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Thursday 16 November, 2017

Keystone Law Grp PLC

Announcement of Intention to Float on AIM

RNS Number : 6460W
Keystone Law Group PLC
16 November 2017
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL.

 

This announcement is an advertisement and not an admission document or a prospectus and does not constitute or form part of an offer to sell or issue or a solicitation of an offer to subscribe for or buy any securities nor should it be relied upon in connection with any contract or commitment whatsoever.  Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of the information in the admission document (the "Admission Document") published by Keystone Law Group plc (the "Company") in connection with the proposed admission of its ordinary shares to trading on AIM, a market operated by London Stock Exchange plc ("Admission").  Copies of the Admission Document will, following Admission, be available to view on the Company's website www.keystonelaw-ir.co.uk and at the registered office of the Company, subject to applicable securities laws or regulations.

 

Press Release

16 November 2017

 

 

 

Keystone Law Group plc

 

Announcement of Intention to Float on AIM

 

Keystone Law Group plc ('Keystone', the 'Company' or the 'Group'), a fast growing, UK Top 100, challenger law firm, is pleased to announce that it has today published its Admission Document following the successful pricing of its £15 million fundraising and applied for admission of its issued and to be issued ordinary shares of £0.002 each in the capital of the Company ('Ordinary Shares') to trading on AIM, a market operated by London Stock Exchange plc ('Admission').  Admission is expected to occur and dealings in the Ordinary Shares to commence at 8.00am on 27 November 2017, under the ticker KEYS and with ISIN GB00BZ020557.

 

·     The Placing Price has been set at 160 pence per Placing Share. Based on the Placing Price, the market capitalisation of Keystone at Admission will be £50 million.

·     The Placing will raise gross proceeds of £9.4 million for the Company and £5 million for the Selling Shareholders. The Placing was significantly oversubscribed.

·     The Company will also issue Subscription Shares to raise a further £0.6 million.

·     On Admission, the Company will have 31,273,941 Ordinary Shares in issue.



 

·     Panmure Gordon (UK) Limited is acting as Financial Adviser, Nominated Adviser and Broker to the Company.

Key Highlights

·  

Significant addressable market, ripe for disruption: Keystone operates in the UK legal services mid-market, which has total annual revenue of £8.8 billion (source: The Lawyer Top 200, 2017).  All types of legal work delivered in the mid-market are capable of being delivered by lawyers within the Keystone model.

·  

A clear and simple growth strategy to take advantage of the market: central to Keystone's growth strategy is the continuing recruitment of experienced lawyers who bring with them their clients and associated revenues.

·  

An attractive proposition for lawyers and clients: the Keystone model enables lawyers to focus exclusively on developing client relationships and delivering legal work, whilst being well remunerated for the work they do.

·  

A strongly cash generative financial model with negligible fixed direct costs and with scope for further operating margin enhancement: Keystone's lawyers are self-employed, working from their own offices with no fixed or minimum remuneration.  A substantial part of Keystone's overhead base is fixed and the Directors are of the view that there is significant scope for operating margins to increase as the business grows.  The Group also has a strong cash generation profile, since lawyers are only paid once Keystone has been paid.

·  

Robust, sustainable income with good predictability of earnings: the Group has no dependency on any single practice area, lawyer or client (reducing practice and revenue concentration risk) and does not operate in areas exposed to a higher level of risk (e.g. high volume, low value personal injury and property conveyancing).  With each lawyer acting as a business developer, Keystone's lawyers tend to develop and drive revenues that sustain their level of income and thus provide a strong degree of predictability over future revenues.

·  

A scalable, proven business model which has demonstrated a history of growth: Keystone already has the necessary infrastructure, including IT, developed and deployed with capacity to support substantially higher lawyer numbers without significantly increasing the working capital requirements of the Group.  This has been demonstrated over the history of the business.

·  

Over the three years ended 31 January 2017, the business has generated consistent revenue growth of over 20% per annum and, for the year ended 31 January 2017, reported revenue of £25.6 million and EBITDA of £2.1 million.

·  

The Board intends to adopt a progressive dividend policy to reflect the expectation of future cash flow generation and long-term earnings potential of the Group.

 



 

Reasons for Admission

·    

To increase brand recognition whilst lending further credibility to its offering to both clients and lawyers, thereby enhancing the Group's future growth potential.

·    

The net proceeds of the Placing of approximately £9 million will be used primarily to redeem the outstanding amount of the Loan Notes held by certain of Keystone's existing shareholders totalling approximately £7.4 million and leave the Group debt free following Admission.

 


James Knight, Chief Executive Officer of Keystone Law Group plc, said:

"I am delighted to announce that Keystone will be joining the AIM market.  The entire team has worked hard to establish our position as one of the leading UK mid-market challenger law firms.  Our decision to list on the London Stock Exchange will provide us with the most resilient and stable platform to support our ambitious growth plans long into the future.

 

"The UK legal services market is the second largest in the world and I believe the Keystone model is well placed to take advantage of this significant opportunity.  I look forward to continuing with our strategy of quality-centric growth, providing a superb standard of legal service to our many clients and delivering value for our shareholders."

 

For further information:

Keystone Law Group plc

 

James Knight, Chief Executive Officer

Tel: +44 (0) 20 3319 3700

Ashley Miller, Finance Director

www.keystonelaw.co.uk

 

Panmure Gordon (UK) Limited

(Nominated Adviser and Broker)

 

Andrew Potts / Peter Steel / Dominic Morley (Corporate Finance)

Tel: +44 (0) 20 7886 2500

Erik Anderson / Amy Sarra (Corporate Broking)

 

 

www.panmure.com

 

 

Media enquiries:

Buchanan

 

Henry Harrison-Topham / Steph Watson / Patrick Hanrahan

Tel: +44 (0) 20 7466 5000

[email protected]

www.buchanan.uk.com

The full terms and conditions of the Placing are set out in the Appendix to this announcement and in the Admission Document.

 

Overview

As a full service networked law firm, Keystone delivers conventional legal services across 23 service areas (which Keystone groups into 8 practice areas) and over 50 industry sectors (with the notable exceptions being high volume/low value personal injury and property conveyancing), to a client base comprising predominantly of SMEs and private individuals.  It is how these services are delivered via Keystone's distinctive platform model, rather than the services themselves, which differentiates Keystone from other law firms.  It is this platform model which has been central to Keystone's growth to date and success, as evidenced by the firm's recent breakthrough into The Lawyer's UK Top 100 law firms, at number 94.

 

Keystone has over 250 high calibre, experienced, self-employed lawyers, who contract with the Group predominantly through personal service companies.  The lawyers work from their own offices mainly throughout the UK (with some based in other countries such as Ireland, the Isle of Man and beyond), supported by the central office team in the Group's head office in the heart of London's legal district on Chancery Lane.  Bespoke proprietary software, developed using leading modern open source products and coding languages, enables Keystone's lawyers to interact with the central office team and each other in an easy and efficient manner, whilst extensive networking and social events engender a strong sense of belonging to the Keystone family.

 

The lawyers have no fixed remuneration, instead benefitting from a transparent, consistent and 100% variable pay structure, with between 60-75% of fees paid to the lawyer once Keystone has been paid for the work undertaken.  The Directors believe that, unlike traditional law firms, the cash generative nature of Keystone's platform model and the associated lack of fixed salary overheads of its lawyers enables the Group to scale rapidly and without working capital pressures and constraints.

 

Keystone's platform model and associated remuneration structure is attractive to high calibre, experienced lawyers from mid-market firms with their own client following, providing an alternative way to practise the law and the opportunity to earn more than in a conventional firm whilst enjoying a better work-life balance.  The recruitment of such lawyers enables the business to drive its growth and to develop a highly diverse client base.  With over 250 lawyers each developing their own business opportunities and cross-referring work to Keystone colleagues, the Directors believe that this growth is sustainable.

The UK Legal Services Market

The UK legal services market is the second largest in the world, behind the US, with fee revenue for 2014/15 of £30.9 billion, accounting for approximately 10% of global legal services revenue and one fifth of European legal services fee revenue (source: CityUK, July 2016).  The UK market is extremely diverse, with the "Magic Circle", "Silver Circle" and other "global elite" law firms, representing the top 15 in the UK by revenue, generating in aggregate £14.7 billion and, at the other end of the market, a large number of firms outside the UK Top 200, with annual revenues of below £9 million.  These smaller firms are categorised by the Directors as the "high street" offering.

 

The segment between the top 15 and the high street offering is UK-centric and categorised by the Directors as the "mid-market".  Generating £8.8 billion of annual revenues, this is the segment in which Keystone operates, and typically where it has recruited its lawyers from.

 

Market trends

Conventional UK mid-market law firms have, for several years, suffered from pressures brought about by the increasing commoditisation of many of their services as well as the general economic climate.  This has resulted in ongoing pressure on fee income which has been compounded by increasing overheads, in particular property costs.

 

The Directors believe that conventional firms have typically responded to these market trends by setting their experienced lawyers with progressively increasing billing targets, whilst expecting them to drive business development and retain significant managerial responsibility.  At the same time, the Directors believe much of the historical appeal of equity partnership has reduced, with many junior partners no longer seeing the merits traditionally associated with that form of ownership.  These dynamics have resulted in a significant number of experienced but dissatisfied lawyers across the UK mid-market seeking alternative ways to practise law.

 

The Directors believe that, as a result of these trends, the UK legal services mid-market offers significant opportunity for an alternative model law firm such as Keystone.

 

Key strengths of the Group

The Directors believe that the Group's core strengths lie in the following areas:

 



 

Significant addressable market, ripe for disruption

Keystone operates in the UK legal services mid-market, which has total annual revenue of £8.8 billion.  All types of legal work delivered in the mid-market are capable of being delivered by lawyers within the Keystone model.  Conventional firms within the segment have typically suffered in recent years from downward fee and upward cost pressures.  At the same time, the appeal of equity partnership in the mid-market, traditionally viewed by the legal profession as the ultimate goal for a lawyer, has waned, with the perceived security of rewards historically associated with this option having been eroded, particularly in light of several high-profile conventional law firm failures in recent years and the emergence of alternative business models following the introduction of the Legal Services Act 2007.  These trends have resulted in significant numbers of dissatisfied but highly experienced lawyers with loyal client followings seeking an alternative means of delivering legal services to their clients.  The Directors believe that there is a significant opportunity for the Group to continue to take advantage of this dissatisfaction through the ongoing recruitment of such lawyers.

 

A clear and simple growth strategy to take advantage of the market

Central to Keystone's growth strategy is the continuing recruitment of experienced lawyers who bring with them their clients and associated revenues.  In the legal services mid-market, client relationships are frequently associated with the lawyer rather than the law firm.  The recruitment of lawyers is therefore key to bringing new clients into the Group and generating growth. Keystone's success in this area is demonstrated by the recent rapid growth in the number of its lawyers, increasing from just over 100 in January 2012 to 248 as at 31 July 2017.

 

An attractive proposition for lawyers and clients

The Keystone model enables lawyers to focus exclusively on developing client relationships and delivering legal work, whilst being well remunerated for the work they do.  With Keystone lawyers working across 23 service areas (which Keystone groups into 8 practice areas) and covering over 50 sectors, the breadth of colleague experience is large and continues to grow, providing lawyers with the opportunity to offer clients a more extensive range of services than may have been available at their previous firms as well as cross-sell their experience to Keystone's other clients.

 

The Directors also believe that the Keystone model enhances a client's experience as it motivates the Group's lawyers to be highly responsive to client needs and facilitates a more commercial approach to pricing, by granting lawyers the ability to negotiate the fees with the client on an engagement by engagement basis.  This results in experienced lawyers being able to deliver a more bespoke and attentive service to their clients.

 

A strongly cash generative financial model with negligible fixed direct costs and with scope for further operating margin enhancement

Keystone's lawyers are self-employed, working from their own offices with no fixed or minimum remuneration.

 

The lawyer remuneration structure is calculated with direct reference to the fees they generate, and lawyers are not paid if Keystone does not get paid for the fees billed.  As such, the Group's gross margin is extremely stable and, with office facilities only provided to the Group's central office team, the significant overheads prevalent in most legal services businesses are much lower in Keystone's model.

 

A substantial part of Keystone's overhead base is fixed (approximately 30%. for the year ending 31 January 2017), accordingly the Directors are of the view that there is significant scope for operating margins to increase as the business grows, as demonstrated by the increase in EBITDA margins from 5.1% in the year ended 31 January 2015 to 8.1% in the year ended 31 January 2017.  The Group also has a strong cash generation profile, since lawyers are only paid once Keystone has been paid.  This aspect of the business model has underpinned average historical operating cash conversion, which is above 80% for the 2.5 years since January 2015.

 

Robust, sustainable income with good predictability of earnings

The Group has no dependency on any single practice area, which reduces concentration risk of any single practice area.  The Board has also decided that Keystone will not operate in areas of the legal practice which are exposed to a higher level of risk (for example, but not limited to, high volume, low value personal injury and property conveyancing).  As each lawyer brings and builds their own client relationships, the client base is extremely diverse, with no single client representing more than 2%, and no single lawyer representing more than 3.5%, of aggregate revenue across the three years ended 31 January 2017, which reduces the risk of revenue concentration.  With each lawyer acting as a business developer, Keystone's lawyers tend to develop and drive revenues that sustain their level of income and thus provide a strong degree of predictability over the Group's future revenues.

 

A scalable, proven business model which has demonstrated a history of growth

Keystone already has the necessary infrastructure, including IT, developed and deployed with capacity to support substantially higher lawyer numbers.  The experienced senior management team has proven its ability to drive the growth of the Group and the financial dynamics of Keystone's model mean that significant numbers of lawyers can be recruited each year without significantly increasing the working capital requirements of the Group.  This has been demonstrated over the history of the business.

 

Growth Strategy

As highlighted above, the key driver to Keystone's growth has been the recruitment of experienced lawyers with client followings.  Given the high growth rate achieved, the Board intends to continue executing this organic growth strategy through further lawyer recruitment.  To that end, the Board firmly believes that Admission will further enhance the Keystone brand, thus reinforcing the Group's ongoing recruitment activity and making the Group even more attractive to experienced lawyers in the UK.

 

With the UK and, within the UK, England and Wales in particular representing such a considerable market for legal services, the focus of the Group will continue to be primarily on this jurisdiction.

 

That said, as in recent years (when Keystone has established a presence in the Isle of Man and Northern Ireland), Keystone will also continue to explore opportunities in overseas territories, adapting its model as appropriate to satisfy regulatory requirements within each jurisdiction.  In the short term, the Group's focus will continue to be on organic growth.  Longer term, the Board believes that suitable acquisitions of smaller businesses, with similar business models but strengths either in specific geographical or niche legal practice areas, may present options to accelerate growth further.  Such opportunities would be considered on their individual merits at the appropriate time.

 

Board of Directors

 

James Knight - Founder and Chief Executive Officer, age 50

James founded Keystone in 2002 when he set out to create a new type of law firm. Prior to that James had a 10-year career as a commercial solicitor in London, Hong Kong and Dubai.  James now focuses on business development, marketing, international opportunities and other drivers of growth.

 

Ashley Miller - Finance Director, age 45

Ashley joined Keystone in January 2015 following the investment by Root Capital in the business. Ashley is a finance professional with over 20 years' experience.  Having trained with Price Waterhouse, Ashley has spent his career establishing and managing international finance departments for SME businesses operating across the professional services sector.

 

Robin Williams - Independent Non-Executive Chairman, age 60

Robin is currently chairman of Xaar plc, the digital inkjet technology developer and, until March 2018, of NHS Professionals Ltd.  He has recently been appointed non-executive chairman at FIH Group plc and is a non-executive director of Van Elle plc, where he also chairs the audit committee. He is an engineering graduate and qualified chartered accountant with over 30 years' experience with listed companies, initially as an adviser and then as a CEO and co-founder of Britton Group plc and then as an executive director of Hepworth plc, the building materials business.

 

Simon Philips - Non-Executive Director, age 49

Simon is managing partner of Root Capital LLP, general partner of the Root Capital Fund II Limited Partnership, and he is also a limited partner in Root Capital Fund II Limited Partnership.  He is an experienced entrepreneur in the software and outsourcing sectors and has considerable expertise in both operational management and deal structuring.  Simon is currently Chairman of a number of businesses in which Root Capital have invested and has been Non-Executive Chairman of the Keystone Board since the investment by Root Capital in 2014, and has reverted to being a non-executive Director of the Company following Robin Williams' appointment as Independent Non-Executive Chairman.

 

Peter Whiting - Independent Non-Executive Director, age 51

Peter has over 20 years' experience as an investment analyst, specialising in the software and IT services sector. He joined UBS in 2000, led the UK small and mid-cap research team and was Chief Operating Officer of UBS European Equity Research from 2007 to 2011. Peter is also a non-executive director, senior independent director and chair of remuneration committee of both Microgen plc and FDM Group (Holdings) plc, having joined the Boards of those companies in 2012 and 2014 respectively.

 

- Ends -

 



 

Important Notices

 

The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Panmure Gordon (UK) Limited ("Panmure Gordon" (registered address: One New Change, London EC4M 9AF)) solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

 

Neither this announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, in whole or in part, in, into or from the United States of America (including its territories and possessions, any state of the United States and the District of Columbia (the "United States" or the "US")), Canada, Australia, the Republic of South Africa or Japan or transmitted, distributed to, or sent by, any national or resident or citizen of any such countries or  any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction (each a "Restricted Jurisdiction").  Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities laws.

 

This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities in any Restricted Jurisdiction.  The placing of Ordinary Shares ("Placing") and the distribution of this announcement and other information in connection with the Placing and Admission in certain jurisdictions may be restricted by law and persons into whose possession this announcement, any document or other information referred to herein comes should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.  Neither this announcement nor any part of it nor the fact of its distribution shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

 

This announcement is directed only at persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and are: (i) if in a member state of the European Economic Area, qualified investors within the meaning of article 2(1)(e) of the Prospectus Directive ("Qualified Investors"); or (ii) if in the United Kingdom, Qualified Investors and fall within: (a) article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); or (b) article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Order (all such persons together being referred to as "Relevant Persons").  The term "Prospectus Directive" means Directive 2003/71/EC as amended and includes any relevant implementing measures in each member state of the European Economic Area.

 

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.

 

The Ordinary Shares referred to in this Announcement have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or under the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act.  The Ordinary Shares have not been and will not be 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.

 

Any subscription for or purchase of Ordinary Shares in the proposed Placing should be made solely on the basis of the information contained in the final Admission Document to be published by the Company in connection with the Placing and Admission.  The information in this announcement is for background purposes only and does not purport to be full or complete.  No reliance may or should be placed for any purposes whatsoever on the information contained in this announcement or its accuracy, completeness or fairness.  The information in this announcement is subject to change.  However, the Company does not undertake to provide the recipient of this announcement with any additional information, or to update this announcement or to correct any inaccuracies, and the distribution of this announcement shall not be deemed to be any form of commitment on the part of the Company to proceed with the Placing or any transaction or arrangement referred to in this announcement.  This announcement has not been approved by any competent regulatory authority.

 

In connection with the Placing, Panmure Gordon and/or any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase Ordinary Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Placing or otherwise. Accordingly, references in the Admission Document, once published, to the Ordinary Shares being offered, subscribed, acquired, placed or otherwise dealt in should be read as including any offer to, or subscription, acquisition, placing or dealing by Panmure Gordon and/or any of their respective affiliates acting as investors for their own accounts.  In addition, Panmure Gordon and/or their respective affiliates may enter into financing arrangements and swaps in connection with which Panmure Gordon and/or their respective affiliates may from time to time acquire, hold or dispose of Ordinary Shares. Panmure Gordon does not have any intention to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

 

Panmure Gordon which is authorised and regulated by the Financial Conduct Authority in the United Kingdom is acting exclusively for the Company and no one else in connection with the Placing and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing and Admission or any other matters referred to in this announcement.

 

Neither Panmure Gordon nor any of its respective subsidiary undertakings, affiliates or any of their respective partners, directors, officers, employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

 

The anticipated timetable for Admission, including the publication of the Admission Document and/or the date of Admission, may be influenced by a range of circumstances, including market conditions.  There is no guarantee that the Admission Document will be published or that Admission will occur and investors should not base their financial decisions on the Company's intentions in relation to the Placing and Admission at this stage.

 

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

 

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.

 

Certain figures in this announcement, including financial information, have been subject to rounding adjustments.  Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly with the total figure given.

 

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this Announcement, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations or statements relating to expectations in relation to shareholder returns, dividends or any statements preceded by, followed by or that include the words "targets", "estimates", "envisages", "believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof, are forward looking statements.

 

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 and performance to be materially different from future results and performance expressed or implied by such forward looking statements.  Such forward looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future.

 

These forward looking statements speak only as of the date of this Announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained herein to reflect any change in the Company's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.



 

 

APPENDIX

Keystone Law Group plc

Terms and Conditions of the Placing

 

The information contained in this Appendix is restricted. Subject to certain limited exceptions, it is not for publication, release or distribution in or into the United States. It is not for publication, release or distribution in or into any province of Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction in which publication, release or distribution would be unlawful.

 

Each Placee should consult with its own advisers as to legal, tax, business and related aspects in relation to any acquisition of Placing Shares.

 

1.         INTRODUCTION

1.1       These terms and conditions ("Terms and Conditions") apply to persons making an offer to acquire Placing Shares under the Placing.

1.2       Each person to whom these Terms and Conditions apply, as described above, who confirms its agreement (whether by telephone or otherwise) to Panmure Gordon to acquire Placing Shares (which may include Panmure Gordon or its nominee(s)) (a "Placee") hereby agrees with the Company and Panmure Gordon to be bound by these Terms and Conditions with respect to its subscription of Placing Shares under the Placing. A Placee shall, without limitation, become irrevocably bound by these Terms and Conditions if Panmure Gordon confirms its allocation of Placing Shares, whether by contract note or otherwise.

2.         SUMMARY OF THE PLACING

2.1       The Placing Price is 160 pence per Placing Share and the Placing comprises the issue by the Company of 5,854,534 New Shares and the sale by the Selling Shareholders of 3,125,000 Sale Shares (together the Placing Shares).

2.2       All New Shares issued pursuant to the Placing will be issued, payable in full, at the Placing Price.

2.3       The Placing is subject to satisfaction of the conditions set out in the Placing Agreement and the Selling Shareholders' Agreement, including Admission occurring and becoming effective by no later than 8.00 a.m. on 27 November 2017 or such later time and/or date as the Company and Panmure Gordon may agree, being not later than 8.00 a.m. on 4 December 2017, and to the Placing Agreement and the Selling Shareholders' Agreement not having been terminated in accordance with its terms.

2.4       Application has been made to the London Stock Exchange for the Shares to be admitted to AIM. It is expected that Admission will take place and dealings in the Shares will commence on AIM at 8.00 a.m. (London time) on 27 November 2017.

2.5       The Placing Shares will rank pari passu in all respects with the Existing Shares and will rank in full for all dividends and other distributions after Admission declared, made or paid on the ordinary share capital of the Company. Further details of the rights attached to the Placing Shares are set out in the Admission Document.

2.6       The Placing Shares have not been, and will not be, registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States. The Placing Shares may not be offered or sold, directly or indirectly, in, into or within the United States or to or for the account or benefit of any persons within the United States except under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

2.7       Certain restrictions that apply to the distribution of this Admission Document and the Placing Shares being issued or sold under the Placing in jurisdictions outside the United Kingdom are described in paragraph 3 below headed "Selling and Transfer Restrictions".

3.         SELLING AND TRANSFER RESTRICTIONS

3.1       General

The distribution of this document and the offer of Placing Shares in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any restrictions, including those set out in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

No action has been, or will be, taken in any jurisdiction that would permit a public offering of the Placing Shares, or possession or distribution of this Admission Document or any other offering material in any country or jurisdiction where action for that purpose is required. Accordingly, the Placing Shares may not be offered or sold, directly or indirectly, and neither this Admission Document nor any other offering material or advertisement in connection with the Placing Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction.

This document and these Terms and Condition do not constitute an offer or invitation to acquire, underwrite or dispose of, or any solicitation of any offer or invitation to acquire, underwrite or dispose of, any Shares or other securities of the Company to any person in any jurisdiction to whom it is unlawful to make such offer, invitation or solicitation in such jurisdiction. Persons who seek to participate in the Placing must inform themselves about and observe any such restrictions and must be persons who are able to lawfully receive this document in their jurisdiction. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. Subject to certain limited exceptions, neither this document nor these Terms and Conditions constitutes an offer or invitation (or a solicitation of any offer or invitation) to acquire, underwrite or dispose of or otherwise deal in any Shares or other securities of the Company in the United States. Neither this document nor these Terms and Conditions constitutes an offer or invitation (or a solicitation of any offer or invitation) to acquire, underwrite or dispose of or otherwise deal in any Shares or other securities of the Company in Canada, Australia, the Republic of South Africa or Japan, or in any other jurisdiction in which any such offer, invitation or solicitation is or would be unlawful.

3.2       Members of the public

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

3.3       Persons in the United Kingdom

In the United Kingdom this document (including these Terms and Conditions) is only being distributed to persons to, and is directed only at: persons who are "qualified investors" (within the meaning of Article 2(1)(e) of the EU Prospectus Directive 2003/71/EC including any relevant measure in each member state of the European Economic Area ("Member State") that has implemented the directive (the "Prospectus Directive")) and who are persons who (i) are persons who have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order"); (ii) are high net worth companies, unincorporated associations, and other bodies within the meaning of Article 49(2)(a) to (d) 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"). It is not directed at and may not be relied on by anyone other than a Relevant Person. Any investment or investment activity to which these terms and conditions relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. By receiving this document and/or by accepting a Placing participation a Placee in the United Kingdom is deemed to represent and warrant to the Company and Panmure Gordon that it is a Relevant Person and agrees to comply with the contents of these Terms and Conditions.

3.4       European Economic Area

In relation to each Member State, no Shares have been offered, or will be offered, to the public in a Member State, prior to the publication of a prospectus in relation to Shares which has been approved by the competent authority in that member State, all in accordance with the Prospectus Directive, except that an offer to the public in that Member State of any Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Member State:

(a)       to any legal entity which is a "qualified investor" as defined under the Prospectus Directive;

(b)       to fewer than 100, or, if that Member State has implemented the relevant provisions of the 2010 Prospectus Amending Directive (Directive 2010/73/EC), 150 natural or legal persons (other than "qualified investors" as defined in the Prospectus Directive) per Member State, subject to obtaining the prior consent of Panmure Gordon; or

(c)       in any other circumstances falling within Article 3(2) of the Prospectus Directive,

 

provided that no such offer of Shares shall result in a requirement for the Company or Panmure Gordon to publish a prospectus pursuant to Article 3 of the Prospectus Directive or a supplemental prospectus pursuant to Article 16 of the Prospectus Directive and each person in a Member State who initially acquires any Shares or to whom any offer is made under the Placing will be deemed to have represented, warranted and agreed to and with the Company and Panmure Gordon that it is a "qualified investor" within the meaning of the law in that Member State implementing Article 2(1)(e) of the Prospectus Directive. Notwithstanding the above, a person who is not a qualified investor and who has notified Panmure Gordon of such fact in writing may, with the consent of Panmure Gordon, be permitted to acquire Shares in the Placing.

For the purposes of this provision, the expression an "offer to the public" in relation to any Shares in any Member State means the communication in any form and by any means of sufficient information on the terms of the Placing and any Shares so as to enable an investor to decide to acquire any Shares, as the same may be varied for that Member State by any measure implementing the Prospectus Directive in that Member State. In the case of Placing Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the Placing Shares acquired by it in the Placing have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to persons in circumstances which may give rise to an offer of any Placing Shares to the public other than their offer or resale in a Member State to qualified investors as so defined or in circumstances in which the prior consent of Panmure Gordon has been obtained to each such proposed offer or resale.

The Company, Panmure Gordon and their respective affiliates, representatives and others will rely upon the truth and accuracy of the foregoing representation, warranty, acknowledgement and agreement.

 

3.5       United States

The Shares have not been and will not be registered under the Securities Act or under the securities laws or regulations of any state or other jurisdiction of the United States and may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into the United States except pursuant to an 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. There will be no public offer of the Shares in the United States.

 

3.6       Australia

This document has not been and will not be lodged with the Australian Securities and Investments Commission or the Australian Stock Exchange and is not a disclosure document for purposes of Australian law. This document (whether in preliminary or definitive form) may not be issued or distributed in Australia and no offer or invitation may be made in relation to the issue, sale or purchase of any Shares in Australia (including an offer or invitation received by a person in Australia) and no Shares may be sold in or into Australia or to or for the account or benefit of any resident in Australia. Each person who initially acquires any Shares or to whom any offer is made under the Placing will be deemed to have represented, warranted and agreed to and with the Company and Panmure Gordon that it is not in Australia. The Company, Panmure Gordon and their respective affiliates, representatives and others will rely upon the truth and accuracy of the foregoing representation, warranty, acknowledgement and agreement.

3.7       Canada

The relevant clearances have not been and will not be, obtained from the Securities Commission of any province of territory of Canada. Accordingly, subject to certain exceptions the Shares may not, directly or indirectly, be offered or sold within Canada, or offered or sold to a resident of Canada or to or for the account or benefit of any resident in Canada. Each person who initially acquires any Shares or to whom any offer is made under the Placing will be deemed to have represented, warranted and agreed to and with the Company and Panmure Gordon that it is not in Canada. The Company, Panmure Gordon and their respective affiliates, representatives and others will rely upon the truth and accuracy of the foregoing representation, warranty, acknowledgement and agreement.

3.8       Republic of South Africa

The relevant clearances have not been and will not be, obtained from the South African Reserve Bank nor any other applicable body in the Republic of South Africa. Accordingly, the Placing Shares will not, directly or indirectly, be offered or sold within the Republic of South Africa or to or for the account or benefit of any resident in the Republic of South Africa. Each person who initially acquires any Shares or to whom any offer is made under the Placing will be deemed to have represented, warranted and agreed to and with the Company and Panmure Gordon that it is not in the Republic of South Africa. The Company, Panmure Gordon and their respective affiliates, representatives and others will rely upon the truth and accuracy of the foregoing representation, warranty, acknowledgement and agreement.

3.9       Japan

The Placing Shares have not been and will not be registered under the Securities and Exchange Law of Japan and may not be offered or sold directly or indirectly in Japan or to or for the account or benefit of any resident in Japan except under circumstances that result in compliance of all applicable laws, regulations and guidelines promulgated by the relevant governmental and regulatory authorised in effect at the relevant time. Each person who initially acquires any Shares or to whom any offer is made under the Placing will be deemed to have represented, warranted and agreed to and with the Company and Panmure Gordon that it is not in Japan. The Company, Panmure Gordon and their respective affiliates, representatives and others will rely upon the truth and accuracy of the foregoing representation, warranty, acknowledgement and agreement.

 

4.         PARTICIPATION IN AND PRINCIPAL TERMS OF THE PLACING

4.1       Each Placee will be deemed to have read these Terms and Conditions in their entirety.

4.2       Conditional upon: (i) Admission occurring and becoming effective by no later than 8.00 a.m. on 27 November 2017 (or such other time as Panmure Gordon may notify to the Company but, in any event, no later than 8.00 a.m. on 4 December 2017);  (ii) each of the Placing Agreement and the Selling Shareholders' Agreement, becoming unconditional in all respects and not having been terminated in accordance with its terms; and (iii) the Placee being allocated Placing Shares, the Placee agrees to become a member of the Company and irrevocably agrees to acquire those Placing Shares allocated to it at the Placing Price. To the fullest extent permitted by law, the Placee acknowledges and agrees that it will not be entitled to exercise any remedy of rescission at any time. This does not affect any other rights which the Placee may have.

4.3       Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Panmure Gordon. Panmure Gordon and its affiliates may participate in the Placing as principal.

4.4       An offer to acquire Placing Shares, which has been communicated by a prospective Placee to Panmure Gordon which has not been withdrawn or revoked prior to publication of this document, will not be capable of withdrawal or revocation immediately following the publication of this document without the consent of Panmure Gordon.

4.5       Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to Panmure Gordon, to pay in cleared funds immediately on the settlement date, in accordance with the registration and settlement requirements set out below, an amount equal to the product of the Placing Price and the number of Placing Shares allocated to such Placee. Panmure Gordon will procure the allotment or transfer of the Placing Shares to each Placee following each Placee's payment to Panmure Gordon of such amount.

4.6       Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at all times and on the basis explained below under "Registration and Settlement".

4.7       To the fullest extent permissible by law, neither the Company, Panmure Gordon nor any of their respective affiliates, directors or employees shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise) under these Terms and Conditions.  In particular, neither the Company, Panmure Gordon nor any of their respective affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of Panmure Gordon's conduct of the Placing.

4.8       Panmure Gordon is acting for the Company and no one else in connection with the Placing of the New Shares and will not regard any other person (whether or not a recipient of these Terms and Conditions) as a client in relation to the Placing and to the fullest extent permitted by law and applicable Financial Conduct Authority rules, neither Panmure Gordon nor any of its affiliates will have any liability to Placees or to any person other than the Company in respect of the Placing.

 

5.         ALLOCATION

5.1       Panmure Gordon has solicited indications of interest from prospective Placees to acquire Shares in the Placing. On this basis, prospective Placees have been asked to specify the number of Shares that they are prepared to acquire at different prices. Multiple applications under the Placing are permitted.

5.2       A number of factors have been considered in deciding the Placing Price and the bases of allocation, including prevailing market conditions, the level and the nature of the demand for Shares and the objective of encouraging long-term ownership of the Shares. The Placing Price has been established at a level determined in accordance with these arrangements, taking into account indications of interest received from persons (including market-makers and fund managers) connected with Panmure Gordon. Accordingly, the Placing Price may be lower than the highest price at which all of the Shares, in respect of which indications of interest have been received or which are available for subscription in the Placing, could have been accepted.

5.3       Placees will be advised verbally or by electronic mail of their allocation as soon as practicable following allocation.

 

6.         REGISTRATION AND SETTLEMENT

6.1       Each Placee undertakes to pay the Placing Price for the Placing Shares subscribed or acquired by such Placee in the manner and by the time directed by Panmure Gordon.

6.2       Each Placee is deemed to agree that, if it fails to pay the Placing Price for the Placing Shares subscribed or acquired by it, Panmure Gordon may sell any or all of the Placing Shares allocated to it and which have not been paid for on its behalf and retain from the proceeds, for Panmure Gordon's account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. Any excess proceeds will be paid to the relevant Placee at its risk. The relevant Placee will, however, remain liable and indemnifies the Company and Panmure Gordon on demand for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or SDRT or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on its behalf. By agreeing to acquire Placing Shares, each Placee confers on Panmure Gordon all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Panmure Gordon lawfully takes in pursuance of such sale.

6.3       The Shares are in registered form and can be held in certificated or uncertificated form. Title to certificated Shares (if any) will be evidenced in the register of members of the Company and title to uncertificated Shares will be evidenced by entry into the operator register maintained by the Registrar (which will form part of the register of members of the Company).

6.4       It is intended  that allocations of Placing Shares to Placees who wish to hold Placing Shares in uncertificated form will take place through CREST on Admission. It is intended that, where applicable, definitive share certificates in respect of the Placing Shares will be posted by first class post as soon as is practicable following 27 November 2017. Dealings in advance of the crediting of the relevant CREST stock account shall be at the risk of the person concerned. Prior to the despatch of definitive share certificates in respect of any Placing Shares which are not settled in CREST, transfers of those Placing Shares will be certified against the register of members of the Company. No temporary documents of title will be issued.

 

7.         PLACING AGREEMENT AND SELLING SHAREHOLDERS' AGREEMENT

7.1       The Company, the Directors and Panmure Gordon have entered into the Placing Agreement, pursuant to which Panmure Gordon has agreed, subject to certain conditions, to use its reasonable endeavours to procure subscribers for the New Shares. The Company, the Selling Shareholders and Panmure Gordon have also entered into the Selling Shareholders' Agreement, pursuant to which Panmure Gordon have agreed, subject to certain conditions, to use its reasonable endeavours to procure acquisitions for the Sale Shares.

7.2       The Placing Agreement and Selling Shareholders' Agreement contain provisions entitling Panmure Gordon to terminate the Placing (and the arrangements associated with it) at any time prior to Admission in certain circumstances.  If this right is exercised, the Placing and these arrangements will lapse and any monies received in respect of the Placing will be returned to Placees without interest.

 

7.3       The Placing Agreement and Selling Shareholders' Agreement provides for Panmure Gordon to be paid a commission in respect of the Placing Shares acquired by Placees. Any commission received by Panmure Gordon may be retained and any Placing Shares acquired by them may be retained or dealt in, by it, for its own benefit.

 

8.         REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

By agreeing to acquire Placing Shares under the Placing, each prospective Placee which enters into a commitment to acquire Placing Shares will (for itself and any person(s) procured by it to acquire Placing Shares and any nominee(s) for any such person(s)) be deemed to agree, represent and warrant to each of the Company, the Selling Shareholders, Panmure Gordon and the Registrar that:

8.1       It has read this document in its entirety and it is relying solely on this document (and any supplementary admission document published by the Company subsequent to the date of this document) and not on any other information given, or representation or statement made at any time, by any person concerning the Group or the Placing.

8.2       It acknowledges that its participation in the Placing shall be made solely on the terms and conditions set out in these Terms and Conditions, the Placing Agreement and/or the Selling Shareholders' Agreement (as the case may be) and the Articles. It agrees that these Terms and Conditions and the contract note issued by Panmure Gordon to it represent the whole and only agreement between it, the Company and Panmure Gordon in relation to its participation in the Placing and supersedes any previous agreement between any such parties in relation to such participation.

8.3       It acknowledges that neither Panmure Gordon, any of its affiliates nor any person acting on its or their behalf is making any recommendation to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing or providing any advice in relation to the Placing, and participation in the Placing is on the basis that it is not and will not be a client of Panmure Gordon or any of its affiliates, that Panmure Gordon is acting for the Company and no-one else and that none of Panmure Gordon or any of its affiliates have any duties or responsibilities to it for providing protections afforded to its or their respective clients or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertaking or indemnities contained in these Terms and Conditions.

8.4       It agrees that, having had the opportunity to read this document, it shall be deemed to have had notice of all information  and representations contained in this document, that it is acquiring Placing Shares solely on the basis of this document and any supplementary admission document published by the Company subsequent to the date of this document and no other information and that in accepting a participation in the Placing it has had access to all information it believes necessary or appropriate in connection with its decision to acquire Placing Shares. It agrees that none of the Company, Panmure Gordon nor the Registrar, nor any of their respective directors, officers, agents or employees, will have any liability for any other information or representation. It irrevocably and unconditionally waives any rights it may have in respect of any other information or representation. This paragraph shall not exclude any liability for fraudulent misrepresentation.

 

8.5       The contents of this document and any supplementary admission document published by the Company subsequent to the date of this document are exclusively the responsibility of the Company and its Directors and apart from the responsibilities and liabilities, if any, which may be imposed on the Company or Panmure Gordon by FSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where the exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, none of the Company, Panmure Gordon nor any person acting on their behalf nor any of their affiliates accept any responsibility whatsoever for and makes no representation or warranty, express or implied, as to the contents of this document or any supplementary admission document published by the Company subsequent to the date of this document or for any other statement made or purported to be made by it, or on its behalf, in connection with the Group, the Placing Shares or the Placing and nothing in this document and any supplementary admission document published by the Company subsequent to the date of this document may be relied upon as a promise or representation in this respect, whether or not to the past or future. The Company and Panmure Gordon accordingly disclaim all and any responsibility or liability, whether arising in tort, contract or otherwise (save as referred to above), which they might otherwise have in respect of this document or any supplementary admission document published by the Company subsequent to the date of this document or any such statement. This paragraph shall not exclude any liability for fraudulent misrepresentation.

8.6       It acknowledges that no person is authorised in connection with the Placing to give any information or make any representation other than as contained in this document and any supplementary admission document published by the Company subsequent to the date of this document and, if given or made, any information or representation must not be relied upon as having been authorised by Panmure Gordon or the Company.

8.7       It acknowledges that time shall be of the essence as regards its obligations to settle payment for the Placing Shares and to comply with its other obligations under the Placing.

8.8       It has the funds available to pay the Placing Price in respect of the Placing Shares for which it commits to acquire under the Placing, and each other person (including, without limitation, any local authority or the managers of any pension fund) on whose behalf it commits to acquire Placing Shares under the Placing or to whom it allocates Placing Shares has the capacity and authority to enter into and to perform its obligations  as a Placee and will comply with the obligations under the Terms and Conditions as if directly binding on them.

8.9       It: (i) is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions; (ii) represents, warrants and undertakes that neither the Company nor Panmure Gordon will infringe any laws outside the United Kingdom as a result of its agreement to acquire Placing Shares or any actions arising from the Placee's rights and obligations under the Placee's agreement to acquire Placing Shares and under the Articles (and, in making this representation and warranty, the Placee confirms that it is aware of the selling and transfer restrictions set out in paragraph 3 above; (iii) has fully observed such laws; (iv) has the requisite capacity and authority and is entitled to enter into and to perform its obligations as an acquirer of Placing Shares and will honour such obligations; and (v) has obtained  all necessary consents and authorities (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this paragraph to enable it to enter into the transactions contemplated  hereby and to perform its obligations in relation thereto) and, in particular, if the Placee is a pension fund or investment company, it is aware of and acknowledges that it is required to comply with all applicable laws and regulations with respect to its acquisition of Placing Shares under the Placing.

8.10    It understands that no action has been or will be taken in any jurisdiction by the Company or any other person that would permit a public offering of the Placing Shares, or possession or distribution of this Admission Document, in any country or jurisdiction where action for that purpose is required.

8.11    If it is in the United Kingdom:

8.11.1    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;

8.11.2    it is acting as principal only in respect of the Placing, or, if it is acting for any other person:

(a)    it is and will remain liable to the Company and Panmure Gordon 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);

(b)   it is both an "authorised person" for the purposes of FSMA and a "qualified investor" as defined at Article 2.1(e)(i) of the Prospectus Directive acting as agent for such person; and

(c)    such person is either  (1) a "qualified investor" or (2) its "client" (as defined in section 86(2) of FSMA) that has engaged it to act as the client's agent on terms which enable it to make decisions concerning the Placing or any other offers of transferable securities on his behalf without reference to the client.

8.12    If it is in any EEA State which has implemented the Prospectus Directive  it is: (a) a legal entity which is a "qualified investor" as defined under the Prospectus Directive; or (b) otherwise permitted by law to be offered and sold Placing Shares in circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive or other applicable laws.

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

8.14    If it is in a Member State of the European Economic Area, 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: (a) 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, as that term is defined in the Prospectus Directive, or in other circumstances falling within Article 3(2) of the Prospectus Directive and the prior consent of Panmure Gordon has been given to the offer or resale; or (b) where Placing Shares have been acquired by it on behalf of persons in any relevant member state 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. For the purposes of this provision, the expression an "offer" in relation to any of the Placing Shares in any relevant member states means the communication in any form and by any means of sufficient information on the terms of the offer and any Placing Shares to be offered so as to enable an investor to decide to purchase or acquire the Placing Shares, as the same may be varied in that relevant member state by any measure implementing the Prospectus Directive in that relevant member state.

8.15    It is not a national, resident or citizen of Australia, Canada, the Republic of South Africa or Japan or a corporation, partnership or other entity organised under the laws of Australia, Canada, the Republic of South Africa or Japan, it will not offer, sell, renounce, transfer or deliver, directly or indirectly, any of the Placing Shares in or into Australia, Canada, the Republic of South Africa, or Japan or to any national, resident or citizen of Australia, Canada, the Republic of South Africa, or Japan and it acknowledges that the Placing Shares have not been, and will not be, registered under the applicable securities laws of Australia, Canada, the Republic of South Africa or Japan and that the same are not being offered for subscription or sale, and may not, directly or indirectly, be offered, sold, transferred or delivered, in or into Australia, Canada, the Republic of South Africa or Japan.

8.16    It has not taken any action or omitted to take any action which will or may result in the Company, Panmure Gordon or any of their respective directors, officers, agents, affiliates, employees or advisers being in breach of the legal or regulatory requirements of any territory in connection with the Placing or its acquisition of Placing Shares pursuant to the Placing.

8.17    It acknowledges that:

8.17.1    the Placing Shares and the Shares have not been and will not be registered under the Securities Act or under any relevant securities laws of any state or other jurisdiction of the United States and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, into or within the United States absent registration or 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 state securities laws;

8.17.2    the Placing Shares and the Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Placing Shares and the Shares or the accuracy or adequacy of this document, and that any representation to the contrary is a criminal offence in the United States.

8.18    It acknowledges that any person in the United States who obtains a copy of this document and who is not a Qualified Institutional Buyer is required to disregard it.

 

8.19    It acknowledges that until 40 days after Admission, the commencement of any offer, sale or transfer of the Placing Shares within the United States by a dealer (whether or not participating in the Placing) may violate the registration requirements of the Securities Act.

8.20    It acknowledges  that if it is not located within the United States, it is acquiring Placing Shares in an "offshore transaction" as defined in Regulation S and where it is acquiring Placing Shares for one or more managed, discretionary or advisory accounts, it is authorised in writing for each such account: (i) to acquire the Placing Shares for each such account; (ii) to make on each such account's behalf the representations, warranties and agreements set out in this document; and (iii) to receive on behalf of each such account any documentation relating to the Placing in the form provided by the Company and/or Panmure Gordon , and is deemed to represent, warrant and agree as follows:

8.20.1    it and any person, if any, for whose account it is acquiring the Placing Shares, is purchasing the Placing Shares outside the United States in an offshore transaction meeting the requirements of Regulation S and the transaction was not pre-arranged with a buyer in the United States;

8.20.2    it is not in any jurisdiction in which it is unlawful to make or accept an offer to acquire the Placing Shares;

8.20.3    it is aware that the Placing Shares have not been and will not be registered under the Securities Act and are being offered and sold in "offshore transactions" outside the United States in reliance on Regulation S;

8.20.4    it is not acquiring the Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Placing Shares into the United States or any jurisdiction referred to above;

8.20.5    if in the future it decides to offer, sell, transfer, assign or otherwise dispose of the Shares, it will do so only pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;

8.20.6    it has received, carefully read and understands this document and has not distributed, forwarded, transferred or otherwise transmitted this document or any other presentation or offering materials concerning the Placing Shares to any persons within the United States, nor will it do any of the foregoing;

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

8.20.8    that the Company, Panmure Gordon, their respective affiliates and others, will rely upon the truth and accuracy of the foregoing acknowledgements, representations or agreements made by it, if it becomes aware that the foregoing acknowledgements, representations or agreements are no longer accurate or have not been complied with, it will immediately notify the Company and Panmure Gordon and, if it is acquiring any Placing Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make such foregoing acknowledgements, representations and agreements on behalf of each such account.

8.21    It confirms that any of its clients, whether or not identified to Panmure Gordon or any of its affiliates or agents, will remain its sole responsibility and will not become clients of Panmure Gordon or any of their affiliates or agents for the purposes of the rules of the FCA or for the purposes of any other statutory or regulatory provision.

8.22    It acknowledges that where it or any person acting on its behalf is dealing with Panmure Gordon, any money held in an account with Panmure Gordon on its behalf and/or any person acting on its behalf will not be treated as client money within the meaning of the relevant rules and regulations of the FCA which therefore will not require Panmure Gordon to segregate such money as that money will be held by Panmure Gordon under a banking relationship and not as trustee.

8.23    It acknowledges  that the Company has only communicated, or caused to be communicated, and will only communicate,  or cause to be communicated, any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person and the investor acknowledges and agrees that this Admission Document is not being issued by Panmure Gordon in its capacity as an authorised person under section 21 of FSMA and such documents may not therefore be subject to the controls which would apply if it was made or approved as a financial promotion by an authorised person.

8.24    It accepts and acknowledges that:

8.24.1    if the Placing does not proceed and/or the conditions to Panmure Gordon's obligations in respect of the Placing under the Placing Agreement and/or Selling Shareholders' Agreement are not satisfied and/or the Placing Agreement and/or Selling Shareholders' Agreement is terminated prior to Admission for any reason whatsoever and/or the Placing Shares are not admitted to trading on AIM for any reason whatsoever, neither the Company, Panmure Gordon nor any of their respective affiliates, nor persons controlling, controlled by or under common control with any of them nor any of their respective employees, agents, officers, members, stockholders, partners or representatives, shall have any liability whatsoever to it or any other person;

8.24.2    Panmure Gordon is entitled to exercise any of its rights under the Placing Agreement and/or Selling Shareholders' Agreement or any other right in its absolute discretion, including the right to terminate the Placing Agreement and/or Selling Shareholders' Agreement, without any liability whatsoever to it (or any person on whose behalf it is acting) and Panmure Gordon shall not have any obligation to consult or notify Placees in relation to any right or discretion given to it or which it is entitled to exercise;

8.24.3    Panmure Gordon expressly reserves the right to determine, at any time prior to Admission, not to proceed with the Placing, and that if such right is exercised, the Placing (and the arrangements associated with it) will lapse and any monies received in respect of the Placing will be returned to Placees without interest.

 

8.25    In connection with its participation in the Placing it has observed all relevant laws and regulations, in particular (but without limitation) those relating to money laundering and countering terrorist financing including under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 and that it accepts full responsibility for any requirement to identify and verify the identity of its clients and other persons in respect of whom it has applied. In addition, it warrants that it is a person: (i) subject to the Money Laundering Regulations 2007 in force in the United Kingdom; or (ii) subject to the Money Laundering Directive (2005/60/EC of the European Parliament and of the EC Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing) ("Money Laundering Directive"); or (iii) acting in the course of a business in relation to which an overseas regulatory authority exercises regulatory functions and is based or incorporated in, or formed under the law of, a country in which there are in force provisions at least equivalent to those required by the Money Laundering Directive.

8.26    It understands that due to anti-money laundering and the countering of terrorist financing requirements, the Company and/or Panmure Gordon may require proof of identity of the Placee and related parties and verification of the source of the payment before the offer commitment can be processed and that, in the event of delay or failure by the Placee to produce any information required for verification purposes, the Company and/or Panmure Gordon may refuse to accept the offer commitment and the subscription moneys relating thereto. It holds harmless and will indemnify the Company and Panmure Gordon against any liability, loss or cost ensuing due to the failure to process the offer commitment,  if such information as has been required has not been provided by it or has not been provided timeously.

8.27    It is aware of the obligations regarding insider dealing in the Criminal Justice Act 1993, the Market Abuse Regulation and the Proceeds of Crime Act 2002 and confirms that it has complied and will continue to comply with those obligations.

8.28    As far as it is aware, it is not acting in concert (within the meaning given in the City Code) with any other person in relation to the Company and it is not a related party of the Company for the purposes of the AIM Rules for Companies.

8.29    It is not applying as, nor is it applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 67, 70, 93 or 96 (depository receipts and clearance services) of the Finance Act 1986 and no instrument under which it acquires Placing Shares (whether as principal, agent or nominee) would be subject to stamp duty or SDRT at the increased rates referred to in those sections and that it, or the person specified by it for registration as a holder of Placing Shares, are not participating in the Placing as nominee or agent for any person or persons to whom the allocation, transfer or delivery of Placing Shares would give rise to such a liability.

8.30    It, or the person specified by it for registration as a holder of the Placing Shares, will be liable for any stamp duty or SDRT liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services), registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto), if any, payable on acquisition of any of the Placing Shares and acknowledge and agree that, neither the Company nor Panmure Gordon nor any of their respective affiliates nor any person acting on behalf of them will be responsible for any other liability to stamp duty or SDRT resulting from a failure to observe this requirement;

8.31    It confirms that it is not and at Admission will not be, an affiliate of the Company or a person acting on behalf of such affiliate and it is not acquiring Placing Shares for the account or benefit of an affiliate of the Company or of a person acting on behalf of such an affiliate.

8.32    It confirms that it will (or will procure that its nominee will) if applicable,  make notification to the Company of the interest in its Shares in accordance with Rule 5 of the Disclosure and Transparency Rules as they apply to the Company.

8.33    It accepts that the allocation of Placing Shares will be determined by Panmure Gordon in its absolute discretion following consultation with the Company and that Panmure Gordon may scale down any placing commitments on such basis as it may determine.

8.34    It acknowledges that the representations, undertakings and warranties given by it as contained in this Appendix are irrevocable. It acknowledges that the Company, Panmure Gordon and their respective affiliates will rely upon the truth and accuracy of such representations, undertakings and warranties and it agrees that if any of the representations, undertakings or warranties made or deemed to have been made by its application for Placing Shares are no longer accurate, it shall promptly notify the Company and Panmure Gordon.

 

9.         INDEMNITY

Each Placee irrevocably agrees, on its own behalf and on behalf of any person on whose behalf it is acting, to indemnify and hold the Company, the Selling Shareholders, Panmure Gordon and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of any breach by it any person on whose behalf it is acting  of the representations, warranties, undertakings, agreements and acknowledgements  in these Terms and Conditions.

 

10.       SUPPLY AND DISCLOSURE OF INFORMATION

If the Company, Panmure Gordon or the Registrar or any of their agents request any information in connection with a Placee's agreement to acquire Placing Shares under the Placing or to comply with any relevant legislation, such Investor must promptly disclose it to them.

 

11        MISCELLANEOUS

11.1    The Company and Panmure Gordon expressly reserve the right to modify the Placing (including, without limitation, its timetable and settlement) at any time before allocations are determined including the right of Panmure Gordon to notify to the Company the extension for the dates and times for satisfaction of any or all of the conditions in the Placing Agreement and/or Selling Shareholders' Agreement (provided that such conditions are not extended beyond 8.00 a.m. on 4 December 2017).

11.2    The rights and remedies of the Company, the Selling Shareholders, Panmure Gordon and the Registrar under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.

11.3    The Placee irrevocably appoints any Director and any director of Panmure Gordon to be its agent and on its behalf (without any obligation or duty to do so), to sign, execute and deliver any documents and do all acts, matters and things as may be necessary for, or incidental to, its acquisition of all or any of the Placing Shares for which it has given a commitment under the Placing, in the event of its own failure to do so.

11.4    On the acceptance of its placing commitment, if a Placee is a discretionary fund manager, that Placee may be asked to disclose in writing or orally the jurisdiction in which its funds are managed or owned.

11.5    All documents provided in connection with the Placing will be sent at the Placee's risk. They may be returned by post to the Placee at the address notified by the Placee.

11.6    The Placee agrees to be bound by the Articles (as amended from time to time) once the Placing Shares, which the Placee has agreed to acquire pursuant to the Placing, have been acquired by the Placee.

11.7    The contract to acquire Placing Shares under the Placing and the appointments and authorities mentioned in this document will be governed by and construed in accordance with, the laws of England. For the exclusive benefit of the Company, Panmure Gordon and the Registrar, the Placee irrevocably submits to the jurisdiction of the courts of England and Wales and waives any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum. This does not prevent an action being taken against an Investor in any other jurisdiction.

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

11.9    Panmure Gordon may, and its affiliates acting as an investor for its or their own account(s) may, acquire 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 these Terms and Conditions to the Placing Shares being offered, subscribed, sold, acquired or otherwise dealt with should be read as including any offer to, or subscription, acquisition or dealing by, Panmure Gordon and/or any of their respective affiliates acting as an Investor for its or their own account(s). Neither the Company nor Panmure Gordon intend to disclose the extent of any such investment or transaction otherwise than in accordance with any legal or regulatory obligation to do so.

11.10  Each Placee which acquires Placing Shares will be deemed to undertake that it agrees that it is liable for any capital duty, stamp duty, stamp duty reserve tax 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 such investor or any other person on the acquisition by such Placee of any Placing Shares or the agreement by such Placee to acquire any Placing Shares.

 


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