REG - Earnz PLC - Proposed Acquisition & Conditional Placing
08/08/2024 07:15
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RNS Number : 7010Z Earnz PLC 08 August 2024
THIS ANNOUNCEMENT (INCLUDING ITS APPENDICES) AND THE INFORMATION CONTAINED
HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES,
AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER
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UNLAWFUL OR BREACH ANY APPLICABLE LAW OR REGULATION. PLEASE SEE THE
IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR
CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY
PERSON TO PURCHASE AND/OR SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY
SECURITIES IN EARNZ PLC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER
THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF,
OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF EARNZ
PLC.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
For immediate release
8 August 2024
EARNZ plc
("EARNZ" or the "Company")
Proposed Acquisition of Cosgrove & Drew Ltd
Proposed Acquisition of South West Heating Services Ltd
Conditional Placing to raise up to £4.0 million at 7.5 pence per share
Proposed Waiver of Rule 9 of the Takeover Code
and
Admission of the Enlarged Share Capital to trading on AIM
Introduction
EARNZ plc (AIM: EARN), an AIM Rule 15 cash shell which is seeking acquisitions
in the energy services sector, is pleased to announce that EARNZ Holdings
Limited ("EHL") (its wholly owned subsidiary) has conditionally agreed to
acquire under two separate sale and purchase agreements the entire issued
share capital of Cosgrove & Drew Ltd ("C&D") and South West Heating
Services Ltd ("SWHS") which both operate in the energy services sector (the
"Acquisitions").
C&D, which was incorporated in 2015 by Zac Cosgrove and Luke Drew, is an
award-winning asset and energy support services company which focuses on two
key services: (i) major projects, self-delivering mechanical engineering
projects for mainly commercial sites within the public sector; and (ii)
facilities management, providing maintenance, compliance or reactive services
of client facilities for heating and plumbing.
SWHS, which was incorporated in 2019 by Andrew Custer, provides heating and
installation maintenance services largely for domestic insurance claims, while
also offering its services directly to domestic households.
The Company is also proposing to raise conditionally up to £4.0 million (all
of which is EIS/VCT qualifying) (before expenses) via the issue of up to
53,333,333 new ordinary shares of 4 pence each in the capital of the Company
at a price of 7.5 pence per share by way of a placing (the "Placing"). The net
proceeds of the Placing will be used to satisfy the cash consideration payable
for the Acquisitions and to provide working capital for the Enlarged Group.
The EIS Placing Shares and VCT Placing Shares will be unconditionally issued
to the relevant Placees at 11.59 p.m. on 27 August 2024 and 7.30 a.m. on 28
August 2024, respectively. Admission to trading on AIM for such shares is
anticipated to take place at 8.00 a.m. on 28 August 2024 ("First Admission").
Re-Admission of the Existing Ordinary Shares and allotment, admission and
dealings will commence in the Non-EIS and VCT Placing Shares at 8.00 a.m. on
29 August 2024 ("Second Admission").
The Acquisitions, together and separately, constitute a reverse takeover
pursuant to AIM Rule 14 of the AIM Rules for Companies, and as such, are,
together with the Placing, conditional, inter alia, upon shareholder approval
which will be sought at a general meeting due to be held on 27 August 2024
(the "General Meeting"). It is currently anticipated that an Admission
Document, including a Notice of General Meeting, will be published later today
on the Company's website and will be posted to Shareholders.
Transaction Highlights
C&D Acquisition
· The total consideration payable by EHL for C&D is up to
£1.96 million. This consideration will be satisfied by:
o initial consideration of approximately £0.73 million payable on
completion of the C&D Acquisition comprising: (i) £0.41 million in cash;
and (ii) the issue of 4,266,666 new Ordinary Shares at the Placing Price
(approximately £0.32 million); and
o deferred consideration of up to approximately £1.23 million to be
satisfied by the issue of new Ordinary Shares (further details are set out in
paragraph 7 below).
· Approximately £0.16 million of the cash consideration payable by
EHL to Zac Cosgrove and Luke Drew on Completion will be used to discharge and
satisfy Zac Cosgrove's and Luke Drew's outstanding directors' loan accounts.
· Bob Holt (Chair of the Company) is also a shareholder of C&D.
However, he will not receive any of the initial cash consideration but instead
will receive 1,804,000 new Ordinary Shares at the Placing Price, which is
proportionate to his share of the initial cash consideration.
· Bob Holt also has an outstanding non-interest bearing loan to
C&D of £450,000. Subject to completion of the C&D Acquisition
occurring, half of this loan will be discharged and settled through the issue
of 3,000,000 new Ordinary Shares by the Company at the Placing Price on Second
Admission (the "Bob Holt Loan Conversion"). The remaining loan balance of
£225,000 will remain outstanding following Completion and Bob Holt has
undertaken not to demand repayment of the balance until 1 January 2027 at the
earliest.
· Pursuant to the C&D Lock-in Deed, each of the C&D
Locked-in Persons (as defined in Appendix IV) has undertaken to the Company,
Shore Capital and Zeus that they will not, and will procure that their related
parties will not, dispose of any Ordinary Shares held by them at Second
Admission or acquired following Second Admission for a period of 12 months
from the date of Admission. Each C&D Locked-in Person has also undertaken
that, for the period of 12 months following the first anniversary of the date
of Second Admission, they will, and will procure that their related parties
will, only dispose of Ordinary Shares held by them at Second Admission or
acquired following Second Admission on an orderly market basis through the
Company's broker/s from time to time. These restrictions apply to any
Additional Consideration Shares allotted to the C&D Locked-in Persons for
the same periods as set out previously but by reference to their date of
admission to trading on AIM. Further information on the C&D Lock-in Deed
is set out in paragraph 7 of Appendix I to this Announcement.
SWHS Acquisition
· The total consideration payable by EHL for SWHS is up to £1.15
million. This consideration is to be satisfied by:
o initial consideration of £0.85 million payable on completion of the
acquisition of SWHS comprising: (i) £0.5 million in cash; and (ii) the issue
of 4,666,666 new Ordinary Shares at the Placing Price (approximately £0.35
million); and
o deferred consideration of up to £0.3 million to be satisfied by the issue
of new Ordinary Shares or cash at the seller's discretion (further details are
set out in paragraph 7 below).
· Pursuant to the SWHS Lock-in Deed, Andrew Custer has undertaken
to the Company, Shore Capital and Zeus that he will not, and will procure that
his related parties will not, dispose of any Ordinary Shares held by them at
Second Admission or acquired following Second Admission for a period of 12
months from the date of Second Admission. Andrew Custer has also undertaken
that, for the period of 12 months following the first anniversary of the date
of Second Admission, he will, and will procure that his related parties will,
only dispose of Ordinary Shares held by them at Second Admission or acquired
following Second Admission on an orderly market basis through the Company's
broker/s from time to time. These restrictions apply to any Additional
Consideration Shares allotted to Andrew Custer for the same periods as set out
previously but by reference to their date of admission to trading on AIM.
Further information on the SWHS Lock-in Deed is provided in paragraph 7 of
Appendix I to this Announcement.
Placing
· The conditional placing of up to 53,333,333 new Ordinary Shares
to raise up to £4.0 million (all of which is EIS/VCT qualifying) (before
expenses) for the Company at the Placing Price by way of an accelerated
bookbuild process (the "Bookbuild") which will be launched immediately
following the release of this Announcement
· The Placing Price represents a discount of 9.1% to the closing
price of an Ordinary Share on 7 August 2024, being the last business day prior
to the release of this Announcement.
· Certain of the Directors intend to conditionally subscribe for
879,999 new Ordinary Shares in the Non-EIS and VCT Placing (being, in
aggregate, approximately £66,000).
Capitalised terms used in this announcement (the "Announcement") have the
meanings given to them in the section headed "Definitions" at Appendix IV to
this Announcement, unless the context provides otherwise.
Shore Capital and Corporate Limited ("SCC") is acting as nominated adviser to
EARNZ and Shore Capital Stockbrokers Limited ("SCS") and Zeus Capital Limited
("Zeus" and, together with SCS, the "Joint Brokers") are acting as joint
brokers in connection with the Proposals.
Bob Holt, Executive Chair of EARNZ, said: ""We are delighted to announce the
proposed acquisitions of Cosgrove & Drew and South West Heating Services.
These two businesses are well aligned to the Group's strategy to build a
leading energy services business in a high growth market that is aligned to
the UK Government's decarbonisation agenda."
"We intend to continue to grow the business and extend our presence in the
sector, and to be the partner of choice for our customers through the
provision of consistent, high quality, multi-dimensional offerings.
"EARNZ is well positioned to take advantage of the very exciting commercial
opportunities ahead in what is a highly fragmented market, which will
ultimately deliver positive shareholder value. I look forward to bringing news
of further earnings enhancing acquisitions in the not too distant future."
Use of proceeds of the Placing
The net proceeds of the Placing will be used to: (i) satisfy the cash element
of the consideration payable for the Acquisitions; and (ii) for general
working capital purposes of the Enlarged Group.
Details of the Placing
The Placing will be conducted by way of the Bookbuild which will be launched
immediately following the release of this Announcement, in accordance with the
terms and conditions set out in Appendix III to this Announcement.
The Company, the Directors, SCC, SCS and Zeus have entered into the Placing
Agreement, pursuant to which, subject to certain conditions, each of SCS and
Zeus has conditionally agreed to use reasonable endeavours to procure
subscribers for the Placing Shares to be issued by the Company, pursuant to
the Placing.
The final number of Placing Shares will be agreed by the Company, Shore
Capital and Zeus following the close of the Bookbuild, and the result of the
Placing will be announced as soon as practicable thereafter. The timing for
the close of the Bookbuild and allocation of the Placing Shares shall be at
the discretion of Shore Capital and Zeus in consultation with the Company. The
Placing is not being underwritten. Members of the public are not entitled to
participate in the Placing and none of the Placing Shares are being offered or
sold in any jurisdiction where it would be unlawful to do so.
As part of the Placing, certain of the Placing Shares will be issued to
Placees who have elected to seek relief under the Enterprise Investment Scheme
(the "EIS Placing") and to companies that are approved as Venture Capital
Trusts (the "VCT Placing"). The EIS Placing Shares and VCT Placing Shares
will be unconditionally issued to the relevant Placees at 11.59 p.m. on 27
August 2024 and 7.30 a.m. on 28 August 2024, respectively, so that Placees
investing as part of the EIS Placing and the VCT Placing should be able to
benefit from tax advantages pursuant to the EIS rules and the VCT rules as
governed by HMRC. Admission to trading on AIM for such shares is anticipated
to take place at 8.00 a.m. on 28 August 2024. Re-Admission of the Existing
Ordinary Shares and the admission of the Initial Consideration Shares, the Bob
Holt Loan Conversion Shares, and the Non-EIS and VCT Placing Shares is
anticipated to take place at 8.00 a.m. on 29 August 2024.
The Placing is conditional, inter alia, upon:
· the resolutions which are to be proposed at the General Meeting
being passed by the requisite majority;
· save in respect of the EIS Placing Shares and VCT Placing Shares,
the SPAs being unconditional in all respects (save for any conditions that
relate to Second Admission and the Placing Agreement) or such other date as
may be agreed between Company, Shore Capital and Zeus;
· the issue of the EIS Placing Shares and VCT Placing Shares at or
before 7:30 a.m. on the First Admission Date;
· save in respect of the EIS Placing Shares and VCT Placing Shares,
the Placing Shares being admitted to trading on AIM; and
· the Placing Agreement becoming unconditional in all respects save
for Second Admission and not having been terminated. By choosing to
participate in the Placing and by making a verbal offer to acquire Placing
Shares, investors will be deemed to have read and understood this Announcement
(including the Appendices) in its entirety and to be making such offer on the
terms and subject to the conditions in this Announcement, and to be providing
the representations, warranties and acknowledgements contained in the
Appendices.
Your attention is drawn to the detailed terms and conditions of the Placing
set out in Appendix III to this announcement.
General
The issue of the New Ordinary Shares is conditional, inter alia, on the
passing of Resolutions at the General Meeting which is expected to be convened
for 10.00 a.m. on 27 August 2024. Applications will be made for the Admission
of the New Ordinary Shares and for the Re-Admission of the Existing Ordinary
Shares to be admitted to trading on AIM. It is expected that First Admission
will occur and that dealings will commence in the EIS Placing Shares and VCT
Placing Shares at 8.00 a.m. on 28 August 2024 and that Re-Admission of the
Existing Ordinary Shares and Second Admission will occur and that dealings
will commence in the Non-EIS and VCT Placing Shares, the Initial Consideration
Shares, the Bob Holt Loan Conversion Shares and the Existing Ordinary Shares
at 8.00 a.m. on 29 August 2024.
The Placing Shares, the Initial Consideration Shares and the Bob Holt Loan
Conversion Shares, will when issued, will be fully paid and rank pari passu in
all respects with the Existing Ordinary Shares.
Related Party Transaction
As Bob Holt is a shareholder in C&D, as well as a Director of the Company,
the proposed acquisition of C&D (including the Bob Holt Loan Conversion)
is deemed to be a related party transaction pursuant to AIM Rule 13. The
Independent Directors (Linda Main and Sandra Skeete) consider, having
consulted with the Company's nominated adviser, SCC, that the terms of the
acquisition of C&D (including the Bob Holt Loan Conversion) are fair and
reasonable insofar as the Shareholders are concerned.
Rule 9 Waiver
The Company has applied to the Panel for a waiver of Rule 9 in order to permit
the allotment of the Initial Consideration Shares, the Additional
Consideration Shares, the Bob Holt Loan Conversion Shares and the Placing
Shares and the exercise of the LTIP awards referred to in paragraph 20.2 of
this Announcement without triggering an obligation on the part of the Existing
Bob Holt Concert Party to make a general offer to Shareholders. The Panel has
agreed, subject to Independent Shareholders' approval on a poll, to waive the
requirement for the Existing Bob Holt Concert Party to make a general offer to
all Shareholders where such an obligation would arise as a result of the
allotment of the Initial Consideration Shares, the Additional Consideration
Shares, the Bob Holt Loan Conversion Shares and the Placing Shares to the
Existing Bob Holt Concert Party and the exercise of the LTIP awards referred
to in paragraph 20 of this Announcement. A Rule 9 Waiver has been granted by
the Panel and in the event that the Existing Bob Holt Concert Party is
allotted all the Additional Consideration Shares and the maximum LTIP awards
vest under the terms of the LTIP, the Existing Bob Holt Concert Party may hold
in excess of 30 per cent. but not more than 50 per cent. of the so enlarged
ordinary share capital. As such, the Existing Bob Holt Concert Party would not
be entitled to further increase its holding or voting rights without incurring
a further obligation under Rule 9 to make a mandatory offer. Further,
individual members of the Existing Bob Holt Concert Party will not be able to
increase their percentage shareholding through or between a Rule 9 threshold
without Panel consent.
In the event that the Proposals are approved at the General Meeting, the
Existing Bob Holt Concert Party will not be restricted from making an offer
for the Company unless they have made a statement that they will not, or have
entered into an agreement with the Company not to, make an offer. No such
statement has been made or agreement entered into.
This Announcement should be read in its entirety. Defined terms used
throughout this announcement have the meanings set out in Appendix IV to this
Announcement unless the context requires otherwise. In particular, you should
read and understand the information provided in the "Important Notices"
section below and Appendix II to this announcement contains certain Risk
Factors in relation to the Acquisitions and the Enlarged Group which should be
carefully considered.
The person responsible for arranging the release of this Announcement on
behalf of EARNZ is John Charlton.
Enquiries:
EARNZ plc +44 (0) 7778 798 816
Bob Holt
Elizabeth Lake
John Charlton
Shore Capital - Nominated Adviser and Joint Broker +44 (0) 20 7408 4090
Tom Griffiths / Tom Knibbs / Lucy Bowden
Zeus Capital Limited - Joint Broker +44 (0) 20 7220 1666
Hugh Morgan / Antonio Bossi / Andrew de Andrade
IMPORTANT NOTICES
SCS and SCC are authorised and regulated by the FCA in the United Kingdom and
are acting exclusively for EARNZ and no one else in connection with the
Proposals, and SCS and SCC will not be responsible to anyone (including any
placees) other than EARNZ for providing the protections afforded to its
clients or for providing advice in relation to the Proposals or any other
matters referred to in this Announcement.
Zeus Capital Limited is authorised and regulated by the FCA in the United
Kingdom and is acting exclusively for EARNZ and no one else in connection with
the Placing, and Zeus will not be responsible to anyone (including any
placees) other than EARNZ for providing the protections afforded to its
clients or for providing advice in relation to the Placing or any other
matters referred to in this Announcement.
No representation or warranty, express or implied, is or will be made as to,
or in relation to, and no responsibility or liability is or will be accepted
by the Joint Brokers or by any of their respective Representatives as to, or
in relation to, the accuracy or completeness of this Announcement or any other
written or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is expressly
disclaimed.
The responsibilities of SCC as EARNZ's nominated adviser under the AIM Rules
for Nominated Advisers are owed solely to the London Stock Exchange and are
not owed to EARNZ or to any director of EARNZ or to any other person.
This Announcement may contain, or may be deemed to contain, "forward-looking
statements" with respect to certain of EARNZ's plans and its current goals and
expectations relating to its future financial condition, performance,
strategic initiatives, objectives and results. Forward-looking statements
sometimes use words such as "aim", "anticipate", "target", "expect",
"estimate", "intend", "plan", "goal", "believe", "seek", "may", "could",
"outlook" or other words of similar meaning. By their nature, all
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances which are beyond the control of EARNZ,
including amongst other things, United Kingdom domestic and global economic
business conditions, market-related risks such as fluctuations in interest
rates and exchange rates, the policies and actions of governmental and
regulatory authorities, the effect of competition, inflation, deflation, the
timing effect and other uncertainties of future acquisitions or combinations
within relevant industries, the effect of tax and other legislation and other
regulations in the jurisdictions in which EARNZ and its affiliates operate,
the effect of volatility in the equity, capital and credit markets on EARNZ's
profitability and ability to access capital and credit, a decline in EARNZ's
credit ratings; the effect of operational risks; and the loss of key
personnel. As a result, the actual future financial condition, performance
and results of EARNZ may differ materially from the plans, goals and
expectations set forth in any forward-looking statements. Any
forward-looking statements made in this Announcement by or on behalf of EARNZ
speak only as of the date they are made. Except as required by applicable
law or regulation, EARNZ expressly disclaims any obligation or undertaking to
publish any updates or revisions to any forward-looking statements contained
in this Announcement to reflect any changes in EARNZ's expectations with
regard thereto or any changes in events, conditions or circumstances on which
any such statement is based.
No statement in this Announcement is intended to be a profit forecast or
estimate, and no statement in this Announcement should be interpreted to mean
that earnings per share of EARNZ for the current or future financial years
would necessarily match or exceed the historical published earnings per share
of EARNZ.
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 from 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 the United States,
Australia, Canada, the Republic of South Africa or Japan. Accordingly, the
Placing Shares may not (unless an exemption under the relevant securities laws
is applicable) be offered, sold, resold or delivered, directly or indirectly,
in or into the United States, Australia, Canada, the Republic of South Africa
or Japan or any other jurisdiction outside the United Kingdom or the EEA.
Neither the content of EARNZ's website nor any website accessible by
hyperlinks on EARNZ's website is incorporated in, or forms part of, this
Announcement.
Information to Distributors
UK product governance
Solely for the purposes of the product governance requirements contained
within Chapter 3 of the FCA Handbook Product Intervention and Product
Governance Sourcebook (the "UK Product Governance Requirements"), and
disclaiming all and any liability, whether arising in tort, contract or
otherwise, which any "manufacturer" (for the purposes of the UK Product
Governance Requirements) may otherwise have with respect thereto, the Placing
Shares have been subject to a product approval process, which has determined
that such securities are: (i) compatible with an end target market of
investors who meet the criteria of retail investors and investors who meet the
criteria of professional clients and eligible counterparties, each as defined
in paragraph 3 of the FCA Handbook Conduct of Business Sourcebook; and (ii)
eligible for distribution through all distribution channels (the "Target
Market Assessment"). Notwithstanding the Target Market Assessment,
distributors (for the purposes of UK Product Governance Requirements) should
note that: (a) the price of the Placing Shares may decline and investors could
lose all or part of their investment; (b) the Placing Shares offer no
guaranteed income and no capital protection; and (c) an investment in the
Placing Shares is compatible only with investors who do not need a guaranteed
income or capital protection, who (either alone or in conjunction with an
appropriate financial or other adviser) are capable of evaluating the merits
and risks of such an investment and who have sufficient resources to be able
to bear any losses that may result therefrom. The Target Market Assessment
is without prejudice to the requirements of any contractual, legal or
regulatory selling restrictions in relation to the Placing. Furthermore, it
is noted that, notwithstanding the Target Market Assessment, the Joint Brokers
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
Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business
Sourcebook; or (b) a recommendation to any investor or group of investors to
invest in, or purchase, or take any other action whatsoever with respect to
the Placing Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the Placing Shares and determining appropriate
distribution channels.
EEA product governance
Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive
(EU) 2017/593 supplementing MiFID II; and (c) local implementing measures in
the European Economic Area (together, the "MiFID II Product Governance
Requirements"), and disclaiming all and any liability, whether arising in
tort, contract or otherwise, which any "manufacturer" (for the purposes of the
MiFID II Product Governance Requirements) may otherwise have with respect
thereto, the Placing Shares have been subject to a product approval process,
which has determined that the Placing Shares are: (i) compatible with an end
target market of (a) retail investors, (b) investors who meet the criteria of
professional clients and (c) eligible counterparties, each as defined in MiFID
II; and (ii) eligible for distribution through all distribution channels as
are permitted by MiFID II (the "EU Target Market Assessment").
Notwithstanding the EU Target Market Assessment, distributors should note
that: the price of the Placing Shares may decline and investors could lose all
or part of their investment; the Placing Shares offer no guaranteed income and
no capital protection; and an investment in the Placing Shares is compatible
only with investors who do not need a guaranteed income or capital protection,
who (either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Placing. Furthermore, it is noted that, notwithstanding the
EU Target Market Assessment, the Joint Brokers will only procure investors who
meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the EU Target Market Assessment does not
constitute: (a) an assessment of suitability or appropriateness for the
purposes of MiFID II; or (b) a recommendation to any investor or group of
investors to invest in, or purchase, or take any other action whatsoever with
respect to the Placing Shares.
Each distributor is responsible for undertaking its own target market
assessment in respect of the Placing Shares and determining appropriate
distribution channels.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2024(1)
Publication of the Admission Document 8 August
Latest time and date for receipt of completed Forms of Proxy and CREST voting 10.00 a.m. on 22 August
instructions
10.00 a.m. on 27 August
General Meeting
8.00 a.m. on 28 August
First Admission occurs and dealings commence in the EIS and VCT Placing Shares
on AIM
EIS and VCT Placing Shares credited to CREST accounts, where applicable, by 8.00 a.m. on 28 August
Re-Admission and Second Admission occur and dealings re-commence in the 8.00 a.m. on 29 August
Existing Ordinary Shares and commence in the Non-EIS and VCT Placing Shares,
the Initial Consideration Shares and the Bob Holt Loan Conversion Shares on
AIM
Non-EIS and VCT Placing Shares, the Initial Consideration Shares and the Bob 8.00 a.m. on 29 August
Holt Loan Conversion Shares credited to CREST accounts, where applicable, by
Despatch of definitive share certificates (as applicable) within 10 business days of each Admission date
Notes:
1. Each of the above times and dates is subject to change at
the absolute discretion of the Company and Shore Capital. Any changes will be
notified via a Regulatory Information Service.
2. All references to times in this Announcement are to the
time in London, unless otherwise stated.
APPENDIX I
Further Information
The following is an extract and summary from admission document (the
"Admission Document") which is expected to be published and despatched to
Shareholders later today and will be available on EARNZ's website at
www.earnzplc.com (http://www.earnzplc.com) .
1. Introduction
EARNZ plc, an AIM Rule 15 cash shell, announces that EHL (its wholly owned
subsidiary) has entered into two separate sale and purchase agreements (the
"SPAs"), each conditional on Shareholder approval, to acquire the entire
issued share capital of each of Cosgrove & Drew Ltd ("C&D") and South
West Heating Services Ltd ("SWHS") (together, the "Acquisitions" and together
with the Company, the "Enlarged Group") for a total maximum consideration of
£3.1 million, the initial consideration for which will be settled as to
£0.67 million by the allotment of 8,933,332 new Ordinary Shares and as to
approximately £0.9 million in cash. Each of the Targets operates in the
energy services sector, in accordance with the Company's acquisition strategy.
These Acquisitions, together and separately, constitute a reverse takeover
pursuant to Rule 14 of the AIM Rules for Companies and, as such, are subject
to Shareholders' approval at the General Meeting. Bob Holt is a shareholder
in C&D, therefore the proposed acquisition of C&D is a related party
transaction, further details of which are set out in paragraph 21 below.
At the same time, the Company is proposing to raise conditionally up to £4.0
million (all of which of which is EIS/VCT qualifying) by way of a Placing,
subject to shareholder approval, the net proceeds of which will be used to
satisfy the cash consideration payable for the Acquisitions and to provide
working capital for the Enlarged Group. Certain of the Directors intend to
invest, in aggregate, approximately £66,000 in the Non-EIS and VCT Placing.
2. History and background
The Company, previously named Verditek plc and under a different board,
historically looked to identify early-stage business opportunities in the
clean technology sector, invest in the opportunities identified and then guide
them through to commercial success. As part of this former strategy, the
Company invested in Verditek Italy srl ("Verditek Italy"), an Italian solar
business. However, the financial year ended 31 December 2023 ("FY23") proved
to be operationally and commercially challenging and although the Company's
previous board sought to mitigate these challenges through several measures to
lower the cost base, these measures were not successful. As a result, on 28
February 2024, a general meeting was held to approve the disposal of Verditek
Italy to Verditek Solar Ltd, a new company established by the holders of the
Company's secured convertible loan notes (the "Notes") in exchange for the
surrender of those Notes by the noteholders (the "Disposal"). The noteholders
and Verditek Solar Ltd warranted that Verditek Solar Ltd was the legal and
beneficial owner of the Notes with full title guarantee free from all
encumbrances and other third party rights, and that each waived, released and
relinquished all rights they may have had under the Notes and their
instrument, and that the Company's obligations under the same had been fully
satisfied. At the same meeting, authority was sought from the Shareholders of
the Company to issue up to 400 million new shares to raise up to £300,000 at
0.075p per share. The purpose of seeking this authority was to give the
Company the flexibility to issue new shares on successful completion of the
Disposal and to facilitate the transition to the new management team.
On 28 February 2024, it was announced that Bob Holt had entered into a
£300,000 loan agreement with the Company and agreed to help procure
subscribers for 400 million new ordinary shares at 0.075p per share pursuant
to the Shareholder authority referred to above.
Completion of the Disposal took place on 29 February 2024 and, on 1 March
2024, it was announced that the Company's previous directors, The Rt Hon Lord
David Willetts, Robert Richards and George Katzaros, had all resigned and that
John Charlton and Bob Holt had been appointed as directors of the Company,
which had become an AIM Rule 15 cash shell looking for acquisitions in the
energy services sector. As a result of becoming an AIM Rule 15 cash shell, the
Company has until 31 August 2024, being 6 months from the date of the
Disposal, to make an acquisition or acquisitions which constitutes a reverse
takeover under AIM Rule 14, failing which trading in the Company's shares on
AIM will be suspended. Should the Company's shares remain suspended from
trading for 6 months, admission of the Company's shares to trading on AIM will
be cancelled under AIM Rule 41 on 28 February 2025.
On 18 March 2024, the Company announced a proposed share consolidation
(100:1), fundraising of £3.7 million at 7.5p per share and the conversion
into new ordinary shares of Bob Holt's £300,000 loan to the Company. These
proposals were approved by Shareholders at a general meeting on 4 April 2024.
The net proceeds of the fundraising were used for working capital purposes
and, in particular, to satisfy the costs of the due diligence to be carried
out on any potential acquisitions to be made by EARNZ.
The Directors have sourced and agreed commercial terms for two acquisition
targets, namely C&D and SWHS, that operate within the energy services
sector. In particular, these Targets specialise in the maintenance and/or
installation of energy efficient products for domestic and commercial use. The
Directors believe this sector presents some exciting commercial opportunities
that will ultimately deliver positive shareholder value, further details of
which are described in the Admission Document.
3. Strategy
The Company's corporate objective is to grow and develop a sustainable
business in the energy services sector with a focus on decarbonisation for the
benefit of all of its stakeholders. The principal means by which it intends to
achieve this is to continue building and extending its presence in its key
markets and to be its customers' partner of choice through the provision of
consistent, high quality and multi-dimensional offerings across each of the
Targets.
As part of this strategy, the Enlarged Group intends specifically to focus
upon:
Organic growth and increasing market share
The Enlarged Group will seek to increase its levels of business from existing
customers and to win new customers in its existing markets. The Directors
believe that there is a significant opportunity to capitalise on the various
high quality and/or longstanding relationships within each of the Targets'
customer bases as well as each Target's established reputation for
reliability, service quality and successful delivery of services, thereby
increasing the Enlarged Group's market share in its key markets.
Cross-selling of services
The Directors believe that there is an opportunity to benefit from the
increasing focus on procurement efficiency and supplier rationalisation within
its core client base by providing multiple services to individual clients,
particularly within C&D. Each of the Targets has significant, longstanding
customer relationships (particularly SWHS and its relationship with national
insurers) within their respective geographies and the Directors believe that
this represents an opportunity for the Enlarged Group to promote the leading
service capabilities of each Target to these customers and so offer a more
comprehensive service offering that rationalises the customer's supply chain
and therefore offers an attractive operational and financial solution for both
the customer and the Enlarged Group.
Expansion into complementary markets and adjacent geographies
Going forward, the Directors intend to pursue further opportunities, both
organically and by focused acquisitions, to provide additional services within
the wider energy services sector.
The Enlarged Group intends to explore opportunities to expand its presence in
its core markets and geographies and in other complementary markets and
geographies with attractive growth characteristics. The Directors will look to
leverage the Enlarged Group's existing capabilities, expertise and broad
service offering together with its understanding of local client requirements
so as to continue developing its geographical footprint beyond the South-West
and the South of England.
Targeted complementary acquisitions
The Enlarged Group will continue to look to broaden and enhance its
capabilities and accelerate its growth profile through targeted acquisitions.
The Directors believe that there are opportunities to:
· pursue further earnings-enhancing acquisitions which build
further presence in the Enlarged Group's core energy services markets;
· broaden the Enlarged Group's service proposition by adding
services which are complementary to its existing service offering and which
can offer further opportunities to cross-sell these services;
· extend coverage into adjacent or other geographies; and
· provide the opportunity to enhance operating margins and improve
cash generation.
4. Background to and reasons for the Acquisitions
As an AIM Rule 15 cash shell, the Company is required to make an acquisition
or acquisitions which constitute a reverse takeover by 31 August 2024. The
Company stated previously that it was looking for acquisitions in the energy
services sector and the Board believes that the Acquisitions represent an
opportunity which aligns with the Company's corporate strategy to capitalise
on the drive for global decarbonisation and will provide a platform for future
growth both organically and inorganically through further acquisitions in the
energy services sector. Each Acquisition is considered by the Directors to be
complementary to the core ambition of the Company and earnings enhancing.
5. The Acquisitions
The Company has identified and agreed commercial terms with the vendors of the
following two Targets which operate in the energy services sector:
Cosgrove & Drew Ltd
Introduction
Cosgrove & Drew Ltd is an award winning asset and energy support services
company, predominantly servicing customers in the South-West of England across
Bristol, Gloucestershire, Wiltshire and Dorset, but also London and the South
of England. It delivers a range of mechanical engineering services, such as
full industrial and commercial projects, installations across housing
associations, local authorities and domestically, transitioning to renewable
energy and, and servicing and maintenance.
The company was founded in 2014 by its Joint Managing Directors, Zac Cosgrove
and Luke Drew, incorporated in 2015 and is headquartered in Bristol. It
currently employs over 50 staff, including approximately 40 engineers and 14
support staff. Its apprenticeship programme set up in 2016 allows the company
to train new engineers pairing junior staff with senior mentors offering a
blend of experience levels which contributes to consistent and efficient
project delivery.
The Directors believe that C&D has created a strong reputation for
delivering bespoke and complex mechanical engineering solutions and building
fabric within both the private and public sectors, including for housing
associations and local authorities.
Business overview
The company operates across two core business divisions:
i) Major Projects ("MP") - self delivery of large commercial
projects such as industrial pipework installations. The company utilises a
highly skilled team of engineers bringing years of hands-on experience in
self-delivery, project management, and executing complex builds from start to
finish.
Core services which can be provided are set out below:
· heating solutions - a complete design and installation service
ranging from small domestic to large commercial installations;
· hot and cold-water systems-- plumbing installations, including
hot and cold-water distribution and sanitary ware installations from a single
WC to full toilet blocks, showers and wet rooms;
· sanitary installation - across commercial, retail, leisure or the
residential sectors that can be designed and installed to specific
requirements;
· above ground drainage - installations of building drainage and
ventilation systems to improve both the efficiency of the drainage systems and
mitigate the escape of foul air into habitable areas;
· plantroom installations - a range of services for plant rooms
from design and specification through to fabrication, installation,
commissioning and maintenance;
· gas services - a full range of commercial gas services, including
pipework installation, testing and commissioning and plant service works
utilising Gas Safe registered operatives; and
· design and consultation-- delivering full mechanical and
electrical projects utilising the company's ever-growing specialist
subcontractor supply chain, which are typically similar sized businesses from
the local area to create a team of highly skilled engineers with the
capabilities to deliver commercial projects on time, on budget and to the
highest of standards.
Contracts are entered into between C&D and the contractor managing the
site, with typical contracts being between 12 and 36 months.
Upon an initial tender, an independent estimating consultant is engaged to
advise C&D on the quote. Quotes are reviewed and approved internally and
all quotes submitted are recorded within C&D's project management and CRM
software system, "Simpro". If a quote is accepted, it is moved, within Simpro,
to an 'Open Workflow', where materials and sub-contractors can be ordered, and
engineers assigned. Once a predetermined milestone of the project has been
met, C&D will assess the work that has been completed to date, as a
percentage of the total contract value. C&D will then submit a
corresponding claim for revenue to the contractor. Should the contractor not
agree with C&D's assessment of work completed, the contractor will submit
a 'pay less notice'. C&D is entitled to the whole amount of the quote
agreed. However, timing of recognition is dependent on agreement of
deliverables and milestones with each contractor. Further details of C&D's
revenue recognition policy is set out in Section B of Part V of the Admission
Document, which will be published later today.
The timeline for the whole project is detailed by the contractor within the
'Programme of Works', although it can be subject to delays and unforeseen
costs as C&D is dependent on other contractors on site completing their
work within the agreed timeline. Delays are highlighted to the contractor in a
weekly 'Dependencies Report' which can result in C&D incurring additional
costs, which may be negotiated and recouped with the contractor through
either:
· revisiting charges - additional labour costs for site revisits by
C&D engineers is recharged;
· variation of work charges-- for changes to original scope of work
in the quote; or
· agreed extension of time charges-- C&D will agree extension
of time rates to keep assigned staff onsite albeit C&D do not retain any
profits under extension of time charges.
As a result of timing of revenue recognition and potential delays,
fluctuations in gross profit margins occur between different MP projects, the
C&D directors note that typically the smaller and quicker the project, the
lower the likelihood for delays and unforeseen costs arising.
The Major Projects division contributed revenue of approximately £6.0 million
in the year ended 31 December 2023.
ii) Facilities Management ("FM") - the provision of small scale project work
or maintenance services of customer facilities, including existing heating,
hot water, gas and renewable energy assets to ensuring continuity, longevity,
efficiency, regulatory compliance, and onsite safety.
In 2022, C&D started focusing on smaller remedial projects, classified as
FM. The FM division became a separate division in 2023 with further investment
made establishing the FM division, including employing FM specific staff.
C&D's management notes that FM projects are smaller in scale and therefore
have a lower likelihood of incurring unexpected costs compared to MP, with
higher and more stable gross profit margins. Thus C&D management's
long-term strategy is to increase the FM offering, while reducing the MP
offering, becoming more selective with the type of works it undertakes as part
of MP with key clients.
FM and small works can be further sub-divided into the following three primary
services:
· PPM - C&D's engineers attend onsite to conduct initial site
audit, testing and servicing before carrying out planned phased maintenance of
equipment to help maximise efficiency and ensure safety and compliance. This
includes upgrading legacy systems by retrofitting new, energy efficient
technologies to reduce energy usage and costs and management and the
commissioning of new plants and responsible decommissioning of outdated
infrastructure in accordance with environmental regulations;
· Reactive support - the company's responsive maintenance services
are available 24/7, 365 days a year and comprise a day-to-day reactive service
enabling C&D's customers to address immediate needs with respect to
breakdowns and repairs; and
· Advice and innovation - focusing on renewable energy solutions to
help improve energy efficiency. This service helps customers assess the
viability of integrating renewable energy sources or lower-carbon
alternatives, where applicable, to support the planning and co-ordination
required for these complex infrastructure projects. C&D utilises advanced
diagnostic equipment and data analytics to optimise operational efficiency to
recommend targeted solutions.
Each service is carried out by a dedicated team of maintenance and small works
engineers who are specifically trained and supported to work full time on
maintenance contracts. FM work typically derives via two routes; through
scoping and identifying public tender opportunities which align with C&D's
wider term strategic plans and also through offering C&D's core business
services to target clients.
Once the customer order is finalised, it is logged in Simpro. Material
purchase orders, subcontractor work orders, and engineers are then requested
and assigned. During the course of the project, purchase invoices and
timesheets are recorded and assigned to the project on project management and
CRM software ("Simpro"). Once the work is finished, the engineer on site will
mark the project as 'Complete' on Simpro, and a sales invoice is generated for
payment.
As compared to MP, FM projects are typically smaller in scope and therefore a
lower likelihood of incurring unexpected costs with higher, more stable gross
profit margins albeit small fluctuations in gross profit margins do occur
between FM projects due to differing mark-ups depending on geographical
location and small additional costs incurred.
The C&D directors intend to expand FM as part of C&D's longer-term
strategy. FM contributed revenue of approximately £3.3 million in the year
ended 31 December 2023.
Customer concentration
The C&D directors believe that C&D has a number of key strengths which
both define it and differentiate it from its competitors. The C&D
directors note that it has created a strong reputation in its core markets of
the private, public and regulated sectors, built on reliability, service
quality and the successful delivery of technology-led cost effective services
to its customers. As a consequence, C&D has developed a number of
significant, long standing relationships with private companies, local
authorities and housing associations enabling it to refine its service
offering further and capitalise on a range of cross-selling and other growth
opportunities.
Competitive market
The competitive environment is diverse and the other companies operating in
the same market include larger national contractors, and South West England
based retrofit specialists, which together with small local firms form a key
part of the competitive landscape in local regions.
C&D seeks to differentiate itself from its competitors by concentrating on
its core strengths in mechanical engineering services, collaborative working
practices, including leveraging technology to inform decision making,
excellent service, and quality of workmanship.
The C&D directors seek to leverage technology to overcome problems
typically prevalent in the construction industry; such as delays, budget
overruns and material or labour shortages. Within its MP, C&D utilises
Simpro to obtain real-time project data, to inform decision making, planning,
visibility, and control with the aim to help mitigate delays and budget
overruns. However, C&D has been subject to losses on three onerous
contracts within its MP division through lack of control around project
analysis which are treated as onerous contracts within the historical
financial information of C&D as set out in Section B of Part V of the
Admission Document. As part of the Admission process, the Directors have set
out processes for monitoring project cost controls and identification of
onerous contracts within the Board Memorandum on Financial Position and
Prospects Procedures.
Within the FM division, the C&D directors note that larger commercial
sites now expect advanced technology integration and intelligent building
solutions as standard offerings. However, the C&D directors believe the
mechanical engineering and construction industry tends to lag in adopting new
technologies which presents an opportunity for C&D to stand out by
providing cutting-edge intelligent building services that solve modern
problems which many customers face such as limited asset life cycle plans, the
lack of data to analyse usage insights and inefficient lighting and heating,
ventilation and air conditioning systems. C&D utilises advanced diagnostic
equipment and data analytics to optimise operational efficiency. By taking a
data-driven approach and focusing on services on intelligent building
implementation, the C&D directors believe the company can recommend
targeted solutions for each customer in a way competitors fail to address.
South West Heating Services Ltd
Introduction
South West Heating Services Ltd was incorporated in 2019 by its founder and
Managing Director, Andrew Custer, who has over 20 years' experience operating
within the heating services sector and manages an experienced team of
qualified heating technicians. SWHS provides heating installation and
maintenance services predominantly for domestic insurance claims of national
heating providers, but it also offers its services directly to some private
domestic clients. SWHS is based in Plymouth and operates across Cornwall,
Devon and Somerset. It has 14 employees consisting of a team of administrative
staff and 10 heating technicians, most of whom are based in Plymouth with two
engineers being based in Bristol.
Business overview
SWHS offers three service lines:
1. Boiler service, maintenance and repairs
SWHS predominantly operates as a third-party heating installation and repair
company, servicing domestic systems for private homeowners on behalf of their
boiler insurance provider. Representing c.80 per cent. of the company's
revenue in the year ended 30 June 2023 ("FY23"), the boiler servicing,
maintenance and repairs service utilises a team of fully qualified heating
technicians, providing reactive and preventative maintenance on domestic
heating systems. SWHS also offers provision of these services to customers
directly.
2. New boiler installation
New boiler installation includes a survey to assess the current boiler
installation and to discuss the customers' requirements with advice on
suitable boiler options, as well as a provision of a quote tailored to the
individual customer. SWHS's heating technicians will supply and fit a new
boiler which includes a ten year extended manufacturer parts and labour
guarantee as standard.
3. Care plans
SWHS offers three maintenance plan options for private homeowners and
landlords as outlined below. These provide proactive and reactive maintenance
and repair for heating systems with call-outs, servicing and parts all
included in a single monthly payment.
· Swes Care - cover for domestic boiler, controls and heating
system with an annual boiler service;
· Swes Care Landlord - cover for the domestic boiler, controls and
heating system with an annual boiler service and gas safety check; and
· Swes Care Service -cover for the controls and heating system with
an annual boiler service.
While in FY23 this represented an insignificant proportion of SWHS's revenue,
Andrew Custer, the SWHS Seller, considers that it could represent a growth
opportunity through marketing this to existing customers during routine
services, and maintenance call outs.
Competitive market
SWHS operates in a regionally focused fragmented marketplace with a large
number of owner operators in the wider domestic heating installation, repair
and service sector. There is thus a high level of competition for private
domestic work and qualified employees. However, Andrew Custer considers that
the company's reputation and established longstanding relationships with
national insurers means there are considered to be significant barriers to
entry for competitors to operate within SWHS's main revenue stream of
servicing domestic systems for private homeowners on behalf of their boiler
insurance provider.
Customer Concentration
SWHS's key customers are national insurers, with its three main insurance
customers accounting for over 75 per cent. of its revenue in FY23, of which
one customer, represented approximately 45 per cent. of FY23's revenue. Whilst
there are no exclusivity arrangements in place between the national insurers
and SWHS, SWHS is a preferred supplier for its largest customer and has
established long standing relationships with its top customers with additional
business driven by reputation and recommendation.
6. Summary historical financial information on the Acquisitions
Cosgrove & Drew Ltd
The table below sets out C&D's summary financial information for the
periods indicated, prepared in accordance with IFRS.
£'000 10 months ended Year ended Year ended
31 December 2021 31 December 2022 31 December 2023
Revenue 3,856 6,290 9,085
Cost of sales (3,854) (5,014) (8,627)
Gross profit 2 1,276 458
(Loss)/ profit before tax (524) 413 (832)
Total (loss) / profit (361) 327 (591)
In the six months ended 30 June 2024, C&D had unaudited revenue of £4.8
million and EBITDA of £0.24 million. The Board considers that the year ended
31 December 2024 will be second half weighted.
South West Heating Services Ltd
The table below sets out SWHS's summary financial information for the periods
indicated, prepared in accordance with IFRS.
£'000 Year ended Year ended 30 Year ended 30 9 months ended
30 June 2022 June 2023 31 March 2024
June 2021
Revenue 803 687 971 1,085
Cost of sales (631) (553) (697) (720)
Gross profit 172 134 274 365
Profit before tax 120 61 184 275
Total profit 89 56 152 220
7. Summary terms of the Acquisitions
Cosgrove & Drew Ltd
Under the terms of the C&D SPA, the Company has, through its wholly owned
subsidiary, EHL, conditionally agreed to acquire C&D for a total
consideration of up to £1.96 million, comprising:
· initial consideration of approximately £0.73 million payable on
Second Admission comprising: (i) £0.41 million in cash; and (ii)
approximately £0.32 million to be satisfied by the issue of 4,266,666 new
Ordinary Shares by the Company at the Placing Price. Approximately £0.16
million of the cash consideration will be paid to C&D on Completion in
satisfaction of Zac Cosgrove's and Luke Drew's outstanding directors' loan
account. Bob Holt will not receive any of the initial cash consideration, but
will receive 1,804,000 new Ordinary Shares to ensure that Bob Holt will
receive his proportionate share of the initial cash consideration (ignoring
for these purposes the £0.16 million relating to directors' loans) (i.e. 33
per cent.); and
· deferred consideration of up to approximately £1.23 million via
earnout, to be satisfied wholly by the issue of new Ordinary Shares, subject
to C&D achieving minimum EBITDA targets (exceeding £500,000) in each 12
month period from Completion and each anniversary thereof until the total
consideration of £1.96 million is achieved.
As part of the acquisition of C&D, half of Bob Holt's outstanding
non-interest bearing loan to C&D of £450,000 will be discharged and
settled on Second Admission (subject to the acquisition of C&D completing)
through the issue of 3,000,000 new Ordinary Shares by the Company at the
Placing Price. The balance of £225,000 will remain outstanding following
Completion and Bob Holt has undertaken not to demand repayment of the balance
until 1 January 2027 at the earliest.
Pursuant to the C&D Lock-in Deed, each of the C&D Locked-in Persons
has undertaken to the Company, Shore Capital and Zeus that they will not, and
will procure that their related parties will not, dispose of Ordinary Shares
held by them at Second Admission or acquired following Second Admission for a
period of 12 months from the date of Second Admission.
Each C&D Locked-in Person has also undertaken that, for the period of 12
months following the first anniversary of the date of Second Admission, they
will, and will procure that their related parties will, only dispose of
Ordinary Shares held by them at Second Admission or acquired following Second
Admission on an orderly market basis through the Company's broker from time to
time.
The above restrictions apply to any Additional Consideration Shares allotted
to the C&D Locked-in Persons for the same periods as set out above but by
reference to their date of admission to trading on AIM.
The restrictions on the disposal of Ordinary Shares contained in the C&D
Lock-in Deed do not apply in certain limited circumstances, including
disposals by way of acceptance of a recommended takeover offer for the entire
issued share capital of the Company.
South West Heating Services Ltd
Under the terms of the SWHS SPA, the Company has, through its wholly owned
subsidiary, EHL, conditionally agreed to acquire SWHS for a total
consideration of up to £1.15 million plus an amount equal to the surplus cash
in SWHS on Completion (the "Surplus Cash Sum"), comprising;
· initial consideration of £0.85 million plus the Surplus Cash Sum
payable on Second Admission comprising: (i) £0.5 million plus the Surplus
Cash Sum in cash; and (ii) £0.35 million to be satisfied by the issue of
4,666,666 new Ordinary Shares by the Company at the Placing Price; and
· deferred consideration of up to £0.3 million to be satisfied by
the issue of new Ordinary Shares or cash at the SWHS Seller's discretion,
subject to SWHS achieving minimum EBITDA for each of the first two 12-month
periods immediately following Completion.
Pursuant to the SWHS Lock-in Deed, the SWHS Locked-in Person has undertaken to
the Company, Shore Capital and Zeus that he will not, and will procure that
his related parties will not, dispose of Ordinary Shares held by them at
Second Admission or acquired following Second Admission for a period of 12
months from the date of Second Admission.
The SWHS Locked-in Person has also undertaken that, for the period of 12
months following the first anniversary of the date of Second Admission, he
will, and will procure that his related parties will, only dispose of Ordinary
Shares held by them at Second Admission or acquired following Second Admission
on an orderly market basis through the Company's broker from time to time.
The above restrictions apply to any Additional Consideration Shares allotted
to the SWHS Locked-in Person for the same periods as set out above but by
reference to their date of admission to trading on AIM.
The restrictions on the disposal of Ordinary Shares contained in the SWHS
Lock-in Deed do not apply in certain limited circumstances, including
disposals by way of acceptance of a recommended takeover offer for the entire
issued share capital of the Company.
8. Details of the Placing
The Company, the Directors, Shore Capital and Zeus have entered into the
Placing Agreement, pursuant to which, subject to certain conditions, each of
Shore Capital and Zeus has conditionally agreed to use reasonable endeavours
to procure subscribers for the Placing Shares to be issued by the Company,
pursuant to the Placing, which will be conducted by way of the Bookbuild
(which will be launched immediately following the release of this
Announcement).
The Placing will not be underwritten by Shore Capital or Zeus in any respect.
The issue of the EIS and VCT Placing Shares is conditional on compliance by
the Group in all material respects with its obligations under the Placing
Agreement as at their date of issue but is not conditional either on First
Admission, the Acquisitions or Second Admission or on the issue of any of the
Non-EIS and VCT Placing Shares and is not conditional on the Placing Agreement
becoming wholly unconditional. The EIS Placing Shares and VCT Placing Shares
are expected to be issued to the relevant investors at 11.59 p.m. on 27 August
2024 and 7.30 a.m. on 28 August 2024, respectively, with admission to trading
to AIM for such shares taking place at 8.00 a.m. on 28 August 2024.
The allotment of the Non-EIS and VCT Placing Shares and the Initial
Consideration Shares, and the Bob Holt Loan Conversion Shares is conditional,
among other things, upon the Placing Agreement becoming unconditional and not
having been terminated in accordance with its terms prior to Second Admission
and Second Admission taking place by 8.00 a.m. on 29 August 2024 (or such
later time and/or date as Shore Capital, Zeus and the Company may agree, in
each case, being not later than 8.00 a.m. on 5 September 2024).
The placing of the EIS and VCT Placing Shares will be completed and effective
immediately upon allotment and issue of the EIS and VCT Placing Shares and
such allotment and issue will not be conditional upon either First Admission
or Second Admission. It is therefore possible that the EIS and VCT Placing
Shares will be allotted and issued, but the Non-EIS and VCT Placing Shares,
the Initial Consideration Shares, and the Bob Holt Loan Conversion Shares are
never issued, Second Admission never occurs and so the Non-EIS and VCT Placing
Shares the Initial Consideration Shares, and the Bob Holt Loan Conversion
Shares are never admitted to trading on AIM. The placing of the Non-EIS and
VCT Placing Shares is conditional on First Admission.
The Placing Shares will be issued credited as fully paid and will, once
issued, rank pari passu in all respects with the Existing Ordinary Shares,
including the right to receive all dividends and other distributions declared,
paid or made after such Admission.
The Placing Shares, following their issue and assuming that all such Placing
Shares are allotted, will represent approximately 41.0 per cent. of the
Enlarged Share Capital; the Initial Consideration Shares and the Bob Holt Loan
Conversion Shares, following their issue, will represent approximately 11.0
per cent. of the Enlarged Share Capital; and the Existing Ordinary Shares
following Re-Admission will represent approximately 48.0 per cent. of the
Enlarged Share Capital.
9. Use of proceeds
The net proceeds of the Placing will be used by the Company to:
· satisfy the initial cash consideration payable to the Sellers;
and
· provide working capital for the Enlarged Group.
10. Directors, Senior Management and Employees
Directors
Robert "Bob" Holt OBE, Chairman and Chief Executive Officer (aged 69)
Bob is a highly-accomplished executive with over 35 years' experience in
senior leadership roles across various sectors, most recently serving as CEO
of Revolution Beauty Plc after joining its board as interim COO. Prior to
that, he successfully led Sureserve Group Plc as Chairman, overseeing its
successful turnaround that resulted in over a fivefold increase in the
company's share price. He is perhaps most widely known for his role in the
rise of Mears Group PLC. Since being appointed as Chair in 1996, he guided the
company through its successful IPO on AIM and played a pivotal role in
building its order book value to £3 billion, establishing Mears as a market
leader in its sector. Bob has been awarded the OBE for his services to
philanthropic causes.
The Company notes that, as Chair, Bob Holt has an executive role. The Company
believes that there are exceptional and well-justified circumstances for this
which are set out in Principle 6 in paragraph 12 below. The role of Executive
Chair is considered to be temporary and will exist only until a suitable Chief
Executive is found, whether that is from within a company which is acquired in
future by the Enlarged Group or, if not, following an executive search which
would be undertaken at the appropriate time.
John Charlton, Executive Director (aged 68)
John spent 28 years in various senior corporate banking and risk
management roles within Barclays plc, specialising latterly in listed
business service companies. He joined Sureserve Group plc as Group Company
Secretary in 2017 and assisted with the successful turnaround of that
business. In addition, John is Trustee and Chair of The Sureserve Foundation.
Elizabeth Lake, Chief Financial Officer (aged 56)
Elizabeth is an accomplished executive with more than 25 years of finance and
commercial experience. Previously, Elizabeth joined the board of Revolution
Beauty plc as CFO in May 2022 and was instrumental in turning around the
business following the suspension of its shares from trading on AIM. Prior to
Revolution Beauty plc, she was CFO of AIM quoted, Everyman Media Group plc.
During her time at Everyman Media Group plc, Elizabeth successfully led the
company through the challenges presented by the Covid 19 pandemic,
demonstrating her ability to navigate uncertainty with strong financial and
operational acumen. Prior to Everyman Media Group plc, Elizabeth was Chief
Financial Officer at the AIM-quoted, Science in Sport plc, and before that,
was finance director of Hugo Boss UK and Ireland Limited. She brings extensive
UK plc experience to EARNZ having also worked in finance roles at Marks &
Spencer, Pearson and Thomson Reuters. Elizabeth is FCA qualified having
trained at Coopers and Lybrand (now PwC).
Linda Main, Senior Independent Director (aged 61)
Linda is a Chartered Accountant who retired from KPMG LLP in September 2023
after a long career leading its Capital Markets Advisory Group. Linda has
advised on well over 100 IPOs and significant transactions by listed companies
of all sizes ranging from start-ups to members of the FTSE 100. She was also a
member of the UK board of KPMG where she chaired the Risk Committee and sat on
the Audit Committee. Until December 2023, Linda was a member of the London
Stock Exchange's AIM Advisory Group and, earlier in her career, she sat on a
number of the QCA's technical committees. She has recently joined the QCA
board. Linda is a Trustee of Carers Trust, a leading charity working to
transform the lives of unpaid carers. She is also a Non-Executive Director of
two private companies. Linda chairs the Company's Audit and Remuneration
Committees.
Sandra Skeete, Non-Executive Director (aged 59)
Sandra has over 25 years' experience working in social housing, holding senior
roles in organisations such as the Peabody Trust and Refugee Housing
Association Limited, and was previously a director of One Housing Group and
the Duke of Lancaster Housing Trust. She was the Chief Executive of Octavia
Housing Association Group, a not-for-profit organisation offering social
housing and care services for vulnerable members of the community in central
and west London. She was previously a non-executive board associate of
Principality Building Society. Sandra sits on the Company's Audit and
Remuneration Committees.
Senior Management
Zac Cosgrove, Managing Director of C&D (aged 33)
Zac, who co-founded C&D with Luke Drew, started his career as an
apprentice mechanical engineer for national contractor Lorne Stewart. He has
recently completed a PGCert in Leading Business at Gloucester University, and
is currently working towards an MBA, to help further enhance his business and
leadership skills.
Luke Drew, Managing Director of C&D (aged 34)
Luke, who co-founded C&D with Zac Cosgrove, started as an apprentice
mechanical engineer. He is currently working towards his Masters 'MBA Masters
Administration' with the University of Gloucestershire following on from a
recent award of PGCert in Leading Business.
Andrew Custer, Managing Director of SWHS (aged 45)
Andrew is a skilled professional with experience in the Royal Navy and HVAC
industry. After serving on HM submarines, he became a registered gas engineer
and joined SWES Ltd as a heating technician and became lead engineer. He
played a key role in a management buyout, tripling the company's revenue over
five years. In 2011, Andrew helped SWES gain certification under the
Microgeneration Certification Scheme, specialising in solar and heat pump
installations. In 2019, he founded South West Heating Services, focusing on
repair and maintenance for major heating insurance providers.
Melanie Cowpertwait, Group Financial Controller of EARNZ (aged 48)
Melanie is an FCCA qualified accountant with more than fifteen years'
experience of financial accounting, control and reporting within organisations
of varying operational reach and complexity. Her background is largely in AIM
quoted mining, oil & gas and shipping companies. Melanie has held a number
of senior accounting positions and has experience in a number of corporate
finance transactions.
11. Employees
Other than the Executive Directors, the Group has two employees. Following
Second Admission, other than the Executive Directors, the Enlarged Group will
have 74 employees.
12. Corporate governance
AIM companies are required to state which recognised corporate governance code
they follow from Admission, how they comply with such code and to explain
reasons for any non-compliance.
QCA Code
The Directors recognise the value and importance of high standards of
corporate governance and intend, given the Enlarged Group's size and the
constitution of the Board, to comply with the recommendations set out in the
QCA Code (as updated in 2023). The QCA Code was devised by the Quoted
Companies Alliance, in conjunction with a number of significant institutional
small company investors as an alternative corporate finance code applicable to
AIM companies and has become a widely recognised benchmark for corporate
governance of small and mid-size quoted companies, particularly AIM companies.
Principle 1: Establish a business strategy and business model which promote
long-term value for Shareholders
The Enlarged Group's business model and strategy is set out in the Admission
Document (which will be published later today). The Directors believe that the
Enlarged Group's model and growth strategy will help to promote long-term
value for Shareholders. An update on strategy will be given from time to time
in the strategic report that is included in the Company's annual report and
accounts.
The Directors will continue to take appropriate steps to identify risks and
undertake a mitigation strategy to manage these risks following Second
Admission, and any emerging risk, including implementing a risk management
framework. In the Company's annual report and accounts, further consideration
will be given to risks as required by relevant legislation and guidance.
Principle 2: Promote a corporate culture that is based on ethical values and
behaviours
The Board recognises that its decisions regarding strategy and risk will
impact the Enlarged Group's corporate culture and that this will impact
performance. The culture is set by the Board and is considered and discussed
at board meetings and the Board is aware that the tone and culture it sets
impacts all aspects of the Enlarged Group and the way that employees behave.
The Board promotes a culture of integrity, honesty, trust and respect and all
employees of the Enlarged Group are expected to operate in an ethical manner
in all of their internal and external dealings.
The Enlarged Group undertakes regular reviews and audits in certain specific
areas of risk, including anti-bribery, cyber/data risk and whistleblowing.
The Enlarged Group has several policies in place which promote this culture
and include whistleblowing, social media, anti-bribery and corruption. The
Board takes responsibility for the promotion of ethical values and behaviours
throughout the Enlarged Group, and for ensuring that such values and
behaviours guide the Enlarged Group's objectives and strategy. The Enlarged
Group also has a code for directors' and employees' dealings in securities
which is appropriate for a company whose securities are traded on AIM, and is
in accordance with Rule 21 of the AIM Rules for Companies and MAR.
The Directors believe that a long-term sustainable business model is essential
for discharging the Board's responsibility to promote the success of the
Enlarged Group, its employees, Shareholders and other stakeholders of the
Company. In considering the Enlarged Group's strategic plans for the future,
the Directors will proactively consider the potential impact of its decisions
on all stakeholders within its business, in addition to considering the
broader environmental and social impact as well as the positive impact it can
have within the local community in which the Enlarged Group operates.
The Company fully endorses the aims of the Modern Slavery Act 2015 and takes a
zero-tolerance approach to slavery and human trafficking within the Enlarged
Group and its supply chain.
Principle 3: Seek to understand and meet Shareholder needs and expectations
The Board is committed to, and actively encourages, effective relationships
and communication with Shareholders. The Enlarged Group will meet with its
institutional shareholders and will seek regular feedback from those
shareholders through its nominated adviser and joint brokers, Shore Capital
and Zeus.
All Shareholders are actively encouraged to participate in, and, if possible,
attend, the Enlarged Group's annual general meetings ("AGMs"). The Enlarged
Group will prepare annual report and accounts and a notice of AGM, which will
be sent to all Shareholders and will be available for download from the
Company's website at www.earnzplc.com (http://www.earnzplc.com) .
The Enlarged Group will seek to maintain an active dialogue with Shareholders,
who will be kept up to date with its developments by way of announcements made
through an RIS on matters of a significant substance and/or a regulatory
nature. Updates will be provided to the market from time to time, including
any financial information, and any expected deviations to market expectations
will be announced through an RIS. The Enlarged Group's AGM will be an
opportunity for Shareholders to meet with the other members of the Board.
The AGM will be open to all Shareholders, giving them the opportunity to ask
questions and raise issues during the formal business or, more informally,
following the meeting. The results of the AGM will be announced through an
RIS.
The Board is keen to ensure that the voting decisions of Shareholders are
reviewed and monitored, and the Enlarged Group intends to engage, as
appropriate, with Shareholders who do not vote in favour of resolutions at
AGMs.
The primary points of contact for Shareholders are the Enlarged Group's
Executive Chair, CFO and Linda Main, the Senior Independent Director ("SID").
If a shareholder has failed to have a concern satisfactorily dealt with
through the normal channels of the Executive Chair or the CFO, they should
contact the SID.
All contact details for investor relations are included on the Enlarged
Group's website, www.earnzplc.com (http://www.earnzplc.com)
Principle 4: Take into account wider stakeholder and social responsibilities
and their implications for long-term success
The Enlarged Group takes its corporate social responsibilities very seriously
and is focused on maintaining effective working relationships across a wide
range of stakeholders including shareholders, employees, customers, suppliers
and local communities. The Directors will maintain an ongoing and
collaborative dialogue with such stakeholders and take all feedback into
consideration as part of the decision-making process and day-to-day running of
the business.
Further details of the Enlarged Group's ESG policy and plans are set out in
paragraph 13 below and will be reported on in the Enlarged Group's annual
report and accounts.
Principle 5: Embed effective risk management, internal controls and assurance
activities considering both opportunities and threats, throughout the
organisation
The Directors will take appropriate steps to identify risks and undertake a
mitigation strategy to manage these risks following Second Admission. A review
of these risks will be carried out at least on an annual basis, the results of
which will be included in the Enlarged Group's annual report and accounts
going forward.
The Board has overall responsibility for the determination of the Enlarged
Group's risk management objective and policies which will be overseen by the
Audit Committee.
Principle 6: Establish and maintain the Board as a well-functioning, balanced
team led by the Chair
On Admission, the Board will comprise three Executive Directors, and two
independent Non-Executive Directors. The Directors' biographies are set out in
paragraph 10 above. The Board considers that it combines a blend of sector and
market expertise, with an effective executive management team and appropriate
oversight by the Non-Executive Directors who are both independent.
The Enlarged Group is satisfied that the current Board is sufficiently
resourced to effectively discharge its governance obligations on behalf of all
its Shareholders and other stakeholders.
The Enlarged Group notes that, as Chair, Bob Holt has an executive role. The
Enlarged Group believes that there are exceptional and well-justified
circumstances for this. The Board believes that Bob Holt provides a wealth of
knowledge and an excellent track record within the energy services sector and
will be instrumental in helping to achieve the Enlarged Group's stated
strategy. Utilising his array of knowledge and contacts in the industry, Bob
Holt will help seek acquisitions as well as maintaining day-to-day contact
with the other Executive Directors.
The QCA Code recommends that the Board should comprise a balance of executive
and non-executive directors, with at least two non-executive directors being
independent. The QCA Code suggests that independence is a board judgement, but
where there are grounds to question the independence of a director, through
length of service or otherwise, this must be explained. Neither of the
Non-Executive Directors is or has been an employee of the Enlarged Group, has
a significant business relationship with the Enlarged Group, or is a
significant shareholder in the Enlarged Group.
Linda Main is the Senior Independent Director. The Company believes that Linda
Main is very well suited to the role and this to be a very appropriate
appointment given her background as a former member of the UK board of KPMG
LLP where she chaired the Risk Committee and sat on the Audit Committee, a
former member of the AIM Advisory Group and a current member of the board of
the QCA having, earlier in her career, sat on a number of the QCA's technical
committees.
As recommended by the QCA Code guidance, the Non-Executive Directors will not
participate in the Enlarged Group's performance-related remuneration schemes.
Principle 7: Maintain governance structures and processes that are fit for
purpose and support good decision-making by the board
The Board will meet regularly, and processes are in place to ensure that each
Director is, at all times, provided with such information as is necessary to
enable each Director to discharge their respective duties. The Board is also
supported by the Audit Committee and the Remuneration Committee. Given the
current size of the Enlarged Group, the Board does not consider there is a
need for a separate nominations committee. This will be reviewed regularly and
will be implemented when the Board considers there to be adequate need for
one. The Board will have the responsibility for reviewing the structure, size
and composition of the Board, give consideration to succession planning and
review the leadership needs of the organisation until it is deemed appropriate
to implement a nominations committee.
The Board will receive a detailed monthly Board report, together with any
other material necessary for the Board to hold fully informed discussions to
discharge its duties, including the review of the Enlarged Group's strategy to
ensure this aligns with creating shareholder value. It is the Board's
responsibility to formulate, review and approve the Enlarged Group's strategy,
budgets, major operating expenditure and capital expenditure, major contracts,
acquisitions and disposals.
The Board has established two committees; Audit, and Remuneration, the terms
of which are available for download from the Company's website at
www.earnzplc.com (http://www.earnzplc.com) .
Principle 8: Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
The Directors will consider the effectiveness of the Board, Audit Committee,
Remuneration Committee and the individual performance of each Director. The
outcomes of performance will be described in the Company's annual report and
accounts.
The Board considers that the corporate governance policies it has currently in
place for Board performance reviews is commensurate with the Company's size
and development stage.
Principle 9: Establish a remuneration policy which is supportive of long-term
value creation and the company's purpose, strategy and culture
The Enlarged Group believes that its remuneration structure for executives and
senior managers is appropriate for a company of its size and current
development stage. The remuneration package for the Executive Directors is
comprised only of basic remuneration and a discretionary bonus.
The Enlarged Group encourages employees' interests to be aligned with all
Shareholders via its Share Option Schemes.
Principle 10: Communicate how the Company is governed and is performing by
maintaining a dialogue with Shareholders and other key stakeholders
Responses to the principles of the QCA Code and the information that will be
contained in the Enlarged Group's annual report and accounts and on its
website provide details to all stakeholders on how the Enlarged Group will be
governed. The Board is of the view that the Company's annual report and
accounts as well as its half year report are key communication channels
through which progress in meeting the Enlarged Group's objectives and updating
its strategic targets can be given to Shareholders following Admission.
Additionally, the Board will use the AGMs as a mechanism to engage directly
with Shareholders, to give information and receive feedback about the Enlarged
Group and its progress.
The Audit Committee
The Audit Committee will have the primary responsibility of monitoring the
quality of internal controls to ensure that the financial performance of the
Enlarged Group is properly measured and reported on. It will receive and
review reports from the Enlarged Group's external auditors relating to the
interim and annual accounts and the accounting and internal control systems in
use within the Enlarged Group. The Audit Committee will meet not less than
three times in each financial year and will have unrestricted access to the
Enlarged Group's external auditors. The terms of reference of the Audit
Committee require that the members of the Audit Committee shall comprise only
the independent Non-Executive Directors and one member, preferably the chair
of the Audit Committee, shall have recent and relevant financial experience
with competence in accounting and auditing.
The Audit Committee will comprise Linda Main (Chair), who has recent and
relevant financial experience, and Sandra Skeete.
The Remuneration Committee
The Remuneration Committee will review the performance of the Executive
Directors and make recommendations to the Board on matters relating to their
remuneration and terms of service. The Remuneration Committee will make
recommendations to the Board on proposals for the granting of share options
and other equity incentives pursuant to any employee share option scheme or
equity incentive plans in operation from time to time.
The members of the Remuneration Committee shall comprise only the independent
Non-Executive Directors. The Remuneration Committee will comprise Linda Main
(Chair) and Sandra Skeete. The Remuneration Committee aims to meet at least
twice a year and otherwise as required.
The Board is responsible for setting the vision and strategy for the Enlarged
Group to deliver value to its Shareholders by effectively putting in place its
business model. The Board members are collectively responsible for defining
corporate governance arrangements to achieve this purpose, under clear
leadership from the Chair.
13. Environmental, social and governance (ESG)
The Enlarged Group understands that its impact reaches beyond that of its core
business and into the environment and society in which it operates. With
integrity at the heart of its corporate social goals, the Enlarged Group's aim
is to make a lasting positive contribution to all of its stakeholders.
In view of the limited number of stakeholders, the Company has not adopted a
specific policy on corporate social responsibility or ESG matters. However, it
does seek to protect the interests of stakeholders in the Enlarged Group
through its policies, combined with ethical and transparent business
operations.
Environment
EARNZ is sensitive to the environment in which it operates. Previously, the
Group established well defined operating guidelines with some of the
manufacturing partners where it sought their compliance with ISO14001 (a
recognised international standard for Environmental Management Systems) when
relevant, to ensure certain environmental standards are complied with. Going
forward, the Enlarged Group will be operating in the energy services sector,
and as such will be instrumental in assisting with the delivery of
de-carbonisation across the public and private sector.
Human Rights
EARNZ is committed to socially and morally responsible research, development
and manufacturing processes for the benefit of all stakeholders. The Enlarged
Group's activities are in line with applicable laws on human rights.
Employees
Employees are key to achieving the business objectives of the Enlarged Group.
The Board seeks to provide a working environment in which its employees can
develop to achieve their full potential and have opportunities for both
professional and personal development. The Board aims to invest time and
resource to support, engage and motivate our employees to feel valued, to be
able to develop rewarding careers and to want to stay with us. The Enlarged
Group embraces employee participation in issue raising and resolution through
regular meetings with managers and values contributions from all levels
regardless of their position in the business.
Shareholders
The Board actively encourages communication and seeks to protect Shareholders'
interests at all times. The Enlarged Group will update Shareholders regularly
through regulatory news, financial reports and research notes. The Enlarged
Group will also engage directly with investors at its AGMs and investor
events.
Health and Safety
The Enlarged Group's activities are carried out in accordance with its health
and safety policy which adheres to all applicable laws.
14. EIS and VCT Status
The following information is based upon the laws, interpretations and practice
currently in force in the UK and may not apply to persons who do not hold
Ordinary Shares as investments.
The Company has received independent advice that certain of the Placing Shares
should be a qualifying holding for the purposes of the VCT Legislation.
However, prospective investors should note that the Company does not make any
representations as to whether any investment in the Company will be one in
respect of which tax relief under VCT rules or the EIS rules will be available
or that any such tax relief will not subsequently be withdrawn by virtue of
the Company's future actions.
The information below is intended only as a general guide to the current tax
position under UK taxation law and is not intended to be exhaustive.
EIS
The Company intends to operate so that it qualifies for the taxation
advantages offered under EIS. The main advantages are as follows:
· Individuals can claim a tax credit reduction of 30 per cent. of
the amount invested in the Company against their UK income tax liability,
provided they have a sufficient tax liability to reclaim this amount, thus
reducing the effective cost of their investment to 70 pence for each £1
invested. However, there is an EIS subscription limit of £1 million in each
tax year, or £2 million in each tax year providing any excess over £1
million is invested into shares in a company which qualifies as a knowledge
intensive company, and, to retain the relief, the EIS Placing Shares must be
held for at least three years.
· UK investors (individuals or certain trustees) may defer a
chargeable gain by investing the amount of the gain in the Company. There is
no limit to the level of investment for this purpose and, therefore, to the
amount of gain which may be deferred in this way. Note that the deferred gain
will come back into charge when the EIS Placing Shares are disposed of or if
the Company ceases to qualify as an EIS company within the three-year
qualifying period.
· There is no tax on capital gains made upon disposal after the
three-year period (the "Qualifying Period") of shares in an EIS qualifying
company on which income tax relief has been given and not withdrawn.
· If a loss is made on disposal of the EIS Placing Shares at any
time, the amount of the loss (after allowing for any income tax relief
retained) can be set off against either the individual's gains for the tax
year in which the disposal occurs, or, if not so used, against capital gains
of a subsequent tax year, or against the individual's net income of the tax
year of the disposal or of the previous tax year.
· Provided a Shareholder has owned EIS Placing Shares for at least
two years and certain conditions are met at the time of transfer, up to 100
per cent. inheritance tax business property relief will be available, which
reduces the inheritance tax liability on a chargeable event in relation to the
EIS Placing Shares to nil.
· The amount of relief an investor may gain from an EIS investment
in the Company will depend on the investor's individual tax circumstances.
Qualifying Period
In order to retain the EIS reliefs, an investor must hold their shares for at
least three years. A sale or other disposal (other than an inter-spousal gift
or a transfer on death) will result in any income tax relief that has been
claimed being clawed back by HMRC. Additionally, any capital gains deferred
will come back into charge and the capital gains tax exemption will be lost.
It is the investor's responsibility to disclose a disposal to HMRC.
An individual can only be eligible for EIS relief on the subscription for
shares if all shares held by that investor are shares which have been or will
be eligible for EIS relief or the original subscriber shares which the
investor has continued to hold.
Additionally, if the Company ceases to meet the EIS qualifying conditions
within three years from the date of the share issue, the tax reliefs will be
lost. This will be shown as the "Termination Date" on the EIS3 compliance
certificate which the Company will issue to investors following formal
approval of the share issue by HMRC.
EIS Status
In order for investors to claim EIS reliefs relating to their shares in the
Company, the Company has to meet a number of rules regarding the kind of
company it is, the amount of money it can raise, how and when that money must
be employed for the purposes of the trade, and the trading activities carried
on. The Company must satisfy HMRC that it meets these requirements and is
therefore a qualifying company.
Although the Company currently expects to satisfy the relevant conditions for
EIS investment, neither the Company nor the Directors give any warranty or
undertaking that relief will be available in respect of any investment in the
EIS Placing Shares or that the Company will continue to satisfy the conditions
for EIS investment.
VCT
The status of the Ordinary Shares as a qualifying holding for VCT purposes
will be conditional, inter alia, on the Company continuing to satisfy the
relevant requirements and on the Ordinary Shares being held as a "qualifying
holding" for VCT purposes throughout the period of ownership.
Neither the Company nor the Directors give any warranty, representation or
undertaking that any VCT investment in the Company will remain a qualifying
holding nor have they obtained any advance assurance from HMRC prior to the
date of the Admission Document. The Company cannot guarantee or undertake to
conduct its business following Admission, in a way to ensure that the Company
will remain a qualifying holding for VCT purposes. VCTs considering making a
qualifying VCT investment are recommended to seek their own professional
advice in order that they may fully understand how the relief legislation may
apply in their individual circumstances.
The status of the VCT Placing Shares as a qualifying holding for VCTs will be
conditional, inter alia, upon the Company continuing to satisfy the relevant
requirements.
Although the Company currently expects to satisfy the relevant conditions for
VCT investment, neither the Company nor the Directors give any warranty or
undertaking to any Shareholder that an investment in the VCT Placing Shares by
a VCT will be a qualifying holding.
Structure of the EIS and VCT Placing
The EIS Placing Shares and VCT Placing Shares are expected to be issued to the
relevant investors at 11.59 p.m. on 27 August 2024 and 7.30 a.m. on 28 August
2024, respectively. It is expected that First Admission will become
effective and that dealings in the EIS and VCT Placing Shares will commence on
AIM at 8.00 a.m. on 28 August 2024. It is expected that Second Admission will
become effective and that dealings in the Non-EIS and VCT Placing Shares will
commence on AIM at 8.00 a.m. on 29 August 2024.
As the rules governing EIS and VCT reliefs are complex and interrelated with
other legislation, if Shareholders and investors are in any doubt as to their
tax position, require more detailed information than the general outline
above, or are subject to tax in a jurisdiction other than the United Kingdom,
they should consult their professional advisers.
15. Unaudited interim results for the six months ended 30 June 2024
Earlier today, the Company announced its unaudited interim results for the six
months ended 30 June 2024 which comprises trading for only January and
February 2024 prior to the Disposal which completed on 29 February 2024. As
set out above, since 1 March 2024, the Company has been an AIM Rule 15 cash
shell and therefore has not traded in that period.
16. Current trading and prospects
As set out above, since 1 March 2024, the Company has been an AIM Rule 15 cash
shell and therefore has not traded in that period.
17. Share dealing code
The Company has a share dealing code (the "Share Dealing Code") which is
compliant with MAR and Rule 21 of the AIM Rules for Companies. The Share
Dealing Code applies to the Directors and all applicable employees (as defined
in the AIM Rules for Companies) of the Enlarged Group. The Directors consider
that the Share Dealing Code is appropriate for a company whose securities are
admitted to trading on AIM.
The Enlarged Group will take all reasonable steps to ensure compliance by the
Directors and any relevant employees with the terms of this code and the
relevant provisions of MAR.
18. Disclosure Guidance and Transparency Rules
The provisions of DTR 5 apply to the Company and the Ordinary Shares and shall
be effective for so long as the Ordinary Shares are admitted to trading on AIM
or any other stock exchange the rules of which would require these DTR
provisions to apply. Such provisions bind the Enlarged Group and its members
and references to an "issuer" (or similar expression) in such DTR provisions
shall be deemed to be references to the Enlarged Group. Accordingly,
Shareholders are required to notify the Enlarged Group when they acquire or
dispose of a major proportion of their voting rights of the Enlarged Group
(either as Shareholder or through their direct or indirect holding or certain
financial instruments, or a combination of such holdings) equal to or in
excess of three per cent. of the voting rights of such share capital (and
every one per cent. thereafter).
19. Lock-in arrangements
Pursuant to the terms of the Lock-In Agreements, each of the Executive
Directors and the Sellers have undertaken to Shore Capital, Zeus and the
Company that they will not, except in certain specified circumstances, sell,
transfer, grant any option over or otherwise dispose of the legal, beneficial
or any other interest in any Ordinary Shares ("Interest") held by the
Executive Directors or the Sellers at the date of Second Admission (or rights
arising from any such shares or other securities or attached to any such
shares) (together the "Restricted Shares") prior to the first anniversary of
Second Admission (the "Lock-in Period").
In order to maintain an orderly market in the Ordinary Shares, each of the
Executive Directors, and the Sellers have also undertaken to Shore Capital,
Zeus and the Company that they will only, for a period of one year following
the expiry of the Lock-in Period, dispose of any Interest in the Restricted
Shares through SCS or Zeus (on the basis of orderly market principles),
provided that SCS or Zeus remain the Company's broker at such time.
Similar lock-in and orderly market restrictions apply to any Additional
Consideration Shares with effect from their respective dates of admission to
trading on AIM.
20. Share Option Schemes
The Directors recognise the role of its staff in contributing to the overall
success of the Group and the importance of the Group's ability to incentivise
and motivate its employees. Therefore, the Directors believe that employees
should be given the opportunity to participate and take a financial interest
in the success of the Company. The Board has adopted the long term incentive
plan, details of which will be set out in the Admission Document and, subject
to Second Admission, has granted a nil-cost awards under it to the Executive
Directors of up to five per cent. of the issued share capital of the Company
as at the relevant vesting date, as set out in the Admission Document.
Following Second Admission, the Board intends to implement a number of other
share option schemes as are more particularly set out in the Admission
Document.
21. Related party transactions
As Bob Holt is a shareholder in C&D, as well as a Director of the Company,
the proposed acquisition of C&D (including the Bob Holt Loan Conversion)
is deemed to be a related party transaction pursuant to AIM Rule 13. The
Independent Directors (being Linda Main and Sandra Skeete) consider, having
consulted with the Company's nominated adviser, Shore Capital and Corporate,
that the terms of the acquisition of C&D (including the Bob Holt Loan
Conversion) are fair and reasonable insofar as the Shareholders are concerned.
22. The City Code
The City Code applies to the Company.
Under Rule 9 of the City Code, if an acquisition of interests in shares were
to cause the acquirer and/or persons acting in concert with it to be
interested in shares carrying, in aggregate, 30 per cent. or more of the
voting rights in the Company, the acquirer and/or (depending on the
circumstances) persons acting in concert with it would be required (except
with the consent of the Panel) to make a cash offer for all of the equity
share capital of the Company not already owned by the acquirer and persons
acting in concert with it at a price not less than the highest price paid for
an interest in a share by the acquirer or persons acting in concert with it
during the previous 12 months. A similar obligation to make such a mandatory
cash offer would also arise on the acquisition of interests in shares by a
person who, alone or together with persons acting in concert with that person,
is interested in shares carrying at least 30 per cent. of the voting rights in
the Company but does not hold more than 50 per cent. of such voting rights, if
the effect of such acquisition were to increase the percentage of shares
carrying voting rights in which the acquirer and the persons acting in concert
with it are interested.
The City Code defines persons "acting in concert" as comprising persons who,
pursuant to an agreement or understanding (whether formal or informal),
co-operate to obtain or consolidate control of a company or to frustrate the
successful outcome of an offer for a company. "Control" means an interest, or
interests, in shares carrying in aggregate 30 per cent. or more of the voting
rights of a company, irrespective of whether such interest or interests give
de facto control. A person and each of its affiliated persons will be deemed
to be acting in concert with each other.
23. Concert Parties
The Company and the Panel have agreed that those persons set out below should
be regarded as acting in concert for the purposes of the City Code:
· the Existing Bob Holt Concert Party comprising:
a. the Bob Holt Concert Party: Bob Holt, Elizabeth Lake, John Charlton,
Ian Currie, James Holt, Rachael Burnett, Robert Holt and William Holt; and
b. the C&D Concert Party: Bob Holt, Zac Cosgrove and Luke Drew.
· the SWHS Concert Party: Andrew Custer
Bob Holt is a common member of the Bob Holt Concert Party and the C&D
Concert Party and together they are known as the Existing Bob Holt Concert
Party. Separately, the SWHS Concert Party, which comprises only Andrew Custer,
is regarded as acting in concert for the purposes of the City Code, but is not
acting in concert with the Existing Bob Holt Concert Party.
For so long as the respective aggregate interests of the Existing Bob Holt
Concert Party and separately the SWHS Concert Party in the Ordinary Shares
remains below 30 per cent., each of them will generally be able to increase
its holding of Ordinary Shares without incurring any obligation on any member
of the Existing Bob Holt Concert Party or the SWHS Concert Party under Rule 9
to make a general offer to Shareholders, and Shareholders will not benefit
from any specific minority shareholder protection other than to the extent
prescribed under the relevant law.
However, should the Existing Bob Holt Concert Party or the SWHS Concert Party
or any individual member of the Existing Bob Holt Concert Party or the SWHS
Concert Party: (i) acquire any interest in Ordinary Shares such that they
become interested in 30 per cent. or more of the voting rights of the Company;
or (ii) where such individual member is already interested in 30 per cent. or
more of the voting rights of the Company but does not hold Ordinary Shares
carrying more than 50 per cent. of the voting rights of the Company acquire
any further interest in Ordinary Shares, the Panel may, subject to note 4 of
Rule 9, regard this as giving rise to an obligation upon that member of the
Existing Bob Holt Concert Party or the SWHS Concert Party to make an offer for
the entire issued share capital of the Company at a price no less than the
highest price paid by the individual member of the Existing Bob Holt Concert
Party or the SWHS Concert Party or any other member of the Existing Bob Holt
Concert Party or the SWHS Concert Party in the previous 12 months.
Investors should be aware that, under the City Code, if a person (or group of
persons acting in concert) holds interests in shares carrying more than 50 per
cent. of the Company's voting rights, that person (or any person(s) acting in
concert with him) will normally be entitled to increase their holding or
voting rights without incurring any further obligations under Rule 9 to make a
mandatory offer, although individual members of the Existing Bob Holt Concert
Party or the SWHS Concert Party will not be able to increase their percentage
shareholding through or between a relevant Rule 9 threshold without Panel
consent.
24. Waiver of Rule 9
The Company has applied to the Panel for a waiver of Rule 9 in order to permit
the allotment of the Initial Consideration Shares, the Additional
Consideration Shares, the Bob Holt Loan Conversion Shares and the Placing
Shares and the exercise of the LTIP awards referred to in paragraph 20 of this
Announcement without triggering an obligation on the part of the Existing Bob
Holt Concert Party to make a general offer to Shareholders. The Panel has
agreed, subject to Independent Shareholders' approval on a poll, to waive the
requirement for the Existing Bob Holt Concert Party to make a general offer to
all Shareholders where such an obligation would arise as a result of the
allotment of the Initial Consideration Shares, the Additional Consideration
Shares, the Bob Holt Loan Conversion Shares and the Placing Shares to the
Existing Bob Holt Concert Party and the exercise of the LTIP awards referred
to in paragraph 20 of this Announcement. A Rule 9 Waiver has been granted by
the Panel and in the event that the Existing Bob Holt Concert Party is
allotted all the Additional Consideration Shares and the maximum LTIP awards
vest under the terms of the LTIP, the Existing Bob Holt Concert Party may hold
in excess of 30 per cent. but not more than 50 per cent. of the so enlarged
ordinary share capital. As such, the Existing Bob Holt Concert Party would not
be entitled to further increase its holding or voting rights without incurring
a further obligation under Rule 9 to make a mandatory offer. Further,
individual members of the Existing Bob Holt Concert Party will not be able to
increase their percentage shareholding through or between a Rule 9 threshold
without Panel consent.
In the event that the Proposals are approved at the General Meeting, the
Existing Bob Holt Concert Party will not be restricted from making an offer
for the Company unless they have made a statement that they will not, or have
entered into an agreement with the Company not to, make an offer. No such
statement has been made or agreement entered into.
25. Intentions of the Concert Parties
Following Admission, the Enlarged Group's business will solely comprise the
businesses of C&D and SWHS, which will be continued in the same manner as
they are at present. With this in mind, the Existing Bob Holt Concert Party
has confirmed that it intends to follow the strategic plans for the Company
set out in paragraph 3 of this Announcement. The Company currently has two
employees (other than the Executive Directors), and on Completion, the
Targets' employees will become employees of the Enlarged Group. The Existing
Bob Holt Concert Party has confirmed that it has no plans to: (i) make any
changes to the continued employment of the employees and management of the
Company or the Targets, including any material change in the conditions of
employment or in the balance of skills and functions of the employees and
management; (ii) make any changes to employer contributions into any pension
scheme(s), the accrual of benefits for existing members, or the admission of
new members; or (iii) redeploy the fixed assets of the Company. The Existing
Bob Holt Concert Party intends to maintain the admission of the Ordinary
Shares to trading on AIM.
26. Admission, settlement and CREST
Applications will be made for the New Ordinary Shares to be admitted to
trading on AIM and for the Re-Admission of the Existing Ordinary Shares. It is
expected that First Admission will occur and that dealings will commence in
the EIS and VCT Placing Shares at 8.00 a.m. on 28 August 2024 and that
Re-Admission of the Existing Ordinary Shares and Second Admission will occur
and that dealings will commence in the Non-EIS and VCT Placing Shares, the
Initial Consideration Shares, the Bob Holt Loan Conversion Shares and the
Existing Ordinary Shares at 8.00 a.m. on 29 August 2024.
No temporary documents of title will be issued. All documents sent by or to a
placee, or at his direction, will be sent through the post at the placees
risk. Pending the despatch of definitive share certificates, instruments of
transfer will be certified against the register of members of the Company.
The Ordinary Shares are enabled in CREST and settlement in CREST will occur on
the date of the relevant Admission. Accordingly, settlement of transactions in
Ordinary Shares following the relevant Admission may take place within the
CREST system if any individual Shareholder so wishes provided such person is a
"system member" (as defined in the CREST Regulations) in relation to CREST.
Dealings in advance of the crediting of the relevant CREST account(s) shall be
at the sole risk of the persons concerned.
CREST is a paperless settlement system enabling securities to be evidenced
otherwise than by certificate and transferred otherwise than by written
instrument in accordance with the CREST Regulations. The Articles permit the
holding of Ordinary Shares in uncertificated form in accordance with the CREST
Regulations. CREST is a voluntary system and holders of Ordinary Shares who
wish to receive and retain share certificates will be able to do so.
27. Dividend policy
Following Re-Admission, the Enlarged Group intends to retain any earnings to
expand the growth and development of its business and, therefore, does not
anticipate paying dividends in the near term. The Board will review the
Enlarged Group's capital allocation policy on an ongoing basis and given the
cash generative nature of the Enlarged Group's activities would, subject to
the availability of sufficient resources and distributable reserves, and, if
commercially prudent to do so, consider commencing the payment of dividends in
the medium term.
APPENDIX II
RISK FACTORS
The following has been extracted from Part III of the Admission Document which
is expected to be published and despatched to Shareholders later today and
will be available on EARNZ's website at www.earnzplc.com
(http://www.earnzplc.com) .
An investment in the Company involves significant risks and is only suitable
for investors who are capable of evaluating the merits and risks of such an
investment and who have sufficient resources to be able to bear any losses
(which may be equal to the whole amount invested) which may result from such
an investment. Prospective investors should carefully review and evaluate the
risks and the other information contained in this Announcement before making a
decision to invest in the Company. If in any doubt prospective investors
should immediately seek their own personal financial advice from their
independent professional adviser authorised under FSMA who specialises in
advising on the acquisition of shares and other securities or other advisers
such as legal advisers and accountants.
If any of the following risks actually occur, the Enlarged Group's business,
financial condition, capital resources, results and/or the future operations
of the Enlarged Group could be materially and adversely affected. In such
circumstances, the price of the Ordinary Shares could decline and investors
may lose all or part of their investment. Additional risks and uncertainties
not currently known to the Board may also have an adverse effect on the
Enlarged Group's business and the information set out below does not purport
to be an exhaustive summary of the risks affecting the Enlarged Group.
Prospective investors should be aware that the value of the Ordinary Shares
and the income from them may go down as well as up and that they may not be
able to realise their initial investment. In addition, it is possible that the
market price of Ordinary Shares may be less than the underlying net asset
value per Ordinary Share.
There can be no guarantee that the Company's investment objectives will be
achieved.
References below to the Company are also deemed to include, where appropriate,
each member of the Enlarged Group.
RISKS RELATING TO THE ENLARGED GROUP'S BUSINESS
Failure to complete the Acquisitions
The Acquisitions are conditional, inter alia, upon:
(i) the approval of the requisite number of Shareholders, which is to be sought at the General Meeting;
(ii) the Placing Agreement becoming unconditional in all respects, save for
any condition relating to completion of the Acquisitions and Second Admission;
and
(iii) the Initial Consideration Shares being admitted to trading on AIM.
There can be no guarantee that all of these conditions will be satisfied and
there is therefore no guarantee that the Acquisitions will complete. The
Company will have expended significant funds in pursuing the Acquisitions and
would therefore incur significant abort costs and there can be no guarantee
that a suitable alternative transaction and/or funding on similar commercial
terms to the Placing can be obtained on a timely basis or at all. Trading on
AIM in the Ordinary Shares will be suspended if Completion does not occur by
31 August 2024. Furthermore, if a reverse takeover is not completed by 28
February 2025, admission to trading on AIM of the Ordinary Shares will be
cancelled. In that event, the Directors would have to consider the options
for the Company and it might be that the Company pursues a members' voluntary
liquidation and returns any funds then in the Company to Shareholders.
The Enlarged Group may fail to integrate the Targets successfully, to realise
the envisaged benefits of the Acquisitions or identify future acquisitions
An important part of the Enlarged Group's longer-term business strategy
involves expansion through the acquisition of further businesses. There is a
risk related to the Enlarged Group's ability to accurately identify suitable
targets and successfully execute transactions for such a strategy.
Any future material acquisitions may significantly affect the Enlarged Group's
operational results. Furthermore, any new acquisitions may divert resources,
including the attention of the Board, both during the acquisition process and
as a result of post-acquisition integration. No assurance can be given that
the Enlarged Group will be able to manage future acquisitions profitably or
integrate such acquisitions successfully without substantial costs, delays or
other problems being incurred or experienced. In addition, no assurance can be
given that any companies or businesses acquired will achieve levels of
profitability that will justify the investment the Enlarged Group makes in
them.
The Enlarged Group will be exposed to a variety of risks in relation to
contract pricing and estimating, cost inflation and overruns and disputes
The nature of the Enlarged Group's business is that some of its services are
procured through contracts where services may be required to be delivered over
an extended period of time. For example, within C&D's Facilities
Management and small works division ("FM"), contracts are held directly with
the customer and an overarching contract typically spans 3 to 10 years. Each
FM overarching contract defines the terms and conditions including the fixed
charges, for Proactive Planned Maintenance ("PPM") and small works, and hourly
charge-out rates, and a markup for any material required for reactive work.
Within Major Projects, contracts are typically 12 to 36 months in length and
held with the relevant third-party contractor. An independent expert is used
to estimate costs for each Major Project to assist with provision of a quote.
Historically C&D has incurred losses on several contracts within its Major
Projects division and these are treated as onerous contracts within the
historical financial information of C&D as set out in Section B of Part IV
of the Admission Document. Whilst the Directors have set out processes for
monitoring project cost controls and identification of onerous contracts
within the Board Memorandum on Financial Position and Prospects Procedures, if
the Enlarged Group is unable to assess or estimate accurately the overall
risks, revenues or costs on a particular contract, then a lower than
anticipated profit may be achieved or a loss incurred on such contract. The
Enlarged Group is susceptible to the pressures of cost inflation and within
C&D, delays in projects, particularly within the Major Projects division,
which can result in additional costs being incurred by C&D. If increases
in costs are not met through corresponding increases in revenues from the
Enlarged Group's contracts or predicted cost inflation is not accurately
estimated or any negotiations on cost overruns result in additional costs
incurred not being recovered, then the Enlarged Group may suffer losses in
relation to such contracts which may have a material adverse impact on the
Enlarged Group's cash flows and its business, financial condition and results
of operations.
If there has been an error made in the pricing structure and cost estimates
built into an agreement (for example, cost inflation occurs at a rate which
exceeds the cost built into the contract pricing structure or additional costs
are incurred on a contract which are not able subsequently to be recovered),
the Enlarged Group might potentially find itself locked into a long-term
contract with an uneconomic pricing structure whilst also having to absorb
additional wage, supply chain and materials costs.
As the businesses that the Enlarged Group carries on increasingly comprise
larger-scale and, in some cases, more complex contracts, as well as a
significant number of medium- to long-term contracts, the potential impact of
these risks may also increase. For example, within C&D, the risk of
significant claims arising between C&D and its customers and/or C&D
and its suppliers is likely to be greater in the context of higher-value,
longer-term building and/or regeneration and maintenance contracts within its
Major Projects division than lower-value, shorter-term ones. There can be no
assurance given as to the value of any such claims and no guarantee that
customers will settle or pay amounts to the Enlarged Group in respect of any
such claims in a timely manner or at all. Similarly, there can be no assurance
as to the number or quantum of any such claims that the Enlarged Group may
face in the future. Large-value claims, whether brought by or against the
Enlarged Group, may have a material adverse impact on the Group's cash flows
and its business, financial condition and results of operations.
In addition, failure to follow best practice guidelines could mean that
projects are not delivered to time, cost, quality or appropriate health and
safety and/or environmental standards and, therefore, do not meet customer
expectations or the expectations of a relevant third party. Failure to follow
the Enlarged Group's standards, procedures and guidelines could adversely
affect the Enlarged Group's reputation and/or expose the Enlarged Group to
financial liabilities and adversely affect its operational, financial and
share price performance.
Dependence on key personnel and employees
The continued success of the Enlarged Group depends partly upon the
performance and expertise of its current and future key executives and
personnel. There is no guarantee that any of the Directors or directors of the
Targets (the "Senior Management Team") will remain employed by the Enlarged
Group. However, the Enlarged Group provides various incentives for the
Directors and Senior Management Team in order to ensure these employees are
retained and rewarded. The Directors and Senior Management Team's skills,
knowledge, experience and performance are important to the Enlarged Group's
ongoing success. Whilst the Enlarged Group has entered into service agreements
with each of the Directors and the Senior Management Team, the retention of
their services cannot be guaranteed. The loss of such individuals, or the
failure to train and attract other high calibre individuals, may impact on the
Enlarged Group's business and the Enlarged Group's ability to achieve its
growth targets.
The Enlarged Group may fail to maintain and develop existing key customer
relationships with dependence on certain customers
A key element of the Enlarged Group's strategy is to develop long-term
relationships with key customers in order to win repeat business from those
customers and to cross-sell the Enlarged Group's other products and services
to them. Whilst the Enlarged Group will attempt to increase customer spend as
a relationship matures by identifying additional services that may be needed,
for example, cross-selling the services provided by the Enlarged Group into
existing contractual relationships, there can be no guarantee that existing
customer relationships will continue to grow or that key customers will not
scale back their use of the Enlarged Group or cease to contract with the
Enlarged Group altogether.
The Enlarged Group has significant contracts and long-term relationships with
a number of key customers with dependence on certain customers, some of which
may be terminated without cause or on written notice during or at expiry of
their term. In addition, many of the contracts to which the Targets are party
contain change of control provisions that allow the other contracting party to
terminate the contract if the relevant Target suffers a change of control. The
Acquisitions will constitute changes of control and it may be the case that
some or all of such contracts are terminated. Although the Enlarged Group
knows of no reason why such contracts should be terminated or will not be
renewed on the same or more favourable terms, the Directors cannot guarantee
that the relevant parties' commercial position or market conditions will not
alter their position. Should any of these contracts be terminated or not be
renewed, it could have a material adverse effect on the financial position and
prospects of the Enlarged Group.
The regulatory environment in which the Enlarged Group operates may change
The Enlarged Group is required to comply with a significant number of laws,
regulations and administrative requirements and policies in its operations
which relate to, among other matters, national, local and other laws,
planning, developments, building, land use, health and safety, environment,
employment, anti-bribery and corruption and tax (including VAT). No
assurance can be given that the Enlarged Group will be successful in complying
with all such laws, regulations and administrative requirements and policies
or maintaining any or all of the various approvals, licences and permits which
may be required to be maintained by any member of the Enlarged Group. To the
extent any approvals, licences or permits are required and not obtained, the
Enlarged Group may be curtailed or prohibited from continuing or proceeding
with certain business lines. These regulations, requirements and policies
often provide broad discretion to the administering authorities and failing to
comply, may result in civil or criminal fines or penalties being imposed on
any member of the Enlarged Group. Changes in relevant law, regulations or
policies, or the interpretation thereof, or delays in such interpretations
being delivered, may delay or increase the cost of projects and the Enlarged
Group's business generally. It is expected that increasingly stringent
regulatory requirements will be imposed in the future. Although the effect of
these requirements cannot be predicted, compliance with them could cause
delays and increase the Enlarged Group's costs. This could have a material
adverse effect on the financial condition and operating results of the
Enlarged Group.
The markets in which the Enlarged Group operates are the subject of
significant competition
Reputation, prior experience and quality of service, pricing and, if
applicable, existing relationship with a client will all have a bearing on the
Enlarged Group gaining new work. The failure by the Enlarged Group to compete
effectively on these criteria could reduce its revenue, profitability or cash
flow. The competitive market of each of the Targets is summarised within Part
III of the Admission Document. The sectors in which the Enlarged Group
operates are competitive on the basis of both price and service and some of
these competitors may have greater financial, technical and operating
resources or capabilities than the Enlarged Group. There can be no assurances
as to the future competitiveness of the Enlarged Group or that the Enlarged
Group will win any additional market share from any of its competitors or
maintain the current aggregate market share of the Enlarged Group. As a result
of this competition, the Enlarged Group may fail to win new contracts in its
chosen growth markets, may be unable to renew current contracts or may fail to
win contracts which are sufficiently profitable to maintain or improve the
financial condition of the Enlarged Group
The Enlarged Group is required to comply with stringent health and safety and
environmental laws
The Enlarged Group is subject to numerous laws, regulations and policies
concerning the protection of health, safety and the environment. The impact of
such laws, regulations and policies can vary greatly depending on the nature
of the activity and the site where it is being undertaken. Environmental laws,
regulations and policies may result in delays, may give rise to substantial
compliance, remediation and/or other costs and can prohibit or severely
restrict construction and/or development in certain locations. The
consequences of breach of environmental law and regulation can be severe. The
Enlarged Group may be liable for losses associated with environmental hazards,
may have its licences and permits withdrawn or suspended or may be forced to
undertake extensive remedial clean-up action or to pay for UK
Government-ordered remedial clean-up actions, even in cases where such hazards
have been caused by any previous or subsequent owners or operators of the
property, by any past or present owners of adjacent properties or by acts of
vandalism by trespassers. Any such losses, withdrawals, suspensions, actions
or payments may have a material adverse effect on the reputation, business,
results of operations and financial condition of the Enlarged Group.
A significant incident negatively impacting the Enlarged Group's reputation
and/or exposing inadequate health and safety regimes could have a material
adverse effect on the Enlarged Group's business and reputation
Part of the Enlarged Group's activities involve it providing regeneration,
repair and maintenance and facilities management services to businesses and to
certain housing associations and local authorities. Any significant service
failure, whether a one-off incident or recurring practice, could negatively
impact the reputation of the Enlarged Group and its operations and financial
performance. This negative impact could be exacerbated or increased by the
nature of the Enlarged Group's activities and the profile of its direct or
indirect customers, specifically publicly-funded bodies.
The nature of the business being conducted by the Enlarged Group involves
exposure to health and safety risks for both the Enlarged Group's employees
and contractors as well as third parties. Part of the Enlarged Group's
business involves its operatives working in people's homes and repairing and
maintaining potentially dangerous equipment, such as gas central heating
boilers. This requires the Enlarged Group to maintain a rigorous operational
and occupational health and safety programme and to ensure that its employees
and contractors comply with when carrying out their work. This is critical to
the success of all areas of the Enlarged Group's business.
The Enlarged Group takes the management of both operational and occupational
health and safety seriously. Any failure in health and safety performance
which results in a major or significant health and safety incident is likely
to be costly for the relevant business in terms of potential liabilities
incurred as a result. Furthermore, such a failure could generate significant
adverse publicity and have a negative impact on the Enlarged Group's
reputation and its ability to win new business, which, in turn, could
adversely affect its operating, financial and share price performance.
Failure to meet quality thresholds and/or failure to complete or loss of major
contracts could have a material adverse effect on the Enlarged Group's
business and financial performance
The work undertaken, and services provided, by the Enlarged Group or on its
behalf by sub-contractors could be subject to quality measures and
satisfaction of KPIs imposed by customers. In the event that the Enlarged
Group fails to achieve the quality measures and/or KPIs imposed upon it or is
otherwise found to be in breach of contract for any reason, it is subject to
the risk that payments due under contracts for work undertaken may not be
recovered in full or will not be recovered at all or that contracts could
potentially be terminated or not renewed. In turn, this could have an adverse
impact on the future profitability of the Enlarged Group and could damage its
reputation, thereby adversely affecting its ability to secure future business
or on terms acceptable to it. Even if amounts disputed under a contract are
recovered, in whole or in part, it remains a risk that the time to recover
such amounts will be longer than anticipated and, where payments are delayed,
cash flow may be adversely affected, which, in turn, may adversely affect the
financial condition and prospects of the Enlarged Group.
Provision of construction and support services is a complex activity which can
involve disputes with third parties and there is no guarantee that a
substantial third party claim will be covered by insurance
The Enlarged Group may be exposed to disputes and potentially significant
litigation, including, but not limited to, breach of contract and contractual
disputes arising from the work it completes or has undertaken for its
customers or with its supply chain. Insurance, if any, may be insufficient to
cover the particular claim or loss arising from such disputes and any
significant litigation may adversely affect the Enlarged Group's business,
financial condition and results of operations or cause the Enlarged Group
significant reputational harm. The Enlarged Group maintains commercial
insurances in an amount the Directors believe is appropriate against risks
commonly insured against by persons carrying on similar businesses, but there
can be no guarantee that it will be able to obtain similar levels of cover on
acceptable terms in the future. In addition, even with such insurance in
place, the risk remains that the Enlarged Group may incur liabilities to
customers and other third parties which exceed the limits of such insurance
cover or are not covered by it. Should such a situation arise, it may have a
material adverse impact on the business, results of operations, financial
condition or prospects of the Enlarged Group.
The Enlarged Group is exposed to risks arising from its dependence on
contractors, sub-contractors and other service providers
Whilst certain of its services are provided on the basis of a direct delivery
model, the Enlarged Group, and C&D, in particular, is, and will continue
to be, reliant on its supply chain as it is required, to a significant extent,
to use third party contractors to provide certain services.
The Enlarged Group seeks to build long-term relationships with its
sub-contractors and providers of sub-contractors, in the same way that it does
with its customers, but this is dependent on it being able to provide them
with sufficient work to keep them engaged at attractive rates. To the extent
that the Enlarged Group is unable to achieve this for any reason, then it
could lose reliable sub-contractors to its competitors who they may consider
are better able to provide them with the pipeline of work that they require
which could affect the ability of the Enlarged Group to service its existing
contracts and to secure new ones. This, in turn, could have a material adverse
impact on the Enlarged Group's businesses, results of operations, financial
condition and prospects.
If a sub-contractor or supplier of goods or services fails financially or is
responsible for late or inadequate delivery or poor quality of work on a
project, then it could damage the Enlarged Group's reputation and/or cause it
to suffer financial losses on a particular contract. Any sub-contractor
employed by the Enlarged Group is likely to be subject to the same competitive
and challenging market conditions as the Enlarged Group, potentially
increasing the risk of financial failure compared with the risk during more
favourable conditions.
The Enlarged Group may hire a contractor that subsequently becomes insolvent,
causing cost overruns, programme delays and increasing the risk that the
Enlarged Group will be unable to recover costs in relation to any defective
work performed by such contractor, to the extent that such costs are not
covered by insurance. The insolvency or other financial distress of one or
more sub-contractors could have a material adverse impact on the Group's
business, financial condition and operating results. The Enlarged Group
assesses the financial strength of its sub-contractors on an ongoing basis.
The directors of C&D do not consider there to be any over reliance on any
one subcontractor or provider of sub-contractors.
Loss of, or failure to obtain, a key accreditation and/or certification could
lead to withdrawal of work, contract loss or a failure to win new business
The Enlarged Group seeks to obtain and maintain a number of regulatory-driven
accreditations and/or certifications in connection with the delivery of its
services as these may either be required in order to secure certain types of
work or, more frequently, assist with the securing of new contracts. For
example, C&D and SWHS are Gas Safe-registered businesses. If these
accreditations are detrimentally affected in any way, or withdrawn in their
entirety by the bodies which issued them, this could have a material adverse
effect on the Enlarged Group's financial condition and prospects as, unless
those accreditations are restored, the Enlarged Group could potentially be
excluded from opportunities to tender for future work or, in some cases, from
being able to continue to perform its existing contracts. The possession of an
accreditation or certification from a specific industry or assessment body
may, in many cases, be required in order for the Enlarged Group to qualify to
tender for, and/or to secure, new contracts from customers in sectors or
markets in which the Enlarged Group does not currently operate, but into which
it is seeking to expand. The process of obtaining a specific accreditation or
certification can, in some cases, be costly and time-consuming, which could
mean that the Enlarged Group is unable to bid for, or to secure, work whilst
its application for accreditation or certification is in progress or being
adjudicated. Any significant delay in obtaining, or failure to obtain at all,
a particular accreditation or certification required could, therefore, inhibit
the Enlarged Group's ability to grow its customer base and/or to expand into
new markets, which could, in turn, have a material adverse impact on the
Enlarged Group's business, financial condition, results of operations and
prospects.
Failure to attract, develop and retain appropriately skilled management or
other personnel could adversely impact the Enlarged Group's business, strategy
and growth potential
The success of the Enlarged Group is dependent on recruiting, retaining,
motivating and developing sufficient appropriately skilled and competent
people at all levels of the organisation. The Enlarged Group faces strong
competition for personnel from other companies and organisations. There may at
any time be shortages in the availability of appropriately skilled people at
all levels within the Enlarged Group. Such shortages, especially engineers, if
they continue for a prolonged period, may affect the Enlarged Group's ability
to tender for, or complete, work and therefore, have a negative effect on the
Enlarged Group's businesses, financial performance and prospects.
In addition, the Enlarged Group's success depends, to a significant extent, on
the continued services of its Senior Management Team, which has substantial
knowledge of, and experience and expertise in, the industries in which the
Enlarged Group operates. The members of the Senior Management Team contribute
to the Enlarged Group's ability to obtain, generate, manage and develop
opportunities. If the Enlarged Group is unable successfully to attract and
retain such personnel, it may not be able to maintain standards of service or
continue to grow its businesses as anticipated. The loss of such personnel, or
the inability to attract and retain additional appropriately skilled employees
required for their activities, could have a material adverse effect on the
Enlarged Group's business and prospects. There is no guarantee that any of the
Senior Management Team will remain employed by the Enlarged Group beyond those
subject to lock in agreements as outlined in paragraphs 12.1.10, 12.1.12 and
12.1.14 of Part IX of the Admission Document. Succession planning is key at
all levels of the Enlarged Group. The loss of the services of key members of
the Senior Management Team and the failure to maintain a robust management
reporting process may lead to a lack of, or inadequate, information being
provided to decision-makers in the Enlarged Group which could have an adverse
effect on the Enlarged Group's future prospects, financial condition or
results of operations.
Additional capital requirements
The Enlarged Group's capital requirements depend on numerous factors,
including its ability to maintain and expand its customer base, monitoring of
working capital, including payment terms with suppliers and customers,
seasonality of revenue, adequate project cost control activities as well as
potential acquisitions. If the plans or assumptions set out in the Enlarged
Group's business plan change or prove to be inaccurate, or if the Company
makes any material acquisitions, this may necessitate further financing. Any
additional equity financing may be dilutive to Shareholders, and debt
financing, if available, may involve restrictions on financing and operating
activities. If the Enlarged Group is unable to obtain additional financing as
needed, it may be required to reduce the scope of its strategic plans. The
Directors are of the opinion, having made due and careful enquiry, that the
Enlarged Group will have sufficient working capital available to it for its
present requirements, that is for at least twelve months from Admission.
Of the Enlarged Group, certain self-employed sub-contractors could be deemed
to be employees for tax and employment law purposes
The Enlarged Group engages with self-employed sub-contractors through third
party contractor agencies, but also directly with bona fide contractors and
self-employed contractors. Whilst the Enlarged Group conducts an onboarding
process to ensure that it remains compliant with published HMRC guidelines on
the status of self-employed sub-contractors, if any arrangements in relation
to those persons change in the future, or if HMRC successfully challenges
whether these activities are compliant with the employment status rules, the
relevant persons could be deemed to be employees instead of sub-contractors,
in which case, the Enlarged Group would be liable to make payments in respect
of PAYE/NIC relating to their employment. Pursuant to UK employment law,
employees and workers enjoy various rights which are not available to
genuinely self-employed individuals and there is also a risk that
self-employed contractors might therefore seek to claim employee or worker
status in order to benefit from additional entitlements, such as compensation
in respect of unfair dismissal (a right which is available only to an
employee). The Enlarged Group would also be liable for increased costs (such
as PAYE income tax, National Insurance Contributions ("NICs") (this can be
offset against tax/NIC paid by the worker/his Personal Service Company etc),
interest and penalties) and contractors could also seek to claim statutory
entitlements such as holiday pay, sick pay and maternity pay. If successful,
their entitlements could extend back to the commencement of engagement by the
relevant Enlarged Group company. Whilst the Enlarged Group endeavours to
ensure that both the contracts and procedures in place with such parties are
constructed in such a way so as to minimise the risk that an employee
relationship is established, the risk nevertheless remains that a court or
tribunal might determine that, in reality, there is an employment
relationship, even if this contradicts what is written in a contract. Any such
determination could, therefore, have a material adverse effect on the Enlarged
Group's business, financial condition, results of operations and prospects.
Disruption or failure of networks and information systems, the internet or
other technology
The Enlarged Group's business is dependent on the availability of network and
information systems, the internet and other technologies, in particular access
to, and use of, software applications. Shutdowns or service disruptions caused
by events such as criminal activity, sabotage or espionage, computer viruses,
hacking and other cyber-security attacks, router disruption, automated attacks
such as denial of service attacks, power outages, natural disasters,
accidents, terrorism, equipment failure or other events within or outside the
Enlarged Group's control could adversely affect the Enlarged Group and
customers. Furthermore, such attacks cannot always be immediately detected,
which means that the Enlarged Group may not be in a position to promptly
address the attacks or to implement adequate preventative measures.
Such events could result in large expenditures necessary to recover data, or
repair or replace such networks or information systems or to protect them from
similar events in the future. Significant incidents could result in a
disruption of parts of the Enlarged Group's business, consumer
dissatisfaction, damage to the Enlarged Group's brands, legal costs or
liability, and a loss of customers or revenues and affect the Enlarged Group's
financial performance and prospects.
Data protection breaches
The Enlarged Group must ensure ongoing compliance with various data protection
laws, including; (i) the UK version of Regulation (EU) 2016/679 as it forms
part of United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018 (the "UK GDPR") as set out in The Data Protection,
Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations
2019; (ii) the Data Protection Act 2018 (the "DPA"); and (iii) the Privacy and
Electronic Communications (EC Directive) Regulations 2003) The Enlarged Group
is under an obligation to protect the private and personal data that it holds,
including that of its employees and any personal information that the Enlarged
Group holds in respect of its employees would be subject to the UK GDPR, the
DPA and other relevant laws. There is an inherent risk that such data could be
processed in a manner which is in direct breach of the relevant data
protection legislation, the consequence of which would not only be a
potentially significant fine, but may also result in damage to the Enlarged
Group's reputation further impacting the Enlarged Group's revenue. There is a
risk that any data breach within the Company could have significant
reputational impact, given the nature of the services the Enlarged Group
offers. Although the Board considers that the Enlarged Group has in place
adequate procedures to ensure compliance with the UK GDPR, the DPA and other
relevant laws and controls to ensure the security of the data collected, this
does not preclude the possibility of litigation or damage of goodwill as a
result of a perceived breach, or an actual breach of the UK GDPR, the DPA and
other relevant data protection laws.
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 brands and websites
similar to those offered by the Enlarged Group without infringing the Enlarged
Group's intellectual property rights, which could adversely affect the
Enlarged Group's reputation, business, financial condition or prospects.
Litigation and other adversarial actions in the ordinary course of business
could materially adversely affect the Enlarged Group
Although the Enlarged Group is not currently party to (either as a claimant or
as a defendant) any material litigation, it may be subject to such litigation
in the future. In addition, the Company may be subject to other disputes,
claims and complaints, including adversarial actions, by customers, employees,
suppliers, insurers and others in the ordinary course of business. Significant
claims or a substantial number of small claims may be expensive to defend, may
divert the time and focus of the Directors and the Senior Management Team away
from the Enlarged Group's operations and may result in the Enlarged Group
having to pay monetary damages, any of which could have a material adverse
effect on the Enlarged Group's financial condition, business, prospects and
results of operations. In addition, adverse publicity or substantial
litigation against the Enlarged Group could negatively impact its reputation,
even if the Enlarged Group is not found liable, which could have a material
adverse effect on the Enlarged Group's business and financial condition.
Adequacy of warranties within the SPAs
The objective of the due diligence conducted on each of the Targets is to
identify any material issues which might affect an acquisition decision and
ensure, where relevant, the sufficiency of warranties given by the Sellers
within the SPAs. When conducting due diligence and making an assessment
regarding an acquisition, the Directors are required to rely on resources
available to them, including, in the main, data provided by the Targets and
public information. As a result, there can be no assurance that the due
diligence undertaken will reveal or highlight all relevant facts that may be
necessary or helpful in evaluating such acquisitions or the adequacy of
warranties contained within the SPAs for all of the past and future
liabilities relating to the operations and activities of the Targets,
including, but not limited to, tax as well as a tax covenant and indemnities
in respect of specific liabilities.
Suppliers
The Enlarged Group relies on certain suppliers, without whom the Enlarged
Group's revenue generation, efficiency of operations and cash flow may not be
optimised. The Enlarged Group cannot guarantee that service and products
delivered from third parties will remain of a high quality in the future and
be provided without interruption. In the event of a major disruption to the
timely supply of third party products and services, alternative suppliers may
only be available at higher prices or at the cost of some delay in supply
which could negatively affect the Enlarged Group's operations, financial
results and performance.
Financial controls and internal reporting procedures
As part of the Admission process, the Enlarged Group has implemented various
new processes and controls to allow it to produce accurate and timely
financial statements and to monitor and manage risks. If any of these systems
or controls were to fail, the Enlarged Group may be unable to produce
financial statements accurately or on a timely basis or expose the Enlarged
Group to risk. Any concerns investors may have in respect of the potential
lack of available and current financial information and the controls the
Enlarged Group has in place could adversely affect the Enlarged Group's share
price.
GENERAL RISKS RELATING TO AN INVESTMENT IN THE ORDINARY SHARES
General
An investment in Ordinary Shares is only suitable for financially
sophisticated investors who are capable of evaluating the merits and risks of
such an investment, or other investors who have been professionally advised
with regard to the investment, and who have sufficient resources to be able to
bear any losses that may arise therefrom (which may be equal to the whole
amount invested). Such an investment should be seen as complementary to
existing investments in a wide spread of other financial assets and should not
form a major part of an investment portfolio. Prospective investors should not
consider investing in the Ordinary Shares unless they already have a
diversified investment portfolio. Prospective investors should be aware that
the value of an investment in the Enlarged Group may go down as well as up and
investors may therefore not recover their original investment.
Legislation and tax status
The Admission Document has been prepared on the basis of current legislation,
regulation, rules and practices and the Directors' interpretation thereof.
Such interpretation may not be correct, and it is always possible that
legislation, rules. and practice may change. Any change in legislation and in
particular in tax status or tax residence of the Enlarged Group or in tax
legislation or practise may have an adverse effect on the returns available on
an investment in the Enlarged Group.
General economic climate
Factors such as inflation, currency fluctuation, interest rates, supply and
demand of capital and industrial disruption have an impact on business costs
and stock market prices. The Enlarged Group's operations, business and
profitability can be affected by these factors, which are beyond the control
of the Enlarged Group.
Economic, political, judicial, administrative, taxation, environmental or
other regulatory matters
In addition to the impact of the downturn of the world's economies, the
Enlarged Group may be adversely affected by other changes in economic,
political, judicial, administrative, taxation or other regulatory or other
unforeseen matters. The Enlarged Group may not have been and may not be at all
times in complete compliance with environmental laws, regulations and permits,
and the nature of the Enlarged Group's operations expose it to the risk of
liabilities or claims with respect to environmental, regulatory and worker
health and safety matters. If the Enlarged Group violates or fails to comply
with relevant laws, regulations and permits, it could be subject to penalties,
fines, restrictions on operations or other sanctions, and the Enlarged Group's
operations could be interrupted or suspended.
Share price volatility and liquidity
Following Admission, the market price of the Ordinary Shares may be subject to
wide fluctuations in response to many factors, including stock market
fluctuations and general economic conditions or changes in political
sentiment. This may substantially affect the market price of the Ordinary
Shares irrespective of the progress the Company may make in terms of
developing and expanding its products or its actual financial, trading, or
operational performance. These factors could include the performance of the
Enlarged Group, 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 certain lock-in and orderly
marketing arrangements), legislative changes and market, economic, political
or regulatory conditions or price distortions resulting from limited liquidity
in the Enlarged Group's shares. The share price for publicly traded companies,
particularly those at an early stage of development, such as the Enlarged
Group, can be highly volatile. Admission should not be taken as implying that
a liquid market for the Ordinary Shares will either exist, develop, or be
sustained following Admission. 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 Ordinary Shares 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 even for a relatively small number of such
Ordinary Shares.
There is no guarantee that the Ordinary Shares will continue to be traded on
AIM
The Enlarged Group cannot assure Shareholders that the Ordinary Shares will
always continue to be traded on AIM or on any other exchange. Trading on AIM
in the Ordinary Shares will be suspended if Completion does not occur by 31
August 2024. Furthermore, if a reverse takeover is not completed by 28
February 2025, admission of the Ordinary Shares to trading on AIM will be
cancelled.
Investment in AIM traded securities
The Ordinary Shares will be traded on AIM rather than admitted to the Official
List. AIM is designed primarily for emerging or smaller companies to which a
higher investment risk tends to be attached than to larger or more established
companies. The rules of AIM are less demanding than the rules for companies
admitted to the Official List and an investment in shares traded on AIM may
carry a higher risk than an investment in shares admitted to the Official
List. In addition, the market in shares traded on AIM may have limited
liquidity (as stated above), therefore making it more difficult for an
investor to realise its investment on AIM than to realise an investment in a
company whose shares are admitted to the Official List. Prospective investors
should therefore be aware that the market price of the Ordinary Shares may be
more volatile than that of shares admitted to the Official List and may not
reflect the underlying value of the Enlarged Group. Investors may, therefore,
not be able to sell at a price which permits them to recover their original
investment and they could lose their entire investment in the Enlarged Group.
Issue of additional Ordinary Shares
It is expected that the Enlarged Group will make further acquisitions
following Completion which will be funded by the issue of further Ordinary
Shares and cash which would be funded either by bank debt, if available to the
Enlarged Group, or by the issue of further Ordinary Shares. It is possible
that the Enlarged Group may decide to issue, pursuant to a public offer or
otherwise, additional Ordinary Shares in the future at a price or prices
higher or lower than the Placing Price. An additional issue of Ordinary Shares
by the Enlarged Group, or the public perception that an issue may occur, could
have an adverse effect on the market price of Ordinary Shares and could dilute
the proportionate ownership interest, and hence the proportionate voting
interest, of Shareholders. This will particularly be the case if, and to the
extent that, such an issue of Ordinary Shares is not effected on a pre-emptive
basis, or Shareholders do not take up their rights to subscribe for further
Ordinary Shares structured as a pre-emptive offer.
Dilution
If the Enlarged Group were to offer equity securities for sale in the future,
Shareholders not participating in these equity offerings may become diluted
and pre-emptive rights may not be available to certain Shareholders. The
Enlarged Group may also in the future issue Ordinary Shares, warrants and/or
options to subscribe for new Ordinary Shares, including (without limitation)
to certain advisers, employees, directors, senior management, and consultants.
The exercise of such warrants and/or options may also result in the dilution
of the shareholdings of other investors.
Risks relating to EIS and VCT
Investors should be aware of the possibility that only the EIS/VCT Placing
Shares might be issued and that none, or only some, of the Non-EIS and VCT
Placing Shares, the Initial Consideration Shares and the Bob Holt Loan
Conversion Shares are issued. Investors should also be aware that Second
Admission might not take place. Consequently, even if the EIS and VCT Placing
Shares have been issued there is no guarantee that the placing of the Non-EIS
and VCT Placing Shares and issuance of the Initial Consideration Shares and
the Bob Holt Loan Conversion Shares will become unconditional. The working
capital statement set out in paragraph 16 of Part IX of the Admission Document
assumes that all of the New Ordinary Shares are issued and Second Admission
takes places. If all of the New Ordinary Shares are not issued and Second
Admission does not take place, the Company may not be able to implement the
strategy and growth plans as outlined in the Admission Document and, on the
assumption that none of the Acquisitions has taken place, all the issued
shares in the Company would be suspended from trading on AIM.
The availability of EIS Relief and the status of the relevant EIS Placing
Shares and/or the VCT Placing Shares as a qualifying holding for VCT purposes
will be conditional on (amongst other things) the Company and the investor
both continuing to satisfy the relevant requirements, under the relevant tax
legislation, throughout, broadly, the period of three years from the date of
issue of the relevant EIS Placing Shares and for VCTs for the period during
which the VCTs hold the shares. Neither the Company, the Board nor the
Company's advisers represent, warrant or undertake that the Company or the EIS
Placing Shares and VCT Placing Shares will comply with the requirements of
respectively the EIS Legislation or the VCT Legislation at or following the
Placing, that investors will be able to obtain EIS Relief or VCT Relief in
respect of their subscription for EIS Placing Shares or VCT Placing Shares, or
that in due course such EIS or VCT Relief will not be withdrawn.
Circumstances may arise (which may include the sale of the Enlarged Group)
where the Board believes that the interests of the Enlarged Group are not best
served by acting in a way that preserves VCT qualifying status, or ensures
that the Company and/or the EIS Placing Shares and VCT Placing Shares will
continue to meet the conditions for EIS Legislation or VCT Legislation
respectively. In such circumstances, the Enlarged Group and the Board cannot
undertake to conduct the activities of the Enlarged Group in a manner designed
to preserve any such relief or status. Should the relevant legislation
regarding EIS or VCTs change, then eligibility for EIS Relief or qualifying
status for VCT purposes previously obtained may be lost.
Any person seeking to obtain EIS or VCT Relief should consult their own
professional tax adviser in order that they may fully understand how the EIS
Legislation and VCT Legislation applies in their individual circumstances. In
particular, any such person should seek professional tax advice as to whether
or not they are considered to be "independent", for the purposes of seeking
EIS Relief. There is a risk that such person may consider themselves to be
"independent", but HMRC does not agree with such classification.
APPENDIX III
TERMS AND CONDITIONS OF THE PLACING
UNLESS DEFINED BELOW CAPITALISED TERMS ARE AS DEFINED IN THE ADMISSION
DOCUMENT.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
ANNOUNCEMENT (INCLUDING THIS APPENDIX) AND THE TERMS AND CONDITIONS SET OUT
HEREIN (TOGETHER, THIS "ANNOUNCEMENT") ARE FOR INFORMATION PURPOSES ONLY AND
ARE DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN
ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR
AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE
IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE
("RELEVANT MEMBER STATE") OF THE EUROPEAN ECONOMIC AREA ("EEA"), PERSONS WHO
ARE QUALIFIED INVESTORS ("EEA QUALIFIED INVESTORS"), BEING PERSONS FALLING
WITHIN THE MEANING OF ARTICLE 2(e) OF REGULATION (EU) 2017/1129 (THE "EU
PROSPECTUS REGULATION"); OR (B) IF IN THE UNITED KINGDOM, PERSONS WHO ARE
QUALIFIED INVESTORS ("UK QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN
THE MEANING OF ARTICLE 2(e) OF PROSPECTUS REGULATION (EU) 2017/1129 AS IT
FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018 (THE "UK PROSPECTUS REGULATION"), AND WHO ARE (I) PERSONS FALLING WITHIN
THE DEFINITION OF "INVESTMENT PROFESSIONAL" IN ARTICLE 19(5) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED
(THE "ORDER") OR (II) PERSONS WHO FALL WITHIN ARTICLE 49(2)(A) TO (D) (HIGH
NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC) OF THE ORDER, OR (C)
PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS
REFERRED TO IN (A), (B) AND (C) TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS").
THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE
ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS
DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO
SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS 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
THE SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
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 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 ANY
OTHER JURISDICTION OF THE UNITED STATES. ACCORDINGLY, THE PLACING SHARES WILL
BE OFFERED AND SOLD ONLY OUTSIDE OF THE UNITED STATES IN "OFFSHORE
TRANSACTIONS" (AS SUCH TERM IS DEFINED IN REGULATION S UNDER THE SECURITIES
ACT ("REGULATION S")) PURSUANT TO REGULATION S AND OTHERWISE IN ACCORDANCE
WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF THE PLACING SHARES IS BEING MADE
IN THE UNITED STATES OR ELSEWHERE.
THIS ANNOUNCEMENT (INCLUDING THE APPENDIX) AND THE INFORMATION CONTAINED
HEREIN 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, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR
ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL.
The distribution of this Announcement and/or the Placing and/or issue of the
Placing Shares in certain jurisdictions may be restricted by law. No action
has been taken or will be taken by the Company, the Nominated Adviser, the
Joint Brokers 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 such Placing Shares in any jurisdiction where
action for that purpose is required. Persons into whose possession this
Announcement comes are required by the Company, the Nominated Adviser, and the
Joint Brokers to inform themselves about and to observe any such restrictions.
Neither this Announcement nor any part of it constitutes or forms part of any
offer to issue or sell, or the solicitation of an offer to acquire, purchase
or subscribe for, any securities in any jurisdiction in which such offer or
solicitation is unlawful and, in particular, is not for distribution in or
into the United States (including its territories and possessions, any state
of the United States and the District of Columbia), Australia, Canada, Japan,
the Republic of South Africa or to any national, resident or citizen of the
United States, Australia, Canada, Japan or the Republic of South Africa or to
any corporation, partnership or other entity created or organized under the
laws thereof, or to any persons in any other country outside the United
Kingdom where such distribution may lead to a breach of any legal or
regulatory requirement. 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 EU Prospectus Regulation and the UK Prospectus Regulation 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 or the Republic of South Africa. Accordingly, the Placing Shares may not
(unless an exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or into
Australia, Canada, Japan, the Republic of South Africa or any other
jurisdiction in which such activities would be unlawful.
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.
Each Placee should consult with its own advisers as to legal, tax, business
and related aspects of an acquisition of Placing Shares. The price of shares
and any income expected from them may go down as well as up and Placees may
not get back the full amount invested upon disposal of the shares. Past
performance is no guide to future performance.
Placees, including any individuals, funds or others on whose behalf a
commitment to acquire Placing Shares is given, will be deemed: (i) to have
read and understood this Announcement, including this Appendix, in its
entirety; and (ii) to be participating and making an offer for Placing Shares
on the terms and conditions and to be providing the representations,
warranties, acknowledgements and undertakings, contained in this Appendix.
Representations, warranties and acknowledgements of the Placees
In particular, each such Placee represents, warrants and acknowledges that:
1 in the case of a Relevant Person in the United Kingdom who acquires
any Placing Shares pursuant to the Placing:
(a) it is a UK Qualified Investor; and
(b) in the case of any Placing Shares acquired by it as a financial
intermediary, as that term is used in Regulation 5(1) of the UK Prospectus
Regulation:
(i) 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 (a) to persons in the United Kingdom other than
UK Qualified Investors or (b) to persons in any Relevant Member State other
than EEA Qualified Investors or (c) or in circumstances in which the prior
consent of the Nominated Adviser and the Joint Brokers has been given to each
such proposed offer or resale;
(ii) where Placing Shares have been acquired by it on behalf of persons in
the United Kingdom other than UK Qualified Investors, the offer of those
Placing Shares to it is not treated under the UK Prospectus Regulation as
having been made to such persons; or
(iii) where Placing Shares have been acquired by it on behalf of persons,
other than EEA Qualified Investors, in any Relevant Member State, the offer of
those Placing Shares to it is not treated under the EU Prospectus Regulation
as having been made to such persons;
2 in the case of a Relevant Person in a Relevant Member State who
acquires any Placing Shares pursuant to the Placing:
(a) it is an EEA Qualified Investor; and
(b) in the case of any Placing Shares acquired by it as a financial
intermediary, as that term is used in Regulation 5 of the EU Prospectus
Regulation:
(i) 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 (a) to persons in the United Kingdom other than
UK Qualified Investors or (b) to persons in any Relevant Member State other
than EEA Qualified Investors or (c) or in circumstances in which the prior
consent of the Nominated Adviser and the Joint Brokers has been given to each
such proposed offer or resale;
(ii) where Placing Shares have been acquired by it on behalf of persons in
the United Kingdom other than UK Qualified Investors, the offer of those
Placing Shares to it is not treated under the UK Prospectus Regulation as
having been made to such persons; or
(iii) where Placing Shares have been acquired by it on behalf of persons,
other than EEA Qualified Investors, in any Relevant Member State, the offer of
those Placing Shares to it is not treated under the EU Prospectus Regulation
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 has authority to
exercise, and is exercising, 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;
5 except as otherwise permitted by the Company and subject to any
available exemptions from applicable securities laws, it (and any person on
whose account it is acting, as referred to in paragraph 4 above) is located
outside the United States and is acquiring the Placing Shares in an "offshore
transaction" as defined in, and in accordance with, Regulation S;
6 if it acquires EIS Placing Shares or VCT Placing Shares (together, the
"EIS and VCT Placing Shares"), its obligations and rights under the Placing in
respect of such EIS and VCT Placing Shares is conditional on the Placing
Agreement having become unconditional in respect of such Placing Shares but is
not conditional on First Admission or Second Admission.
Further details regarding the EIS Placing Shares and VCT Placing Shares
Investors must take their own professional advice in order that they may fully
understand how the relief legislation may apply in their individual
circumstances and rely on it. In particular, investors should note it is
intended that, if the Placing Agreement has not been terminated in accordance
with its terms before such time, the Company will unconditionally allot and
issue the EIS Placing Shares and the VCT Placing Shares prior to the
anticipated time of First Admission.
It is anticipated that the EIS Placing Shares will be issued unconditionally
on or around 11:59 p.m. on 27 August 2024, the VCT Placing Shares will be
issued unconditionally on or around 7:30 a.m. on 28 August 2024, and that
dealings for such shares will commence at 8.00am on 28 August 2024. The
Non-EIS and VCT Placing Shares will be issued on Second Admission and dealings
in the Non-EIS and VCT Placing Shares (along with the admission of the Initial
Consideration Shares and the Bob Holt Loan Conversion Shares and the
re-admission of the Existing Ordinary Shares and the EIS and VCT Placing
Shares) will commence at 8.00 a.m. on 29 August 2024 (or such later time
and/or date as may be agreed by the Nominated Adviser, the Joint Brokers and
the Company, not being later than 8.00 a.m. on 5 September 2024). Placees
acquiring EIS and VCT Placing Shares should be aware of the possibility that
the EIS Placing Shares and/or the VCT Placing Shares might be issued and that
none of the remaining Non-EIS and VCT Placing Shares are issued, and such
Placees should also be aware that neither the First Admission nor the Second
Admission may take place. Consequently, even if the EIS Placing Shares or the
VCT Placing Shares have been issued, there is no guarantee that the placing of
the remaining Non-EIS and VCT Placing Shares (or the issuance of the Initial
Consideration Shares and the Bob Holt Loan Conversion Shares) will become
unconditional or that the First Admission, Second Admission or completion of
the SPAs will occur.
Details of the Placing Agreement, the Placing Shares and the Bookbuild
SCC is acting as nominated adviser and SCS and Zeus are acting as a joint
brokers in connection with the Placing and Admissions. SCC, SCS and Zeus have
entered into the Placing Agreement with the Company under which, among other
things, SCS and Zeus have agreed to use their respective reasonable endeavours
to procure Placees to take up the Placing Shares, on the terms and subject to
the conditions set out therein.
SCS and Zeus will today commence the Bookbuild. This Appendix gives details of
the terms and conditions of, and the mechanics of participation in, the
Placing. No commissions will be paid to Placees or by Placees in respect of
any Placing Shares. The Placing is not being underwritten.
SCS and Zeus shall be entitled to effect the Placing by such alternative
method to the Bookbuild as it may, in its absolute discretion following
consultation with the Company, determine.
The Placing Shares will, as from the date when they are issued, be fully paid
up, rank in full for all dividends and other distributions declared, made or
paid on the Ordinary Shares and otherwise rank pari passu in all respects
with, and be identical to, the Existing Ordinary Shares.
Application for listing and admission to trading
Applications will be made for admission of the Placing Shares, the Initial
Consideration Shares and the Bob Holt Loan Conversion Shares to trading on
AIM.
The Placing and the Acquisitions are both subject to, inter alia, Shareholder
approval at the General Meeting. Should Shareholder approval not be satisfied,
the Placing will not proceed and neither First Admission nor Second Admission
will occur.
It is expected that First Admission will become effective and that dealings in
the EIS and VCT Placing Shares will commence at 8.00 a.m. on 28 August 2024.
It is expected that Second Admission will become effective and that dealings
in the Non-EIS and VCT Placing Shares (along with the Initial Consideration
Shares and the Bob Holt Loan Conversion Shares and the re-admission of the
Existing Ordinary Shares) will commence at 8.00 a.m. on 29 August 2024.
Participation in, and principal terms of, the Placing
The Joint Brokers are arranging the Placing as joint brokers and agents of the
Company for the purpose of procuring Placees at the Placing Price for the
Placing Shares.
1 Participation in the Placing will only be available to persons who may
lawfully be, and are, invited to participate by the Joint Brokers. Each Joint
Broker may severally (but is not obliged to) agree to be a Placee in respect
of all or some of the Placing Shares or may nominate any member of its group
to do so.
2 The number of Placing Shares to be issued at the Placing Price will be
agreed by the Joint Brokers (in consultation with the Company) following
completion of the Bookbuild. The number of Placing Shares to be issued will
also be announced on an RIS following the completion of the Bookbuild (the
"Placing Results Announcement").
3 To bid in the Bookbuild, Placees should communicate their bid by
telephone to their usual sales contact at the applicable Joint Broker. Each
bid should state the number of Placing Shares which the prospective Placee
wishes to subscribe for. Bids may be scaled down by the Joint Brokers on the
basis referred to in paragraph 7 below.
4 A bid in the Bookbuild will be made on the terms and subject to the
conditions in this Appendix and will be legally binding on the Placee on
behalf of which it is made and, except with the Joint Brokers' consent, will
not be capable of variation or revocation after the time at which it is
submitted. Each Placee will also have an immediate, separate, irrevocable and
binding obligation, owed to the Company and the relevant Joint Broker, to pay
to them (or as the relevant Joint Broker may direct) in cleared funds an
amount equal to the product of the Placing Price and the number of Placing
Shares that such Placee has agreed to subscribe for and the Company has agreed
to allot and issue to that Placee. Each prospective Placee's obligations will
be owed to the Company and the Joint Brokers.
5 The Bookbuild is expected to close at 11.00 a.m. today, but may be
closed earlier or later at the discretion of the Joint Brokers. The Joint
Brokers may, in agreement with the Company, accept bids, either in whole or in
part, that are received after the Bookbuild has closed.
6 The Joint Brokers may choose to accept bids, either in whole or in
part, on the basis of allocations determined in consultation with the Company
and may scale down any bids for this purpose on such basis as they may
determine. The Joint Brokers may also, notwithstanding paragraphs 4 and 5
above, (a) allocate Placing Shares after the time of any initial allocation to
any person submitting a bid after that time and (b) allocate Placing Shares
after the Bookbuild has closed to any person submitting a bid after that time.
The Company reserves the right (upon agreement with the Joint Brokers) to
reduce or seek to increase the amount to be raised pursuant to the Placing at
its discretion.
7 Allocations of the Placing Shares will be determined by the Joint
Brokers in their absolute discretion after consultation with the Company with
regard to the identities of the proposed Placees in accordance with the
conduct of business sourcebook of the FCA handbook. Allocations will be
confirmed orally by the relevant Joint Broker and a Form of Confirmation will
be despatched as soon as possible thereafter. The relevant Joint Broker's oral
confirmation to such Placee constitutes an irrevocable legally binding
commitment upon such person (who will at that point become a Placee), in
favour of the Joint Brokers and the Company, to acquire the number of Placing
Shares allocated to it and to pay the Placing Price in respect of such shares
on the terms and conditions set out in this Appendix and in accordance with
the Company's articles of association. Except with the Joint Brokers' consent,
such commitment will not be capable of variation or revocation after the time
at which it is submitted.
8 Each Placee's allocation and commitment to the Joint Brokers (acting
as placing agents for the Company) will be evidenced by a Form of Confirmation
issued to such Placee by the relevant Joint Broker. The terms of this Appendix
will be deemed incorporated in that contract note.
9 Irrespective of the time at which a Placee's allocation pursuant to
the Placing is confirmed, settlement for all Placing Shares to be acquired
pursuant to the Placing will be required to be made at the relevant time, on
the basis explained below under "Registration and Settlement".
10 All obligations of the Joint Brokers 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 "Right to terminate under the Placing Agreement".
11 By participating in the Placing, each Placee will agree that its rights
and obligations in respect of the Placing will terminate only in the
circumstances described below under "Right to terminate under the Placing
Agreement" and will not be capable of rescission or termination by the Placee.
12 To the fullest extent permissible by law, neither Joint Broker, nor the
Company, nor any of their respective affiliates, agents, directors, officers
or employees shall have any responsibility or liability to Placees (or to any
other person whether acting on behalf of a Placee or otherwise). In
particular, neither Joint Broker, nor the Company, nor any of their respective
affiliates, agents, directors, officers or employees shall have any
responsibility or liability (including to the extent permissible by law, any
fiduciary duties) in respect of the conduct of the Placing or of such
alternative method of effecting the Placing as the Joint Brokers and the
Company may determine.
13 The Placing Shares will be issued subject to the terms and conditions
of this Appendix and each Placee's commitment to subscribe for Placing Shares
on the terms set out herein will continue notwithstanding any amendment that
may in future be made to the terms and conditions of the Placing and Placees
will have no right to be consulted or require that their consent be obtained
with respect to the Company's or the Joint Brokers' conduct of the Placing.
14 All times and dates in this Announcement may be subject to amendment.
The Joint Brokers shall notify the Placees and any person acting on behalf of
the Placees of any such changes.
Conditions of the Placing
The entire Placing is conditional upon the Placing Agreement becoming
unconditional and not having been terminated in accordance with its terms.
The Nominated Adviser and the Joint Brokers' obligations under the Placing
Agreement are conditional on, inter alia:
1 the Company procuring that the Admission Document and Form of Proxy
are submitted to the London Stock Exchange and are sent to each Shareholder
who is entitled to receive notice of the General Meeting;
2 the SPAs having been entered into by the parties thereto on or before
the date of the Placing Agreement; and
3 the Placing Results Announcement is released through a RIS by no later
than 5.00p.m. on the date of the Placing Agreement.
The Nominated Adviser and the Joint Brokers' obligations under the Placing
Agreement in respect of the EIS Placing Shares are conditional on, inter alia:
1 the First Admission Application having been made;
2 the passing of the Resolutions (without amendment) by the requisite
majorities of Shareholders at the General Meeting on the date of the General
Meeting (and not, without the prior written consent of the Nominated Adviser
and the Joint Brokers (acting jointly), at any adjournment of such meeting);
3 the warranties given by the Company in the Placing Agreement being
true and accurate and not misleading when made at the date of the Placing
Agreement, publication of the Admission Document or completion of the EIS
Placing, by reference to the facts and circumstances subsisting at that time;
4 in the opinion of the Nominated Adviser and each Joint Broker (acting
in good faith), there having been no Specified Event (as defined in the
Placing Agreement) having occurred or Material Adverse Change (as defined in
the Placing Agreement) before completion of the EIS Placing;
5 no Supplementary Admission Document being required to be published or
having been published by the Company;
6 each of the SPAs having been entered into on or before the date of the
Placing Agreement and remaining in full force and effect and having become
unconditional in all respects in each case other than for Second Admission and
the Placing Agreement and not having been modified, or rescinded, lapsed or
been terminated (in whole or in part);
7 the Initial Consideration Shares and the Bob Holt Loan Conversion
Shares having been allotted, conditional only on Second Admission; and
8 the EIS Placing Shares having been unconditionally allotted and issued
by the Company at or before 11:59 p.m. on the day immediately prior to the
First Admission Date.
The Nominated Adviser and the Joint Brokers' obligations under the Placing
Agreement in respect of the VCT Placing Shares are conditional on, inter alia:
1 all the conditions in the Placing Agreement relating to the EIS
Placing having been fulfilled;
and
2 the VCT Placing Shares having been unconditionally allotted and issued
by the Company at or before 7:30 a.m. on the First Admission Date.
The Nominated Adviser and the Joint Brokers' obligations under the Placing
Agreement in respect of the Non-EIS and VCT Placing Shares are conditional on,
inter alia:
1 First Admission becoming effective no later than 8.00 a.m. on the
First Admission Date (or such later date as the Nominated Adviser and the
Joint Brokers may agree as the date for First Admission but in any event no
later than 8.00 a.m. on the Long Stop Date) (the "First Admission Condition");
2 the conditions in the Placing Agreement relating to the VCT Placing
Shares having been fulfilled;
3 the Non-EIS and VCT Placing Shares having been allotted, conditionally
only on Second Admission, in the manner described in the Placing Agreement;
and
4 Second Admission occurring not later than 8:00 a.m. on the Second
Admission Date (or such later date as the Nominated Adviser and the Joint
Brokers may agree as the date for Second Admission but in any event no later
than 8.00 a.m. on the Long Stop Date) (the "Second Admission Condition").
Save for the First Admission Condition and the Second Admission Condition
(which are not capable of being waived), the Nominated Adviser and the Joint
Brokers may, at its absolute discretion and subject to such conditions as they
consider appropriate, extend (or where capable of waiver, waive) the time and
date by which any of the Conditions may be satisfied, provided that the time
for satisfaction of the First Admission Condition and the Second Admission
Condition shall not extend beyond the Long Stop Date.
Any such extension or waiver will not affect Placees' commitments as set out
in this Announcement.
If: (i) any of the conditions contained in the Placing Agreement, including
those described above, is not fulfilled or (where permitted) waived by the
relevant time or date specified (or such later time and/or date as the
Company, the Nominated Adviser and the Joint Brokers' may agree); or (ii) the
Placing Agreement is terminated in the circumstances specified below, the
Placing (or the VCT Placing and/or the Non-EIS and VCT Placing, as the case
may be) will lapse, any funds delivered by the Placee to the Joint Brokers or
the Company in respect of the Placee's participation will (if applicable) be
returned to the Placee at the Placee's risk without interest and the Placees'
rights and obligations hereunder in relation to the Placing Shares (if
applicable) shall cease and terminate at such time and each Placee agrees that
no claim can be made by it (or any person on whose behalf the Placee is
acting) in respect thereof.
Neither the Nominated Adviser, the Joint Brokers nor any of their respective
affiliates, agents, directors, officers or employees nor the Company shall
have any liability to any Placee (or to any other person whether acting on
behalf of a Placee or otherwise) in respect of any decision they may make as
to whether or not to waive, or to extend the time and/or date for the
satisfaction of, any condition in the Placing Agreement nor in respect of any
decision they may make as to the satisfaction of any condition or in respect
of the Placing generally and by participating in the Placing each Placee
agrees that any such decision is within the absolute discretion of the Joint
Brokers.
Right to terminate under the Placing Agreement
The Nominated Adviser and each Joint Broker may, in its absolute discretion,
be entitled, at any time before Second Admission, to terminate the Placing
Agreement in accordance with its terms in certain circumstances, including,
inter alia, if, in the opinion of the Nominated Adviser or either Joint
Broker:
1 any statement contained in the Transaction Documents (as defined in
the Placing Agreement) has become untrue, inaccurate or misleading or any
matter having arisen which would, if such documents were issued at that time,
constitute an omission from such documents or any of them;
2 any of the warranties given by the Company in the Placing Agreement
was untrue, inaccurate or misleading when made and/or that any such warranties
having ceased to be true or accurate or has become misleading in each case by
reference to the facts and circumstances subsisting at that time;
3 the Resolutions are not passed by the requisite majority of
shareholders and without amendment at the General Meeting;
4 any of the Applications is withdrawn or refused by the London Stock
Exchange;
5 any party to each of the SPAs have become entitled to terminate or
rescind or has terminated or rescinded the respective SPA or any of the SPAs
is no longer in full force or effect; or
6 a Supplementary Admission Document has been published or is required
to be published by the Company;
7 a Specified Event (as defined in the Placing Agreement) or a Material
Adverse Change (as defined in the Placing Agreement) has occurred or there is
a fact, circumstance or development reasonably likely to result in a Material
Adverse Change; or
8 there has occurred:
(a) material adverse change in the financial markets in the United States,
the United Kingdom or in any member or associate member of the European Union
or the international financial markets;
(b) any outbreak or escalation of hostilities, war, act of terrorism,
declaration of emergency or martial law or other calamity or crisis or event
or any change or development involving a prospective change in national or
international political, financial, economic, monetary or market conditions or
currency exchange rates or controls in the United States, the United Kingdom
or in any member or associate member of the European Union;
(c) a suspension or material limitation by the London Stock Exchange on any
exchange or other-the-counter market in the trading in any securities of
EARNZ, or a suspension or material limitation in trading generally on the New
York Stock Exchange, the NASDAQ National Market or the London Stock Exchange,
or the fixing of minimum or maximum prices for trading or the imposition of a
requirement for maximum ranges for prices of securities, by any of said
exchanges or by such system or by order of any governmental authority, or a
material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States or in Europe;
(d) any actual or prospective change or development in the United Kingdom or
any other Taxation that would have a materially adverse effect on any member
of the EARNZ Group, the allotment, issue or delivery of the New Ordinary
Shares or the transfer thereof, or any member or associate member of the
European Union; or
(e) a declaration of a banking moratorium by the authorities in the United
States, the United Kingdom or a member or associate member of the European
Union,
which in any such case would (either individually or together with any other
event referred to in this paragraph 8), in the opinion of the Nominated
Adviser or either Joint Broker (acting in good faith), be likely to prejudice
the success of the Transaction, dealings in the New Ordinary Shares following
Second Admission or which makes it impractical or inadvisable to proceed with
the Transaction in the manner contemplated in the Transaction Documents (as
defined in the Placing Agreement).
If Zeus but not Shore Capital serves notice to terminate the Placing Agreement
under its terms, Shore Capital may, in its absolute discretion and without
obligation, within 24 hours thereafter elect, by giving notice to the Company,
allow the Placing to proceed on the basis that Shore Capital shall assume any
and all obligations of Zeus which remain to be performed under the Placing
Agreement. For the avoidance of doubt, in no circumstances shall Zeus proceed
with the Placing if Shore Capital elect to terminate the Placing Agreement.
By participating in the Placing, Placees agree with the Company, the Nominated
Adviser and the Joint Brokers that the exercise or non-exercise by Shore
Capital and/or Zeus of any right of termination or other right or other
discretion under the Placing Agreement shall be within the absolute discretion
of Shore Capital and/or Zeus or for agreement between the Company and Shore
Capital and/or Zeus (as the case may be) and that neither the Company nor
Shore Capital and/or Zeus need make any reference to, or consult with, you and
that none of the Company, Shore Capital and/or Zeus nor any of their
respective affiliates or its or their respective duly authorised
representatives shall have any liability to you whatsoever in connection with
any such exercise or failure to so exercise or otherwise.
Restriction on Further Issue of Shares and certain other matters
The Company has undertaken to the Nominated Adviser and the Joint Brokers that
it will not, and will procure that no Enlarged Group Company will, between the
date of the Placing Agreement and 180 days after Second Admission, inter alia:
1 allot, issue, offer, sell, contract to sell or issue, grant any
option, right or warrant to subscribe or purchase or otherwise dispose of or
create an encumbrance over, directly or indirectly, any "equity securities"
(as defined in the Companies Act) (or any securities convertible into or
exchangeable for equity securities or which carry rights to subscribe or
purchase equity securities) or any interest in any equity securities or agree
to do any of such things; or
2 enter into, or incur any obligation to make, any commitment or
agreement, or put itself in a position where it is obliged to announce that
any commitment or agreement may be entered into or made save to the extent
that it relates to such a commitment or agreement disclosed in the Admission
Document and in this Announcement, which in either case is or might be
material in the context of the Transaction, without the prior written consent
of the Joint Brokers (acting jointly).
No Prospectus
No offering document or prospectus has been or will be submitted to be
approved by the FCA or submitted to the London Stock Exchange in relation to
the Placing.
Placees' commitments will be made solely on the basis of publicly available
information taken together with the information contained in this
Announcement, and any other Exchange Information and subject to the further
terms set forth in the Form of Confirmation. Each Placee, by accepting a
participation in the Placing, agrees that the content of this Announcement
(including this Appendix) and all other Exchange Information is exclusively
the responsibility of the Company and confirms that it has neither received
nor relied on any other information, representation, warranty or statement
made by or on behalf of the Company or the Nominated Adviser and the Joint
Brokers or any other person and none of the Company or the Nominated Adviser,
the Joint Brokers nor any other person will be liable for any Placee's
decision to participate in the Placing based on any other information,
representation, warranty or statement which the Placees may have obtained or
received. Each Placee acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the Company in
accepting a participation in the Placing. Nothing in this paragraph shall
exclude the liability of any person for fraudulent misrepresentation by that
person.
Registration and Settlement
Settlement of transactions in the Placing Shares (ISIN: GB00BRC2TB67)
following the relevant Admission will take place within CREST. Subject to
certain exceptions, the Joint Brokers and the Company reserve the right to
require settlement for, and delivery of, the Placing Shares (or any part
thereof) to Placees by such other means that they deem necessary if delivery
or settlement is not possible or practicable within CREST within the timetable
set out in this Announcement or would not be consistent with the regulatory
requirements in the Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent a Form of
Confirmation in accordance with the standing arrangements in place with the
relevant Joint Broker stating the number of Placing Shares allocated to it at
the Placing Price, the aggregate amount owed by such Placee to the relevant
Joint Broker and settlement instructions. Each Placee agrees that it will do
all things necessary to ensure that delivery and payment is completed in
accordance with the standing CREST or certificated settlement instructions in
respect of the Placing Shares that it has in place with the relevant Joint
Broker. Settlement within CREST will take place on a delivery versus payment
basis.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of two
percentage points above the base rate of Barclays Bank PLC as determined by
the Joint Brokers.
It is expected that settlement will be on 28 August 2024 in respect of the EIS
Placing Shares and VCT Placing Shares and 29 August 2024 in respect of the
Non-EIS and VCT Placing Shares in accordance with the instructions set out in
the Form of Confirmation.
Each Placee is deemed to agree that, if it does not comply with these
obligations, the Joint Brokers 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 relevant Joint Brokers' 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) or other similar taxes imposed in
any jurisdiction which may arise upon the sale of such Placing Shares on such
Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the Form of Confirmation is copied and delivered
immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its
nominee or in the name of any person for whom a Placee is contracting as agent
or that of a nominee for such person, such Placing Shares should, subject as
provided below, be so registered free from any liability to UK stamp duty or
stamp duty reserve tax. If there are any circumstances in which any stamp duty
or stamp duty reserve tax or other similar taxes or duties (including any
interest and penalties relating thereto) is payable in respect of the
allocation, allotment, issue, sale, transfer or delivery of the Placing Shares
(or, for the avoidance of doubt, if any stamp duty or stamp duty reserve tax
is payable in connection with any subsequent transfer of or agreement to
transfer Placing Shares), none of the Nominated Adviser, the Joint Brokers nor
the Company shall be responsible for payment thereof.
Representations, Warranties, Undertakings and Further Terms
By participating in the Placing each Placee (and any person acting on such
Placee's behalf) irrevocably:
1 represents and warrants that it has read and understood this
Announcement, including this Appendix, in its entirety and that its
acquisition of Placing Shares is subject to and based upon all the terms,
conditions, representations, warranties, acknowledgements, agreements and
undertakings and other information contained herein and undertakes not to
redistribute or duplicate this Announcement;
2 acknowledges that its obligations are irrevocable and legally binding
and shall not be capable of rescission or termination by it in any
circumstances;
3 acknowledges that no offering document or prospectus has been or will
be prepared in connection with the Placing and represents and warrants that it
has not received and will not receive a prospectus or other offering document
in connection with the Placing or the Placing Shares and that any
participation in the Bookbuild will solely be on the basis of the information
in this Announcement and other Exchange Information;
4 acknowledges that the Placing does not constitute a recommendation or
financial product advice and the Nominated Adviser and the Joint Brokers has
had regard to its particular objectives, financial situation or needs;
5 acknowledges that none of the Nominated Adviser, the Joint Brokers,
the Company nor any of their respective affiliates, agents, directors,
officers or employees has provided, nor will provide, it with any material
regarding the Placing Shares or the Company other than the Admission Document
(when published) and this Announcement; nor has it requested any of the
Nominated Adviser, the Joint Brokers, the Company, any of their respective
affiliates or any person acting on behalf of any of them to provide it with
any such information;
6 acknowledges that the Existing Ordinary Shares are admitted to trading
on AIM and that the Company is therefore required to publish certain business
and financial information in accordance with the rules and practices under the
AIM Rules, which includes a description of the Company's business and the
Company's financial information, including balance sheets and income
statements, and that it is able to obtain or access such information, or
comparable information concerning other publicly traded companies, in each
case without undue difficulty;
7 acknowledges that the content of the Admission Document (when
published) and this Announcement is exclusively the responsibility of the
Company and that none of the Nominated Adviser, the Joint Brokers, nor their
respective affiliates or any person acting on behalf of any of them, has or
shall have any liability for any information, representation or statement
contained in, or omission from, the Admission Document (when published) and/or
this Announcement or any information previously published by or on behalf of
the Company, pursuant to applicable laws, and will not be liable for any
Placee's decision to participate in the Placing based on any information,
representation or statement contained in the Admission Document (when
published) or this Announcement or otherwise. Each Placee further represents,
warrants and agrees that the only information on which it is entitled to rely
and on which such Placee has relied in committing itself to acquire Placing
Shares is contained in this Announcement and other Exchange Information, such
information being all that such Placee deems necessary or appropriate and
sufficient to make an investment decision in respect of the Placing Shares and
that it has neither received nor relied on any other information given, or
representations, warranties or statements made, by any of the Nominated
Adviser, the Joint Brokers, or the Company nor any of their respective
affiliates, agents, directors, officers or employees and none of the Nominated
Adviser, the Joint Brokers, or the Company or any such affiliate, agent,
director, officer or employee will be liable for any Placee's decision to
accept an invitation to participate in the Placing based on any other
information, representation, warranty or statement, provided that nothing in
this paragraph excludes the liability of any person for fraudulent
misrepresentation made by that person;
8 acknowledges and agrees that it may not rely, and has not relied, on
any investigation that the Nominated Adviser, the Joint Brokers or any of
their respective affiliates or any person acting on their respective behalf,
may have conducted with respect to the Placing Shares or the Company, and none
of such persons has made any representation, express or implied, with respect
to the Company, the Placing Shares or the accuracy, completeness or adequacy
of the information from the London Stock Exchange or any other information;
each Placee further acknowledges that it has received all information it
believes necessary or appropriate in connection with its investment in the
Placing Shares;
9 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 none of the Nominated
Adviser, the Joint Brokers, or 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 Exchange Information
and any information in the Admission Document (to be published) and any
Supplementary Admission Document (if required); nor has it requested any of
the Nominated Adviser, the Joint Brokers, 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;
10 the content of this Announcement is exclusively the responsibility of
the Company and the Directors and none of the Nominated Adviser, the Joint
Brokers or any person acting on behalf of either of them or any of their
respective affiliates, agents, directors, officers or employees has or shall
have any liability for any information, representation or statement contained
in this Announcement, the Admission Document (when published) or any
Supplementary Admission Document (if required) or any Exchange Information or
other information previously published by or on behalf of the Company or any
member of the Group;
11 represents and warrants that it, and any prospective beneficial owner
for whose account or benefit it is purchasing the Placing Shares, is and, at
the time the Placing Shares are subscribed for, will be located outside the
United States and is acquiring the Placing Shares in an "offshore transaction"
as defined in, and in accordance with, Regulation S;
12 represents and warrants that it has not been offered to purchase or
subscribe for Placing Shares by means of (i) any "directed selling efforts" as
defined in Regulation S, or (ii) any form of "general solicitation" or
"general advertising" within the meaning of Rule 502(c) of Regulation D in
connection with any offer or sale of Placing Shares in the United States;
13 confirms that it understands that the Placing Shares:
(a) have not been and will not be registered or otherwise qualified and that
a prospectus will not be cleared in respect of any of the Placing Shares under
the securities laws or legislation of the United States, Australia, Canada,
Japan, the Republic of South Africa, or any state, province, territory or
jurisdiction thereof;
(b) may not be offered, sold, or delivered or transferred, directly or
indirectly, in or into the above jurisdictions or any jurisdiction (subject to
certain exceptions) in which it would be unlawful to do so and no action has
been or will be taken by any of the Company, the Nominated Adviser, the Joint
Brokers or any person acting on behalf of the Company or , the Nominated
Adviser or the Joint Brokers that would, or is intended to, permit a public
offer of the Placing Shares in the United States, Australia, Canada, Japan,
the Republic of South Africa or any country or jurisdiction, or any state,
province, territory or jurisdiction thereof, where any such action for that
purpose is required;
14 confirms that it is not and at the time the Placing Shares are
subscribed for, neither it nor the beneficial owner of the Placing Shares will
be, a resident of, nor have an address in, Australia, Japan, the Republic of
South Africa or any province or territory of Canada;
15 confirms that it, and any prospective beneficial owner for whose
account or benefit it is purchasing the Placing Shares: (i) is not a US Person
(as defined in Regulation S) and is, and at the time the Placing Shares are
subscribed for will be, located outside the United States and is acquiring the
Placing Shares in an "offshore transaction" as defined in, and in accordance
with, Regulation S; (ii) is aware of the restrictions on the offer and sale of
the Placing Shares pursuant to Regulation S, including that Rule 904 of
Regulation S regarding "Offshore Resales" is not applicable to "affiliates"
(as defined in Rule 405 under the Securities Act) of the Company; and (iii)
has not been offered to purchase or subscribe for Placing Shares by means of
any "directed selling efforts" as defined in Regulation S;
16 confirms that it understands that the Placing Shares have not been, and
will not be, registered under the US Securities Act and may not be offered,
sold or resold in or into or from the United States or to, or for the account
or benefit of, US Persons (as defined in Regulation S) except pursuant to an
effective registration under the US Securities Act, or pursuant to an
exemption from the registration requirements of the US Securities Act and in
accordance with applicable state securities laws;
17 confirms that 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,
Australia, Canada, Japan, the Republic of South Africa (including electronic
copies thereof) to any person, and it has not distributed, forwarded,
transferred or otherwise transmitted any such materials to any such person;
18 acknowledges that in making any decision to acquire Placing Shares it:
(a) has such knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of subscribing for or purchasing
the Placing Shares;
(b) will not look to the Nominated Adviser or the Joint Brokers for all or
part of any loss it may suffer as a result of any such subscription or
purchase;
(c) is experienced in investing in securities of this nature in this sector
and is aware that it may be required to bear, and is able to bear, the
economic risk of an investment in the Placing Shares;
(d) is able to sustain a complete loss of an investment in the Placing
Shares; and
(e) has no need for liquidity with respect to its investment in the Placing
Shares;
19 if it indicates to the Joint Brokers that it wishes to subscribe for
VCT Placing Shares, confirms that:
(a) it is a VCT, subscribing for such VCT Shares pursuant to the Placing
using VCT funds; and
(b) confirms that the date on which it raised funds was on or after 6 April
2012;
20 if it indicates to the Joint Brokers that it wishes to subscribe for
EIS Placing Shares, confirms that the beneficial owner of such shares will be
a "qualifying investor" within the meaning of section 162 Income Tax Act 2007;
21 represents and warrants that the issue to it, or the person specified
by it for registration as holder, of Placing Shares will not give rise to a
liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986
(depositary receipts and clearance services) and that the Placing Shares are
not being acquired in connection with arrangements to issue depositary
receipts or to issue or transfer Placing Shares into a clearance service;
22 represents and warrants that it has complied with its obligations under
the Criminal Justice Act 1993, MAR and in connection with money laundering and
terrorist financing under the Money Laundering Regulations and the Money
Laundering Sourcebook of the FCA and, if making payment on behalf of a third
party, that satisfactory evidence has been obtained and recorded by it to
verify the identity of the third party as required by the Money Laundering
Regulations;
23 acknowledges that in order to ensure compliance with the Money
Laundering Regulations, the Joint Brokers (for themselves severally and as
agent on behalf of the Company), or the Company's registrars may, in their
absolute discretion, require verification of its identity, location or legal
status. Pending the provision to the Joint Brokers or the Company's
registrars, as applicable, of evidence of identity, location or legal status,
definitive certificates in respect of the Placing Shares may be retained at
the Joint Brokers' absolute discretion or, where appropriate, delivery of the
Placing Shares to it in uncertificated form may be delayed in either of the
Joint Broker'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, location or legal status, the Joint Brokers (for themselves
severally and as agent on behalf of the Company), or the Company's registrars
have not received evidence satisfactory to them, either Joint Broker and/or
the Company may, at its absolute discretion, terminate its commitment in
respect of the Placing, in which event the monies payable on the conditional
allocation of Placing Shares allotment will, if already paid, be returned
without interest to the account of the drawee's bank from which they were
originally debited;
24 represents and warrants that it is acting as principal only in respect
of the Placing or, if it is acting for any other person: (i) it is duly
authorised to do so and has full power to make the acknowledgements,
warranties, representations, confirmations, undertakings, and agreements
herein on behalf of each such person; and (ii) it is and will remain liable to
the Company and/or Joint Brokers 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);
25 if it is a financial intermediary, as that term is used in Article 2(d)
of the EU Prospectus Regulation or the UK Prospectus Regulation, as
applicable, that it understands the resale and transfer restrictions set out
in this Appendix and that any Placing Shares acquired by it in the Placing
will not be acquired on a non-discretionary basis on behalf of, nor will they
be acquired with a view to their offer or resale to, persons in circumstances
which may give rise to an offer of securities to the public other than an
offer or resale in a member state of the EEA to EEA Qualified Investors or in
the United Kingdom to Relevant Persons, or in circumstances in which the prior
consent of the Joint Brokers has been given to each such proposed offer or
resale.
26 that it has not offered or sold and, prior to the expiry of a period of
six months from the relevant issue, will not offer or sell any Placing Shares
to persons in the EEA, except to Qualified Investors or otherwise in
circumstances which have not resulted and which will not result in an offer to
the public in any member state in the EEA within the meaning of Article 2(d)
of the EU Prospectus
Regulation;
27 that it has not offered or sold and, prior to the expiry of a period of
six months from the relevant issue, will not offer or sell any Placing Shares
to persons in the United Kingdom, except to Relevant Persons 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 Article 2(d) of the UK
Prospectus Regulation;
28 that any offer of Placing Shares may only be directed at persons in
member states of the EEA who are Qualified Investors and represents, warrants
and undertakes that it has not offered or sold and will not offer or sell any
Placing Shares to persons in the EEA prior to Admission except to Qualified
Investors or otherwise in circumstances which have not resulted and which will
not result in an offer to the public in any member state of the EEA within the
meaning of the EU Prospectus Regulation;
29 that any offer of Placing Shares may only be directed at persons in the
United Kingdom who are Relevant Persons and represents, warrants and
undertakes that it has not offered or sold and will not offer or sell any
Placing Shares to persons in the United Kingdom prior to the issue of the
relevant Placing Shares except to Relevant Persons 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 the UK Prospectus
Regulation;
30 represents, warrants and undertakes that it has only communicated or
caused to be communicated and will only communicate or cause to be
communicated any invitation or inducement to engage in investment activity
(within the meaning of section 21 of the FSMA) relating to the Placing Shares
in circumstances in which section 21(1) of the FSMA does not require approval
of the communication by an authorised person;
31 represents, warrants and undertakes that it has complied and will
comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Placing Shares in, from or otherwise involving
the United Kingdom;
32 represents and warrants, if in a member state of the EEA, unless
otherwise specifically agreed with the Nominated Adviser and the Joint Brokers
in writing, that it is a EEA Qualified Investor;
33 represents and warrants, if in the United Kingdom, that it is a person
(i) having professional experience in matters relating to investments who
falls within the definition of "investment professionals" in Article 19(5) of
the Order or (ii) who falls within Article 49(2)(a) to (d) ("High Net Worth
Companies, Unincorporated Associations, etc") of the Order, or (iii) to whom
this Announcement may otherwise lawfully be communicated;
34 acknowledges and agrees that no action has been or will be taken by the
Company, the Nominated Adviser, the Joint Brokers or any person acting on
behalf of the Company, the Nominated Adviser or the Joint Brokers that would,
or is intended to, permit a public offer of the Placing Shares in any country
or jurisdiction where any such action for that purpose is required;
35 represents and warrants that it and any person acting on its behalf is
entitled to acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has fully observed such laws and obtained all such
governmental and other guarantees, permits, authorisations, approvals and
consents which may be required thereunder and complied with all necessary
formalities to enable it to commit to this participation in the Placing and to
perform its obligations in relation thereto (including, without limitation, in
the case of any person on whose behalf it is acting, all necessary consents
and authorities to agree to the terms set out or referred to in this Appendix)
and will honour such obligations and that it has not taken any action or
omitted to take any action which will or may result in the Nominated Adviser,
the Joint Brokers, the Company or any of their respective directors, officers,
agents, employees or advisers acting in breach of the legal or regulatory
requirements of any jurisdiction in connection with the Placing;
36 undertakes that it (and any person acting on its behalf) will make
payment in respect of the Placing Shares allocated to it in accordance with
this Appendix on the due time and date set out herein, failing which the
relevant Placing Shares may be placed with other acquirers or sold as the
Joint Brokers may each in their sole discretion determine and without
liability to such Placee, who will remain liable for any amount by which the
net proceeds of such sale fall short of the product of the relevant Placing
Price and the number of Placing Shares allocated to it and may be required to
bear any stamp duty, stamp duty reserve tax or other similar taxes (together
with any interest or penalties) which may arise upon such placing or sale of
such Placee's Placing Shares;
37 acknowledges that none of the Nominated Adviser, the Joint Brokers, nor
any of their respective affiliates, agents, directors, officers or employees
is making any recommendations to it or advising it regarding the suitability
of any transactions it may enter into in connection with the Placing and that
its participation in the Placing is on the basis that it is not and will not
be a client of either the Nominated Adviser or the Joint Brokers in connection
with its participation in the Placing and that neither the Nominated Adviser
nor the Joint Brokers have any duty nor responsibility to it for providing the
protections afforded to its clients or customers or for providing advice in
relation to the Placing nor in respect of any representations, warranties,
undertakings or indemnities contained in the Placing Agreement nor for the
exercise or performance of any of its rights and obligations thereunder
including any rights to waive or vary any conditions or exercise any
termination right;
38 undertakes that the person whom it specifies for registration as holder
of the Placing Shares will be (i) itself or (ii) its nominee, as the case may
be. None of the Nominated Adviser, the Joint Brokers nor the Company will be
responsible for any liability to stamp duty or stamp duty reserve tax or other
similar taxes resulting from a failure to observe this requirement
("Indemnified Taxes"). Each Placee and any person acting on behalf of such
Placee agrees to indemnify the Company, the Nominated Adviser and the Joint
Brokers, on an after-tax basis in respect of any Indemnified Taxes;
39 agrees to indemnify on an after tax basis and hold the Company, the
Nominated Adviser, the Joint Brokers and their respective affiliates harmless
from any and all costs, claims, liabilities and expenses (including legal fees
and expenses) arising out of or in connection with any breach of its
representations, warranties, acknowledgements, agreements and undertakings in
this Appendix and further agrees that the provisions of this Appendix shall
survive after completion of the Placing;
40 except as set out in paragraph 41 below, represents and warrants that
it has neither received nor relied on any 'inside information' (for the
purposes of MAR and section 56 of the Criminal Justice Act 1993) concerning
the Company prior to or in connection with accepting the invitation to
participate in the Placing and is not purchasing Placing Shares on the basis
of material non-public information;
41 if it has received any 'inside information' (for the purposes of MAR
and section 56 of the Criminal Justice Act 1993) in relation to the Company
and its securities, confirms that it has received such information within the
market soundings regime provided for in article 11 of MAR and associated
delegated regulations and it has not: (i) dealt (or attempted to deal) in the
securities of the Company; (ii) encouraged, recommended or induced another
person to deal in the securities of the Company; or (iii) unlawfully disclosed
inside information to any person, prior to the information being made publicly
available;
42 if it is a pension fund or investment company, confirms that its
purchase of Placing Shares is in full compliance with applicable laws and
regulations;
43 agrees that the Company, the Nominated Adviser, the Joint Brokers and
their respective affiliates and others will rely upon the truth and accuracy
of the foregoing representations, warranties, acknowledgements, agreements,
and undertakings which are given to the Nominated Adviser and the Joint
Brokers for themselves and on behalf of the Company and are irrevocable and it
irrevocably authorises the Company, the Nominated Adviser and the Joint
Brokers to produce this Announcement, pursuant to, in connection with, or as
may be required by, any applicable law or regulation, administrative or legal
proceeding or official inquiry with respect to the matters set forth herein;
44 acknowledges that none of the Company, the Nominated Adviser or the
Joint Brokers owes any fiduciary or other duties to any Placee in respect of
any acknowledgments, confirmations, undertakings, representations, warranties
or indemnities in the Placing Agreement;
45 acknowledges and agrees that its commitment to take up Placing Shares
on the terms set out in this Announcement (including this Appendix) will
continue notwithstanding any amendment that may or in the future be made to
the terms and conditions of the Placing and that Placees will have no right to
be consulted or require that their consent be obtained with respect to the
Company, the Nominated Adviser's or the Joint Brokers' conduct of the Placing;
46 acknowledges that its allocation (if any) of Placing Shares will
represent a maximum number of Placing Shares which it will be entitled, and
required, to subscribe for, and that the Nominated Adviser, the Joint Brokers
or the Company may call upon it to subscribe for a lower number of Placing
Shares (if any), but in no event in aggregate more than the aforementioned
maximum;
47 acknowledges that time is of essence as regards its obligations under
this Appendix;
48 acknowledges that information provided by it to the Company and the
Registrar will be stored on the Company's and/or the Registrars' computer
system(s), and acknowledges and agrees that for the purposes of the General
Data Protection Regulation (EU) 2016/679 and other relevant data protection
legislation which may be applicable (the "Data Protection Law"), the Company
and the Registrars are required to specify the purposes for which they will
hold personal data; and that it has obtained the consent of any data subjects
to the Registrars and the Company and their respective associates holding and
using their personal data for the Purposes (as defined below). For the
purposes of this Announcement, "data subject", "personal data" and "sensitive
personal data" shall have the meanings attributed to them in the Data
Protection Law. The Company and the Registrars will only use such information
for the purposes set out below (collectively, the "Purposes"), being to:
(a) process its personal data (including sensitive personal data) 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 or the
Registrars may consider necessary in connection with its affairs and generally
in connection with its holding of Ordinary Shares or as the Data Protection
Law may require, including to third parties outside the United Kingdom or the
EEA;
(d) without limitation, provide such personal data to the Company or the
Nominated Adviser or the Joint Brokers for processing, notwithstanding that
any such party may be outside the United Kingdom or the EEA States; and
(e) process its personal data for the Company's or Registrars' internal
administration; and
49 acknowledges that these terms and conditions and any agreements entered
into by it pursuant to the terms and conditions set out in this Appendix, and
all non-contractual or other obligations arising out of or in connection with
them, shall be governed by and construed in accordance with the laws of
England and Wales and it submits (on behalf of itself and on behalf of any
person on whose behalf it is acting) to the exclusive jurisdiction of the
English courts as regards any claim, dispute or matter arising out of any such
contract (including any dispute regarding the existence, validity or
termination of such contract or relating to any non-contractual or other
obligation arising out of or in connection with such contract), except that
enforcement proceedings in respect of the obligation to make payment for the
Placing Shares (together with any interest chargeable thereon) may be taken by
any of the Company, the Nominated Adviser or the Joint Brokers 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.
The foregoing representations, warranties, agreements, undertakings,
acknowledgements and confirmations are given for the benefit of the Company as
well as the Nominated Adviser and the Joint Brokers, and are irrevocable. Each
Placee, and any person acting on behalf of the Placee, acknowledges that none
of the Company, the Nominated Adviser or the Joint Brokers, owes any fiduciary
or other duties to any Placee in respect of any representations, warranties,
undertakings, acknowledgements, agreements or indemnities in the Placing
Agreement.
The agreement to allot and issue Placing Shares to Placees (and/or to persons
for whom such Placee is contracting as agent) free of stamp duty and stamp
duty reserve tax relates only to their allotment and issue to Placees, or such
persons as they nominate as their agents, direct from the Company for the
Placing Shares in question. Such agreement also assumes that the Placing
Shares are not being acquired in connection with arrangements to issue
depositary receipts or to issue or transfer the Placing Shares into a
clearance service. If there are any such arrangements, or the settlement
relates to any other dealing in the Placing Shares, stamp duty or stamp duty
reserve tax or other similar taxes may be payable, for which none of the
Company, the Nominated Adviser or the Joint Brokers will be responsible and
the Placees shall indemnify the Company, the Nominated Adviser and the Joint
Brokers on an after-tax basis for any stamp duty or stamp duty reserve tax
paid by them in respect of any such arrangements or dealings. If this is the
case, each Placee should seek its own advice and notify the relevant Joint
Broker accordingly. Placees are advised to consult with their own advisers
regarding the tax aspects of the subscription for Placing Shares.
The Company, the Nominated Adviser and the Joint Brokers are not liable to
bear any transfer taxes that arise on a sale of Placing Shares subsequent to
their acquisition by Placees or for transfer taxes arising otherwise than
under the laws of the United Kingdom. Each Placee should, therefore, take its
own advice as to whether any such transfer tax liability arises and notify the
relevant Joint Broker accordingly. Furthermore, each Placee agrees to
indemnify on an after-tax basis and hold each of the Nominated Adviser, the
Joint Brokers and the Company and their respective affiliates harmless from
any and all interest, fines or penalties in relation to stamp duty, stamp duty
reserve tax and all other similar duties or taxes to the extent that such
interest, fines or penalties arise from the default or delay of that Placee or
its agent.
In addition, Placees should note that they will be liable for any stamp duty
and all other stamp, issue, securities, transfer, registration, documentary or
other duties or taxes (including any interest, fines or penalties relating
thereto) payable outside the UK by them or any other person on the acquisition
by them of any Placing Shares or the agreement by them to acquire any Placing
Shares.
Each Placee and any person acting on behalf of the Placee acknowledges and
agrees that the Joint Brokers and any of their respective affiliates may, at
their absolute discretion, agree to become a Placee in respect of some or all
of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with either
Joint Broker, any money held in an account with the relevant Joint Broker on
behalf of a Placee and/or any person acting on behalf of a Placee will not be
treated as client money within the meaning of the rules and regulations of the
FCA made under the FSMA. The Placee acknowledges that the money will not be
subject to the protections conferred by the client money rules; as a
consequence, this money will not be segregated from the relevant Joint
Broker's money in accordance with the client money rules and will be used by
the relevant Joint Broker in the course of its own business and the Placee
will rank only as a general creditor of the relevant Joint Broker.
All times and dates in this Announcement are references to London time and may
be subject to amendment. The relevant Joint Broker shall notify the Placees
and any person acting on behalf of the Placees of any changes.
No statement in this Announcement is intended to be a profit forecast or
estimate, 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.
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.
APPENDIX IV
DEFINITIONS
The following definitions apply throughout this Announcement, unless the
context otherwise requires:
"2006 Act" the Companies Act 2006.
"Acquisition" separately, the conditional acquisition of the issued share capital of C&D
or SWHS, as the context requires
"Acquisitions" together, the conditional acquisitions of C&D and SWHS
"Additional Consideration Shares" the Ordinary Shares to be issued to the Sellers in respect of the additional
consideration provisions contained in the SPAs
"Admission" as the context requires, First Admission and/or Second Admission
"Admission Document" the admission document which is expected to be published by the Company later
today
"AIM" AIM, a market operated by the London Stock Exchange
"AIM Rules for Companies" the AIM Rules for Companies published by the London Stock Exchange from time
to time
"AIM Rules for Nominated Advisers" the AIM Rules for Nominated Advisers published by the London Stock Exchange
from time to time
"Applications" the First Admission Application and Second Admission Application
"Articles" the articles of association of the Company as adopted by a special resolution
of the Company on 13 February 2018
"Bob Holt Concert Party" together, Bob Holt, Elizabeth Lake, John Charlton, Ian Currie, James Holt,
Rachael Burnett, Robert Holt and William Holt for the purposes of the City
Code
"Bob Holt Loan Conversion" the conversion of half of Bob Holt's loan to C&D into 3,000,000 new
Ordinary Shares on Second Admission at the Placing Price
"Bob Holt Loan Conversion Shares" the 3,000,000 new Ordinary Shares to be allotted to Bob Holt, conditional upon
Admission, pursuant to the Bob Holt Loan Conversion
"City Code" the City Code on Takeovers and Mergers published by the Panel from time to
time
"Company" or "EARNZ" EARNZ plc, a company incorporated under the laws of England and Wales with
company number 10114644
"Concert Parties" together the Existing Bob Holt Concert Party and the SWHS Concert Party for
the purposes of the City Code
"Completion" completion of the Acquisitions
"Consideration Shares" together, the Initial Consideration Shares and the Additional Consideration
Shares
"C&D" Cosgrove & Drew LTD, a company incorporated under the laws of England and
Wales with company number 09436019
"C&D Concert Party" together, Bob Holt, Zac Cosgrove and Luke Drew for the purposes of the City
Code
"C&D Lock-in Deed" the lock-in agreement entered into between the Company, Shore Capital, Zeus
and the C&D Locked-in Persons
"C&D Locked-in Persons" the C&D Sellers who are signatories of the C&D Lock-in Deed
"C&D Sellers" the shareholders of C&D
"C&D SPA" the agreement dated 8 August 2024 between (1) the C&D Sellers, (2) the
Company and (3) EHL in respect of the conditional acquisition of the issued
share capital of C&D which contains details of the consideration payable
to, and the warranties and indemnities to be given by, the C&D Sellers
"C&D Warrantors" the C&D Sellers who have provided warranties as part of the C&D SPA
"CREST" the relevant system (as defined in the CREST Regulations) in respect of which
Euroclear is the Operator (as defined in the CREST Regulations) in accordance
with which securities may be held and transferred in uncertificated form
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755)
"Directors" or "Board" the directors of the Company
"DTRs" the Disclosure Guidance and Transparency Rules sourcebook published by the FCA
from time to time
"EHL" EARNZ Holdings Limited, a company registered in England and Wales with company
number 1574113 and whose registered office is at Holborn Gate, 330 High
Holborn, London WC1V 7QT
"EIS" Enterprise Investment Scheme
"EIS and VCT Placing" the conditional placing of the EIS and VCT Placing Shares by the Joint Brokers
pursuant to the Placing Agreement
"EIS and VCT Placing Shares" the Ordinary Shares to be issued and allotted at the Placing Price pursuant to
the Placing to those Placees comprising certain VCTs and other investors
seeking to qualify for VCT Relief or EIS Relief
"EIS Legislation" Part 5 of the Income Tax Act 2007 and any provisions of UK or European law
referred to therein
"EIS Placing Shares" the shares intended to qualify for EIS Relief
"EIS Relief" relief from UK tax under the EIS Legislation
"Enlarged Group" the Company as enlarged by the Acquisitions immediately following Second
Admission
"Enlarged Share Capital" the issued share capital of the Company immediately following Second Admission
"Euroclear" Euroclear UK & International Limited, a company incorporated under the
laws of England and Wales
"Exchange Information" the business and financial information the Company is required to publish in
accordance with MAR, the AIM Rules and other applicable laws and regulations
"Executive Directors" Bob Holt, Elizabeth Lake and John Charlton
"Existing Bob Holt Concert Party" together the Bob Holt Concert Party and the C&D Concert Party for the
purposes of the City Code
"Existing Ordinary Share Capital" the Ordinary Shares in issue as at the date of this Announcement
"Existing Ordinary Shares" the 62,879,828 Ordinary Shares in issue at the date of this Announcement
"FCA" the Financial Conduct Authority of the UK
"First Admission" admission of the EIS and VCT Placing Shares to trading on AIM becoming
effective in accordance with Rule 6 of the AIM Rules for Companies
"First Admission Application" the application to be made by the Company through the Nominated Adviser to the
London Stock Exchange for the First Admission
"First Admission Date" 28 August 2024
"FSMA" the Financial Services and Markets Act 2000, as amended
"Form of Proxy" the form of proxy which will accompany the Admission Document for use at the
General Meeting
"General Meeting" the general meeting of the Company to be held at the offices of Shore Capital,
Cassini House, 57 St James's Street, London SW1A 1LD at 10.00 a.m. on 27
August 2024
"Group" the Company and its subsidiary undertakings for the time being
"HMRC" His Majesty's Revenue and Customs (which shall include its predecessors, the
Inland Revenue and HM Customs and Excise)
"IFRS" International Financial Reporting Standards issued by the International
Accounting Standards Board as adopted in the United Kingdom
"Independent Directors" Linda Main and Sandra Skeete
"Independent Shareholders" the Shareholders other than the members of the Bob Holt Concert Party
"Initial Consideration Shares" the Ordinary Shares to be issued to the Sellers pursuant to the terms of, and
subject to the conditions in, the SPAs
"ISIN" International Securities Identification Number
"Joint Broker Agreement" the joint broker agreement dated on or around 1 March 2024 and made between:
(1) the Company and (2) WH Ireland Limited (and subsequently assigned by WH
Ireland Limited to Zeus on 15 July 2024
"Joint Brokers" together, SCS and Zeus
"Lock-in Agreements" the lock-in and orderly market agreements entered into between (1) the
Company, (2) Shore Capital (3) Zeus and the Locked-in Shareholders or the
Executive Directors (as appropriate)
"Locked-in Shareholders" together, the Executive Directors, the C&D Sellers and the SWHS Seller
"London Stock Exchange" London Stock Exchange plc
"Long Stop Date" 5 September 2024
"MAR" the UK version of Regulation (EU) No. 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018
"Money Laundering Regulations" the Money Laundering, Terrorist Financing and Transfer of Funds (Information
on the Payer) Regulations 2017
"New Articles" the Articles as proposed to be amended by Resolution 5
"New Options" the awards to be granted to the Executive Directors under the terms of the
long term incentive plan set out in paragraph 20 of this Announcement together
with any other options that have not yet been granted but may be granted by
the Board under the option schemes referred to in paragraph 20 of this
Announcement
"New Ordinary Shares" the Initial Consideration Shares, the Bob Holt Conversion Shares, and the
Placing Shares
"Nominated Adviser and Broker Agreement" the nominated adviser and broker agreement dated 8 August 2024 and made
between (1) the Company (2) Shore Capital and Corporate and (3) Shore Capital
Stockbrokers
"Non-EIS and VCT Placing" the conditional placing of the Non-EIS and VCT Placing Shares by the Joint
Brokers pursuant to the Placing Agreement
"Non-EIS and VCT Placing Shares" the 8 Ordinary Shares to be issued and allotted at the Placing Price pursuant
to the Placing other than the EIS and VCT Placing Shares
"Non-Executive Directors" Linda Main and Sandra Skeete
"Official List" the Official List of the FCA
"Ordinary Shares" ordinary shares of 4p each in the capital of the Company
"Panel" the Panel on Takeovers and Mergers
"Placees" the subscribers for Placing Shares pursuant to the Placing
"Placing" together the EIS and VCT Placing and the Non-EIS and VCT Placing
"Placing Agreement" the agreement dated 8 August 2024 between (1) the Company (2) the Directors
(3) SCC (4) SCS and (5) Zeus relating to the Placing
"Placing Price" 7.5p per Placing Share
"Placing Shares" the Ordinary Shares to be allotted and issued pursuant to the Placing
"Prohibited Territories" USA, Australia, Canada, Japan, the Republic of South Africa and their
respective territories and possessions
"Proposals" together, the Acquisitions, the Bob Holt Loan Conversion and the Placing
"Prospectus Regulation" the UK version of the Prospectus Regulation (EU) No. 2017/1129 which is part
of UK law by virtue of the European Union (Withdrawal) Act 2018
"Prospectus Regulation Rules" the rules made pursuant to section 73A of the FSMA
"QCA" the Quoted Companies Alliance
"QCA Code" the QCA Corporate Governance Code published from time to time
"Re-Admission" the re-admission of the Existing Ordinary Shares to trading on AIM becoming
effective in accordance with Rule 6 of the AIM Rules for Companies
"Registrars" Neville Registrars Limited of Neville House, Steelpark Road, Halesowen B62
8HD
"Resolutions" the resolutions (each being a "Resolution") to be proposed and voted upon at
the General Meeting and which are contained in the General Meeting notice
"RIS" Regulatory Information Service
"Rule 9" Rule 9 of the City Code
"Rule 9 waiver" the waiver of any requirement under Rule 9 of the City Code for the Existing
Bob Holt Concert Party to make a general offer to the Shareholders as a result
of any market purchase of Ordinary Shares by the Company
"Second Admission" admission of the Non-EIS and VCT Placing Shares, the Bob Holt Conversion
Shares and the Initial Consideration Shares, and the re-admission of the
Existing Ordinary Shares, to trading on AIM becoming effective in accordance
with Rule 6 of the AIM Rules for Companies
"Second Admission Application" the application to be made by the Company through the Nominated Adviser to the
London Stock Exchange for the Second Admission
"Second Admission Date" 29 August 2024
"Sellers" together, the C&D Sellers and the SWHS Seller
"Share Option Schemes" the existing employment management incentive scheme operated by the Company,
together with the LTIP, the EMI Scheme and the SAYE Scheme as defined
"Shareholders" holders of Ordinary Shares from time to time
"Shore Capital" Shore Capital and Corporate and/or Shore Capital Stockbrokers, as the context
requires
"Shore Capital and Corporate", "SCC" or "Nominated Adviser" Shore Capital and Corporate Limited (a private limited company incorporated
and registered in England and Wales with company number 02083043), the
Company's nominated adviser for the purposes of the AIM Rules for Companies
"Shore Capital Stockbrokers" or "SCS" Shore Capital Stockbrokers Limited (a private limited company incorporated and
registered in England and Wales with company number 01850105), the Company's
joint broker for the purposes of the AIM Rules for Companies
"Supplementary Admission Document" any supplementary Admission Document prepared in relation to the Company as
further described in the Placing Agreement
"SWHS" South West Heating Services Limited, a company incorporated under the laws of
England and Wales with company number 12074906
"SWHS Lock-in Deed" the lock-in agreement entered into between the Company, Shore Capital and Zeus
and the SWHS Locked-in Person
"SWHS Locked-in Person" the SWHS Seller who is a signatory of the SWHS Lock-in Deed
"SWHS Seller" or "SWHS Concert Party" the sole shareholder of SWHS, being Andrew Custer
"SWHS SPA" the agreement dated 8 August 2024 between (1) the SWHS Seller and (2) EHL in
respect of the acquisition of the issued share capital of C&D which
contains details of the consideration payable to, and the warranties and
indemnities to be given by, the SWHS Seller
"SWHS Warrantor" Andrew Custer who has provided warranties as part of the SWHS SPA
"SPAs" together the C&D SPA and the SWHS SPA
"Subsidiary undertakings" as defined in section 1162 of the 2006 Act
"Targets" together C&D and SWHS (each separately being a "Target")
"Transaction" the Acquisitions, the Placing, the Admission Document (including any
Supplementary Admission Document), the General Meeting, the Applications, the
allotment and issue of the Initial Consideration Shares, the Bob Holt Loan
Conversion Shares and the Placing Shares and Admission
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"uncertificated" or "in uncertificated form" Ordinary Shares recorded on the Company's share register as being held in
uncertificated form in CREST and title to which, by virtue of the CREST
Regulations, may be transferred by means of CREST
"US" or "USA" or "United States" the United States of America, its territories and possessions, any state or
political sub-division of the United States of America, the District of
Columbia and all other areas subject to the jurisdiction of the United States
of America
"US" or "USD" United States Dollars, the lawful currency of the United States
"US Securities Act" the US Securities Act of 1933
"VAT" value added tax
"VCT" venture capital trust
"VCT Legislation" Part 6 of the Income Tax Act 2007 and any provisions of UK or European law
referred to therein
"VCT Placing Shares" the shares intended to qualify for VCT purposes
"VCT Relief" relief from UK tax under the VCT Legislation
"Whitewash Resolution" Resolution 2 set out in the notice of General Meeting
"Zeus" Zeus Capital Limited
"£" and "p" respectively pounds and pence sterling, the lawful currency of the UK
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