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Attraqt Group PLC

ATTRAQT Group PLC - Proposed Acquisition & Conditional Placing

RNS Number : 3983Y
ATTRAQT Group PLC
08 May 2019
 

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8 May 2019

Attraqt Group plc

("Attraqt" or the "Company")

 

Proposed acquisition of Early Birds SAS

 

Conditional Placing of £17.1 million

 

Attraqt Group plc (AIM: ATQT), the provider of SaaS solutions that power exceptional online shopping experiences, is pleased to announce the conditional acquisition of Early Birds SAS ("Early Birds") and a conditional placing to raise £17.1 million at 27.0 pence per share.

 

Highlights

 

·     

The Company has entered into a conditional agreement (the "Acquisition Agreement") to acquire Early Birds for consideration of €15.89 million (c.£13.82 million), of which c.£11.03 million will be satisfied in cash and c.£2.79 million will be satisfied by the issue of the Consideration Shares (the "Acquisition")

·     

The Company also announces that it has conditionally raised £17.1 million (before expenses) by way of a conditional placing (the "Placing") of a total of 63,333,334 new Ordinary Shares (the "Placing Shares") at 27.0 pence per New Ordinary Share (the "Placing Price")

·     

The Placing Price represents a premium of 1.89 per cent. to the Company's closing share price on 7 May 2019

·    

The Placing, which was oversubscribed and is not underwritten, has been strongly supported by both new and existing shareholders, pursuant to the terms and conditions set out in Appendix II below, by Canaccord Genuity Limited ("Canaccord Genuity").

·    

Certain Directors and associated entities and members of the Company's senior management team have also indicated that they intend to participate in the Placing for Placing Shares at the Placing Price. A further announcement will be made in due course once such dealings have been made.

·    

The Enlarged Group's unified solutions will aim to deliver omnichannel search, merchandising, and product and content personalization for retailers and brands. The Directors intend to combine Attraqt's pedigree in data-led search and merchandising capabilities to optimize product discovery and visual curation, with Early Birds' award-winning ability to empower learning algorithms to orchestrate and personalize the entire shopper journey.

 

Proposed acquisition of Early Birds

Early Birds provides an artificial intelligence ("AI") powered Software as a Service ("SaaS") platform that allows internet retailers to personalise their offering to individual customers, in real-time, across both online and offline channels. Early Birds is positioned as one of the market leaders in France for true AI-driven personalisation.

Early Birds serves 69 customers trading in more than 28 countries through a modern, proven, scalable SaaS platform that currently services 1.8 billion API calls per month. Early Birds' clients include The Kooples, Boulanger, Cdiscount, Fnac/Darty, La Fourchette and La Redoute.

Early Birds was founded by Mrs. Laetitia Comes-Bancaud and Mr. Nicolas Mathon, who will join the Enlarged Group in senior management positions following completion of the Acquisition. Both Founders will also become shareholders in the Company upon Admission of the Consideration Shares, which will be subject to a Lock-in Agreement for two years. The Acquisition is conditional on, inter alia, the completion of the Placing and Admission. The Acquisition, will therefore, complete on the date of Admission which is expected to be on or around 29 May 2019.

In the year ended 31 December 2018, Early Birds generated revenue of approximately €2.3 million (2017: €1.4 million) and €3.6 million of annual recurring revenue ("ARR") (2017: €2.0 million). In March 2019, Early Bird's Annual Recurring Revenue was €3.6m and is targeted to be €4.9m+ by year end. As of 31 December 2018, Early Birds had consolidated net assets of approximately £1.2m (2017: £2.1m).

The Board believes that the Acquisition represents a transformational step to the Group's vision of building an AI eCommerce leader that is integral to the world's best shopping experiences. As well as giving brands the ability to test and deploy AI algorithms from various sources, the Directors believe the Acquisition will enable retailers to curate specific experiences for high-traffic sites, landing pages or targeted campaigns utilizing Attraqt's powerful merchandising capabilities. This is underpinned by Attraqt's proposition of delivering automation which can be further augmented by human input and creativity.

The combination of the Company with Early Birds creates a powerful and differentiated proposition that the Board believes will:

·      Deliver an enlarged product offering;

·      Increase competitive win rate, reduce attrition and increase average selling prices;

·      Immediately fulfil a cornerstone of the Company's 2019 to 2020 product development roadmap; namely the addition of AI capabilities to the Company's product offering; and

·      Add scale to the Company by:

Increasing access to 69 customers that are trading in more than 28 countries (of which 15 are enterprise clients);

Control of one of the market leaders in France, providing a base for geographic expansion into the SEMEA region;

Creating up-sell and cross-sell opportunities for both the Company and Early Birds; and

Increasing the addressable market, including through new verticals.

Global fashion brand and leading eRetailer, The Kooples, is the first retailer to sign up to the unified Attraqt and Early Birds solution pursuant to the partnership announced in March 2019. Arnaut Fritz, Chief Information Officer at The Kooples said of the partnership between Attraqt and Early Birds:

 

"We are proud of The Kooples distinctive identity and it is important that we create emotional and individual connections with our shoppers consistently throughout the shopper journey, in stores and online. The ability to harness data and tailor-made algorithms alongside each other to empower our great merchandising team is just what we were looking for. We welcome the unified solution from Early Birds and Attraqt and we are excited to explore the impact this will have on our customer journeys and our financial performance."

Conditional Placing

The Company intends to fund the cash component of the consideration for the Acquisition and provide additional growth and working capital to the Enlarged Group by way of the Placing. The Company has conditionally raised approximately £17.1 million (before expenses) by way of a placing of 63,333,334 Placing Shares at the Placing Price with certain institutional and other investors. The Placing Price represents a 1.89 per cent premium to the closing middle market price of 26.5 pence per Ordinary Share on 7 May 2019, being the latest Dealing Day prior to the announcement of the Acquisition and the Placing.

Of the Placing proceeds, £12.3 million will be used to satisfy the cash consideration payable in respect of the Acquisition and associated transaction costs, with a portion used to fund the growth plans (c.£2.0 million) and implementation costs (c.£0.6 million) for the Enlarged Group following completion of the Acquisition. The balance of the Placing proceeds, being an aggregate sum of c. £2.2 million, will be used for general working capital purposes for the Enlarged Group.

The Placing (which is not being underwritten) is conditional, amongst other things, upon:

(a)        

the Placing Agreement becoming unconditional in all respects as regards the Placing (subject to Admission occurring) and not having been terminated in accordance with its terms prior to Admission;

(b)        

the Acquisition Agreement becoming unconditional in all respects (subject to Admission occurring) and not having been terminated in accordance with its terms prior to Admission;

(c)        

the Resolutions set out in the Notice of General Meeting being approved by the Shareholders; and

(d)        

Admission of the Placing Shares becoming effective on or before 8.00 a.m. on 29 May 2019 or such later date as the Company and Canaccord Genuity may agree, being no later than 8.00 a.m. on 28 June 2019.

The Placing Shares, upon issue, will represent approximately 35.2 per cent. of the Enlarged Share Capital immediately following Admission. The Placing Shares will rank in full for all dividends with a record date on or after the date of Admission and otherwise equally with the Existing Ordinary Shares and the Consideration Shares in issue from the date of Admission.

Attraqt has entered into a placing agreement (the "Placing Agreement") with Canaccord Genuity which acted as sole bookrunner in relation to the Placing. Further details of the Placing Agreement can be found in the terms and conditions of the Placing contained in the Appendix to this announcement (which forms part of this announcement).

Posting of Circular

The Company will shortly be publishing copies of the Circular, containing a notice of general meeting and a proxy form to Shareholders, and a copy of the Circular will be available on the Company's website at https://www.attraqt.com.

Application will be made for the admission of the 63,333,334 Placing Shares and the 10,346,284 Consideration Shares to trading on AIM and dealings in New Ordinary Shares is expected to occur at 8.00 a.m. on 29 May 2019. Assuming the passing of the Resolutions, Attraqt's enlarged issued ordinary share capital immediately following the issue of the Placing Shares and Consideration Shares will be 180,048,207 Ordinary Shares.

Related party transactions and Directors' dealings

The Company has also today been notified that the following substantial shareholder of Attraqt has agreed to acquire Placing Shares pursuant to the terms of the Placing. Conditional upon Admission, their interest in the Company will be as follows:

Shareholder

Number of Existing Ordinary Shares

Number of Placing Shares subscribed for in the Placing

Number of Ordinary Shares immediately following completion of the Placing

Percentage of Enlarged Share Capital

Lombard Odier Asset Management (Europe) Limited

21,221,518

7,407,407

28,628,925

15.90%

 

In addition, certain Directors and associated entities and members of the Company's senior management team have also indicated that they intend to shortly participate in the Placing for Placing Shares at the Placing Price. Such entities have provided the following non-binding indications and a further announcement will be made in due course once such dealings have been made:

Shareholder

Number of Existing Ordinary Shares

Indicative number of Placing Shares intending to subscribe for in the Placing

Indicative number of Ordinary Shares immediately following completion of the Placing

Indicative percentage of Enlarged Share Capital

Azini 3 LLP*1

17,224,846

6,721,849

23,946,695

13.30%

Luke McKeever

Nil

 370,370

 370,370

0.21%

Eric Dodd*2

Nil

 92,592

 92,592

0.05%

*1 Azini 3 LLP is a private equity fund managed by Azini Capital. Nick Habgood (Chairman of Attraqt) is the Managing Partner of Azini Capital Partners LLP. Azini 3(FP)LP is a limited partner in Azini and Nick Habgood is a partner in Azini 3(FP)LP. Therefore, Nick Habgood has an indirect interest in the share capital of the Company.

*2 Such shares are being subscribed for by Swapnil Dodd, the wife of Eric Dodd.

By virtue of being a substantial shareholder of the Company, the issue of the Placing Shares to Lombard Odier Asset Management (Europe) Limited constitute related party transactions for the purposes of Rules 13 of the AIM Rules;

In the event that Azini 3 LLP*, Luke McKeever and Eric Dodd participate in the Placing with the above indications, such dealings shall also constitute related party transactions under Rules 13 and 16 of the AIM Rules.

The independent Directors (being Ivor Dunbar and Robert Fenner) consider, having consulted with the Company's nominated adviser, Canaccord Genuity, that the terms of the aforementioned related party transactions with (i) Lombard Odier Asset Management (Europe) Limited and (ii) Azini 3 LLP*, Luke McKeever and Eric Dodd, are fair and reasonable insofar as Shareholders are concerned.

 

Luke McKeever, CEO of Attraqt, commented

"We are pleased to announce the proposed acquisition of Early Birds, a leading AI-driven personalisation platform. Combining our two businesses will enable the Company to orchestrate the entire shopper experience for our clients using a single solution, delivering increased conversion rates, greater productivity from the retailers' online visual merchandising teams and greater flexibility to respond to trends. Importantly, the acquisition will accelerate Attraqt's existing strategic roadmap, positioning us well with both existing and potential customers."

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR").

 

-ends-

 

For further enquiries please contact:

 

Attraqt Group plc

Via Alma PR

Luke McKeever, CEO

Eric Dodd, CFO

 

 


Canaccord Genuity (Nominated Adviser, Financial Adviser and Sole Bookrunner)

Simon Bridges

Adam James

 

+44 (0)20 7523 8000

Alma PR

+44 (0)20 3405 0205

Rebecca Sanders-Hewett

Susie Hudson

Sam Modlin

attraqt@almapr.co.uk

 

About Attraqt Group plc

 

Attraqt powers exceptional shopping experiences for over 240 of the world's leading retail brands. Attraqt's core product, Fredhopper Discovery Platform, drives relevant and inspiring ecommerce experiences through personalization, search, recommendations, internationalization and merchandising SaaS solutions. Simple-to-use interfaces and efficient workflows enable Merchandisers to take full control and enhance the value of smart automation with their own strategic expertise and creativity.

 

For more information visit www.attraqt.com 

 

A circular containing details of the Resolutions is expected to be posted to Shareholders later today along with a Form of Proxy to vote at a General Meeting expected to be convened for 28 May 2019 (the "Circular"). Capitalised terms in this announcement are defined as set out at the end of this announcement. The Circular will be available on the Company's website, www.www.attraqt.com.

 

 

 

1.               INTRODUCTION

The Company is pleased to announce that it has today entered into a conditional agreement to acquire the entire issued and to be issued share capital of Early Birds SAS for an aggregate consideration of €15.89 million (c. £13.82 million), subject to adjustment for normalised working capital,  of  which €12.68 million (c. £11.03 million) will be satisfied in cash and €3.21 million (c. £2.79 million) will be satisfied by the issue of Consideration Shares.

Early Birds has developed and owns a real-time predictive personalisation platform that delivers a multichannel customer experience for its customers. It is positioned as one of the market leaders in France for true AI-driven personalisation. Early Birds serves 69 customers trading in more than 28 countries through a modern, proven, scalable SaaS platform that currently services 1.8 billion API calls per month. Such clients include Boulanger, Cdiscount, Fnac/Darty, La Fourchette, La Redoute and The Kooples.

The Company proposes to fund the cash component of the consideration for the Acquisition and provide growth capital to the Enlarged Group by way of the Placing. The Company has conditionally raised approximately £17.1 million (before expenses) by way of a placing of 63,333,334 Placing Shares at a price of 27 pence per share with certain institutional and other investors. The Placing Price represents a 1.89 per cent. premium to the closing middle market price of 26.5 pence per Ordinary Share on 7 May 2019, being the latest Dealing Day prior to the announcement of the Acquisition.

The Placing is conditional on Admission becoming effective and the Placing Agreement becoming unconditional in all respects by no later than 29 May 2019, or such later date (being no later than 28 June 2019) as the Company and Canaccord may determine.

The Board believes that the Acquisition represents a transformational step to the Group's vision of building an AI eCommerce leader that is integral to the world's best shopping experiences. The Acquisition will enable the Company's existing and prospective retailer clients to combine a high degree of AI-powered automation and personalisation with the ability to create highly curated and individual shopping experiences.

The combination of the Company with Early Birds creates a powerful and differentiated proposition that the Board believes will:

·      Deliver an enlarged product offering;

·      Increase competitive win rate, reduce attrition and increase average selling prices;

·      Immediately fulfil a cornerstone of the Company's 2019 to 2020 product development roadmap; namely the addition of AI capabilities driven by an API deployment model to the Company's product offering; and

·      Add scale to the Company by:

-          Increasing access to Early Birds' 69 customers that are trading in more than 28 countries (of which 15 are enterprise clients);

-          Control of one of the market leaders in France, providing a base for geographic expansion into the SEMEA region;

-          Creating up-sell and cross-sell opportunities for both the Company and Early Birds; and

-          Increasing the addressable market, including through new verticals.

Further details of the Acquisition and the Placing, and the Shareholder approvals required in relation to them, are set out below.

2.               INFORMATION ON ATTRAQT

Introduction

Attraqt is a leading provider of online merchandising and onsite search for eCommerce. Branded 'The Fredhopper Discovery Platform', the Company's SaaS platform focuses on providing retailers with search and visual merchandising tools to give them much greater control over how their products are merchandised on their eCommerce sites.

It is developed, sold, implemented and supported by 129 people based in the UK, Netherlands, Bulgaria, USA, Germany, France and Australia.

The platform serves 240 brands across the globe in multiple verticals including fashion, home & garden, luxury, beauty and department stores. Clients include ASOS, Waitrose, Vans, Pretty Little Thing, Paul Smith, Misguided, JD Sports and Selfridges & Co. The technology is proven, robust and scalable, having served, for example, 360 million requests over Black Friday 2018.

The Directors believe that the benefits for retailers include:

·      Increased conversion rates;

·      Greater productivity from the retailers' online visual merchandising teams;

·      Greater flexibility to respond to trends;

·      An enhanced shopper experience that provides retailers with a competitive advantage; and

·      Reduced reliance on internal IT to make changes.

Recent developments

In 2018, a leadership change was initiated by the Board, and a refreshed strategic plan was enacted to guide the Company into its next stage of growth following the acquisition of Fredhopper in 2017. That plan led to organisational alignment within the Company and the creation of a customer success team to improve client retention. Improvements were also made to on-boarding and the Company's professional services operation. Additionally, a competitive audit was conducted which resulted in the creation of a single, new vision for the Company - to become integral to the world's best shopping experiences.

The 2018 Company's financial highlights include:

·      Proforma revenue increase of 10 per cent. to £17.1 million;

·      Comparable gross profit increased 16 per cent. to £11.5 million;

·      Annual Contract Value increased by 14 per cent. to £97,000;

·      Adjusted EBITDA moved into breakeven of £0.03 million (2017: loss of £0.2 million);

·      15 new logos with an average Annual Contract Value of £73,000;

·      Net revenue retention of 96 per cent.; and

·      Annual Recurring Revenue flat at £16.0 million.

In 2019, the Company's near and mid-term plan is to execute on a focused product vision and deliver on its 12-month strategic roadmap. In connection therewith, partnerships have been or are in the process of being created with companies that have complementary technology, eCommerce platform providers, system integrators and providers of connectivity software and services.

This year saw the development and launch of the Company's Experience Optimisation team which provides retailers with specialist retail insights and expertise to help them optimise their merchandising performance. In doing so, retailers validate the benefits delivered by the Fredhopper Discovery Platform thereby justifying their investment, a key driver of client retention.

Marketing has been restructured and improved with a view to executing a focused account-based market sales model.

Business model

The Company operates through a SaaS model, based primarily on a recurring monthly service fee with one-off on-boarding and setup fees and additional follow-on project fees. Clients typically contract for a minimum of 12 months, with some larger clients signing for two to three years. The Board considers this to be a standard and scalable model.

Acquisition strategy

The acquisition of Fredhopper in March 2017 was the first step in changing the scale and reach of the Company. The Board has continued to explore further acquisitions aligned to the Group's corporate strategy, which led it to this proposed acquisition of Early Birds. Through this Acquisition, the Company fulfils a cornerstone of its 2019/2020 product development roadmap by adding AI, API-led connectivity and personalised recommendations to its service offering, a powerful platform augmentation.

3.               MARKET OVERVIEW

Market trends - AI and personalisation is key to competing in the future marketplace

Digital commerce applications make use of AI to assist with pattern recognition and classification. This enables personalisation, customer segmentation and sentiment analysis. According to Forrester Research Inc(1) in 2019, the market dynamics are changing, as 89 per cent. of digital professionals plan to invest in personalising the customer experience and 77 per cent. of consumers have chosen, recommended, or paid more for a brand that provides a personalised service/experience.

As consumer expectations continue to rise, retailers need to offer consumers more relevant and personalised shopping experiences. In recent years, retailers and brands have placed increased emphasis on the customisation of each individual shoppers' eCommerce experience through the delivery of personalised search results and making product recommendations.

The business response has been measured as follows:

·      75 per cent. of brands have personalised website content.

·      55 per cent. of brands have personalised promotions/product offers.

·      49 per cent. of brands have personalised product recommendations.

Retailers that successfully meet these expectations have experienced increased customer conversion and improved average order value.

This momentum is accelerating and the sector is predicted to grow at a CAGR of 40.7 per cent. for the next five years. A 2019 study by Monetate(2) reported that 24.3 per cent. of retail businesses are already invested in machine learning/AI technology for personalisation and 50.5 per cent. of retail businesses intend to invest in such technology during 2019.

Notably, there is a greater weighting to European businesses (52 per cent. EU, 45 per cent. North America).

 

 

(1)      Source: 2019 Forrester Research Inc - The Personalization Imperative: Making The Move to Individualisation by Brendan Witcher (Vice President, Principal Analyst).

(2)      Source: Monetate - 2019 Personalization Development Study.

 

Further, Forrester Research(3) reports that:

·      61 per cent. of customers are unlikely to return to a website that does not provide a satisfactory customer experience;

·      77 per cent. of consumers have chosen, recommended, or paid more for a brand that provides a personalised service/experience; and

·      89 per cent. of digital professionals plan to invest in personalising the customer experience.

The Company estimates that the total addressable market for Website Personalisation today is

€167 million, the UK's share of which is approximately €27 million.

 

 

Source: SimilarWeb, Website Traffic Statistics and Market Intelligence.

AI-driven personalisation is front and centre in many of the Company's current competitive tender processes. The Company has noted that competitors have implemented this technology as part of their product offering and are making it a key part of clients' buying criteria.

The Company considers AI competence and personalisation key to competing in the future marketplace. While the Company considers itself the clear market leader in highly curated shopping experiences for eCommerce search and merchandising, personalisation remains a core area of focus for enhancement. The proposed acquisition of Early Birds addresses this component in the product roadmap and is central to the Company's ambition to power the world's best shopping experiences.

4.               INFORMATION ON EARLY BIRDS

4.1       Overview of Early Birds

Early Birds is an AI-driven personalisation SaaS platform that delivers real-time, multichannel shopping experiences for its customers.

Its high quality, state-of-the art online personalisation technology is built on a scalable and modern technology platform, hosted on Google Cloud. It is capable of ingesting vast product catalogues and delivering personalisation services expected by large and medium sized retailers. Despite processing very large product catalogues, query response time is impressively fast.

Positioned as one of the market leaders in France, Early Birds believe it offers the only solution on the market that is able to integrate customers' own personalisation algorithms.

In 2017, Early Birds was voted the most innovative data and analytics start-up by the Federation of eCommerce and Distance Selling (FEVAD) & KPMG.

Benjamin Coutière - Sales Manager, Retail & E-commerce - Google Cloud France stated:

"Built and running on Google Cloud Platform, Early Birds is the most reliable and efficient personalization platform for retailers and pure players. [They] provide an innovative solution to increase sales and improve customer satisfaction, based on top of the class Artificial Intelligence and Machine Learning technologies."

History

Early Birds began product development in 2012 and launched its first product in 2015. In April 2015, it raised a seed funding round of €450k, a Series A funding round of €4.3 million in September 2017 and opened a UK office in 2018.

 

 

(3)      Source: 2019 Forrester Research Inc - The Personalization Imperative: Making the Move to Individualisation by Brendan Witcher (Vice President, Principal Analyst).

Talent

The Early Birds group has 26 employees of which 45 per cent. are in Product Research & Development and 38 per cent. hold client facing roles. The majority of employees are based in Paris, with three employees focused in the UK.

Key technology features

The Early Birds platform creates a single, real-time, contextual view of a consumer, and enables data science teams to test and deploy their own machine learning algorithms alongside other best-in-class models including those developed by Early Birds itself.

New data sources are created and enriched via the process of data transformation and then analysed through the Early Birds Algorithm Orchestration Platform to produce consumer insights and personalised recommendations. A retailer uses the product suite to optimise consumer outcomes by testing and learning via A/B testing and reporting.

An overview of the technical components is set out below:

·      Visitor integration: client-definable events and an event-reporting API for both clickstream and non clickstream events.

·      Catalogue integration: includes a breadcrumb model of item categories allowing for representation of a full lattice of category types (i.e., {mens. shirts, sale}), together with an expressive widget language over the lattice.

·      Data Management: manages the collection, cleaning and enrichment of data.

·      Algorithm Hosting Platform: enables data to be processed through algorithms, which may be developed by Early Birds, open source providers, third parties and/or the client. In other words, the platform enables data science teams to test and deploy their own machine learning alongside other best-in-class models (AI Orchestration) whilst at the same time maintaining the ability to merchandise, A/B test and report.

·      On-page recommendation widgets: these are highly customisable and interactive. They incorporate rollover, explanation and feedback functionality.

·      Merchandising functionality: enables comprehensive control over visitors, web pages and recommendations.

·      Reporting: includes a comprehensive set of operating and performance statistics.

·      A/B testing: testing evaluation and reporting facilities available at widget level and, critically, includes test-result significance reporting. This enables different personalisation strategies to be tested.

·      Omni-channel capability: the ability to place offers and content throughout, inter alia, the website, basket, checkout, in-store and call centres.

Other key features and functional areas include:

·      On-site recommendations

-          multiple strategies

-          available throughout all pages on website

-          may be product or content based

·      Email recommendations

-          can be based on user action i.e abandon shopping cart or feature as part of marketing email

-          extension of the product offering being extended into the large marketing automation sector

·      AI driven Merchandising

-          ability to post filter output from recommendation results before rendering to end users

-          ability to deploy merchandising rules at local site level and across multiple same brand sites

 

Platform performance

Early Birds is positioned as one of the market leaders in France for true AI-driven personalisation with its modern, proven, scalable SaaS platform that currently:

·      Serves 1.8 Billion API calls per month.

·      Serves 58 million recommendations per day.

·      Manages 152 million products - the largest customer holds >50m product SKUs.

·      Has an average response time of 62.8ms.

Clients

Early Birds currently has 69 customers in more than 28 countries. These include Boulanger, Cdiscount, Fnac/Darty, La Fourchette, La Redoute and The Kooples. Of the 69 clients, 15 are enterprise clients with an average Annual Contract Value of €171k.

Early Bird's top three clients, in aggregate, accounted for approximately 32 per cent. of its total revenues in 2018 while the top ten clients accounted for approximately 53 per cent. of total revenues in the same period. There is limited customer overlap between the Company and Early Birds.

In 2018, Early Birds acquired 26 new clients which has contributed towards its impressive annual recurring revenue growth, as set out in section 4.3 below.

4.2       Early Birds management and Sellers

The two co-founders of Early Birds will join the Enlarged Group in key senior management roles focusing on the priorities below.

·      Laetitia Comes-Bancaud will become Vice President, Attraqt Southern Europe. She will report to Luke McKeever, CEO and join the Attraqt executive team. Her key responsibilities will include the execution of the current pipeline for Early Birds and assisting in the commercial integration of the business and growth plans for 2020 and beyond.

·      Nicolas Mathon will be Vice President of Data & Artificial Intelligence Solutions, Attraqt. Nicolas will report to Peter Thomas, CTO and join the Attraqt executive team. His key responsibilities will include the deployment of an integrated and enhanced software solution and the launch of the Attraqt data science team. He will remain a key executive sponsor and spokesperson in major accounts.

 

A two-year lock-in has been agreed in respect of the Founders Consideration Shares, further details of which are set out below.

4.3       Summary Early Birds financial results

 

 

Audited consolidated figures for the year end

31 December 2016

31 December 2017

31 December 2018

€ million




Revenue

0.6

1.4

2.3

Annual Recurring Revenue

0.9

2.0

3.6

EBITDA

(0.2)

(0.5)

(0.5)

Loss before tax

(0.3)

(1.0)

(1.2)

In 2018, Early Bird's revenues were generated from:

·      SaaS subscriptions (90 per cent.)

·      Professional services (10 per cent.)




The average contract value is €59,000. As of 31 December 2018, Early Birds had consolidated net assets of approximately £1.2 million (2017: £2.1 million). In March 2019, Early Bird's annual recurring revenue was €3.6 million and is targeted to be greater than €4.9 million by year end.(4)

 

 

(4)      This is a target only and not a forecast. There can be no assurance that the target will be met and it should not be taken as an indication of the Company's expected or actual future results. Potential investors should not place any reliance on these targets.

5.               BACKGROUND TO AND REASONS FOR THE ACQUISITION

Vision

The Board considers this to be a strategic acquisition. Attraqt's vision is to create the artificial intelligence eCommerce leader delivering a single unified solution for search, merchandising, product and content personalisation for retailers and brands.

This is achieved by combining the Company's existing ability to creatively control search and merchandising shopping experiences (being the Fredhopper Discovery Platform) with Early Birds' automation platform which deploys AI to personalise shopping experiences.

Once the companies are combined, Attraqt intends to optimise the product discovery phase and the beginning of a purchase cycle. Early Birds will optimise and personalise the buying process once the intent of each customer is ascertained.

The result is AI that is augmented and enhanced by human expertise and creativity producing a seamless, exceptional and personalised shopping experience across all eCommerce channels.

Example value proposition

An example value proposition for a retailer/brand is set out below:

·      A shopper searches the eCommerce website.

·      The Fredhopper Discovery Platform finds relevant products.

·      The Early Birds platform ranks the search results against shopper user preferences.

·      The results are returned to the Fredhopper Discovery Platform and displayed to the shopper in accordance with the retailer's visual merchandising rules.

The outcome is accurate offers that deliver relevant and compelling shopping experiences to shoppers and also take into account the retailer's or brand's criteria for best performance such as average order value and higher sales.

Initial collaboration success

On 18 March 2019, the Company and Early Birds announced a strategic partnership to consolidate its search, merchandising and personalisation technologies to deliver exceptional shopping experiences. That partnership achieved its first success with Attraqt acquiring a new client in April 2019 and a joint integration project being conducted with an existing mutual client.

Accelerating the Company's existing roadmap

Early Birds is built on a highly complementary, contemporary technology stack. The Board intends to leverage the strengths of each platform to accelerate the Company's innovation. The combined roadmap will be split into three categories:

I.      Engagement, which improves the user experience, search function and delivers personalised content recommendations;

II.    Conversion, through better user navigation of retail websites, product recommendations, and merchandising; and

III.   Analytics, covers AB testing, segmentation, predictive and external analytics. Each category will be underpinned by Artificial Intelligence.

Investment case and conclusion

The Company is now operating under a refreshed vision, purpose, product positioning and strategy.

The Board believes that the Acquisition represents a powerful leap forward for the Company as an AI leader. It is a transformative strategic acquisition that will enable retailers to combine a high degree of AI-powered automation and personalisation with the ability to create exceptional, highly curated and individual shopping experiences.

The combination of the Company with Early Birds creates a powerful and differentiated proposition that the Board believes will:

·      Significantly enhance and broaden the Company's product offering (extends market opportunity and sales win rate).

·      Augment the Company's limited AI competence, which competitors have begun to exploit.

·      Increase competitive win rate, reduce attrition and increase average selling prices.

·      Immediately fulfil a cornerstone of the Company's 2019 - 2020 product development roadmap.

·      Add significant scale to the Company by:

-      Increasing access to 69 Early Birds customers of which 15 are enterprise clients.

-      Control of the market leader in France, providing a base for geographic expansion into the SEMEA region.

·      Create upsell and cross-sell opportunities for both the Company and Early Birds.

·      Increase the total addressable market, including through new verticals.

6.               PRINCIPAL TERMS OF THE ACQUISITION

Under the terms of the Acquisition Agreement, the Company has agreed to acquire the entire issued and to be issued share capital of Early Birds SAS from the Sellers for an aggregate consideration of EUR €15.89 million (£13.82 million), subject to adjustment for normalised working capital, of which €12.68 million (£11.03 million) will be satisfied in cash and €3.21 million (£2.79 million) will be satisfied by the issue of the Consideration Shares. A portion of the share consideration valued at 1.60 million (£1.39 million) (represented by 5,152,982 Consideration Shares in aggregate) shall be held in escrow for a period of 24 months to cover any warranty and indemnity claims made by the Company under the terms of the Acquisition Agreement.

The Consideration Shares, when issued, will represent approximately 5.7 per cent. of the Enlarged Share Capital immediately following Admission. The Consideration Shares, when issued, will represent approximately 5.7 per cent. of the Enlarged Share Capital immediately following Admission, of which Mrs. Laetitia Comes-Bancaud and Mr. Nicolas Mathon will each beneficially hold 3,578,435 Consideration Shares (approximately 2.0 per cent. of the Enlarged Share Capital each) and EB Growth will beneficially hold 3,189,414 Consideration Shares (approximately 1.8 per cent. of the Enlarged Share Capital). The Consideration Shares will rank in full for all dividends with a record date on or after the date of Admission and otherwise equally with the Ordinary Shares and Placing Shares in issue from the date of Admission.

The Consideration Shares shall be deemed to have an issue price of £0.27 per share.

Completion of the Acquisition is conditional upon, inter alia, the passing of the Resolutions and admission of the Placing Shares to trading on AIM.

The Acquisition Agreement contains warranties from the Founders and EB Growth relating to, inter alia, the business and operations of Early Birds and indemnities in favour of the Company and the limitations on liability under the warranties are set at a market standard level for such a transaction. The warranties were given on signing of the Acquisition Agreement and will be repeated immediately prior to Closing. The Guarantor has irrevocably guaranteed to the Company the performance by EB Growth of EB Growth's obligations under the Acquisition Agreement. If EB Growth fails to perform any such obligation, the Guarantor shall perform (or procure the performance of) of that obligation.

The Sellers shall procure that Early Birds carries on its business in the ordinary course between the date of signing the Acquisition Agreement and Closing and shall not take certain decisions or carry out certain actions without the prior consent of Attraqt.

7.               DETAILS OF THE PLACING

The Placing will raise, in aggregate, £17.1 million (before commissions and expenses) through the conditional placing of the Placing Shares at the Placing Price with institutional and other investors.

The Placing Shares, when issued, will represent approximately 35.2 per cent. of the Enlarged Share Capital immediately following Admission. The Placing Shares will rank in full for all dividends with a record date on or after the date of Admission and otherwise equally with the Existing Ordinary Shares and the Consideration Shares in issue from the date of Admission.

The Placing (which is not being underwritten) is conditional, inter alia, upon:

(a)              the Placing Agreement becoming unconditional in all respects as regards the Placing (Admission occurring) and not having been terminated in accordance with its terms prior to Admission;

(b)             the Acquisition Agreement not having been lapsed or terminated and having become unconditional in all respects (subject only to Admission);

(c)              the Resolutions set out in the Notice of General Meeting being approved by the Shareholders; and

(d)             Admission of the Placing Shares becoming effective on or before 29 May 2019 or such later date as the Company and Canaccord may agree, being no later than 28 June 2019.

8.               THE PLACING AGREEMENT

Pursuant to the terms of the Placing Agreement, Canaccord has conditionally agreed to use its reasonable endeavours, as agent for the Company, to procure subscribers for the Placing Shares at the Placing Price with certain institutional and other investors.

The Placing Agreement contains warranties from the Company in favour of Canaccord in relation to, inter alia, the accuracy of the information in this document and other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Canaccord in relation to certain liabilities they may incur in respect of the Placing. Canaccord has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties given in the Placing Agreement, the failure of the Company to comply in any material respect with its obligations under the Placing Agreement, the occurrence of a force majeure event which in Canaccord's opinion may be material, or a material adverse change affecting the financial position or business or prospects of the Company.

9.               LOCK-IN ARRANGEMENTS

Under the terms of the Lock-in Agreements, each of the Founders have entered into irrevocable undertakings not to dispose (save in certain specified circumstances) of any interest in the Consideration Shares for a period of 24 months after Closing.

10.            SETTLEMENT AND DEALINGS

Application will be made to the London Stock Exchange for the Placing Shares and the Consideration Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares and the Consideration Shares will commence on 29 May 2019, subject to the passing of the Resolutions at the General Meeting.

The Placing Shares and the Consideration Shares being issued pursuant to the Placing and Acquisition will, on Admission, rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission and will otherwise rank pari passu in all respects with the issued Ordinary Shares.

11.            USE OF PROCEEDS

Of the Placing proceeds, £12.3 million will be used to satisfy the cash consideration payable in respect of the Acquisition and associated transaction costs, with a portion used to fund the growth plans (c.£2 million) and implementation costs (c.£0.6 million) for the Enlarged Group following completion of the Acquisition. The balance of the Placing proceeds, being an aggregate sum of c. £2.2 million, will be used for general working capital purposes for the Enlarged Group

12.            CURRENT TRADING AND PROSPECTS

Trading for the first three months of the year was in line with management's expectations. The Company is confident that the enlarged business following completion of the Acquisition will provide a compelling proposition to brands looking to deliver exceptional shopping experiences.

15.            RECOMMENDATION

Shareholders should be aware that if the Resolutions are not passed, the Placing and, therefore, the Acquisition will not proceed.

The Directors consider the Placing and the Acquisition to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend that Shareholders vote in favour of the Resolutions as they intend to do in respect of their beneficial holdings amounting, in aggregate, to 1,214,000 Existing Ordinary Shares, representing approximately 1.14 per cent. of the current issued share capital of the Company.

 

Yours faithfully

 

 

Nick Habgood

Chairman

 

STATISTICS RELATING TO THE PROPOSALS

 

Number of Existing Ordinary Shares as at the date of this document

106,368,589

Number of Placing Shares to be issued

63,333,334

Number of Consideration Shares to be issued

10,346,284

Enlarged Share Capital on Admission*

180,048,207

Placing Price

27 pence

Gross proceeds of the Placing receivable by the Company

£17.1 million

Placing Shares expressed as a percentage of the Enlarged Share Capital on Admission*

35.2%

Consideration Shares expressed as a percentage of the Enlarged Share Capital on Admission*

5.7%

Market capitalisation of the Company at the Placing Price on Admission

£48.6 million

 

* Assumes that no other Ordinary Shares (except for the Placing Shares and the Consideration Shares) will be issued by the Company in the period from the date of this document up to and including Admission.

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 


2019

Announcement of the proposed Acquisition, the Placing and publication of this document

8 May

Latest time and date for receipt of Forms of Proxy for the General Meeting

23 May

General Meeting

28 May

Admission, Closing of the Acquisition, the Placing and commencement of dealings in the Placing Shares and Consideration Shares

29 May

CREST accounts credited in respect of the Placing Shares and the Consideration Shares

29 May

Dispatch of share certificates in respect of the Placing Shares and Consideration Shares (if applicable)

By no later than 5 June

 

If any of the above dates or times should change, the revised date and/or time will be notified to Shareholders by an announcement to a Regulatory Information Service.

 

 

DEFINITIONS AND GLOSSARY

 

"Acquisition"

the proposed acquisition by the Company of the entire issued and to be issued share capital of Early Birds pursuant to the Acquisition Agreement;

"Acquisition Agreement"

the conditional agreement dated 8 May 2019 entered into between:


(1) the Company; (2) the Sellers; and (3) the Guarantor, pursuant to which the Company has agreed to acquire the entire issued and to be issued share capital of Early Birds;

"Act"

the Companies Act 2006;

"Admission"

means admission of the Placing Shares and the Consideration Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules;

"AI"

artificial intelligence;

"AIM"

the AIM market operated by the London Stock Exchange;

"AIM Rules"

the AIM Rules for Companies published by the London Stock Exchange from time to time;

"API"

application programming interface;

"Canaccord"

Canaccord Genuity Limited;

"Closing"

means the closing of the Acquisition in accordance with the terms of the Acquisition Agreement; expected to occur on 29 May 2019 (conditional upon, inter alia, the passing of the Resolutions);

"Consideration Shares"

means the 10,346,284 new Ordinary Shares to be issued and allotted to the Sellers as consideration pursuant to the terms of the Acquisition Agreement;

"Company" or "Attraqt"

ATTRAQT Group Plc, a company incorporated and registered in England and Wales with registered number 08904529;

"CREST"

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

"CREST Manual"

The CREST reference manual available from https://www.euroclear.com/site/public/EUI ;

"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" or "Board"

the directors of the Company whose names are set out on page 17 of this document, or any duly authorised committee thereof;

"Early Birds"

Early Birds SAS (a private company limited by shares incorporated in France with company number RCS Paris 448 692 301);

"EB Growth"

means EB Growth, a French société par actions simplifiée with registered number RCS Paris 831 190 889, and its registered office at 8 rue des Capucines, 75002 Paris, France;

"Enlarged Group"

the enlarged group immediately following the acquisition of Early Birds by the Company;

"Enlarged Share Capital"

the issued Ordinary Shares of the Company following the issue of the Placing Shares and the Consideration Shares;

"Euroclear"

Euroclear UK & Ireland Limited, the operator of CREST;

"Existing Ordinary Shares"

the 106,368,589 existing Ordinary Shares in issue at the date of this document;

"FCA"

the UK Financial Conduct Authority;

"Form of Proxy"

the form of proxy for use in connection with the General Meeting, which accompanies this document;

"Founders"

means Mrs. Laetitia Comes-Bancaud and Mr. Nicolas Mathon;

"Fredhopper"

Fredhopper B.V., a company incorporated and registered in the Netherlands with commercial register number 34119121 (being a wholly owned subsidiary of the Company);

"Fredhopper Discovery Platform"

means the Company's existing online merchandising and onsite search tool utilised in the eCommerce sector which is branded 'The Fredhopper Discovery Platform';

"FSMA"

the Financial Services and Markets Act 2000;

"GAAP"

Generally Accepted Accounting Principles;

"General Meeting" or "GM"

the general meeting of the Company to be held at the Company's offices on 7th Floor 222-236 Gray's Inn Road, London England WC1X 8HB on 28 May 2019 at 10.30 a.m., notice of which is set out at the end of this document;

"Group"

the Company and its subsidiaries as at the date of this document;

"Guarantor"

means AB2, a French société par actions simplifiée having its registered office located at 8, rue des Capucines, 75002 Paris, registered with the Trades and Companies Registry of Paris under number 441 349 016;

"Lock-in Agreements"

means the lock-in agreements to be entered into by: (1) each of the Founders; and (2) the Company, pursuant to which the Founders have agreed not to sell any of their Consideration Shares for a period of two years following Closing;

"London Stock Exchange"

London Stock Exchange plc;

"New Ordinary Shares"

means the Placing Shares and the Consideration Shares, each a "New Ordinary Share";

"Notice of General Meeting"

the notice convening the General Meeting which is set out at the end of this document;

"Ordinary Shares"

ordinary shares of £0.01 each in the capital of the Company;

"Placing"

the conditional placing of the Placing Shares by Canaccord as agent on behalf of the Company, pursuant to the Placing Agreement, further details of which are set out in this document;

"Placing Agreement"

the conditional agreement dated 8 May 2019 entered into between: (1) the Company; and (2) Canaccord in relation to the Placing, further details of which are set out in this document;

"Placing Price"

27 pence per Placing Share;

"Placing Shares"

the 63,333,334 new Ordinary Shares to be issued and allotted by the Company pursuant to the Placing;

"Registrars"

Link Asset Services, 34 Beckenham Road, Beckenham, Kent  BR3 4TU;

"Resolutions"

the resolutions set out in the notice of General Meeting at the end of this document;

"SaaS"

software as a service;

"Sellers"

the Founders, EB Growth and various other individuals and/or entities that hold shares in Early Birds immediately prior to Closing;

"Shareholders"

holders of Existing Ordinary Shares;

"Substantial Shareholder"

a person who holds any legal or beneficial interest directly or indirectly in 10 per cent. or more of the ordinary shares of a company admitted to trading on AIM as more fully defined in the AIM Rules; and

"UK" or "United Kingdom"

the United Kingdom of Great Britain and Northern Ireland.

 

Note: Any reference to any provision of any legislation includes any amendment, modification, re-enactment or extension of it. Words importing the singular include the plural and vice versa and words importing the masculine gender shall include the feminine or neuter gender.

 

 

APPENDIX I

RISK FACTORS

 

AN INVESTMENT IN ORDINARY SHARES IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. THE ATTENTION OF PROSPECTIVE INVESTORS IS DRAWN TO THE FACT THAT OWNERSHIP OF SHARES IN THE COMPANY WILL INVOLVE A VARIETY OF RISKS WHICH, IF THEY MATERIALISE, MAY HAVE AN ADVERSE EFFECT ON THE GROUP'S BUSINESSES, FINANCIAL CONDITION, RESULTS OR FUTURE OPERATIONS. IN ANY SUCH CASE, THE MARKET PRICE OF THE ORDINARY SHARES COULD DECLINE AND AN INVESTOR MIGHT LOSE ALL OR PART OF HIS INVESTMENT.

In addition to the information set out in this document, the following risk factors should be considered carefully in evaluating whether to make an investment in the Company. The following factors do not purport to be an exhaustive list or explanation of all the potential risks and uncertainties associated with an investment in the Company and they are not set out in any order of priority.

Additionally, there may be further risks of which the Directors are not presently aware or currently believe to be immaterial that may, in the future, adversely affect the Group's businesses and the market price of the Ordinary Shares. In particular, the Company's performance might be affected by changes in market, policy and economic conditions and in legal, regulatory and tax requirements.

Before making a final investment decision, prospective investors should consider carefully whether an investment in the Company is suitable for them and, if they are in any doubt, should consult with an independent financial adviser authorised under the FSMA, as amended or, if they are a person outside the UK, a person otherwise similarly qualified in their jurisdiction, who specialises in advising on the acquisition of shares and other securities.

Forward looking statements

This document includes "forward-looking statements" which include all statements other than statements of historical facts including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "plan", "project", "believes", "estimates", "aims", "intends", "can", "may", "expects", "forecasts", "anticipates", "would", "should", "could" or similar expressions or the negative 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 its 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 Group will operate in the future. Among the important factors that could cause the Company's actual results, performance or achievements to differ materially from those implied by any forward-looking statements include factors in this section entitled "Risk Factors" and elsewhere in this document. These forward-looking statements speak only as at the date of this document. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions in relation 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. As a result of these factors, the events described in the forward looking statements in this document may not occur. Prospective investors should be aware that these statements are estimates, reflecting only the judgement of the Company's management and prospective investors should not rely on any forward-looking statements.

The Ordinary Shares should be regarded as a highly speculative investment and an investment in Ordinary Shares may not be suitable for all recipients of this document, which should only be made by those with the necessary expertise to fully evaluate such an investment. In addition to the usual risks associated with an investment in a business which is at an early stage of development, the Directors believe the following risks should be considered carefully by investors before acquiring Ordinary Shares. Accordingly, prospective investors are advised to consult an independent adviser authorised under FSMA or, if they are a person outside the UK, a person otherwise similarly qualified in their jurisdiction who specialises in advising in investments of this kind before making any investment decisions. A prospective investor should consider carefully whether an investment in the Company is suitable in the light of his personal circumstances and the financial resources available to him. If any of the risks described in this document actually occurs, the Group may not be able to conduct its business as currently planned and its financial condition, operating results and cash flows could be seriously harmed. In that case, the market price of the

Ordinary Shares could decline and all or part of an investment in the Ordinary Shares could be lost. No inference ought to be drawn as to the order in which the following risk factors are presented as to their relative importance or potential effect.

RISK FACTORS RELATING TO THE BUSINESS AND OPERATIONS OF THE ENLARGED GROUP

Customer concentration

Early Birds' top three customers by annual contract value are approximately €1 million. This represents 20 per cent. of Early Birds' projected annual recurring revenue for the year end 31 December 2019. Customers of the Enlarged Group typically subscribe for one to three years. There can be no guarantee that the Enlarged Group will be able to successfully renegotiate its existing customer contracts prior to their expiration. Furthermore, as is typical of a high growth and relatively recently established business, a number of the Early Birds' existing clients have only been recently acquired. A young, installed base typically requires a higher level of customer service management. Any deterioration of the Enlarged Group's relationship with any of these customers or loss of customer contracts could have a material adverse effect on the Enlarged Group's business.

Client and staff flight risk

As with any company acquisition, there is always a risk of losing clients and staff from the acquired company. Whilst the Directors believe that the Enlarged Group's combined service and technology offering will be enhanced by the Acquisition and thus mitigate some client attrition, the mitigation plan involves identifying and speaking with key clients to reassure them of the Enlarged Group's commitment to them and its future development roadmap. Similarly, the Enlarged Group has identified who are the key staff in the target company and will be meeting to reassure them of their position in the Enlarged Group. Where appropriate, retention bonuses and share options may be used to manage staff attrition.

 

Warranties and indemnities given by Seller in the Sale and Purchase Agreement may provide limited protection for the Company

The Acquisition Agreement contains certain warranties and indemnities given by the Sellers in favour of the Company (as buyer), breach of which could cause the Enlarged Group to incur liabilities and obligations in the event that it seeks to make a claim for such breach.

As is usual in such a transaction, the warranties and indemnities in the Acquisition Agreement are subject to specific negotiated limitations also contained in the Acquisition Agreement and therefore do not provide the Company with full protection in relation to all risks related to the Early Birds business. Furthermore, although the parties have agreed to certain escrow arrangements which are principally intended to aid recovery in the event the Company makes claim for a breach of the Acquisition Agreement, only a portion of the share consideration valued at €1.60 million (£1.39 million) (represented by 5,152,982 Consideration Shares in aggregate) shall be held in escrow for a period of 24 months to cover any warranty and indemnity claims made by the Company under the terms of the Acquisition Agreement.

As a result of such limitations, the right of the Enlarged Group to recover damages or compensation in the event of contingent liabilities covered by such warranties or indemnities crystallising or an undisclosed liability of Early Birds being discovered after Closing, may not be sufficient to cover the full extent of the relevant liability and the Company may not have recourse against the Sellers in respect of any loss suffered. Furthermore, in the event that the Company makes a claim(s) which exceeds the sum of the escrow consideration (being €1.6 million), then in these circumstances, the Company shall not have recourse to the escrow consideration for any loss in excess of €1.6 million (or in the event of claim made after the second anniversary of Closing, the Company shall have no recourse at all to the escrow consideration). In these instances, the Company may bring a contractual claim against EB Growth and/or the Founders (each of which shall only be liable for pro rata proportion of the loss incurred) but there is no guarantee that any of these entities and/or persons will have the resources to meet the full amount of the claim and there may be significant costs and/or delays in pursuing such claims.

Changing consumer habits and confidence

Consumers are changing the way they shop and can purchase products at all times from multiple different channels. To be successful, the Enlarged Group will have to offer services across multiple channels and

regions but there is no guarantee that it will be able to adapt in time to changing consumer preferences and in so doing to be able to offer the services that consumers demand.

The integration of Early Birds may give rise to challenges

The Enlarged Group's success will depend upon the Directors' ability to integrate Early Birds without disruption to the Existing Group's business. The management team will be required to commit time towards achieving the integration of Early Birds and the Existing Group's businesses, and this may affect or impair its ability to run the business of the Enlarged Group effectively, inter alia, of technology, systems and procedures, personnel and working culture, may prove more difficult than currently anticipated by the Directors, or take longer than expected, thereby posing a risk to the Enlarged Group's profitability, and the costs to achieve this integration may also be greater than expected, any of which could have a material adverse effect on the Enlarged Group.

Technological innovation

The market for the Enlarged Group's services is characterised by rapid technological change, evolving industry standards, frequent device and service introductions and short life cycles. The Enlarged Group's success depends on its ability to enhance its current solutions and to develop and introduce new solutions and enhanced performance features and functionality on a timely basis at competitive prices. The Enlarged Group's inability, for technological or other reasons, to enhance, develop, introduce or deliver compelling services in a timely manner, or at all, in response to changing market conditions, technologies or consumer expectations could harm operating results or could result in its services becoming obsolete. The Enlarged Group's ability to compete successfully will depend to a great extent on its ability to maintain a technically skilled R&D team consisting of engineers, data scientists and artificial intelligence specialists and to adapt to technological changes and advances in the industry, including providing for the continued compatibility of its technology platform with evolving industry standards and protocols.

Competition and market development

The market for the Enlarged Group's solutions is rapidly evolving and the Enlarged Group expects competition to further intensify in the future with well-funded competitors emerging in recent years, particularly from the US. This market is characterised by rapidly changing technologies and an abundance of potential market participants. As the market, technologies and industries evolve and as the Enlarged Group introduces additional technical solutions, the Directors expect to face significantly increased competition from other companies in the e-commerce visual merchandising, site search and personalised recommendation technology space. Such increased competition could harm the Enlarged Group's revenue and operations.

Reliance on key personnel

Loss of key management or other key personnel, particularly to competitors, could have adverse consequences for the Enlarged Group. Whilst the Enlarged Group has entered into service agreements or letters of appointment with each of its Directors and senior employees, the retention of their services cannot be guaranteed. Furthermore as the Enlarged Group expands it will need to recruit and integrate additional personnel. The Enlarged Group may not be successful in identifying and engaging suitably qualified people or integrating them into the Enlarged Group.

High exposure to retail sector

As a result of the nature of the technology the Enlarged Group provides, the Enlarged Group's customers are predominantly in the retail sector. The existing group has seen a number of high-profile retailer insolvency events in recent years. There is a reasonable expectation that such events will continue for the foreseeable future. A widespread downturn in the economy could put pressure on capital expenditure budgets for software spending if overall retail volumes dropped, which could result in early termination of customer contracts and deter new customers from using the Enlarged Group's services.

Business strategy may change

The future success of the Enlarged Group will depend on the Directors' ability to continue to implement effectively its business strategy. In particular, the pursuit of that strategy may be affected by changes in social and demographic factors or by changes in the competitive environment in the markets in which the Enlarged Group currently operates or expects to operate. If such changes were to materialise, the Directors may decide to change certain aspects of the Enlarged Group's strategy. This might entail the development of alternative products and services, which may place additional strain on the Enlarged Group's capital resources.

Interruption or failure of the Enlarged Group's information technology and communications systems

The availability of the Enlarged Group's products and services depends on the performance, reliability and availability of its information technology and communications systems. The Enlarged Group's systems are vulnerable to damage or interruption from power loss, telecommunications failures, computer viruses, computer denial of service attacks or other attempts to harm its systems, natural disasters (including floods and fires), vandalism, terrorist attacks or other acts. The Enlarged Group's disaster recovery plans may not address adequately every potential event and its insurance policies may not cover any loss (including losses resulting from business interruption) or damage that it suffers fully or at all.

The Enlarged Group relies on third parties, including data centres and bandwidth providers, to host and operate the Enlarged Group's sites. Any failure or interruption in the services provided by these third parties could harm its operations and reputation. In addition, the Enlarged Group may have little or no control over these third parties, which increases its vulnerability to service problems. Any disruption in the network access or co-location services provided by these parties or any failure of these providers to handle current or higher visitor traffic or transaction volumes could significantly harm the Enlarged Group's business. The Enlarged Group has experienced and may in the future experience disruptions or delays in these services. If these providers were to suffer financial or other difficulties, their services to the Enlarged Group could be interrupted or discontinued and replacement providers may be uneconomical or unavailable.

The Enlarged Group's intellectual property rights

The Enlarged Group relies on a combination of trademarks, service marks and domain name registrations, common law or statutory copyright protection and contractual restrictions to establish and protect its intellectual property. Any third party may challenge the Enlarged Group's intellectual property. The Enlarged Group may incur substantial costs in defending any claims relating to its intellectual property rights.

There can be no guarantee that third parties have not and/or will not manage to independently develop software with the same functionality as the Enlarged Group's products without infringing the Enlarged Group's intellectual property rights and there can be no guarantee that any such competing software would not have a material adverse effect on the Enlarged Group.

Although the Directors believe that the Enlarged Group's intellectual property rights do not infringe the intellectual property rights of others, third parties may assert claims that the Enlarged Group has infringed a particular copyright, trade mark or other proprietary right or confidential information belonging to them. Any such intellectual property claims, with or without merit, could be time consuming, expensive to litigate or settle and could divert management resources and information.

The Enlarged Group could also be subject to potential claims from employees, consultants or third parties with whom it conducts business who allege ownership or co-ownership of certain intellectual property used by the Enlarged Group. Although the Enlarged Group enters into invention assignment and non-disclosure agreements with its employees, consultants and third parties, there is no assurance that these contracts will be enforceable or interpreted to cover the Enlarged Group's use or development of the disputed intellectual property.

Use of open source software

Some of Early Birds' key proprietary software and critical IT systems incorporates significant elements of "open source" software, the use of which by Early Birds is subject to the terms of applicable licenses.

Open source software is typically licensed for use at no initial charge on terms which may allow modification and distribution of the software by the licensee in accordance with such terms. However, licence terms may impose on the user compliance requirements and obligations to disclose modifications Early Birds has made to the software to third parties.

Early Birds' (and consequently the Enlarged Group's) ability to realise fully the commercial benefits of any such software may be restricted because:

l                 open source licenses may be drafted in legally ambiguous language and may result in unanticipated consequences or obligations regarding Early Birds' software and its use and distribution;

l                 different open source licence terms may 'conflict' with one-another thus restricting combination and distribution of certain products in compliance with each licence; as a result of the potential requirements to make modifications available to the open source community in accordance with the relevant licence, the Enlarged Group's competitors or licensees may have access to information which may help them to develop competitive products;

l                 open source software is available to the public for anyone to access and utilise, including the Enlarged Group's competitors; and

l                 it may be difficult for the Enlarged Group to identify accurately the developers of the open source code (who may be licensors of the software) and whether the licensed software infringes third party intellectual property rights.

In addition, there is a risk that open source software may contain harmful code which may adversely impact the Enlarged Group's customer networks and expose the Enlarged Group to claims.

Furthermore, to the extent that Early Birds uses open source software, it faces more general risks which apply to any organisation making use of such software. For example, the scope and requirements of some common open source software licenses may subject certain portions of Early Birds' proprietary software to certain requirements, including an obligation on Early Birds to disclose that software to third parties and to permit them to use the software free of charge.

There are also other general risks associated with the use of open source software. Such risks in relation to the open source software code acquired, used and incorporated by Early Birds are that it may:

l                 contain a virus;

l                 contain a bug which the developers or associated community (if any) cannot fix or development support may cease from time to time for a variety of reasons;

l                 come with only limited informal or 'paid for' support arrangements which may simply cease or may not necessarily be available in the future; and

l                 typically be made available for use without warranty or assurance of any kind (which in turn makes it difficult to pass assurances on to third party users and customers utilising such software).

Finally, open source licences typically present onerous compliance risks, and failure to observe these or a failure to pass on relevant notification or disclosure requirements within Early Birds' own terms, may result in litigation or the loss of the right to use the software which may have an adverse effect on the Enlarged Group's financial condition and future prospects. The Enlarged Group is not aware that Early Birds has breached any of these compliance requirements nor has any third party claimed that software owned by Early Birds should be made available on an open source basis.

Enlarged Group's contracts

Certain of the customer, supplier and partner contracts entered into by the Enlarged Group contain onerous and/or unusual terms (including in some cases no clauses limiting liability, some clauses restricting the territory in which the company can operate, unclear termination provisions and change of control provisions relating to certain of Early Bird's existing contracts) which may not adequately protect the Enlarged Group or which may leave the Enlarged Group exposed to liabilities or restrictions. While the Enlarged Group intends to seek to negotiate improved terms for use with new customers, suppliers and partners and to try and negotiate appropriate amendments to contracts with existing customers, suppliers and partners when the existing contracts are to be renewed, there is no guarantee that customers, suppliers or partners will agree to these terms or that such negotiations will be successful. Enforcement of a contract containing onerous and/or unusual terms by a customer, supplier or partner could result in increased liability or restrictions for the Enlarged Group.

Trading and conversion of sales pipeline

The Enlarged Group's trading expectations are based on assumptions relating to the conversion of its sales pipeline which the Directors consider to be reasonable, but which are inherently subject to variation and uncertainty. There can be no assurance or guarantee that those expectations will be fulfilled, that the outcome of the Enlarged Group's strategy will be achieved, or that the Enlarged Group will achieve the desired levels of revenue or profit.

The Enlarged Group may fail to realise the expected benefits of the Acquisition

The Directors believe that the Acquisition will provide strategic and financial benefits for the Enlarged Group. However, there is a risk that the anticipated benefits will fail to materialise, or that they will be less significant than anticipated, and this may have a significant impact on the Enlarged Group's financial condition, result of operations and prospects and/or the price of the Ordinary Shares and the Enlarged Group.

The value of the Early Birds may be less than the consideration paid by Attraqt

In the event that the business does not perform as expected or there is an adverse event affecting the value of Early Birds, the value of Early Birds may be less than the consideration agreed to be paid by Attraqt and, accordingly, the net assets of the Enlarged Group could be reduced and Attraqt may not realise the envisaged value of the Acquisition. Following Completion, Attraqt would not be able to renegotiate the consideration paid for Early Birds in such circumstances and Attraqt may therefore pay an amount in excess to market value for Early Birds, which could have an adverse effect on the business and financial condition of the Enlarged Group.

Changes in applicable laws and regulations

Regulation of the internet and e-commerce is rapidly evolving and there are an increasing number of directly applicable laws and regulations. It is possible that additional laws and regulations may be enacted with respect to the internet, covering issues such as user privacy, law enforcement, pricing, taxation, content liability, data encryption, copyright protection and quality of products and services. The requirement to comply with and the adoption of such new or revised regulations, or new or changed interpretations or enforcement of existing regulations, may have a material adverse effect on the Enlarged Group.

Data protection and changes resulting from the General Data Protection Regulation and global data protection measures

The Enlarged Group does not aim to collect, store or use personally identifiable information (such as names, addresses, telephone numbers or other information that permits the contacting of a specific individual) from end users, but the data that the Enlarged Group collects about users' interactions with its customers may be considered personally identifiable information in some jurisdictions and subject to various international data protection laws and regulations. Accordingly, the Enlarged Group has been and will remain subject to a number of laws relating to privacy and data protection, including the UK's Data Protection Act 1998 and the Privacy and Electronic Communications (EC Directive) Regulations 2003, as well as relevant non-EEA data protection and privacy laws. Such laws govern the Enlarged Group's ability to collect, use and transfer personal information. The General Data Protection Regulation (Regulation (EU) 2016/679) ("GDPR") came into force on 25 May 2018 and places more onerous obligations in relation to data protection compliance. The Directors believe that the Enlarged Group's businesses have taken, and will take, steps to ensure compliance with the GDPR, but there is a risk that such measures may not be deemed sufficient in order to comply with the regulation or regulatory guidance. Failure to comply with the GDPR or other data protection legislation in the countries where the Enlarged Group operates or to which it is subject, may leave it open to criminal and civil sanctions.

Reputation risk

The Enlarged Group's reputation is central to its future success in terms of the services and products it provides, the way in which it conducts its business and the financial results it achieves. Issues that may give rise to reputational risk include, but are not limited to, failure to deal appropriately with legal and regulatory requirements, money-laundering, fraud prevention, privacy, record-keeping, sales and trading practices and the credit, liquidity, and market risks inherent in the Enlarged Group's business. If the Enlarged Group fails, or appears to fail, to deal with various issues that may give rise to reputational risk or if it fails to retain customers for any other reason, this could materially harm its business prospects.

Foreign exchange currency risk

The Enlarged Group currently has foreign sales denominated in US dollars and Euro's and may, in the future, have sales denominated in the currencies of additional countries in which the Enlarged Group establishes sales offices. Any fluctuation in the exchange rate of these foreign currencies may have a material adverse effect on the Enlarged Group's business. The Enlarged Group has not previously engaged in foreign currency hedging. If the Enlarged Group decides to hedge its foreign currency exposure, it may not be able to hedge effectively due to lack of experience, unreasonable costs or illiquid markets.

Taxation legislation

Any change in the Enlarged Group's tax status or in taxation legislation in any jurisdiction in which the Enlarged Group operates could affect the Enlarged Group's financial condition and results and its ability (if any) to provide returns to Shareholders. Statements in this document concerning the taxation of investors in Ordinary Shares are based on current UK tax law and practice which is subject to change. The taxation of an investment in the Company depends on the individual circumstances of investors.

Economic conditions and current economic weakness

Any economic downturn either globally or locally in any area in which the Enlarged Group operates may have an adverse effect on the demand for the Enlarged Group's products or services. A more prolonged economic downturn may lead to an overall decline in the volume of the Enlarged Group's revenue, restricting the Enlarged Group's ability to realise a profit.

In addition, although signs of economic recovery have been perceptible in certain countries, the sustainability of a global economic upturn is not yet assured. If economic conditions remain uncertain, the Enlarged Group might see lower levels of growth than in the past, which might have an adverse impact on the Enlarged Group's operations and business results.

UK's proposed termination of its membership of the European Union

The Enlarged Group faces potential risks associated with the proposed exit by the UK from its membership of the European Union, and the potential uncertainty preceding that exit. The UK exiting the European Union could materially change both the fiscal and legal framework in which the Enlarged Group operates, and it could have a material impact on the UK's economy and its future economic growth. In addition, prolonged uncertainty regarding aspects of the UK economy as a result of the uncertainty around the proposed exit could damage customers' and investors' confidence.

RISKS RELATING TO THE COMPANY'S SECURITIES

General

An investment in the Ordinary Shares is only suitable for investors capable of evaluating the risks (including the risk of capital loss) and merits of such investment and who have sufficient resources to sustain a total loss of their investment. An investment in the Ordinary Shares should be seen as long-term in nature and complementary to investments in a range of other financial assets as part of a diversified investment portfolio. Accordingly, typical investors in the Company are expected to be institutional investors, private client fund managers and private client brokers, as well as private individuals who have received advice from their professional advisers regarding investment in the Ordinary Shares and/or who have sufficient experience to enable them to evaluate the risks and merits of such investment themselves.

Share price volatility and liquidity

Following Admission, the market price of the Enlarged Share Capital may be subject to wide fluctuations in response to many factors, including stock market fluctuations and general economic conditions or changes in political sentiment that may substantially affect the market price of the Enlarged Share Capital irrespective of the Enlarged Group's actual financial, trading or operational performance. These factors could include the performance of the Enlarged Group, large purchases or sales of the Ordinary Shares (or the perception that the same may occur, as, for example in the period leading up to the expiration of the restrictions contained in the Lock-in Agreement), legislative changes and market, economic, political or regulatory conditions. The share price for publicly traded companies can be highly volatile. The admission of the Ordinary Shares to AIM should not be taken as implying that a liquid market for the Enlarged Share Capital will either develop or be sustained. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. The liquidity of a securities market is often a function of the volume of the underlying shares that are publicly held by unrelated parties. If a liquid trading market for the Enlarged Share Capital does not develop, the price of the Ordinary Shares may become more volatile and it may be more difficult to complete a buy or sell order for such Ordinary Shares.

Dilution of Shareholders' interest as a result of additional equity fundraisings

The Company may need to raise additional funds in the future to finance, inter alia, working capital, expansion of the Enlarged Group's businesses, new developments relating to existing operations and/or further acquisitions. If additional funds are raised through the issuance of new equity or equity-linked securities of the Company other than on a pro rata basis to existing Shareholders, the percentage ownership of existing Shareholders will be reduced. Shareholders may also experience subsequent dilution and/or such securities may have preferred rights, options and pre-emption rights ranking ahead of the Ordinary Shares.

 

 

APPENDIX II

TERMS AND CONDITIONS OF THE PLACING

IMPORTANT INFORMATION FOR INVITED PLACEES ONLY REGARDING THE PLACING

THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, DOES NOT CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT AND THIS APPENDIX DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF THE COMPANY IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

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

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED ("QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(e) OF DIRECTIVE 2003/71/EC AS AMENDED, INCLUDING BY THE 2010 PROSPECTUS DIRECTIVE AMENDING DIRECTIVE (DIRECTIVE 2010/73/EC) AND TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO (I) ARE PERSONS HAVING PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) (INVESTMENT PROFESSIONALS) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

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

INFORMATION TO DISTRIBUTORS

FOR THE PURPOSES OF THE PRODUCT GOVERNANCE REQUIREMENTS OF EACH OF (A) EU DIRECTIVE 2014/65/EU ON MARKETS IN FINANCIAL INSTRUMENTS, AS AMENDED ("MIFID II"); (B) ARTICLES 9 AND 10 OF COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 SUPPLEMENTING MIFID II; AND (C) LOCAL IMPLEMENTING MEASURES (TOGETHER, THE "MIFID II PRODUCT GOVERNANCE REQUIREMENTS") AND FOR NO OTHER PURPOSES, CANACCORD GENUITY LIMITED ("CANACCORD GENUITY") HAS CARRIED OUT AN ASSESSMENT OF THE ORDINARY SHARES AND HAS DETERMINED THEM TO BE: (I) COMPATIBLE WITH AN END TARGET MARKET OF RETAIL INVESTORS AND INVESTORS WHO MEET THE CRITERIA OF PROFESSIONAL CLIENTS AND ELIGIBLE COUNTERPARTIES, EACH AS DEFINED UNDER THE FCA'S CONDUCT OF BUSINESS SOURCEBOOK; AND (II) ELIGIBLE FOR DISTRIBUTION THROUGH ALL DISTRIBUTION CHANNELS AS ARE PERMITTED BY MIFID II (THE "TARGET MARKET ASSESSMENT").

ALL DISTRIBUTORS SHOULD NOTE THAT: THE PRICE OF ORDINARY SHARES MAY DECLINE AND INVESTORS COULD LOSE ALL OR PART OF THEIR INVESTMENT; THE ORDINARY SHARES OFFER NO CERTAINTY OF INCOME AND NO CAPITAL PROTECTION; AND AN INVESTMENT IN THE ORDINARY SHARES IS COMPATIBLE ONLY WITH INVESTORS WHO: (I) DO NOT NEED A CERTAIN AND PROTECTED INCOME OR CAPITAL PROTECTION; AND (II) (EITHER ALONE OR IN CONJUNCTION WITH AN APPROPRIATE FINANCIAL OR OTHER ADVISER) ARE CAPABLE OF EVALUATING THE MERITS AND RISKS OF SUCH AN INVESTMENT AND HAVE SUFFICIENT RESOURCES TO BE ABLE TO BEAR ANY LOSSES THAT MAY RESULT THEREFROM. THE TARGET MARKET ASSESSMENT IS ADDITIONAL TO THE RESTRICTIONS CONTAINED WITHIN THE TERMS OF THE PLACING. IN ALL CIRCUMSTANCES, CANACCORD GENUITY WILL ONLY PROCURE INVESTORS WHO MEET THE CRITERIA OF PROFESSIONAL CLIENTS AND ELIGIBLE COUNTERPARTIES.

FOR THE AVOIDANCE OF DOUBT, THE TARGET MARKET ASSESSMENT DOES NOT CONSTITUTE: (A) AN ASSESSMENT OF SUITABILITY OR APPROPRIATENESS FOR THE PURPOSES OF MIFID II OR OTHERWISE; OR (B) A RECOMMENDATION TO ANY INVESTOR OR GROUP OF INVESTORS TO INVEST IN, OR PURCHASE, OR TAKE ANY OTHER ACTION WHATSOEVER WITH RESPECT TO THE ORDINARY SHARES.

EACH DISTRIBUTOR IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE ORDINARY SHARES AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES. THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. SUBJECT TO CERTAIN EXCEPTIONS AND AT THE SOLE DISCRETION OF THE COMPANY, THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE IN THE UNITED STATES, THE UNITED KINGDOM OR ELSEWHERE. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED.

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

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

This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States (including its territories and possessions, any state of the United States and the District of Columbia), Canada, the Republic of Ireland, Australia, the Republic of South Africa, Japan or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

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

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained for the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan, the Republic of Ireland or the Republic of South Africa or in any other jurisdiction. Accordingly, the Placing Shares may not (unless an exemption under relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, Canada, Japan, the Republic of Ireland or the Republic of South Africa or any other jurisdiction outside the United Kingdom.

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

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

Each person who is invited to and who chooses to participate in the Placing (a "Placee") will be deemed to have read and understood this Announcement in its entirety, to be participating, making an offer and subscribing for Placing Shares on the terms and conditions contained herein and to be providing the representations, warranties, indemnities, acknowledgements and undertakings contained in this Appendix.

In particular, each such Placee represents, warrants, undertakes, agrees and acknowledges (amongst other things) that:

1         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;

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

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

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

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

2.2.2     where Placing Shares have been acquired by it on behalf of persons in any member state of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons;

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

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

5         except as otherwise permitted by the Company and subject to any available exemptions from applicable securities laws, it (and any account referred to in paragraph 3 above) is outside the United States acquiring the Placing Shares in offshore transactions as defined in and in accordance with Regulation S under the Securities Act.

No prospectus

No prospectus or other offering document has been, or will be submitted to be approved by the FCA or any other regulatory body in any Relevant Member State in relation to the Placing or the Placing Shares.

The Placees' commitments will be made solely on the basis of this Announcement and subject to any further terms set forth in the Form of Confirmation to be sent to individual Placees.

Each Placee, by participating in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any information (other than this Announcement), representation, warranty or statement made by or on behalf of Canaccord Genuity, the Company or any other person and none of Canaccord Genuity, the Company or any other person acting on such person's behalf nor any of their respective affiliates has or shall have any liability for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement. 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.

Details of the Placing Agreement and the Placing Shares

Canaccord Genuity has today entered into the Placing Agreement with the Company under which, on the terms and subject to the conditions set out in the Placing Agreement, Canaccord Genuity, as agent for and on behalf of the Company, has agreed to use its reasonable endeavours to procure Placees to subscribe for the Placing Shares at the Placing Price, such subscription commitments being conditional upon the conditions (summarised below) being satisfied by the Company or otherwise waived by Canaccord Genuity. 

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

Application for admission to trading

Application will be made to the London Stock Exchange for admission of the Placing Shares to trading on AIM.

It is expected that Admission will take place at 8.00 a.m. on or around 29 May 2019 and that dealings in the Placing Shares on AIM will commence at the same time.

Principal terms of the Placing

1         Canaccord Genuity is acting as nominated adviser and broker to the Placing, as agent for and on behalf of the Company. Canaccord Genuity 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 their respective customers 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 by Canaccord Genuity to participate. Canaccord Genuity and any of its respective affiliates are entitled to participate in the Placing as principals.

3        The price per Placing Share will be 27p.

4         Each Placee's allocation is determined by Canaccord Genuity in its discretion following consultation with the Company and has been or will be confirmed orally by Canaccord Genuity and a Form of Confirmation will be dispatched as soon as possible thereafter. That oral confirmation will give rise to an irrevocable, legally binding commitment by that person (who at that point becomes a Placee), in favour of Canaccord Genuity (as applicable) and the Company, under which it agrees to acquire the number of Placing Shares allocated to the Placee at the Placing Price and otherwise on the terms and subject to the conditions set out in this Appendix and in accordance with the Company's articles of association. Except with Canaccord Genuity's prior written consent, such commitment will not be capable of variation or revocation at the time at which it is submitted.

5         Each Placee's allocation and commitment will be evidenced by a Form of Confirmation issued to each such Placee by Canaccord Genuity (as applicable). The terms and conditions of this Appendix will be deemed incorporated in that Form of Confirmation.

6         Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to Canaccord Genuity (as applicable) (as agent for the Company), to pay to Canaccord Genuity (as applicable) (or as Canaccord Genuity (as applicable) may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire and the Company has agreed to allot and issue to that Placee.

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

8         All obligations of Canaccord Genuity under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing".

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

10       To the fullest extent permissible by law and applicable FCA rules, none of (a) Canaccord Genuity, (b) any of its respective affiliates, agents, directors, officers, consultants, (c) to the extent not contained within (a) or (b), any person connected with Canaccord Genuity as defined in FSMA ((c) and (d) being together "affiliates" and individually an "affiliate" of Canaccord Genuity (as applicable)) or (e) any person acting on Canaccord Genuity's behalf, shall have any liability (including to the extent permissible by law, any fiduciary duties) to Placees or to any other person whether acting on behalf of a Placee or otherwise. In particular, none of Canaccord Genuity or any of its respective affiliates shall have any liability (including, to the extent permissible by law, any fiduciary duties) in respect of their conduct of the Placing or of such alternative method of effecting the Placing as Canaccord Genuity and the Company may agree.

Registration and Settlement

Settlement of transactions in the Placing Shares will take place inside the CREST system.

Settlement of transactions in the Placing Shares will, unless otherwise agreed, take place on a delivery versus payment basis within CREST.

The Company will procure the delivery of the Placing Shares to CREST accounts operated by Canaccord Genuity (as applicable) for the Company and Canaccord Genuity (as applicable) will enter their delivery (DEL) instructions into the CREST system. The input to CREST by each Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

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

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

It is expected that settlement will take place on or about 29 May 2019 in CREST on a basis in accordance with the instructions set out in the conditional trade confirmation. Settlement will be through Canaccord Genuity against CREST ID: 805 (as applicable).

Each Placee allocated Placing Shares in the Placing will be sent a conditional trade confirmation(s) stating the number of Placing Shares to be allocated to it at the Placing Price 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 applicable registration and settlement procedures, including if applicable, CREST rules and regulations and settlement instructions that it has in place with Canaccord Genuity (as applicable).

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

Legal and/or beneficial title in and to any Placing Shares shall not pass to any relevant Placee until it has fully complied with its obligations hereunder.

Trade Date: 8 May 2019

Settlement Date: 29 May 2019 (Electronic)

ISIN code for the Placing Shares: GB00BMJJFZ18

SEDOL code for the Placing Shares: BMJJFZ1

No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee provided that the Placing Shares are not issued to a person whose business is or includes issuing depositary receipts or the provision of clearance services or to an agent or nominee for any such person.

The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, UK stamp duty or stamp duty reserve tax may be payable, for which none of the Company or Canaccord Genuity will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Canaccord Genuity in the event that the Company or Canaccord Genuity has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify Canaccord Genuity accordingly.

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 subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.

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 obligations of Canaccord Genuity under the Placing Agreement are, and the Placing is, conditional upon, inter alia:

(a)       none of the warranties or undertakings contained in the Placing Agreement being or having become untrue, inaccurate or misleading at any time before Admission, and no fact or circumstance having arisen which would constitute a breach of any of the warranties or undertakings given in the Placing Agreement or which would constitute a specified event, being an event occurring or matter arising on or after the date of the Placing Agreement and before Admission which, which, if it had occurred before the date of the Placing Agreement, would have rendered any of the warranties in the Placing Agreement untrue or incorrect;

(b)       the fulfilment by the Company of its obligations under the Placing Agreement to the extent they fall to be performed prior to Admission;

(c)       the due convening of the General Meeting and passing of the Resolutions thereat without amendment;

(d)       the Company allotting and issuing the New Ordinary Shares conditional only on Admission, in accordance with the Placing Agreement;

(e)       completion of the Acquisition Agreement in accordance with its terms, save for any conditions in the Acquisition Agreement that relate to Admission and the Placing Agreement; and

(f)        Admission occurring by not later than 8.00 a.m. on 29 May 2019 (or such later date as the Company and Canaccord Genuity may agree in writing, in any event being not later than 28 June 2019, such later date being referred to hereafter as the "Long Stop Date"), 

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

If any of the conditions are not fulfilled or, where permitted, waived in accordance with the Placing Agreement within the stated time periods (or such later time and/or date as the Company and Canaccord Genuity may agree not being later that 28 June 2019) the Placing and the rights and obligations in it shall terminate at such time and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof.

By participating in the Placing, each Placee agrees that its rights and obligations cease and terminate only in the circumstances described above and under "Termination of the Placing" below and will not be capable of rescission or termination by it.

Certain conditions may be waived in whole or in part by Canaccord Genuity, in its absolute discretion by notice in writing to the Company and Canaccord Genuity may also agree in writing with the Company to extend the time for satisfaction of any condition save that the condition relating to Admission referred to at paragraph (f) above may not be waived and the Long Stop Date may not be extended. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.

Canaccord Genuity may terminate the Placing Agreement in certain circumstances, details of which are set out below.

Neither Canaccord Genuity, the Company 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 any of them may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition where such condition can rightfully be waived, or such time/date can rightfully be extended, under these terms and conditions nor for any decision any of them may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing, each Placee agrees that any such decision is within the absolute discretion of Canaccord Genuity.

Termination of the Placing

Canaccord Genuity may terminate the Placing Agreement, in accordance with its terms, at any time prior to Admission if, inter alia:

1         it comes to the attention of Canaccord Genuity that any of the warranties in the Placing Agreement were not true or accurate, or were misleading when given or deemed given; or

2         it comes to the attention of Canaccord Genuity that the Company has failed to comply with its obligations under the Placing Agreement, the Companies Act, FSMA, the AIM Rules for Companies or other applicable law; or

3         it comes to the attention of Canaccord Genuity that any statement contained in, inter alia, this Announcement, the investor presentation and the Circular (the "Issue Documents") has become or been discovered to be untrue, inaccurate or misleading in any respect or a new matter has arisen that constitutes a material admission from the Issue Documents; or

4                 it comes to the attention of Canaccord Genuity that there has been a material adverse change in relation to the Company or the Target Group;       

5                 it comes to the attention of Canaccord Genuity that there has been a material breach of the Acquisition Agreement; or

6                 there shall have developed or occurred a change in national or international financial, monetary, economic, political, environmental or stock market conditions, which in the opinion of Canaccord Genuity is or is likely to be, prejudicial to the Enlarged Group, the Placing, the Acquisition or Admission.

If the Placing Agreement is terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing as described in this Announcement shall terminate at such time and no claim can be made by any Placee in respect thereof.

By participating in the Placing, each Placee agrees with the Company and Canaccord Genuity that the exercise by the Company or Canaccord Genuity of any right of termination or any other right or other discretion under the Placing Agreement shall be within the absolute discretion of the Company or Canaccord Genuity and that neither the Company nor Canaccord Genuity need make any reference to such Placee and that neither Canaccord Genuity, the Company, nor any of their respective affiliates, agents, directors, officers or employees shall have any liability to such Placee (or to any other person whether acting on behalf of a Placee or otherwise) whatsoever in connection with any such exercise.

By participating in the Placing, each Placee agrees that its rights and obligations terminate only in the circumstances described above and under the "Conditions of the Placing" section of this Appendix and will not be capable of rescission or termination by it after the issue by Canaccord Genuity of a Form of Confirmation confirming each Placee's allocation and commitment in the Placing.

Representations, warranties and further terms

By participating in the Placing, each Placee (and any person acting on such Placee's behalf) represents, warrants, acknowledges and agrees (for itself and for any such prospective Placee) that (save where Canaccord Genuity expressly agrees in writing to the contrary):

1         it has read and understood this Announcement in its entirety and that its subscription for the Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, indemnities, acknowledgements, agreements and undertakings and other information contained herein and that it has not relied on, and will not rely on, any information given or any representations, warranties or statements made at any time by any person in connection with Admission, the Placing, the Company, the Placing Shares or otherwise, other than the information contained in this Announcement;

2         it has not received a prospectus or other offering document in connection with the Placing and acknowledges that no prospectus or other offering document: (a) is required under the Prospectus Directive; and (b) has been or will be prepared in connection with the Placing;

3         the Existing Ordinary Shares are (and the New Ordinary Shares will be) admitted to trading on AIM, and that the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules, which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that it is able to obtain or access such information without undue difficulty, and is able to obtain access to such information or comparable information concerning any other publicly traded company, without undue difficulty;

4         it has made its own assessment of the Placing Shares and has relied on its own investigation of the business, financial and trading position of the Company in accepting a participation in the Placing and neither Canaccord Genuity, the Company nor any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or the Company or any other person other than the information in this Announcement; nor has it requested any of Canaccord Genuity, the Company, any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them to provide it with any such information;

5         the content of this Announcement is exclusively the responsibility of the Company and the Directors and neither Canaccord Genuity nor any person acting on behalf of either of it or any of its respective affiliates, agents, directors, officers or employees has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously published by or on behalf of the Company or any member of the Group;

6         the only information on which it is entitled to rely and on which it has relied in committing to subscribe for the Placing Shares is contained in this Announcement, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and it has made its own assessment of the Company, the Placing Shares and the terms of the Placing based on this Announcement;

7         neither Canaccord Genuity, the Company nor any of their respective affiliates, agents, directors, officers or employees has made any representation or warranty to it, express or implied, with respect to the Company, the Placing or the Placing Shares or the accuracy, completeness or adequacy of the information contained in this Announcement;

8         it has conducted its own investigation of the Company, the Placing and the Placing Shares, satisfied itself that the information is still current and relied on that investigation for the purposes of its decision to participate in the Placing;

9         it has not relied on any investigation that Canaccord Genuity, the Company or any person acting on their behalf may have conducted with respect to the Company, the Placing or the Placing Shares;

10       the content of this Announcement has been prepared by and is exclusively the responsibility of the Company and the Directors and that neither Canaccord Genuity nor any person acting on their behalf is responsible for or has or shall have any liability for any information, representation, warranty or statement relating to the Company contained in this Announcement, nor will they be liable for any Placee's decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement. Nothing in this this Appendix shall exclude any liability of any person for fraudulent misrepresentation;

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

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

12.1      is entitled to acquire Placing Shares pursuant to the Placing under the laws and regulations of all relevant jurisdictions;

12.2      has fully observed such laws and regulations;

12.3      has capacity and authority and is entitled to enter into and perform its obligations as an acquirer of Placing Shares and will honour such obligations; and

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

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

14       the Placing Shares have not been, and will not be, registered under the Securities Act and may not be offered, sold or resold in or into or from the United States except pursuant to an effective registration under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with applicable state securities laws; and no representation is being made as to the availability of any exemption under the Securities Act for the re-offer, resale, pledge or transfer of the Placing Shares;

15       the Company is not registered under the Investment Company Act and that the Company has put in place restrictions to ensure that it is not and will not be required to register under the Investment Company Act;

16       it and the beneficial owner of the Placing Shares 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" as defined in, and in accordance with, Regulation S under the Securities Act;

17       it is not acquiring the Placing Shares as a result of any "directed selling efforts" as defined in Regulation S under the Securities Act;

18       if the Placing Shares are being acquired for the account of one or more other persons, it has full power and authority to make the representations, warranties, agreements and acknowledgements herein on behalf of each such account;

19       it (and any account for which it is purchasing) is acquiring the Placing Shares for investment purposes only and is not acquiring the Placing Shares with a view to any offer, sale or distribution thereof in violation of the Securities Act or any other securities laws of any state or other jurisdiction of the United States;

20       the Company is not obliged to file any registration statement in respect of any resales of the Placing Shares in the United States with the US Securities and Exchange Commission or with any securities administrator of any state or other jurisdiction of the United States;

21       if in the future it decides to offer, sell, transfer, assign or otherwise dispose of the Placing Shares, it will do so only in compliance with an exemption from the registration requirements of the Securities Act and under circumstances with will not require the Company to register under the Investment Company Act;

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

23       neither Canaccord Genuity, any of their respective affiliates, agents, directors, officers or employees nor any person acting on behalf of any of them 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 participation in the Placing is on the basis that it is not and will not be a client of Canaccord Genuity and Canaccord Genuity have no duties or responsibilities to it for providing the protections afforded to its clients 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;

24       it has the funds available to pay for the Placing Shares for which it has agreed to subscribe and acknowledges and agrees that it will make payment to Canaccord Genuity for the Placing Shares allocated to it in accordance with the terms and conditions of this Announcement on the due times and dates set out in this Announcement, failing which the relevant Placing Shares may be placed with others on such terms as Canaccord Genuity may, in its absolute discretion determine without liability to the Placee and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this Announcement) which may arise upon the sale of such Placee's Placing Shares on its behalf;

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

26       the person who it specifies for registration as holder of the Placing Shares will be: (a) the Placee; or (b) a nominee of the Placee, as the case may be. None of Canaccord Genuity or the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to acquire Placing Shares pursuant to the Placing and agrees to pay the Company and Canaccord Genuity in respect of the same (including any interest or penalties)

27       it is acting as principal only in respect of the Placing or, if it is acting for any other person, (a) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person, and (b) it is and will remain liable to the Company and Canaccord Genuity 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);

28       the allocation, allotment, issue and delivery to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a stamp duty or stamp duty reserve tax liability under (or at a rate determined under) any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depository receipts and clearance services) and that it is not participating in the Placing as nominee or agent for any person or persons to whom the allocation, allotment, issue or delivery of Placing Shares would give rise to such a liability;

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

30       it and any person acting on its behalf (if within the United Kingdom) is a person of a kind described in: (a) Article 19(5) (Investment Professionals) and/or 49(2) (High net worth companies etc.) of the Order and/or an authorised person as defined in section 31 of FSMA; and (b) section 86(7) of FSMA ("Qualified Investor"), being a person falling within Article 2.1(e) of the Prospectus Directive. For such purposes, it undertakes that it will acquire, hold, manage and (if applicable) dispose of any Placing Shares that are allocated to it for the purposes of its business only;

31              that it is responsible for obtaining any legal, financial, tax and other advice that it deems necessary for the execution, delivery and performance of its obligations in accepting the terms and conditions of the Placing, and that it is not relying on the Company or Canaccord Genuity to provide any legal, financial, tax or other advice to it;

32              it has only communicated or caused to be communicated and it will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person and it acknowledges:

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

32.2      if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive (including any relevant implementing measure in any member state), the Placing Shares acquired by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the EEA which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the express prior written consent of Canaccord Genuity has been given to the offer or resale;

32.3      (other than as set out in this Announcement) it has neither received nor relied on any confidential price sensitive information about the Company in accepting this invitation to participate in the Placing;

32.4      neither Canaccord Genuity nor any of its respective affiliates, agents, directors, officers or employees or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement or for any information previously published by or on behalf of the Company or any other written or oral information made available to or publicly available or filed or any representation, warranty or undertaking relating to the Company, and will not be liable for its decision to participate in the Placing based on any information, representation, warranty or statement contained in this Announcement or elsewhere, provided that nothing in this paragraph shall exclude any liability of any person for fraud;

32.5      neither Canaccord Genuity, the Company nor any of their respective affiliates, agents, directors, officers or employees or any person acting on behalf of Canaccord Genuity, the Company or 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 nor providing advice in relation to the Placing nor in respect of any representations, warranties, acknowledgements, agreements, undertakings or indemnities contained in the Placing Agreement nor the exercise or performance of Canaccord Genuity's rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

32.6      acknowledges and accepts that Canaccord Genuity may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the Placing Shares and/or related instruments for its own account for the purpose of hedging its underwriting exposure or otherwise and, except as required by applicable law or regulation, Canaccord Genuity will not make any public disclosure in relation to such transactions;

32.7      Canaccord Genuity and each of its affiliates, each acting as an investor for its or their own account(s), may bid or subscribe for and/or purchase Placing Shares and, in that capacity, may retain, purchase, offer to sell or otherwise deal for its or their own account(s) in the Placing Shares, any other securities of the Company or other related investments in connection with the Placing or otherwise. Accordingly, references in this Announcement to the Placing Shares being offered, subscribed, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by Canaccord Genuity and/or any of its respective affiliates, acting as an investor for its or their own account(s). Neither Canaccord Genuity nor the Company intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so;

32.8      it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (together, the "Regulations") and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

32.9      it is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, FSMA, the EU Market Abuse Regulation No. 596 of 2014 and the Proceeds of Crime Act 2002 and confirms that it has and will continue to comply with those obligations;

32.10    in order to ensure compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, Canaccord Genuity (for itself and as agent on behalf of the Company) or the Company's registrars may, in their absolute discretion, require verification of its identity. Pending the provision to Canaccord Genuity or the Company's registrars, as applicable, of evidence of identity, definitive certificates in respect of the Placing Shares may be retained at Canaccord Genuity's absolute discretion (as the case may be) or, where appropriate, delivery of the Placing Shares to it in uncertificated form may be delayed at Canaccord Genuity's or the Company's registrars', as the case may be, absolute discretion. If within a reasonable time after a request for verification of identity, Canaccord Genuity (for itself and as agent on behalf of the Company) or the Company's registrars have not received evidence satisfactory to them, Canaccord Genuity and/or the Company may, at its absolute discretion, terminate its commitment in respect of the Placing, in which event the monies payable on acceptance of allotment will, if already paid, be returned without interest to the account of the drawee's bank from which they were originally debited;

32.11    acknowledges that its commitment to acquire Placing Shares on the terms set out in this Announcement and in the Form of Confirmation will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's, or Canaccord Genuity's conduct of the Placing;

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

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

32.14    the Company, Canaccord Genuity and others (including each of their respective affiliates, agents, directors, officers or employees) will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and agreements, which are given to Canaccord Genuity, on its own behalf and on behalf of the Company and are irrevocable;

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

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

32.17    any document that is to be sent to it in connection with the Placing will be sent at its risk and may be sent to it at any address provided by it to Canaccord Genuity;

32.18    the Placing Shares will be issued subject to these terms and conditions of this Appendix; and

32.19    these terms and conditions and all documents into which they are incorporated by reference or otherwise validly forms a part and/or any agreements entered into pursuant to these terms and conditions and all agreements to acquire shares pursuant to the Placing will be governed by and construed in accordance with English law and it submits to the exclusive jurisdiction of the English courts in relation to any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Canaccord Genuity 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;

33       by participating in the Placing, each Placee (and any person acting on such Placee's behalf) agrees to indemnify and hold the Company, Canaccord Genuity and each of their respective affiliates, agents, directors, officers and employees harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings given by the Placee (and any person acting on such Placee's behalf) in this this Appendix or incurred by Canaccord Genuity, the Company or each of their respective affiliates, agents, directors, officers or employees arising from the performance of the Placee's obligations as set out in this Announcement, and further agrees that the provisions of this this Appendix shall remain in full force and effect after completion of the Placing. The agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the United Kingdom relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct by the Company. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement related to any other dealings in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event, the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax and none of the Company or Canaccord Genuity shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and should notify Canaccord Genuity accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares and each Placee, or the Placee's nominee, in respect of whom (or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such non-United Kingdom stamp, registration, documentary, transfer or similar taxes or duties undertakes to pay such taxes and duties, including any interest and penalties (if applicable), forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Canaccord Genuity in the event that the Company and/or Canaccord Genuity has incurred any such liability to such taxes or duties;

34       The representations, warranties, acknowledgements and undertakings contained in this this Appendix are given to Canaccord Genuity for itself and on behalf of the Company and are irrevocable;

35       Each Placee and any person acting on behalf of the Placee acknowledges that Canaccord Genuity does not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings, acknowledgements, agreements or indemnities in the Placing Agreement;

36       Each Placee and any person acting on behalf of the Placee acknowledges and agrees that Canaccord Genuity may (at its absolute discretion) satisfy its obligation to procure Placees by itself agreeing to become a Placee in respect of some or all of the Placing Shares or by nominating any connected or associated person to do so;

37       When a Placee or any person acting on behalf of the Placee is dealing with Canaccord Genuity, any money held in an account with Canaccord Genuity 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 relevant rules and regulations of the FCA made under FSMA. Each 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 Canaccord Genuity's money (as applicable) in accordance with the client money rules and will be held by it under a banking relationship and not as trustee;

38       References to time in this Announcement are to London time, unless otherwise stated;

39       All times and dates in this Announcement may be subject to amendment;

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

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

42       The Placing Shares to be issued or sold pursuant to the Placing will not be admitted to trading on any stock exchange other than AIM;

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

44       Pursuant to the General Data Protection Regulation as implemented in the UK by the Data Protection Act 2018 ("GDPR") the Company and/or Canaccord Genuity, may hold personal data (as defined in the GDPR) relating to past and present shareholders. Personal data may be retained on record for a period exceeding six years after it is no longer used. The Company and/or Canaccord Genuity will only process such information for the purposes set out below (collectively, the "Purposes"), being to: (a) process its personal data to the extent and in such manner as is necessary for the performance of their obligations under the contractual arrangements between them, including as required by or in connection with its holding of Ordinary Shares, including processing personal data in connection with credit and money laundering checks on it; (b) communicate with it as necessary in connection with its affairs and generally in connection with its holding of Ordinary Shares; (c) provide personal data to such third parties as the Company and/or Canaccord Genuity may consider necessary in connection with its affairs and generally in connection with its holding of Ordinary Shares or as the GDPR may require, including to third parties outside the EEA; and (d) without limitation, provide such personal data to their respective affiliates for processing, notwithstanding that any such party may be outside the EEA; and (e) process its personal data for the Company's and/or Canaccord Genuity's internal administration; and

45       By becoming registered as a holder of Placing Shares, it acknowledges and agrees that the processing by the Company and/or Canaccord Genuity of any personal data relating to it in the manner described above is undertaken for the purposes of: (a) performance of the contractual arrangements between them; and (b) to comply with applicable legal obligations. In providing the Company and/or Canaccord Genuity with information, it hereby represents and warrants to each of them that it has notified any data subject of the processing of their personal data (including the details set out above) by the Company and/or Canaccord Genuity and their respective affiliates and group companies, in relation to the holding of, and using, their personal data for the Purposes. Any individual whose personal information is held or processed by a data controller: (a) has the right to ask for a copy of their personal information held; (b) to ask for any inaccuracies to be corrected or for their personal information to be erased; (c) object to the ways in which their information is used, and ask for their information to stop being used or otherwise restricted; and (d) ask for their personal information to be sent to them or to a third party (as permitted by law). A data subject seeking to enforce these rights should contact the relevant data controller. Individuals also have the right to complain to the UK Information Commissioner's Office about how their personal information has been handled.


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