Hilton Food Group PLC Proposed Acquisition of Seachill and Placing (8821T)

TIDMHFG

RNS Number : 8821T

Hilton Food Group PLC

18 October 2017

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU NO. 596/2014).

18 October 2017

Hilton Food Group plc ("Hilton" or the "Company")

Proposed Acquisition of Icelandic Group UK Limited and associated Placing

and

Notice of General Meeting

Hilton (LSE: HFG), a leading specialist international meat packing business, today announces its wholly owned subsidiary, Hilton Foods Limited, has agreed to acquire Icelandic Group UK Limited ("Seachill"), a leading chilled UK fish processor (the "Acquisition"), for cash consideration of GBP80.8 million.

The Company also announces its intention to conduct a non-pre-emptive underwritten cash placing to raise gross proceeds of GBP55.9 million (the "Placing") to part-fund the Acquisition through the issue of new ordinary shares at an indicative price per share of 760 pence to be confirmed pursuant to an accelerated bookbuilding process.

 
  Acquisition Highlights 
 
        *    Proposed acquisition of Seachill with an enterprise 
             value of GBP84.0 million 
 
       *    Strategically and financially compelling transaction 
            for Hilton 
 
        *    Attractive growth opportunity and entry into the 
             processing and supply of fish in the UK 
 
        *    Existing customers see opportunities in adjacent 
             categories, such as fish, both in the UK and 
             internationally and the Acquisition therefore 
             broadens Hilton's offering to both the Group's UK and 
             overseas customers 
 
        *    Chilled seafood market within Great Britain has 
             displayed resilient growth evidenced by a 20 year 
             track record of increasing market value 
 
       *    Expected to be earnings enhancing in the first full 
            year 
 The Placing 
 
        *    Fully underwritten placing of GBP53.0 million to 
             raise gross proceeds of GBP55.9 million at the 
             indicative share price 
 
        *    Numis Securities Limited ("Numis") is acting as Sole 
             Sponsor, Financial Adviser and Joint Bookrunner in 
             respect of the Placing. Panmure Gordon (UK) Limited 
             ("Panmure Gordon") has been appointed as Joint 
             Bookrunner with Numis (together the "Bookrunners") 
 
        *    The Placing is being conducted through an accelerated 
             bookbuilding process which will be launched 
             immediately following this announcement 
 
        *    The Placing will be used to part-fund the Acquisition, 
             with the balance of the Acquisition consideration 
             (plus associated transaction costs) to be funded by a 
             new debt package comprising a new banking facility 
             totalling GBP34.0 million 
 
       *    Certain Directors of the Company have indicated their 
            intention to subscribe for Placing Shares. Further 
            details of the Placing and any participation by such 
            Directors will be set out in the announcement to be 
            made on the closing of the Placing which is expected 
            to be made later today 
 

Robert Watson OBE, Chief Executive of Hilton, said: "The processing and supplying of fish and seafood into the UK is an attractive and growing market and one where we see considerable opportunities to build Hilton's business. Our initial discussions with key customers support this view and we look forward to broadening our offering to both our UK and overseas customers alongside our existing meat business."

Timetable

 
 Announcement of the Acquisition               18 October 2017 
 Publication and posting of                    18 October 2017 
  the Circular and the Forms 
  of Proxy 
 Latest time and date for receipt    10a.m. on 2 November 2017 
  of Forms of Proxy (or electronic 
  / CREST proxy appointment) 
 General Meeting                     10a.m. on 6 November 2017 
 Expected date of Completion                   7 November 2017 
  of the Acquisition 
 Expected date of Admission                    7 November 2017 
  and commencement of dealings 
  in the Placing Shares 
 

The times and dates set out in the expected timetable of principal events above and mentioned throughout this announcement are times in London unless otherwise stated, and may be adjusted by the Company in consultation with or, if required, with the agreement of Numis.

A circular is expected to be published by the Company later today (the "Circular"). The Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM. The Circular will also be available on the Company's website at: http://www.hiltonfoodgroupplc.com/. Capitalised terms used, but not defined in this announcement shall have the same meaning as set out in the Circular.

Market soundings, as defined in the Market Abuse Regulation ("MAR"), were taken in respect of the Placing and the Acquisition with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

For further information please contact:

 
 Hilton Food Group plc      Tel: [phone] 
 Robert Watson OBE, Group 
  Chief Executive 
 Nigel Majewski, Chief 
  Financial Officer 
 
 Numis                      Tel: [phone] 
  Mark Lander 
  Luke Bordewich 
  Andrew Hackney 
 Panmure Gordon             Tel: [phone] 
  Erik Anderson 
  Andrew Godber 
  Tom Salvesen 
 Citigate Dew Rogerson      Tel: [phone] 
  Angharad Couch 
  Ellen Wilton 
 

Further information in relation to the Acquisition and the Placing

   1.   Introduction 

The Board announces that its wholly owned subsidiary, Hilton Foods Limited (the "Buyer") has entered into a conditional agreement to acquire the entire issued share capital of Seachill with the Company entering into the agreement as guarantor. The consideration for the Acquisition is GBP80.8 million which is payable in cash on Completion.

In accordance with the Listing Rules, the Target Group is of such a size relative to the Company that the Acquisition constitutes a Class 1 Transaction and is, therefore, conditional upon the approval of Shareholders at a General Meeting. The General Meeting will be convened for 10 a.m. on 6 November 2017 at 2-8 The Interchange, Latham Road, Huntingdon PE29 6YE and the notice of the General Meeting containing the Resolutions will be set out at the end of the Circular.

   2.   Background to and reasons for the transaction 

Hilton

Hilton is a leading specialist international meat packing business, supplying major international retailers from its state-of-the-art facilities. Hilton's business was established in 1994 to set up and operate a beef and lamb central meat packing facility in Huntingdon, England. Hilton has grown rapidly and now has six factories across Europe plus a joint venture which allows the Group's products to be sold in supermarkets across 14 European countries. Hilton also formed a joint venture with Woolworths, Australia in 2013 which operates two factories and the Group has recently announced that it will be constructing a new meat processing facility in Queensland to be operated as Hilton Foods Australia, a subsidiary 100% owned by Hilton.

Hilton strategy

From the outset, Hilton has had a simple, clear and well defined strategy focusing on the following four key elements:

   1.         Building volumes with and extending product ranges for existing customers; 
   2.         Partnering with existing customers in new territories; 
   3.         Gaining new customers in new territories; and 
   4.         Maintaining an uncompromising focus on unit costs, quality and product development. 

Throughout Hilton's development it has worked closely and collaboratively with its customers to deliver the strategy outlined above. The Group has grown its capacity and capabilities through disciplined capital investment and continued innovation, to meet its customers' commercial needs and expanding its range of services to enhance its customer offering. The Group's successful expansion into international markets, including recent investments in Australia and Portugal, are good examples of this successful strategy in execution. As a result of this strong and growing track record as a trusted and added value partner to its customers, the Group is working with an increasing number of its existing customers on plans to expand Hilton's products, capabilities and capacity.

To date, the Group has been focused on the processing of meat, principally beef and lamb as well as pork outside the UK, and this will remain at the core of the business in the future. However the Group's customers sell a broader range of protein products than just meat. It is clear to the Group and its customers have an interest in the prospect of Hilton processing and supplying other proteins beyond red meat, based on the Group's expertise in sourcing, assembling, packing and distribution. The Board sees this as an attractive and sustainable area to develop and grow Hilton's business, and its initial discussions with key customers supports this view.

 
 Reasons for the Acquisition 
 As a result, the Board believes that the acquisition of Seachill, 
  the number 2 player in the UK fish market, presents an attractive 
  and relatively low risk entry into the processing and supply of 
  fish in the UK. This is a new category for the Group and it is 
  an attractive growth opportunity for the Group, for the following 
  reasons: 
 
 
   *    fish is a growing consumer category where the Group 
        does not currently have a presence; 
 
   *    the Group's existing customers have shown interest in 
        opportunities in adjacent categories, such as fish, 
        both in the UK and internationally; 
 
   *    consumer tastes and preferences for healthier 
        lifestyles and menus underpin the attractive market 
        dynamics for fish as a category; and 
 
   *    the opportunity created by the extension of the 
        Group's proven customer focused strategy to this new 
        category. 
 
 The UK chilled seafood market with Great Britain has displayed 
  resilient growth evidenced by a 20 year track record of increasing 
  market value. Customers see it as a key category with 80% of shoppers 
  buying chilled seafood and on average customers making 19 purchases 
  and spending a total GBP82 per annum. 
 
 Following completion of the proposed Acquisition there are a number 
  of opportunities for the Enlarged Group to create value moving 
  forwards. These include: 
 
 
   *    investing in the Seachill business to increase 
        capacity and using Hilton's experience in robotics 
        and automated processes to develop state-of-the-art 
        facilities in the assembling, packing and 
        distributing of fish products, which will deliver 
        even higher quality and better value to the consumer; 
 
   *    expanding into overseas territories using the 
        Seachill management team's expertise in the fish 
        category, following the successful model of its 
        recent overseas expansion alongside key customers in 
        Portugal and Australia; 
 
   *    developing innovative new products in the fish 
        category in collaboration with its customers, 
        broadening the range of products that the Enlarged 
        Group can offer new and existing customers; and 
 
   *    expanding the proprietary "The Saucy Fish Co." brand 
        into other categories both in the UK and overseas. 
 
 Financial effects of the Acquisition 
 It is anticipated that the acquisition will be EPS accretive in 
  the first full year of the proposed acquisition. The Group believes 
  that Hilton and Seachill management's combined expertise in a 
  number of areas will enable the Enlarged Group to operate more 
  efficiently over the medium term. More importantly, the proposed 
  acquisition will provide the foundations for Hilton to offer Seachill's 
  fish packing expertise strengthened by Hilton's supply chain experience 
  to a number of its leading retailer customers both in the UK and 
  Internationally. 
 
   3.   Summary information about Seachill 

Founded in 1998, Seachill has grown to be one of the largest chilled fish processors in the UK, with well-invested facilities and a well-established supply chain based in Grimsby, Lincolnshire. Under Simon Smith's leadership, who will lead the Seachill business as a division within Hilton going forward, the Seachill business has performed well over a number of years, operating from three sites in the area and supplying a number of leading food retail customers in the UK. Seachill focuses on the three largest fish species in the UK and has successfully innovated and developed new products including The Saucy Fish Co. brand, which is the largest chilled wet fish brand in the UK.

Seachill's largest customer, Tesco, accounts for approximately 80% of its net sales and there is consequently significant reliance on one customer relationship. As Tesco is also one of the Company's principal customers, it is expected that the Acquisition will strengthen the Company's existing relationship with Tesco through the supply of a new product category.

The summarised audited financial history of Seachill is set out below:

 
                        Year ended   Year ended   Year ended 
                         31           31           31 
                         December     December     December 
                         2016         2015         2014 
                         GBP'000      GBP'000      GBP'000 
 Revenue                266.3        248.4        258.8 
 Gross profit           39.2         38.6         37.9 
 Operating profit       3.4          4.0          (1.7) 
 Net cash generated 
  from operations       15.4         6.2          2.4 
 Gross assets           101.5        108.2        109.2 
 
   4.   Principal terms of the Acquisition 

The Sale and Purchase Agreement entered into by the Buyer, the Company, the Seller and the Seller Guarantor on 18 October 2017 sets out the terms of the Acquisition pursuant to which the Buyer has agreed to acquire Seachill from the Seller for headline consideration of GBP80.8 million payable in cash on Completion. Any amount of leakage will be deducted from the purchase price.

 
 The Sale and Purchase Agreement is conditional upon the approval 
  of the Resolutions by Shareholders at the General Meeting, namely: 
 
              *    the first Resolution approving the Acquisition as a 
                   result of the Acquisition constituting a Class 1 
                   transaction; and 
 
              *    the second and third Resolutions which provide the 
                   Directors with the authority to allot the Placing 
                   Shares. 
 The Sale and Purchase Agreement contains representations, warranties, 
  covenants, undertakings and conditions that are customary for 
  a transaction of this size and nature. 
 Assuming that the Shareholders approve the Resolutions at the 
  General Meeting, Completion is expected to occur on 7 November 
  2017. 
 
   5.   Financing of the Acquisition 

Historically the Company has built up net cash balances through strong cash generation. In addition to the proposed acquisition of Seachill, the Board believes there are significant growth opportunities in the medium term. Consequently the Board has put in place appropriate financing to support that growth including bank borrowing facilities and raising equity. The Board expects to carry an amount of gearing on the balance sheet for the medium term. This structure reflects the Board's prudent and conservative approach to financing with target gearing of not more than 2.5x net debt/EBITDA.

 
 
 In line with the Group's prudent financing strategy the transaction 
  will be funded as follows: 
 
   *    an issue of new Ordinary Shares, pursuant to the 
        Placing, raising GBP53.8 million net of expenses at 
        the indicative share price; and 
 *    a new banking facility totalling GBP34.0 million. 
 
 Additional new banking facilities of GBP84.7 million together 
  with existing net cash balances, which were GBP38.9 million at 
  16 July 2017, provide funds for future capital investment and 
  the Group's working capital requirements. 
 
   6.   Current trading and prospects 

Hilton

On 12 September 2017, Hilton published its interim results for the 28 weeks to 16 July 2017, in which Hilton stated:

"Hilton delivered strong volume and profit growth during the period. Our strategic progress continued with entry into Portugal and expansion recently announced in Central Europe where beef deboning has commenced and a fresh food factory will be developed. The initial work on our new factory in Queensland, Australia continues with the planning approvals process well advanced. We remain committed to growing our business through innovation and product development as well as exploring a range of new expansion opportunities to further our geographic reach.

Hilton's overall underlying trading performance remained strong, despite competitive retail grocery markets and uncertain macroeconomic conditions. Volumes increased by 8.7% reflecting growth in Ireland, Sweden and Australia and also the start of the Portuguese joint venture. Turnover increased by 9.3% to GBP690.7m (2016: GBP631.9m) and by 3.2% on a constant currency basis.

Operating profit for the first 28 weeks of 2017 was 9.0% higher at GBP18.8m (2016: GBP17.3m) and 1.4% higher on a constant currency basis including new product start-up and support costs in Europe and initial Queensland costs as well as weaker trading across Central Europe. The operating profit margin at 2.7% was unchanged compared to last year."

The Hilton 2017 Unaudited Interim Financial Statements outlined Hilton's continued operating momentum and, since that date, Hilton's trading performance continues to be in line with the Hilton Board's expectations.

The Company announced on 16 October 2017 that it will proceed with plans to expand its packing capability to New Zealand. Hilton will construct a new meat processing facility in Auckland and will supply Progressive Enterprises Ltd (which trades as Countdown Supermarkets). The development will take place as an extension of the existing site and will be financed by a newly formed subsidiary, Hilton Foods New Zealand. The Company is targeting production at the facility for 2020. Progressive Enterprises LTD is part of the Woolworths group and this development further strengthens Hilton's existing relationship with Woolworths Ltd.

Target Group

In the current year, the Target Group has performed well and delivered revenue growth through new business wins, launching a number of new products and grown its core business.

At the same time the business has made a number of operational efficiencies. A supply contract with Seachill's second largest customer, which contributed GBP49.8m of revenue in the 12 months to 31 December 2016, was exited as both parties could not agree on pricing.

Revenue growth this year up to 27 August 2017 on a like-for-like basis versus the same period in 2016 was 21.5% when adjusted for the exit from the supply contract detailed above.

   7.   Details of the Placing 

In order to part fund the Acquisition, the Company proposes to raise GBP53.8 million net of expenses under the underwritten Placing.

Pursuant to the terms of the Placing Agreement dated 18 October 2017, Numis and Panmure Gordon, as agents for the Company, have agreed to use their reasonable endeavours to procure placees to subscribe for such number of Placing Shares as would raise gross proceeds of GBP53.0 million. To the extent that Numis and Panmure Gordon do not so procure subscribers, Numis and Panmure Gordon themselves have agreed to subscribe for the relevant Placing Shares.

The Placing will be effected by way of an accelerated bookbuilding to be managed by Numis and Panmure Gordon. The bookbuilding process will commence with immediate effect. The Placing Price and the number of Placing Shares will be agreed between the Company, Numis and Panmure Gordon at the close of the bookbuilding period. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the bookbuilding process.

Accordingly, the Placing is being fully underwritten by Numis and Panmure Gordon on the terms and subject to the conditions set out in the Placing Agreement. The Placing is conditional upon, amongst other things, the Resolutions being duly passed at the General Meeting, the Placing Agreement not being terminated and Admission. The Placing shall become unconditional on Admission occurring. Further details in relation to the Placing Agreement and in particular the termination rights of Numis and Panmure Gordon and the conditions of the Placing Agreement are set out in the Appendix.

Application will be made for the Placing Shares to be admitted to trading on the Main Market and it is expected that, subject to the Placing Agreement becoming unconditional in all respects and not having been terminated, Admission of the Placing Shares will become effective and that dealings in the Placing Shares will commence at 8.00 a.m. on 7 November 2017.

The Placing Shares will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue. As such the Placing Shares will not be eligible for the current year interim dividend of 5.0p per share which will be paid to shareholders on the register at close of business on 3 November 2017 which is prior to the Admission of the Placing shares.

   8.   Important notices 

The Bookrunners, which are both authorised and regulated in the United Kingdom by the FCA, are acting for the Company and for no-one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Bookrunners, or for providing advice in relation to the contents of this announcement or any matters referred to herein.

Apart from the responsibilities and liabilities, if any, which may be imposed on Numis and/or Panmure Gordon under FSMA or the regulatory regime established thereunder, neither Numis nor Panmure Gordon accept any responsibility whatsoever and make no representation or warranty, express or implied, concerning the contents of this announcement including its accuracy, completeness and verification or concerning any other statement made or purported to be made by it or on behalf of it, in connection with the Company and the Acquisition. Numis and Panmure Gordon accordingly disclaim to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to herein) which it might otherwise have in respect of this document or any such statement.

Certain statements in this announcement may be forward-looking. Although the Company believes that the expectations reflected in these forward looking statements are reasonable, it can give no assurance or guarantee that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward looking statements.

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

APPIX: TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPIX ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC, AS AMED FROM TIME TO TIME, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPIX IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT AND THIS APPIX HAS BEEN ISSUED BY AND IS THE SOLE RESPONSIBILITY OF THE COMPANY.

THIS ANNOUNCEMENT, INCLUDING THIS APPIX, IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. THE SECURITIES MENTIONED HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT") OR UNDER ANY SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, RESOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THERE WILL BE NO PUBLIC OFFER OF THE SECURITIES MENTIONED HEREIN IN THE UNITED STATES.

THE SECURITIES MENTIONED HEREIN WILL NOT HAVE BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON ORORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES. THE PRICE OF PLACING SHARES AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON DISPOSAL OF THOSE PLACING SHARES.

 
 
 Persons who are invited to and who choose to participate in the Placing 
  by making an oral or written offer to acquire Placing Shares, including 
  any individuals, funds or others on whose behalf a commitment to acquire 
  Placing Shares is given (the "Placees"), will be deemed: (i) to have 
  read and understood this Announcement, including this Appendix, in 
  its entirety; and (ii) to be participating and making an offer for 
  Placing Shares on the terms and conditions, and to be providing the 
  representations, warranties, acknowledgements and undertakings, contained 
  in this Appendix. 
 In particular each such Placee represents, warrants and acknowledges 
  that: 
 (a) it is a Relevant Person 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; 
 (b) it is and, at the time the Placing Shares are acquired, will be 

  outside the United Statesand acquiring the Placing Shares in an "offshore 
  transaction" in accordance with Rule 903 or Rule 904 of Regulation 
  S under the Securities Act ("Regulation S") and is acquiring beneficial 
  interests in the Placing Shares for its own account; if acquiring 
  the Placing Shares for the account of one or more other persons, it 
  has full power and authority to make the representations, warranties, 
  agreements, undertakings, and acknowledgements herein on behalf of 
  each such person; and 
 (c) if it is a financial intermediary, as that term is used in Article 
  3(2) of the Prospectus Directive, any Placing Shares acquired by it 
  in the Placing will not be acquired on a non-discretionary basis on 
  behalf of, nor will they be acquired with a view to their offer or 
  resale to, persons in circumstances which may give rise to an offer 
  of securities to the public other than an offer or resale to Qualified 
  Investors in a member state of the EEA which has implemented the Prospectus 
  Directive, or in circumstances in which the prior consent of the Bookrunners 
  has been given to each such proposed offer or resale. 
 The Company and Bookrunners will rely upon the truth and accuracy 
  of the foregoing representations, acknowledgements and agreements. 
 

This Announcement, including this Appendix, does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Securities may not be offered or sold in the United States absent (i) registration under the Securities Act or (ii) an available exemption from, or in a transaction not subject to, registration under the Securities Act. The securities mentioned herein have not been, and will not be, registered under the Securities Act. The Placing Shares are being offered and sold solely outside the United States in "offshore transactions" in accordance with Regulation S. There will be no public offering of the securities in the United States.

Details of the Placing Agreement, the Placing Shares and the Bookbuild

The Bookrunners are acting as joint bookrunners in connection with the Placing and have entered into the Placing Agreement with the Company under which they have agreed to use their respective reasonable endeavours to procure, as agents for the Company, Placees to take up the Placing Shares, on the terms and subject to the conditions set out therein.

The Bookrunners will today commence the bookbuilding process to determine demand for participation in the Placing by Placees (the "Bookbuild"). This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

In the event that the Bookrunners fail to procure Placees for at least such number of Placing Shares as would raise gross proceeds of GBP53.0 million (or such other number as agreed by the Company and the Bookrunners) then subject to the satisfaction (or waiver) of the Conditions, Numis severally agrees that it shall itself as principal acquire 75 per cent, and Panmure Gordon severally agrees that it shall itself as principal acquire 25 per cent, in each case of any such shortfall not so taken up upon the terms and conditions set out in this Appendix.

The Placing Shares will, as from the date when they are issued, be fully paid up, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission and otherwise rank pari passu in all respects with, and be identical to, the existing Ordinary Shares then in issue.

 
 Application for listing and admission to trading 
 Application will be made to the: 
 (a) Financial Conduct Authority ("FCA") for admission of the Placing 
  Shares to the premium listing segment of the Official List London Stock 
  Exchange; and 
 (a) London Stock Exchange for admission of the Placing Shares to trading 
  on the London Stock Exchange's main market for listed securities. 
 Subject to, amongst other things, the Placing Agreement becoming unconditional 
  and not being terminated in accordance with its terms, it is expected 
  that Admission of the Placing Shares will become effective at or around 
  8.00 a.m. (London time) on 7 November 2017 and that dealings in the 
  Placing Shares will commence at that time. 
 Participation in, and principal terms of, the Placing 
 1. The Bookrunners are arranging the Placing severally, and not jointly, 
  nor jointly and severally, as bookrunners and placing agents of the 
  Company for the purpose of using their respective reasonable endeavours 
  to procure Placees at the Placing Price (as defined below) for the 
  Placing Shares. Each Bookrunner is authorised and regulated in the 
  United Kingdom by the FCA, and is acting exclusively for the Company 
  and no one else in connection with the matters referred to in this 
  Announcement and will not be responsible to anyone other than the Company 
  for providing the protections afforded to the customers of each Bookrunner 
  or for providing advice in relation to the matters described in this 
  Announcement. 
 2. Participation in the Placing will only be available to persons who 
  may lawfully be, and are, invited to participate by the Bookrunners. 
  Each Bookrunner may itself agree to be a Placee in respect of all or 
  some of the Placing Shares or may nominate any member of its group 
  to do so. 
 3. The Bookbuild, if successful, will establish a single price per 
  Placing Share payable to the Bookrunners as agent for the Company by 
  all Placees whose bids are successful (the "Placing Price"). The Placing 
  Price and the number of Placing Shares will be agreed by the Bookrunners 
  and the Company following completion of the Bookbuild. Any discount 
  to the market price of the Ordinary Shares will be determined in accordance 
  with the Listing Rules as published by the FCA pursuant to Part VI 
  of the FSMA. The Placing Price and the number of Placing Shares to 
  be issued will be announced on a Regulatory Information Service following 
  the completion of the Bookbuild (the "Placing Results Announcement"). 
 4. The Bookbuild is expected to close later today, but in any event 
  no later than 5.00 p.m. on 18 October 2017, but at the sole discretion 
  of the Bookrunners the timing of the closing of the books, pricing 
  and allocations may be accelerated or delayed. The Bookrunners may, 
  in agreement with the Company, accept bids that are received after 
  the Bookbuild has closed. The Company reserves the right (upon agreement 
  with the Bookrunners) to reduce or seek to increase the amount to be 
  raised pursuant to the Placing in its absolute discretion 
 5. Any person who wishes to participate in the Bookbuild should communicate 
  their bid by telephone to their usual sales contact at the relevant 
  Bookrunner. Each bid should state the number of Placing Shares which 
  the prospective Placee wishes to acquire at either the Placing Price 
  which is ultimately established by the Company and the Bookrunners 
  or at prices up to a price limit specified in its bid. 
 6. Each of the Bookrunners reserves the right not to accept bids or 
  to accept bids in part rather than inwhole. The acceptance of the bids 
  shall be at the Bookrunners' absolute discretion. A bid in the Bookbuild 
  will be made on the terms and conditions in this Appendix and will 
  be legally binding on the Placee on behalf of which it is made and, 
  except with the consent of the Bookrunners, will not be capable of 
  variation or revocation after the close of the Bookbuild. 
 7. Allocations of the Placing Shares will be determined by the Bookrunners 
  after consultation with the Company (the proposed allocations having 
  been supplied by the Bookrunners to the Company in advance of such 
  consultation). Allocations will be confirmed orally by one of the Bookrunners 
  and a trade confirmation or contract note will be despatched as soon 
  as practicable thereafter. A Bookrunner's oral confirmation to such 
  Placee constitutes an irrevocable legally binding commitment upon such 
  person (who will at that point become a Placee), in favour of the Bookrunners 
  and the Company, to acquire the number of Placing Shares allocated 
  to it and to pay the Placing Price in respect of such shares on the 
  terms and conditions set out in this Appendix and in accordance with 
  the Company's articles of association. Except with the Bookrunners' 
  consent, such commitment will not be capable of variation or revocation 
  after the time at which it is submitted. 
 8. Each Placee's allocation and commitment will be evidenced by a trade 
  confirmation or contract note issued to such Placee by the Bookrunners. 
  The terms of this Appendix will be deemed incorporated in that trade 
  confirmation or contract note. 
 9. Irrespective of the time at which a Placee's allocation pursuant 
  to the Placing is confirmed, settlement for all Placing Shares to be 
  acquired pursuant to the Placing will be required to be made at the 
  same time, on the basis explained below under "Registration and Settlement". 
 10. All obligations of the Bookrunners under the Placing will be subject 
  to fulfilment or (where applicable) waiver of the conditions referred 
  to below under "Conditions of the Placing" and to the Placing not being 
  terminated on the basis referred to below under "Right to terminate 
  under the Placing Agreement". 
 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 under "Right to terminate under 
  the Placing Agreement" and will not be capable of rescission or termination 
  by the Placee. 
 12. To the fullest extent permissible by law, neither the Bookrunners, 
  nor the Company, nor any of their respective affiliates, agents, directors, 
  officers or employees shall have any responsibility or liability to 
  Placees (or to any other person whether acting on behalf of a Placee 

  or otherwise). In particular, neither the Bookrunners, nor the Company, 
  nor any of their respective affiliates, agents, directors, officers 
  or employees shall have any responsibility or liability (including 
  to the extent permissible by law, any fiduciary duties) in respect 
  of the Bookrunners' conduct of the Placing or of such alternative method 
  of effecting the Placing as the Bookrunners and the Company may determine. 
 13. Each Placee acknowledges and agrees that that it has obtained all 
  governmental and other consents (if any) which may be required for 
  the purpose of, or as a consequence of, its participation, and it will 
  provide promptly to the Bookrunners such evidence, if any, as to the 
  identity or location or legal status of any person which the Bookrunners 
  may request from it in connection with the Placing (for the purpose 
  of complying with the Regulations 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 the Bookrunners on the 
  basis that any failure by it to do so may result in the number of Placing 
  Shares that are to be purchased by it or at its direction pursuant 
  to the Placing being reduced to such number, or to nil, as the Bookrunners 
  may decide at their sole discretion; 
 14. Each Placee acknowledges and agrees that the Company is responsible 
  for the allotment of the Placing Shares to the Placees and the Bookrunners 
  shall have no liability to the Placees for the failure of the Company 
  to fulfil those obligations. 
 Conditions of the Placing 
 The Placing is conditional upon the Placing Agreement becoming unconditional 
  and not having been terminated in accordance with its terms. The Bookrunners' 
  obligations under the Placing Agreement are conditional on, inter alia: 
 (a) Admission occurring at or before 8:00 a.m. (London time) on 7 November 
  2017 (or such later time and/or date, not being later than 8:00 a.m. 
  (London time) on 21 November 2017, as the Company and Numis may otherwise 
  agree) (the "Closing Date"); 
 (b) the Company having confirmed to the Bookrunners that, prior to 
  the delivery of such confirmation, none of the representations, warranties 
  and agreements of the Company contained in the Placing Agreement was 
  untrue, inaccurate or misleading at the date of the Placing Agreement 
  or will be untrue, inaccurate or misleading immediately prior to Admission 
  when repeated at that time, by reference to the facts and circumstances 
  then subsisting; 
 (c) the Company having complied with or performed its obligations under 
  the Placing Agreement to the extent that the same fall to be performed 
  prior to Admission, save for any non-compliance which in the good faith 
  opinion of Numis is not material; 
 (d) the Acquisition Agreement (i) having been duly executed by the 
  parties thereto by or on the date of this Announcement; (ii) remaining 
  in full force and effect and not having been materially modified, or 
  rescinded, lapsed or been terminated (in whole or in part) prior to 
  Admission (save with the consent of Numis); and (iii) having become 
  unconditional in all respects save for any condition relating to Admission 
  occurring and to the Placing Agreement not having been terminated and 
  having become unconditional in all respects; 
 (e) in the good faith opinion of Numis, between the date of the Placing 
  Agreement and Admission there has been no material adverse change in, 
  or any development involving a prospective material adverse change 
  in, or affecting, the condition (financial, operational, legal or otherwise) 
  or the earnings, management, business affairs, solvency, credit rating 
  or prospects of the Company or of the Group (taken as a whole), whether 
  or not arising in the ordinary course of business; and 
 (f) in the good faith opinion of Numis, between the date of the Placing 
  Agreement and Admission there has been no material adverse effect on 
  the business, operations, financial condition, assets, liabilities 
  or gross profits of the Target and its subsidiaries, taken as a whole, 
  which results in costs or losses or liability for the Target group 
  of GBP7,500,000 or more (excluding certain circumstances, such as conditions 
  generally affecting the industries in which the Target and its subsidiaries 
  operate, and matters disclosed to the Company prior to the date of 
  the Placing Agreement). 
 Numis, at its discretion and upon such terms as its thinks fit, waive 
  compliance by the Company with the whole or any part of any of the 
  Company's obligations in relation to certain conditions in the Placing 
  Agreement save that the above conditions relating, inter alia, to Admission 
  taking place may not be waived. Any such extension or waiver will not 
  affect Placees' commitments as set out in this Announcement. 
 If: (i) any of the conditions contained in the Placing Agreement, including 
  those described above, is not fulfilled or (where permitted) waived 
  by Numis by the relevant time or date specified (or such later time 
  or date as the Company and Numis may agree); or (ii) the Placing Agreement 
  is terminated by Numis in the circumstances specified 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 it in respect thereof. 
 Neither the Bookrunners nor any of their respective affiliates, agents, 
  directors, officers or employees shall have any liability to any Placee 
  (or to any other person whether acting on behalf of a Placee or otherwise) 
  in respect of any decision Numis may make as to whether or not to waive, 
  or to extend the time and/or date for the satisfaction of, any condition 
  in the Placing Agreement nor in respect of any decision it may make 
  as to the satisfaction of any condition or in respect of the Placing 
  generally and by participating in the Placing each Placee agrees that 
  any such decision is within the absolute discretion of Numis. 
  Neither the Bookrunners nor the Company shall 
    have any liability to any Placee (or to any other 
    person whether acting on behalf of a Placee or 
    otherwise) in respect of any decision each of 
    them may make as to whether or not to waive or 
    to extend the time and/or date for the satisfaction 
    of any condition to the Placing nor for any decision 
    each of them may make as to the satisfaction 
    of any condition or in respect of the Placing 
    generally and by participating in the Placing 
    each Placee agrees that any such decision is 
    within the absolute discretion of the Company 
    and/or the Bookrunners (as applicable). 
  Right to terminate under the Placing Agreement 
 Numis is entitled, at any time before Admission, to terminate the Placing 
  Agreement in accordance with its terms in certain circumstances, including, 
  inter alia: 
 (a) if it comes to the knowledge of either Bookrunner that any of the 
  warranties given by the Company in the Placing Agreement was untrue 
  or inaccurate or misleading when made and/or that any of such warranties 
  would be untrue or inaccurate in a material respect or misleading if 
  it were to be repeated at any time prior to Admission by reference 
  to the facts, matters and circumstances then subsisting and, in the 
  opinion of either Bookrunner (acting in good faith), the effect of 
  such is that it would materially prejudice the success of the Placing 
  or the distribution of the Placing Shares; 
 (b) any material adverse change in, or any development reasonably likely 
  to lead to a material adverse change in, the condition (financial, 
  operational or legal), the assets, or the earnings, results of operations 
  or prospects of the Enlarged Group taken as a whole whether or not 
  arising in the ordinary course of business and, in the opinion of either 
  Bookrunner (acting in good faith), the effect of such is that it would 
  materially prejudice the success of the Placing or the distribution 
  of the Placing Shares; 
 (c) the occurrence of one or more specified adverse macro-economic 
  changes, suspension or material limitation in the trading on the London 
  Stock Exchange's main market for listed securities of any securities 
  of the Company or a general moratorium on commercial banking activities 
  in London or New York which, in the opinion of either Bookrunner (acting 
  in good faith) would materially prejudice the success of the Placing 
  or the distribution of Placing Shares; or 
 (d) any of the conditions to the Placing are not fulfilled or waived 
  (as applicable). 
 The rights and obligations of the Placees shall terminate only in the 
  circumstances described in these terms and conditions and in the Placing 
  Agreement and will not be subject to termination by the Placee or any 
  prospective Placee at any time or in any circumstances. By participating 
  in the Placing, Placees agree that the exercise by Numis of any right 
  of termination or other discretion under the Placing Agreement shall 
  be within the absolute discretion of Numis and that it need not make 
  any reference to, or consult with, Placees and that it shall have no 
  liability to Placees whatsoever in connection with any such exercise. 
  Placees will have no rights against either Bookrunner, the Company 
  or any of their respective directors or employees under the Placing 
  Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 
  (as amended). 
 Whilst, in the circumstances described above, Panmure Gordon may also 
  have the right to terminate its obligations under the Placing Agreement, 
  such right shall not entitle Panmure Gordon to terminate the Placing 
  Agreement and accordingly (subject to any concurrent right by Numis 
  to terminate the Placing Agreement) such termination by Panmure Gordon 
  shall be without prejudice to the surviving rights and obligations 

  of Numis, the Company and any Placees. 
 

No Prospectus

The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require a prospectus in the United Kingdom or in any other jurisdiction. No offering document or prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing.

Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) released by the Company today and subject to the further terms set forth in the trade confirmation or contract note to be provided to individual Placees. Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including this Appendix) and all other publicly available information previously published by the Company by notification to a Regulatory Information Service 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 either Bookrunner or any other person and none of the Company or the Bookrunners 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. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation by that person.

Neither the Company, nor either Bookrunner are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares.

Registration and Settlement

Settlement of transactions in the Placing Shares (ISIN: GB00B1V9NW54) following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"). Subject to certain exceptions, the Bookrunners and the Company reserve the right to require settlement for, and delivery of, the Placing Shares (or any part thereof) to Placees by such other means that they deem necessary if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation or contract note in accordance with the standing arrangements in place with the relevant Bookrunner stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Bookrunner and settlement instructions. Each 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 in respect of the Placing Shares that it has in place with the relevant Bookrunner.

Subject to, amongst other things, the Placing Agreement becoming unconditional and not being terminated in accordance with its terms, it is expected that settlement will be on 7 November 2017 in accordance with the instructions set out in the trade confirmation or contract note.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Bookrunners.

Each Placee is deemed to agree that, if it does not comply with these obligations, the Bookrunners may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Bookrunners' account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable and shall indemnify the Bookrunners 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) or other similar taxes imposed in any jurisdiction which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating an intention to subscribe for Placing Shares, each Placee confers on the Bookrunners all such authorities and powers necessary to carry out any such subscription and agrees to ratify and confirm all actions which the Bookrunners lawfully take in pursuance of such subscription.

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

Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

 
 Representations, Warranties and Further Terms 
 By participating in the Placing each Placee (and any person acting 
  on such Placee's behalf) irrevocably: 
 1. represents and warrants that it has read and understood the Announcement, 
  including this Appendix, in its entirety and that its acquisition 
  of Placing Shares is subject to and based upon all the terms, conditions, 
  representations, warranties, acknowledgements, agreements and undertakings 
  and other information contained herein and undertakes not to redistribute 
  or duplicate this Announcement; 
 2. acknowledges that no offering document or prospectus has been or 
  will be prepared in connection with the Placing and represents and 
  warrants that it has not received and will not receive a prospectus 
  or other offering document in connection with the Placing or the Placing 
  Shares; 
 3. acknowledges that the Placing does not constitute a recommendation 
  or financial product advice and neither Bookrunner has had regard 
  to its particular objectives, financial situation or needs; 
 4. acknowledges that none of the Bookrunners, the Company, any of 
  their respective affiliates, agents, directors, officers or employees 
  has provided, nor will provide, it with any material regarding the 
  Placing Shares or the Company other than this Announcement; nor has 
  it requested any of the Bookrunners, the Company, any of their respective 
  affiliates or any person acting on behalf of any of them to provide 
  it with any such information; 
 5. acknowledges that the Ordinary Shares are listed on the Official 
  List and are admitted to trading on the main market of the London 
  Stock Exchange and that the Company is therefore required to publish 
  certain business and financial information in accordance with the 
  rules and practices of the London Stock Exchange and/or the FCA, which 
  includes a description of the Company's business and the Company's 
  financial information, including balance sheets and income statements, 
  and that it is able to obtain or access to such information, or comparable 
  information concerning other publicly traded companies, in each case 
  without undue difficulty; 
 6. acknowledges that the content of this Announcement is exclusively 
  the responsibility of the Company and that neither of the Bookrunners, 
  nor their respective affiliates or any person acting on behalf of 
  any of them, has or shall have any liability for any information, 
  representation or statement contained in, or omission from, this Announcement 
  or any information previously published by or on behalf of the Company, 
  pursuant to applicable laws, 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 otherwise; 
 7. 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 acquire Placing Shares is contained in this Announcement 
  and any information previously published by the Company by notification 
  to a Regulatory Information Service, such information being all that 
  such Placee deems necessary or appropriate and sufficient 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 any of the Bookrunners 
  or the Company nor any of their respective affiliates, agents, directors, 
  officers or employees and none of the Bookrunners or the Company or 
  any such affiliate, agent, director, officer or employee 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, provided that nothing in this paragraph excludes the 
  liability of any person for fraudulent misrepresentation made by that 
  person; 
 8. acknowledges and agrees that it may not rely, and has not relied, 
  on any investigation that either Bookrunner, any of their affiliates 
  or any person acting on their behalf, may have conducted with respect 
  to the Placing Shares or the Company, and none of such persons has 
  made any representation, express or implied, with respect to the Company, 

  the Placing Shares or the accuracy, completeness or adequacy of the 
  information from the London Stock Exchange or any other information; 
  each Placee further acknowledges that it has conducted its own investigation 
  of the Company and the Placing Shares and has received all information 
  it believes necessary or appropriate in connection with its investment 
  in the Placing Shares; 
 9. acknowledges that it has made its own assessment and has satisfied 
  itself concerning the relevant tax, legal, currency and other economic 
  considerations relevant to its investment in the Placing Shares; 
 10. acknowledges that none of the Bookrunners, their respective affiliates 
  or any person acting on behalf of any of them has or shall have any 
  liability for any information made publicly available by or in relation 
  to the Company or any representation, warranty or statement relating 
  to the Company or the Group contained therein or otherwise, and that 
  where any such liability nevertheless arises as a matter of law Placees 
  will immediately waive any claim against any of such persons which 
  they may have in respect thereof, provided that nothing in this paragraph 
  excludes the liability of any person for fraudulent misrepresentation 
  made by that person; 
 11. represents and warrants that (i) the Placing Shares have not been, 
  and will not be, registered under the Securities Act; (ii) it is and, 
  at the time the Placing Shares are acquired, will be outside the United 
  States and acquiring the Placing Shares in an "offshore transaction" 
  in accordance with Rule 903 or Rule 904 of Regulation S; (iii) if 
  acquiring the Shares for the account of one or more other persons, 
  it has full power and authority to make the representations, warranties, 
  agreements, undertakings and acknowledgements herein on behalf of 
  each such person; (iv) it is not acquiring the Placing Shares as a 
  result of any "directed selling efforts" as defined in Regulation 
  S; and (v) it will not publish, distribute or transmit this Announcement 
  or any other document or information related to the Placing, by any 
  means or media, directly or indirectly, in whole or in part, in or 
  into the United States; 
 12. acknowledges that in making any decision to acquire Placing Shares 
  it (i) has such knowledge and experience in financial and business 
  matters to be capable of evaluating the merits and risks of subscribing 
  for or purchasing the Placing Shares, (ii) will not look to either 
  Bookrunner for all or part of any loss it may suffer as a result of 
  any such subscription or purchase, (iii) is experienced in investing 
  in securities of this nature in this sector and is aware that it may 
  be required to bear, and is able to bear, the economic risk of an 
  investment in the Placing Shares, (iv) is able to sustain a complete 
  loss of an investment in the Placing Shares and (v) has no need for 
  liquidity with respect to its investment in the Placing Shares; 
 13. undertakes, unless otherwise specifically agreed with the Bookrunners, 
  that it is not and at the time the Placing Shares are acquired, neither 
  it nor the beneficial owner of the Placing Shares will be, a resident 
  of Australia, Canada, Japan or South Africa and further acknowledges 
  that the Placing Shares have not been and will not be registered under 
  the securities legislation of Australia, Canada, Japan or South Africa 
  and, subject to certain exceptions, may not be offered, sold, transferred, 
  delivered or distributed, directly or indirectly, in or into any of 
  those jurisdictions; 
 14. acknowledges that the Placing Shares have not been and will not 
  be registered, and that a prospectus will not be cleared in respect 
  of any of the Placing Shares, under the securities laws or legislation 
  of the United States or any state or jurisdiction thereof, Australia, 
  Canada, Japan, or South Africa and, subject to certain exceptions, 
  may not be offered, sold, or delivered or transferred, directly or 
  indirectly, in or into those jurisdictions; 
 15. represents and warrants that the issue to it, or the person specified 
  by it for registration as holder, of Placing Shares will not give 
  rise to a liability under any of sections 67, 70, 93 or 96 of the 
  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; 
 16. represents and warrants that it has complied with its obligations 
  under the Criminal Justice Act 1993, the EU Market Abuse Regulation 
  (2015/596/EU) ("MAR") and in connection with money laundering and 
  terrorist financing under the Proceeds of Crime Act 2002 (as amended), 
  the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering 
  Regulations 2007 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; 
 17. represents and warrants 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 the acknowledgments, 
  warranties, representations, undertakings, and agreements herein on 
  behalf of each such person; and (ii) it is and will remain liable 
  to the Company and/or the Bookrunners 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); 
 18. if a financial intermediary, as that term is used in Article 3(2) 
  of the EU Prospectus Directive, represents, warrants and undertakes 
  that the Placing Shares purchased 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 which has implemented the Prospectus Directive 
  other than Qualified Investors, or in circumstances in which the prior 
  consent of the Bookrunners has been given to the offer or resale; 
 19. represents, warrants and undertakes that it has not offered or 
  sold and 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 FSMA; 
 20. represents, warrants and undertakes that it has not offered or 
  sold and will not, prior to Admission, offer or sell any Placing Shares 
  to persons in the EEA except to persons whose ordinary activities 
  involve them in acquiring, holding, managing or disposing of investments 
  (as principal or agent) for the purposes of their business or otherwise 
  in circumstances which have not resulted in and which will not result 
  in an offer to the public (within the meaning of the Prospectus Directive) 
  in any member state of the EEA; 
 21. represents, warrants and undertakes that it has only communicated 
  or caused to be communicated and will only communicate or cause to 
  be communicated any invitation or inducement to engage in investment 
  activity (within the meaning of section 21 of the FSMA) relating to 
  the Placing Shares in circumstances in which section 21(1) of the 
  FSMA does not require approval of the communication by an authorised 
  person; 
 22. represents, warrants and undertakes that it has complied and will 
  comply with all applicable provisions of the FSMA with respect to 
  anything done by it in relation to the Placing Shares in, from or 
  otherwise involving the United Kingdom; 
 23. represents and warrants, if in a Member State of the European 
  Economic Area, unless otherwise specifically agreed with the Bookrunners 
  in writing, that it is a "Qualified Investor"; 
 24. represents and warrants, if in the United Kingdom, that it is 
  a person (i) having professional experience in matters relating to 
  investments who falls within the definition of "investment professionals" 
  in Article 19(5) of the Order or (ii) who falls within Article 49(2)(a) 
  to (d) ("High Net Worth Companies, Unincorporated Associations, etc") 
  of the Order, or (iii) to whom this Announcement may otherwise lawfully 
  be communicated; 
 25. acknowledges and agrees that no action has been or will be taken 
  by either the Company or the Bookrunners or any person acting on behalf 
  of the Company or the Bookrunners 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; 
 26. represents and warrants that it and any person acting on its behalf 
  is entitled to acquire the Placing Shares under the laws of all relevant 
  jurisdictions and that it has all necessary capacity, fully observed 
  such laws and obtained all such governmental and other guarantees, 
  permits, authorisations, approvals and consents which may be required 
  thereunder and complied with all necessary formalities to enable it 
  to commit to this 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 Appendix) and will honour such obligations and that it 
  has not taken any action or omitted to take any action which will 

  or may result in the Bookrunners, the Company or any of their respective 
  directors, officers, agents, employees or advisers acting in breach 
  of the legal or regulatory requirements of any jurisdiction in connection 
  with the Placing; 
 27. undertakes that it (and any person acting on its behalf) will 
  make payment in respect of the Placing Shares allocated to it in accordance 
  with this Appendix on the due time and date set out herein, failing 
  which the relevant Placing Shares may be placed with other acquirers 
  or sold as the Bookrunners may in their sole discretion determine 
  and without liability to such Placee, who will remain liable and will 
  indemnify the Bookrunners on demand for any amount by which the net 
  proceeds of such sale fall 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 
  such placing or sale of such Placee's Placing Shares; 
 28. acknowledges that neither of the Bookrunners, nor any of their 
  respective affiliates, agents, directors, officers or employees is 
  making any recommendations to it or advising it regarding the suitability 
  of any transactions it may enter into in connection with the Placing 
  and that its participation in the Placing is on the basis that it 
  is not and will not be a client of either Bookrunner in connection 
  with its participation in the Placing and that neither Bookrunner 
  has any duty nor responsibility 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; 
 29. acknowledges that each of the Bookrunners does not have any duties 
  or responsibilities to it, or its clients, similar or comparable to 
  the duties of "best execution" and "suitability" imposed by the Conduct 
  of Business Sourcebook in the FCA's Handbook of Rules and Guidance 
  and that neither of the Bookrunners is acting for it or its clients 
  and that it will not be responsible for providing protections to it 
  or its clients; 
 30. undertakes that 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. Neither of the Bookrunners nor the Company will 
  be responsible for any liability to stamp duty or stamp duty reserve 
  tax or other similar taxes resulting from a failure to observe this 
  requirement ("Indemnified Taxes"). Each Placee and any person acting 
  on behalf of such Placee agrees to indemnify the Company and the Bookrunners 
  on an after-tax basis in respect of any Indemnified Taxes; 
 31. acknowledges that these terms and conditions and any agreements 
  entered into by it pursuant to the terms and conditions set out in 
  this Appendix, and all non-contractual or other obligations arising 
  out of or in connection with them, 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 (including 
  any dispute regarding the existence, validity or termination of such 
  contract or relating to any non-contractual or other obligation arising 
  out of or in connection with 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 either the Company or either Bookrunner in any jurisdiction in 
  which the relevant Placee is incorporated or in which any of its securities 
  have a quotation on a recognised stock exchange; 
 32. agrees to indemnify on an after tax basis and hold the Company, 
  the Bookrunners and their respective affiliates harmless from any 
  and all costs, claims, liabilities and expenses (including legal fees 
  and expenses) arising out of or in connection with any breach of its 
  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; 
 33. except as set out in clause 34 below, represents and warrants 
  that it has neither received nor relied on any 'inside information' 
  (for the purposes of MAR and section 56 of the Criminal Justice Act 
  1993) concerning the Company prior to or in connection with accepting 
  the invitation to participate in the Placing and is not purchasing 
  Placing Shares on the basis of material non-public information; 
 34. if it has received any 'inside information' (for the purposes 
  of MAR and section 56 of the Criminal Justice Act 1993) in relation 
  to the Company and its securities, it confirms that it has received 
  such information within the market soundings regime provided for in 
  article 11 of 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, prior to the information being made publicly 
  available; 
 35. if it is a pension fund or investment company, its purchase of 
  Placing Shares is in full compliance with applicable laws and regulations; 
 36. agrees that the Company, the Bookrunners and their respective 
  affiliates and others will rely upon the truth and accuracy of the 
  foregoing representations, warranties, acknowledgements, agreements, 
  and undertakings which are given to the Bookrunners on their own behalf 
  and on behalf of the Company and are irrevocable and it irrevocably 
  authorises the Company and the Bookrunners 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; 
 37. none of the Company or the Bookrunners owes any fiduciary or other 
  duties to any Placee in respect of any acknowledgments, confirmations, 
  undertakings, representations, warranties or indemnities in the Placing 
  Agreement; and 
 38. its commitment to take up Placing Shares on the terms set out 
  in this Announcement (including this Appendix) will continue notwithstanding 
  any amendment that may or in the 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 
  or the Bookrunners' conduct of the Placing. 
 

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

The agreement to allot and issue Placing Shares to Placees (and/or to persons for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement also assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax or other similar taxes may be payable, for which neither the Company nor the Bookrunners will be responsible and the Placees shall indemnify the Company and the Bookrunners on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. If this is the case, each Placee should seek its own advice and notify the Bookrunners accordingly.

The Company and the Bookrunners are not liable to bear any transfer taxes that arise on a sale of Placing Shares subsequent to their acquisition by Placees or for transfer taxes arising otherwise than under the laws of the United Kingdom. Each Placee should, therefore, take its own advice as to whether any such transfer tax liability arises and notify the Bookrunners accordingly. Furthermore, each Placee agrees to indemnify on an after-tax basis and hold each of the Bookrunners and the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the default or delay of that Placee or its agent.

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 UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

Each Placee and any person acting on behalf of the Placee acknowledges and agrees that any Bookrunner or any of its affiliates may, at its absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares and that, in the event that the Bookrunners fail to procure Placees for any of the Placing Shares then the Bookrunners will, as principal, subscribe for such Placing Shares.

When a Placee or person acting on behalf of the Placee is dealing with a Bookrunner, any money held in an account with such Bookrunner 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 the 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 such Bookrunner's money in accordance with the client money rules and will be used by such Bookrunner in the course of its own business and the Placee will rank only as a general creditor of such Bookrunner.

All times and dates in this Announcement may be subject to amendment. The Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any changes.

DEFINITIONS

 
 Acquisition           the purchase by the Company of the Target pursuant 
                        to the Acquisition Agreement. 
 Admission             admission of the Placing Shares to the Official 
                        List of the FCA and to trading on the London 
                        Stock Exchange's main market. 
 Bookrunners           Numis and Panmure Gordon. 
 Buyer                 Hilton Foods Limited, a wholly owned subsidiary 
                        of the Company. 
 Circular              the circular to shareholders to be published 
                        today setting out details of the Acquisition. 
 Class 1 Transaction   a major transaction, the size of which results 
                        in a 25 per cent. threshold being reached under 
                        any of the class tests set out in the Listing 
                        Rules. 
 Company or            Hilton Food Group plc. 
  Hilton 
 Completion            completion of the Acquisition pursuant to the 
                        Sale and Purchase Agreement 
 Enlarged Group        the Group as enlarged following the acquisition 
                        of the Target. 
 FSMA                  the Financial Services and Markets Act 2000. 
 General Meeting       The general meeting of the Company (or any adjournment 
                        of it) convened for 10 a.m. on 6 November 2017 
                        for shareholders to approve the Resolutions, 
                        notice of which are set out in the Circular. 
 Group                 the Company and its subsidiary undertakings. 
 Listing Rules         The listing rules made by the UKLA under Part 
                        VI of FSMA 
 London Stock          London Stock Exchange plc. 
  Exchange 
 Numis                 Numis Securities Limited. 
 Ordinary Shares       ordinary shares of GBP0.10 each in the capital 
                        of the Company. 
 Panmure Gordon        Panmure Gordon (UK) Limited. 
 Placing               the underwritten placing of the Placing Shares 
                        on the terms and subject to the conditions contained 
                        in the Placing Agreement and to the terms and 
                        conditions set out in this Announcement. 
 Placing Agreement     the conditional agreement between the Company 
                        and the Bookrunners entered into on the date 
                        of this Announcement in connection with the Placing. 
 Placing Shares        the new Ordinary Shares to be allotted and issued 
                        by the Company pursuant to the Placing. 
 Resolutions           the resolutions in the notice of General Meeting 
                        to be set out in the Circular. 
 Sale and Purchase     the conditional agreement between (1) the Buyer 
  Agreement             (2) the Company as the Buyer's guarantor (3) 
                        the Seller and (4) the Seller Guarantor dated 
                        18 October 2017 in respect of the Acquisition 
 Seller                Gadus B.V. 
 Seller Guarantor      Framtakssjóður Íslands slhf. 
 Target                Icelandic Group UK Limited. 
 UKLA                  the Financial Conduct Authority exercising its 
                        functions under Part VI of FSMA. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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(END) Dow Jones Newswires

October 18, 2017 02:00 ET (06:00 GMT)