) may lawfully be issued, directed or otherwise communicated without the need for it to be approved, made or directed by an "authorised person" as referred to in FSMA.

Members of the public are not eligible to take part in the Placing.

In this Appendix:

(a) "you" or "Placee" means any person who becomes committed through the Bookbuild to subscribe for Placing Shares; and

(b) terms defined elsewhere in this announcement have the same meanings, unless the context requires otherwise.

Various dates referred to in this announcement are stated on the basis of the expected timetable for the Placing. It is possible that some of these dates may be changed. The expected date for Admission is 5 July 2017 and, in any event, the latest date for Admission is 31 July 2017 (the "Long Stop Date").

   2.            Bookbuild 

finnCap is proceeding with a share placing bookbuild process (the "Bookbuild") for the purpose of assessing demand from institutional and other investors for subscribing for Placing Shares at the Placing Price and the Company then issuing those shares under the Placing to raise up to GBP7.5 million for the Company before expenses. finnCap is acting as the Company's agent in respect of the Bookbuild and the Placing.

The Bookbuild is expected to close at or before 6.00 p.m. today. The Company will then release an announcement through the London Stock Exchange's Regulatory News Service confirming the number of Placing Shares to be issued and the amount to be raised under the Placing. finnCap will determine the basis for allocating Placing Shares to bids submitted to it in the Bookbuild and may at its discretion (i) accept bids, either in whole or in part, (ii) accept bids that are received after the Bookbuild has closed, and/or (iii) scale down all or any bids on such basis as it considers appropriate. finnCap may carry out the Placing by any alternative method to the Bookbuild as it chooses. Neither finnCap nor any other finnCap Person will have any liability to Placees (subject to applicable law) or to anyone else other than the Company in respect of the Placing or in respect of its conduct of the Bookbuild or of any alternative method that it may adopt for carrying out the Placing.

The Company and finnCap may, by agreement with each other, increase the amount to be raised through the Placing. The Company also reserves the right to allow officers of the Company and/or Group employees to subscribe for some of the Placing Shares at the Placing Price, with finnCap's agreement, on substantially the same or similar terms as apply to those FSMA Qualified Investors subscribing for shares under the Placing.

   3.            Participation and settlement 

Participation in the Bookbuild is only available to persons who are invited to participate in it by finnCap.

If you are invited to participate in the Bookbuild and wish to do so, you should communicate your bid by telephone to your usual broking contact at finnCap. Each bid should state the number of Placing Shares which you wish to subscribe for at the Placing Price. If your bid is successful, in whole or in part, your allocation will be confirmed orally following the close of the Bookbuild. finnCap's oral confirmation of your allocation will constitute a legally binding commitment on your part to subscribe for the number of Placing Shares allocated to you at the Placing Price on the terms and subject to the conditions set out or referred to in this Appendix and subject to the Company's constitution.

A person who submits a bid in the Bookbuild will not be able, without finnCap's agreement, to vary or revoke the bid before the close of the Bookbuild. Such a person will not be able, after the close of the Bookbuild, to vary or revoke a submitted bid in any circumstances.

If you are allocated Placing Shares in the Bookbuild, you will be sent a written confirmation stating (i) the number of Placing Shares allocated to you, (ii) the aggregate amount you will be required to pay for those Placing Shares at the Placing Price, (iii) relevant settlement information, and (iv) settlement instructions. Settlement instructions will accompany each written confirmation and, on receipt, should be confirmed back to finnCap by the date and time stated in it. Settlement of transactions in the Placing Shares will take place within the CREST system, subject to certain exceptions, on a "delivery versus payment" (or "DVP") basis. finnCap reserves the right to require settlement for and/or delivery to any Placee of any Placing Shares to be made by such other means as it may deem appropriate if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this announcement. If your Placing Shares are to be delivered to a custodian or settlement agent, you should ensure that the written confirmation is copied and delivered promptly to the appropriate person within that organisation.

Each Placee's obligations to subscribe and pay for Placing Shares under the Placing will be owed to each of the Company and finnCap. No commissions will be paid to or by Placees in respect of their agreement to subscribe for any Placing Shares.

Placees' commitments in respect of Placing Shares will be made solely on the basis of the information contained in this announcement and on the terms contained in it. No admission document for the purposes of the AIM Rules nor any prospectus is required to be published, or has been or will be published, in relation to the Placing or the Placing Shares.

   4.            Placing conditions 

Under the terms of the Placing Agreement finnCap has agreed to use its reasonable endeavours as the Company's agent to procure subscribers for Placing Shares at the Placing Price.

The Placing is conditional on (i) finnCap's obligations under the Placing Agreement not being terminated in accordance with its terms, (ii) the passing of a resolution at a general meeting of the Company that is to be proposed in the notice of that meeting that is to be included in the Company's circular to its shareholders concerning the Placing and the Open Offer, (iii) Admission taking place not later than 8.30 a.m. on 5 July 2017, (iv) agreement and execution of the Facility Amendment Agreement and (v) finnCap's obligations under the Placing Agreement becoming unconditional in all other respects. finnCap may extend the time and/or date for the fulfilment of any of the conditions in the Placing Agreement to a time no later than 5.00 p.m. on the Long Stop Date. If any such condition is not fulfilled (and, if capable of waiver under the Placing Agreement, is not waived by finnCap) by the relevant time, the Placing will lapse and your rights and obligations in respect of the Placing will cease and terminate at such time.

finnCap may terminate its obligations under the Placing Agreement prior to Admission in certain circumstances including, among other things, following a material breach of the Placing Agreement by the Company. The exercise of any right of termination pursuant to the Placing Agreement, any waiver of any condition in the Placing Agreement and any decision by finnCap whether or not to extend the time for satisfaction of any condition in the Placing Agreement are within finnCap's absolute discretion (as is the exercise of any right or power of finnCap under the terms of this Appendix). finnCap will have no liability to you or to anyone else in respect of any such termination, waiver or extension or any decision to exercise or not to exercise any such right of termination, waiver or extension.

   5.            Placees' warranties and undertakings 

By communicating a bid to finnCap under the Bookbuild you will irrevocably acknowledge and confirm and warrant and undertake to, and agree with, each of the Company and finnCap, in each case as a fundamental term of your application for Placing Shares of the Company's obligation to allot and/or issue any Placing Shares to you or at your direction, that:

   (a)           you agree to and accept all the terms set out in this announcement; 

(b) your rights and obligations in respect of the Placing will terminate only in the circumstances referred to in this announcement and will not be subject to rescission or termination by you in any circumstances;

(c) this announcement, which has been issued by the Company, is within the sole responsibility of the Company;

(d) you have not been, and will not be, given any warranty or representation in relation to the Placing Shares or to the Company or to any other member of its Group in connection with the Placing, other than by the Company as included in this announcement or to the effect that the Company is not now in breach of its obligations under the London Stock Exchange's AIM Rules for Companies or under the EU Market Abuse Regulation (596/2014) to disclose publicly in the correct manner all such information as is then required to be so disclosed by the Company;

(e) you have not relied on any representation or warranty in reaching your decision to subscribe for Placing Shares under the Placing, save as given or made by the Company as referred to in the previous paragraph;

(f) you are not a client of finnCap in relation to the Placing and finnCap is not acting for you in connection with the Placing and will not be responsible to you in respect of the Placing for providing protections afforded to its clients;

(g) you have not been, and will not be, given any warranty or representation by any finnCap Person in relation to any Placing Shares, the Company or any other member of its Group and no finnCap Person will have any liability to you for any information contained in this announcement or which has otherwise been published by the Company or for any decision by you to participate in the Placing based on any such information or on any other information provided to you;

(h) you will pay the full subscription sum at the Placing Price as and when required in respect of all Placing Shares finally allocated to you and will do all things necessary on your part to ensure that payment for such shares and their delivery to you or at your direction is completed in accordance with the standing CREST instructions (or, where applicable, standing certificated settlement instructions) that you have in place with finnCap or puts in place with finnCap;

(i) you are permitted to subscribe for Placing Shares in accordance with the laws of all relevant jurisdictions which apply to you and you have complied, and will fully comply, with all such laws (including where applicable, the Anti-Terrorism, Crime and Security Act 2001, the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2007) and have obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such subscription, and you will provide promptly to finnCap such evidence, if any, as to the identity or location or legal status of any person which finnCap may request from you (for the purpose of its complying with any such laws or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by finnCap on the basis that any failure by you to do so may result in the number of Placing Shares that are to be allotted and/or issued to you or at your direction pursuant to the Placing being reduced to such number, or to nil, as finnCap may decide;

(j) you have complied and will comply with all applicable provisions of the FSMA with respect to anything done or to be done by you in relation to any Placing Shares in, from or otherwise involving the United Kingdom and you have not made or communicated or caused to be made or communicated, and you will not make or communicate or cause to be made or communicated, any "financial promotion" in relation to Placing Shares in contravention of section 21 of FSMA;

   (k)           you are a FSMA Qualified Investor; 

(l) you are acting as principal only in respect of the Placing or, if you are acting for any other person (i) you are duly authorised to do so, (ii) you are and will remain liable to the Company and/or finnCap for the performance of all your obligations as a Placee in respect of the Placing (regardless of the fact that you are acting for another person), (iii) you are both an "authorised person" for the purposes of FSMA and a "qualified investor" as defined at Article 2.1(e)(i) of Directive 2003/71/EC (known as the Prospectus Directive) acting as agent for such person, and (iv) such person is either (1) a FSMA Qualified Investor or (2) a "client" (as defined in section 86(2) of FSMA) of yours that has engaged you to act as his agent on terms which enable you to make decisions concerning the Placing or any other offers of transferable securities on his behalf without reference to him;

(m) nothing has been done or will be done by you in relation to the Placing or to any Placing Shares that has resulted or will result in any person being required to publish a prospectus in relation to the Company or to any Ordinary Shares in accordance with FSMA or the UK Prospectus Rules or in accordance with any other laws applicable in any part of the European Union or the European Economic Area;

(n) you will not treat any Placing Shares in a manner that would contravene any legislation applicable in any territory or jurisdiction and no aspect of your participation in the Placing will contravene any legislation applicable in any territory or jurisdiction or cause the Company or finnCap to contravene any such legislation;

(o) (in this paragraph "US person" and other applicable terms have the meanings that they have in Regulation S made under the US Securities Act of 1933, as amended) (i) none of the Placing Shares have been or will be registered under that Act or under the securities laws of any State of or other jurisdiction within the United States, (ii) subject to certain exceptions, no Placing Shares may be offered or sold, resold, or delivered, directly or indirectly, into or within the United States or to, or for the account or benefit of, any US person, (iii) you are (unless otherwise expressly agreed with finnCap) neither within the United States nor a US person, (iv) you have not offered, sold or delivered and will not offer sell or deliver any of the Placing Shares to persons within the United States, directly or indirectly, (v) neither you, your affiliates, nor any persons acting on your behalf, have engaged or will engage in any directed selling efforts with respect to the Placing Shares, (vi) you will not be subscribing Placing Shares with a view to resale in or into the United States, and (vii) you will not distribute this announcement or any offering material relating to Placing Shares, directly or indirectly, in or into the United States or to any persons resident in the United States;

(p) finnCap may satisfy its obligations to procure Placees by itself agreeing to become a Placee in respect of some or all of the Placing Shares or by nominating any other finnCap Person or any person associated with any finnCap Person to do so or by allowing officers of the Company and/or Group employees to subscribe for Placing Shares under the Placing at the Placing Price;

   (q)           time is of essence as regards your obligations under this Appendix; 

(r) this Appendix and any contract which may be entered into between you and finnCap and/or the Company pursuant to this Appendix or the Placing, and all non-contractual obligations arising between you and finnCap and/or the Company in respect of the Placing, will be governed by and construed in accordance with the laws of England, for which purpose you submit (for yourself and on behalf of any person on whose behalf you are acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute, or matter arising out of or relating to this Appendix or such contract, except that each of the Company and finnCap will have the right to bring enforcement proceedings in respect of any judgement obtained against you in the English courts or in the courts of any other relevant jurisdiction;

(s) each right or remedy of the Company or finnCap provided for in this Appendix is in addition to any other right or remedy which is available to such person and the exercise of any such right or remedy in whole or in part will not preclude the subsequent exercise of any such right or remedy; and

(t) any document that is to be sent to you in connection with the Placing will be sent at your risk and may be sent to you at any address provided by you to finnCap.

   6.            Payment default 

Your entitlement to receive any Placing Shares will be conditional on finnCap's receipt of payment in full for such shares by the relevant time to be stated in the written confirmation referred to above, or by such later time and date as finnCap may decide, and otherwise in accordance with that confirmation's terms. finnCap may waive this condition, and will not be liable to you for any decision to waive it or not.

If you fail to make such payment by the required time for any Placing Shares (1) the Company may release itself, and (if it decides to do so) will be released from, all obligations it may have to allot and/or issue any such Placing Shares to you or at your direction which are then unallotted and/or unissued, (2) the Company may exercise all rights of lien, forfeiture and set-off over and in respect of any such Placing Shares to the full extent permitted under its constitution or by law and to the extent that you then have any interest in or rights in respect of any such shares, (3) the Company or, as applicable, finnCap may sell (and each of them is irrevocably authorised by you to do so) all or any of such shares on your behalf and then retain from the proceeds, for the account and benefit of the Company or, where applicable, finnCap (i) any amount up to the total amount due to it as, or in respect of, subscription monies, or as interest on such monies, for any Placing Shares and (ii) any amount required to cover dealing costs and/or commissions necessarily or reasonably incurred by it in respect of such sale and (4) you will remain liable to the Company and to finnCap for the full amount of any losses and of any costs which it may suffer or incur as a result of it (i) not receiving payment in full for such Placing Shares by the required time, and/or (ii) the sale of any such Placing Shares to any other person at whatever price and on whatever terms are actually obtained for such sale by or for it. Interest may be charged in respect of payments not received by finnCap for value by the required time referred to above at the rate of two percentage points above the base rate of National Westminster Bank plc.

   7.            Overseas jurisdictions 

The distribution of this announcement and the offering and/or issue of shares pursuant to the Placing in certain jurisdictions is restricted by law. FSMA Qualified Investors who seek to participate in the Placing must inform themselves about and observe any such restrictions. In particular, this document does not constitute or form part of any offer or invitation, nor a solicitation of any offer or invitation, to subscribe for or acquire or sell or purchase or otherwise deal in Ordinary Shares in the United States, Canada, Japan, the Republic of Ireland, the Republic of South Africa or Australia or in any other jurisdiction in which any such offer, invitation or solicitation is or would be unlawful. New Ordinary Shares have not been and will not be registered under the US Securities Act of 1933, as amended or under the securities laws of any State of or other jurisdiction within the United States, and, subject to certain exceptions, may not be offered or sold, resold or delivered, directly or indirectly, in or into the United States, or to, or for the account or benefit of, any US persons (as defined in Regulation S under that Act). No public offering of New Ordinary Shares is being or will be made in the United States.

DEFINITIONS

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

"Admission" the admission of the Placing Shares and to the extent taken up Open Offer Shares to trading on AIM, becoming effective in accordance with the AIM Rules

"AIM" the market of that name operated by London Stock Exchange

"AIM Rules" the AIM Rules for Companies, published by London Stock Exchange

"Application Form" the application form for use by Qualifying Non-CREST Shareholders in connection with the Open Offer

   "Board"                                            the board of directors of the Company 

"Circular" the circular to Shareholders expected to be posted later today containing the notice convening the General Meeting and details of the Open Offer

   "the Company" or "K3"                     K3 Business Technology Group plc 

"CREST" the relevant system (as defined in the Uncertificated Securities Regulations 2001) for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited

"CREST Regulations" the Uncertificated Securities Regulations 2001 (S.I. 2001 No. 3755)

"Dealing Day" a day on which the London Stock Exchange is open for business in London

   "Directors"                                       the directors of the Company 

"Enlarged Issued Share Capital" all of the Ordinary Shares in issue on Admission, assuming full take up of the Open Offer Shares

"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST

"Excess Application Facility" the arrangement pursuant to which Qualifying Shareholders may apply for additional Open Offer Shares in excess of their Open Offer Entitlement in accordance with the terms and conditions of the Open Offer

"Excess CREST Open Offer in respect of each Qualifying CREST Shareholder, the entitlement

Entitlements" (in addition to his Open Offer Entitlement) to apply for Open Offer Shares pursuant to the Excess Application Facility, which is conditional on him taking up his Open Offer Entitlement in full and which may be subject to scaling back in accordance with the provisions of this document

"Excess Open Offer Entitlements" an entitlement for each Qualifying Shareholder to apply to subscribe for Open Offer Shares in addition to his Open Offer Entitlement pursuant to the Excess Application Facility which is conditional on him taking up his Open Offer Entitlement in full and which may be subject to scaling back in accordance with the provisions of this document

"Excess Shares" Open Offer Shares applied for by Qualifying Shareholders under the Excess Application facility

"Ex-entitlement Date" the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being 12 June 2017

"Existing Ordinary Shares" the 35,999,201 existing ordinary shares of 25 pence each in issue at the date of this document, all of which are admitted to trading on AIM

   "FCA"                                               the Financial Conduct Authority 
   "finnCap"                                         finnCap Limited 

"Form of Proxy" the form of proxy for use by Shareholders in connection with the General Meeting

   "FSMA"                                            the Financial Services and Markets Act 2000 

"General Meeting" the general meeting of the Company to be convened for 10.00 a.m. on 4 July 2017

"Group" the group comprising the Company and its subsidiary undertakings

   "Issue Price"                                    140 pence per New Ordinary Share 
   "London Stock Exchange"               London Stock Exchange plc 
   "Money Laundering Regulations"    the Money Laundering Regulations 2007 
   "New Ordinary Shares"                    together, the Placing Shares and the Open Offer Shares 

"Ordinary Shares" ordinary shares of 25p each in the capital of the Company

"Placing" the conditional placing of the Placing Shares pursuant to the

Placing     Agreement 

"Open Offer" the conditional invitation by the Company to Qualifying Shareholders to apply to subscribe for the Open Offer Shares at the Issue Price on the terms and subject to the conditions set out in this document and, in the case of Qualifying Non-CREST Shareholders, in the Application Form

"Open Offer Entitlement" the individual entitlements of Qualifying Shareholders to subscribe for Open Offer Shares allocated to Qualifying Shareholders pursuant to the Open Offer

"Open Offer Shares" the up to 719,984 new Ordinary Shares to be issued by the Company

pursuant to the Open Offer

"Overseas Shareholders" Shareholders with a registered address outside the United Kingdom

"Placing Agreement" the agreement dated 12 June 2017 between the Company and finnCap relating to the Placing

   "Placing Shares"                             5,353,214 new Ordinary Shares 

"Prospectus Rules" the prospectus rules made by the FCA pursuant to section 73A of FSMA

"Qualifying CREST Shareholders" Qualifying Shareholders holding Existing Ordinary Shares in uncertificated form

"Qualifying Non-CREST Qualifying Shareholders holding Existing Ordinary Shares in

   Shareholders"                                 certificated form 

"Qualifying Shareholders" holders of Existing Ordinary Shares on the register of members of the Company at the Record Date but excluding any Overseas Shareholder who has a registered address in any Restricted Jurisdiction

   "Receiving Agent"                           Capita Asset Services, Corporate Actions 
   "Record Date"                                  8 June 2017 

"Regulatory Information Service" a service approved by the FCA for the distribution to the public of regulatory announcements and included within the list maintained on the FCA's website

"Resolution" the resolution set out in the Notice of General Meeting

    "Shareholders"                              holders of Ordinary Shares 

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

"US" or "United States" the United States of America, each State thereof, its territories and possessions (including the District of Columbia) and all other areas subject to its jurisdiction

"uncertificated" or "in an Ordinary Share recorded on a company's share register as being

uncertificated form" held in uncertificated form in CREST and title to which, by virtue

of the        CREST Regulations, may be transferred by means of CREST 

"GBP", "pounds sterling", are references to the lawful currency of the United Kingdom

"pence"or "p"

"EUR" or "Euros" are references to a lawful currency of the European Union

This information is provided by RNS

The company news service from the London Stock Exchange

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June 12, 2017 02:00 ET (06:00 GMT)