REG - Velocys PLC - £52 million for smaller scale GTL <Origin Href="QuoteRef">VLSV.L</Origin> - Part 1

VelocysAnnouncement

29/10/2014 15:03

RNS Number : 8003S
Velocys PLC
29 September 2014
29th September 2014
Velocys plc
("Velocys" or "the Company")
52 million for smaller scale GTL
Velocys plc (VLS.L), the company at the forefront of smaller scale gas-to-liquids (GTL), is pleased to announce the proposed placing of up to 23,111,111 new ordinary shares ("Ordinary Shares") at a placing price of 225 pence per share, to raise gross proceeds of approximately 52 million (the "Placing").
Highlights
 Placing to raise gross proceeds of approximately 52 million;
o Placing was significantly oversubscribed.
 Placing of up to 23,111,111 Ordinary Shares (16 per cent. of the enlarged issued share capital of the Company).
 The Placing Price of 225 pence per share represents a slight premium to the closing mid-market price of the Ordinary Shares on 26 September 2014. 
 Proceeds of the Placing will be used to build upon the Company's recent successes and help to further accelerate adoption of Velocys technology following announcement of its first commercial project, by:
o Strengthening the Company's balance sheet to support sales (including technology guarantees);
o Helping support the development of selected projects to funding readiness; and
o Fund the general working capital requirements of the business.
 The Placing is conditional upon the passing of certain resolutions. A general meeting is being convened for the purpose of considering the relevant resolutions, at 1:30 p.m. on 17 October 2014 at the offices of Mayer Brown International LLP, London. 
 Numis Securities is sole book-runner and financial adviser on the Placing.
Roy Lipski, CEO of Velocys, said:
"After more than 15 years of progress, Velocys has established itself as technology leaders in smaller scale GTL, just at the time when the market is beginning to take off. With commercial roll-out underway, Velocys is bringing modular gas-to-liquids to the mainstream of the oil and gas industry.
"Our vision for smaller scale GTL is fast becoming a commercial reality. Over the next 24 months, we will be focused on working with our partners to successfully deliver on Waste Management's Oklahoma plant, as well as securing final investment decision on the Ashtabula GTL plant and a number of other commercial projects in our growing pipeline of opportunities. 
"This significantly oversubscribed fund raise of 52m, at a slight premium to market price, is a very substantial vote of confidence from the market. It provides strong support to Velocys as we enter a hugely exciting new phase of growth." 


For further information, please contact: 
Velocys
Roy Lipski, CEO
Susan Robertson, CFO
+1 713 275 5840
+44 1235 841 700
Numis Securities (Nomad and Broker)
Alex Ham / Tom Ballard - Corporate Broking
Stuart Skinner / Jamie Lillywhite - Nominated Adviser
+44 20 7260 1000
Camarco (financial communications)
Billy Clegg / Georgia Mann
+44 20 3757 4983
Lionsgate Communications (European PR)
Jonathan Charles 
+44 20 3697 1209
Pierpont Communications (North American PR)
Krystal Hewitt 
+1 713 627 2223
Notes to editors
Velocys enables modular gas-to-liquids (GTL) plants to convert unconventional, remote and problem gas into valuable liquid fuels. Systems based on the Company's technology are significantly smaller than those using conventional technology, enabling modular plants that can be deployed cost effectively in remote locations and on smaller fields than is possible with competing systems. Together with world-class partners, Velocys provides complete modular GTL solutions that address an untapped market of up to 25 million barrels of fuel a day.
Velocys plc is listed on the AIM market of the London Stock Exchange (LSE: VLS). The Company has over 100 employees with facilities in Houston, Texas, USA and near Oxford, UK and Columbus, Ohio, USA.
www.velocys.com


1. Introduction
The Board is pleased to announce that it has proposed to raise, subject to certain conditions, approximately 52 million (before expenses) by way of a placing of up to 23,111,111 new Ordinary Shares at a placing price of 225 pence per share. 
The Placing is conditional (amongst other things) upon the passing of certain resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the Placing Shares for cash on a non-pre-emptive basis. A General Meeting is therefore being convened for the purpose of considering the Resolutions at 1:30 p.m. on 17 October 2014 at the offices of Mayer Brown International LLP, 201 Bishopsgate, London, EC2M 3AF. 
The Directors intend to vote in favour of the Resolutions in respect of their legal and/or beneficial shareholdings amounting, in aggregate, to 3,213,598 Ordinary Shares representing approximately 2.7 per cent. of the Ordinary Shares in issue as at the date of this announcement.
The Board has chosen to conduct the Placing to raise funds rather than a rights issue or other offer open to all Shareholders as the Placing can be executed on a more efficient timetable and with lower costs given the size of the Placing.
2. Background to the Placing
Velocys designs and develops technology for the smaller scale production of clean synthetic fuels from unconventional, remote and associated gas, as well as carbon containing solids such as biowaste. The Directors believe that market conditions for the production of such fuels are favourable and that Velocys is enjoying a high level of interest in its technology.
The shale gas boom occurring across the world, and especially in North America, is changing the energy landscape, creating many opportunities for smaller scale GTL projects. Long term expectations of continued low gas prices and relatively high oil prices mean that GTL provides a clearly quantifiable market arbitrage. In addition, there are numerous opportunities arising from associated or low value stranded gas. The growing political, geological and environmental complexity of oil exploration and production has focussed attention on the monetisation of gas reserves and cessation of flaring. As the majority of stranded gas fields and flare gas streams are too small for conventional technology, the opportunity for the Company's technology is sharply in focus.
After more than 15 years of development, which began at two of the world's leading research organisations (the University of Oxford and the Battelle Memorial Institute), and over US$300 million of investment, much of which came from industrial partners, the commercial role out of the Company's technology has now begun. During 2014, the Company announced:
 On 22 September 2014, thatRed Rock Biofuels, a customer of Velocys, has been awarded a US$70 million grant to construct a biomass-to-liquids plant incorporating Velocys FT technology. Their plant in Oregon will convert some 170,000 tons per year of forestry and sawmill waste into approximately 1,100 barrels per day of ultra clean transportation fuels. The Directors believe that successful execution of Red Rock Biofuels project in Oregon will result in revenues to Velocys in excess of $15 million during construction, and an additional $30 million or more over the life of the facility;
 On 29 July 2014, that final investment decision had been made to proceed with the construction of a commercial GTL plant using the Company's technology located at Waste Management's East Oak landfill site in Oklahoma, US which is being funded by a joint venture between Waste Management, NRG Energy, Ventech Engineers and the Company as a minority holder. The project will provide a commercial reference site for the Velocys technology and will deploy a number of the Company's full scale FT reactors;
 On 25 June 2014, the acquisition of Pinto Energy LLC, one of the leading project developers of smaller scale GTL in North America, which is developing a 2,800 bpd plant in Ohio, USA; 
 On 16 April 2014, the achievement of specific milestones concerning the British Airways GreenSky London project (Europe's first commercial scale sustainable jet fuel facility being developed by Solena Fuels Corporation who in July 2012 selected Velocys to provide its FT technology to the project); and
 On 6 January 2014, the sale of a commercial FT reactor to a customer in the Commonwealth of Independent States. The 175 bpd reactor, with accompanying catalyst, will be installed in a small GTL plant processing natural gas into synthetic crude.
With more than 100 employees and the world's largest micro-channel patent portfolio (over 900 issued patents and filed patent applications owned or licensed exclusively by the Company), the Directors believe that Velocys has established itself as a leader in advanced smaller scale GTL technology and, with its group of first class partners, is well positioned to push forward with the commercialisation of its technology.
3. Recent corporate developments 
Waste Management GTL plant and joint venture
On 29 July 2014, the Company announced that final investment decision had been made to proceed with the construction of a commercial GTL plant located at Waste Management's East Oak landfill site in Oklahoma, US using the Company's technology which is being funded by a joint venture between Waste Management, NRG Energy, Ventech Engineers and the Company as a minority holder. The project will provide a commercial reference site for the Company's technology and will deploy a number of the Company's full scale FT reactors. The Company holds a minority interest in the joint venture and its investment is limited to around US$5 million, which will be drawn down over the course of construction. This amount excludes revenues due to Velocys for the supply of technology and services. 
Purchase of major equipment for the GTL plant has begun. The Directors expect that construction and commissioning of the plant will be complete, and that the plant will enter full commercial operation by the end of the second quarter of 2016. The joint venture has entered into the major contracts required for the project, including a technology license, supply and service agreements with Velocys (at market rates), an EPC contract with Ventech, a land lease with Waste Management, and gas purchase and product offtake agreements.
 
Acquisition of Pinto Energy 
On 25 June 2014, Velocys announced the acquisition of Pinto Energy LLC (Pinto Energy), one of the leading project developers of smaller scale GTL in North America, renamed Velocys Project Solution (VPS). The first project being developed by VPS is the Ashtabula GTL project, an approximately 2,800 bpd plant at an 80 acre industrial site that it owns near the Port of Ashtabula, Ohio, USA. Initial engineering for the facility is complete and the air permit has been issued. Final investment decision is expected in the first half of 2015. In addition to Ashtabula, VPS has a pipeline of smaller scale GTL projects it is seeking to develop throughout North America.
The Directors believe that the acquisition of Pinto Energy provides the Company with a key stepping stone for commercial growth, strengthening its route to market, accelerating early adoption of its technology and deepening the Company's ties with suppliers, partners, investors and customers across the entire GTL value chain. 
Velocys and the sellers of Pinto Energy (the Sellers) have now finalised the arrangements relating to the remaining 201,089 Ordinary Shares (Holdback Shares) that were due to be issued to the Sellers as part of an escrow arrangement. It has been agreed that a portion of the Holdback Shares (being a total of 159,445 Ordinary Shares) will not be issued to the Sellers in order to satisfy certain liabilities of the Sellers under the acquisition documentation. The remaining 41,644 Holdback Shares that were due to form part of the escrow arrangement will be withheld from issue for a certain period of time as security against any potential future claims against the Sellers under the acquisition documentation.
Shiloh Industries 
On 11 March 2014, Velocys announced that it had entered into a partnership agreement with Shiloh Industries (Shiloh) whereby the two companies agreed to preferentially work together to continually improve the Company's FT reactor manufacturing, and, over time, to enhancing the effectiveness of the whole GTL plant, as well as exploring other opportunities in the oil and gas market. In addition, as part of the agreement, Shiloh has committed to investing in manufacturing resources for Velocys, and is making available to the partnership a dedicated team of engineers. Shiloh, headquartered in Valley City, Ohio, is one of North America's leading suppliers of engineered metal products and light weighting solutions to the automotive industry. At the same time, Shiloh subscribed for 601,626 new ordinary shares of Velocys at 2.00 per share raising approximately 1.2 million for the Company. 
CompactGTL litigation
As announced on 22 September 2014, the UK High Court has ruled in favour of Velocys in a case that the Company filed against CompactGTL Ltd. alleging infringement of two of its patents. The judgment upheld the validity of the two patents in suit (known as '508 and '509), and found CompactGTL to be infringing both patents, six patent claims in total.
A judgement hearing has been set for 2 October 2014 to deal with issues arising out of this decision, including relief from infringement, damages to Velocys, and reimbursement of Velocys' legal costs.
4. Current trading & strategy
Current trading
The Company's financial position reflects its anticipated stage of development as activities become focused on commercial rollout. Revenues for the first half of 2014 consisted of engineering study receipts and one reactor sale (unlike previous periods where there were some development or technical milestone payments). The timing of signing the supply agreement to the East Oak GTL plant, just after period end, meant that no licence revenues for this project could be recognised in the period. These will materialise in the second half of the year. 
Total revenues for the half year to 30 June 2014 were 1.0 million (H1 2013: 1.7 million). Cash* at period end stood at 18.3 million (31 December 2013: 26.4 million), while cash outflow** was 9.3 million (H1 2013: 7.0 million). The Board confirms that the Company is trading in line with management's expectations for the current year. 
* Cash is defined as cash, cash equivalents and short term investments. 
** Cash outflow is defined as cash movement excluding monies from fund raising and issuance of shares.
Strategy
In the next twenty four months, the Directors intend that the Company will concentrate on seeking to:
 Successfully deliver on the East Oak GTL project;
 Proceed to construction of the Ashtabula GTL plant;
 Secure final investment decision for at least two more commercial plants;
 Continue to reinforce the Company's profile as a leader in smaller scale GTL;
 Grow its plant and project delivery teams; and
 Progress development of a pipeline of other GTL projects.
5. Use of proceeds
The Directors intend that the net proceeds of the Placing will be used by the Company to help accelerate adoption of its technology following announcement of the Company's first commercial project. 
Specifically, the Directors intend to utilise the net proceeds of the Placing to:
(a) Strengthen the Company's balance sheet to support sales (credibility and technology guarantees);
(b) Accelerate adoption of the Company's technology by helping develop projects to funding readiness; and
(c) Fund the general working capital requirements of the business.
6. Details of the Placing
The Company proposes raising approximately 52 million, before expenses, by way of a conditional, non-pre-emptive placing of up to 23,111,111 new Ordinary Shares at the Placing Price. The Placing Shares will be placed by Numis as agent for the Company and pursuant to the Placing Agreement, with institutional and other professional investors. 
The Placing Price represents a slight premium to the closing mid-market price of the Ordinary Shares as at 26 September 2014 of 224 pence per Ordinary Share. The Placing Shares will represent approximately 16 per cent. of the Ordinary Share capital as enlarged by the Placing and will, when issued, rank pari passu in all respects with the other Ordinary Shares then in issue, including all rights to all dividends and other distributions declared, made or paid following Admission. 
The Placing Agreement is conditional upon (amongst other things) the passing of the Resolutions at the General Meeting and Admission occurring on or before 20 October 2014 (or such later date as Numis and the Company may agree, not being later than 3 November 2014). 
The Placing Agreement contains warranties from the Company in favour of Numis in relation to, (amongst other things), the Company and its business. In addition, the Company has agreed to indemnify Numis in relation to certain liabilities it may incur in undertaking the Placing. Numis has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, it may terminate in the event that there has been a material breach of any of the warranties or for force majeure.
Application will be made for the Placing Shares to be admitted to trading on AIM, subject to the Placing Agreement not having been terminated, and it is expected that trading in the Placing Shares will commence at 8:00 a.m. on 20 October 2014.
7. Resolutions
The Company currently does not have sufficient authority to allot shares under the Act to effect the Placing. Accordingly the Resolutions, summarised below, are being proposed at the General Meeting to ensure that the Directors have sufficient authority to allot the Placing Shares on a non-pre-emptive basis.
(a) Resolution 1 is an ordinary resolution to grant authority to the Directors under s551 of the Act to allot relevant securities, up to a maximum aggregate nominal amount of 231,111.11 pursuant to the Placing, such authority expiring at the earlier of the Company's next annual general meeting and 31 July 2015;
If Resolution 1 is passed, the Directors will have the authority, under the Act, to allot Ordinary Shares up to the maximum aggregate nominal amount of 231,111.11 (being the maximum required for the purposes of issuing the Placing Shares); and
(b) Resolution 2 is a special resolution, conditional upon the passing of Resolution 1, to empower the Directors, pursuant to s570 of the Act, to allot Ordinary Shares up to a maximum aggregate nominal amount of 231,111.11 on a non-pre-emptive basis pursuant to the Placing, such authority expiring at the earlier of the Company's next annual general meeting and 31 July 2015.
If Resolution 2 is passed, the Directors will have the power, under the Act, to allot the Placing Shares without offering those shares to existing Shareholders.
These authorities are required to enable the Directors to effect the Placing and are in addition to the general authorities that were granted by Shareholders at the Company's annual general meeting on 10 June 2014, which gave the Directors authority to allot relevant securities up to a maximum aggregate nominal amount of 390,128.09 under s551 of the Act and to allot Ordinary Shares up to a maximum aggregate nominal amount of 117,038.43 on a non-pre-emptive basis under s570 of the Act (such authorities expire at the next annual general meeting of the Company or 31 July 2015, whichever is earlier).
Resolution 1 is an ordinary resolution and requires a majority of more than 50 per cent. of the Shareholders voting to be passed. Resolution 2 is a special resolution and requires the approval of more than 75 per cent. of the Shareholders voting to be passed.
The General Meeting is to be held at the offices of Mayer Brown International LLP, 201 Bishopsgate, London EC2M 3AF at 1:30 p.m. on 17 October 2014.
8. Recommendation
The Directors consider that the Placing and the Resolutions are in the best interests of the Company and its Shareholders as a whole and accordingly recommend that Shareholders vote in favour of the Resolutions, as they intend to do in respect of their own legal and/or beneficial shareholdings, amounting, in aggregate, to 3,213,598 Ordinary Shares (representing approximately 2.7 per cent. of the Ordinary Shares in the issue as at the date of this announcement).


Appendix
Terms and conditions of the Placing
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING.
This announcement, including this Appendix (together, the "Announcement") and the information in it, is restricted, and, subject to certain exceptions, is not for publication, release or distribution, directly or indirectly, in whole or in part, in, into or from the United States, Canada, Australia, New Zealand, Japan, The Republic of Ireland or The Republic of South Africa or any other jurisdiction in which such publication or distribution would be unlawful.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
Members of the public are not eligible to take part in the Placing. This Appendix and the terms and conditions set out herein are for information purposes only and are directed only at: (A) persons in member states of The European Economic Area who are qualified investors as defined in section 86(7) of the Financial Services and Markets Act 2000, as amended, ("Qualified Investors") being persons falling within the meaning of article 2(1)(E) of the Prospectus Directive; (B) in the United Kingdom, Qualified Investors who are persons who (i) fall within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); (ii) fall within article 49(2)(A) to (D) ("high net worth companies, unincorporated associations, etc") of the order; or (iii) are persons to whom it may otherwise be lawfully communicated; and (C) QIBS in the United States (all such persons together being referred to as "Relevant Persons"). This Appendix and the terms and conditions set out herein must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this Appendix and the terms and conditions set out herein relates is available only to relevant persons and will be engaged in only with relevant persons.
This Announcement, including this Appendix, is for information purposes only and does not itself constitute an offer for sale or subscription of any securities in the Company. This Announcement has been issued by and is the sole responsibility of the Company.
This Announcement, including this Appendix, is not an offer for sale or subscription in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such jurisdiction. This Announcement, including this Appendix, is not an offer of or solicitation to purchase or subscribe for securities in the United States. Persons receiving this Announcement, including the Appendix (including, without limitation, custodians, nominees and trustees) must not distribute, mail or send it in, into or from the United States, or use the United States mails, directly or indirectly, in connection with the Placing, and by doing so may invalidate any related purported application for the securities referred to herein. The securities referred to herein have not been and will not be registered under the Securities Act and may not be offered, sold, resold, transferred or delivered directly or indirectly, in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Neither the United States Securities and Exchange Commission nor any securities regulatory authority of any state or other jurisdiction of the United States has approved or disapproved of an investment in the securities or passed upon or endorsed the merits of the Placing or the accuracy or adequacy of the contents of this Announcement.Any representation to the contrary is a criminal offence in the United States.No public offering of securities is being made in the United States.No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this Announcement, will not be accepted.
Each placee should consult with its own advisers as to legal, tax, business and related aspects of an investment in Placing Shares.
The price of shares in the Company and the income from them (if any) may go down as well as up and investors may not get back the full amount invested on disposal of shares.
Persons who are invited to and who choose to participate in the Placing, by making (or on whose behalf there is made) an oral or written offer to subscribe for Placing Shares (the Placees), will be deemed to have read and understood this Announcement, including this Appendix, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in this Appendix. In particular, each such Placee represents, warrants and acknowledges that:
1. It is a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
2. In the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Placing Shares acquired by it have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State of the European Economic Area (EEA) which has implemented the Prospectus Directive other than Qualified Investors or in circumstances in which the prior consent of Numis has been given to the offer or resale; or (ii) where Placing Shares have been acquired by it on behalf of persons in any Member State of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and/or
3. (a) (i) It is not in the United States and (ii) it is not acting for the account or benefit of a person in the United States; (b) (i) it is a QIB and accredited investor in the United States and (ii) has duly executed an investor letter in the form provided to it and delivered the same to the Company and Numis; (c) it is a dealer or other professional fiduciary in the United States acting on a discretionary basis for a non-US person (other than an estate or trust) in reliance on Regulation S under the Securities Act; or (d) it is otherwise acquiring the Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the Securities Act.
The Company and Numis will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
This Announcement does not constitute an offer, and may not be used in connection with an offer, to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. Subject to certain exceptions, this Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Canada, Australia, New Zealand, Japan, the Republic of Ireland or the Republic of South Africa or in any jurisdiction in which such publication or distribution is unlawful. Persons into whose possession this Announcement may come are required by the Company to inform themselves about and to observe any restrictions of transfer of this Announcement. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.
In particular, the Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or any laws of, or with any securities regulatory authority of, any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States. The Placing Shares are being offered and sold outside the United States in accordance with Regulation S under the Securities Act.
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; 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 Canada, Australia, New Zealand, Japan, the Republic of Ireland 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, transferred or delivered, directly or indirectly, in or into Canada, Australia, New Zealand, Japan, the Republic of Ireland or the Republic of South Africa or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, custodians, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Appendix or the Announcement of which it forms part should seek appropriate advice before taking any action.
In this Appendix, unless the context otherwise requires, "Placee" means a Relevant Person (including individuals, funds or others) on whose behalf a commitment to subscribe for Placing Shares has been given.


Details of the Placing 
Numis has entered into a Placing Agreement with the Company under which Numis has, on the terms and subject to the conditions set out therein, undertaken to use its reasonable endeavours to procure, as agent for the Company, subscribers for the Placing Shares at the Placing Price. The Placing is not being underwritten by Numis. 
The Placing Agreement contains customary warranties given by the Company to Numis as to matters relating to the Company and its business and a customary indemnity given by the Company to Numis in respect of liabilities arising out of or in connection with the Placing. 
The Placing is conditional upon, amongst other things, Admission becoming effective and the Placing Agreement becoming unconditional and not being terminated in accordance with its terms.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of the Ordinary Shares after the date of issue of the Placing Shares.
Application for admission to trading
Application will be made to the London Stock Exchange for Admission. Subject to, amongst other things, the Placing Agreement becoming unconditional and not being terminated in accordance with its terms, it is expected that settlement of any such shares and Admission will become effective on or around 20 October 2014 and that dealings in the Placing Shares will commence at that time.
Participation in, and principal terms of, the Placing
1. Numis (whether through itself or any of its affiliates) is arranging the Placing as placing agent of the Company for the purpose of using reasonable endeavours to procure Placees at the Placing Price for the Placing Shares.
2. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Numis. Numis and its affiliates may participate in the Placing as principal.
3. 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.
4. The Placing Price will be a fixed price of 225 pence per new Ordinary Share.
5. Each Placee's allocation will be confirmed to Placees orally by Numis, and a trade confirmation or contract note will be dispatched as soon as possible thereafter. The oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of Numis and the Company, under which it agrees to acquire the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's Articles of Association.
6. Except as required by law or regulation, no press release or other announcement will be made by Numis or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.
7. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".
8. All obligations under the Placing will be subject to fulfilment or (where applicable) waiver of, amongst other things, 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".
9. By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
10. To the fullest extent permissible by law, none of the Company, Numis or any of their respective affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise) in respect of these terms and conditions. In particular, none of the Company, Numis or any of their respective affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of Numis' conduct of the Placing. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and Numis shall have no liability to the Placees for the failure of the Company to fulfil those obligations.
Conditions of the Placing
Numis' obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:
(a)  The Company allotting, subject only to Admission, the Placing Shares in accordance with the Placing Agreement; and
(b)  Admission taking place not later than 8.00 a.m. (UK Time) on 20 October 2014 (or such other date as the Company and Numis shall agree).
If (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by Numis by the respective time or date where specified (or such later time or date as the Company and Numis may agree, not being later than 3 November 2014), or (ii) the Placing Agreement is terminated as described below, the Placing in relation to the Placing Shares will lapse and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.
Numis may, at its discretion and upon such terms as it thinks fit, waive, or extend the period (up to 3 November 2014) for, compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement, save that the condition relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.
Neither Numis 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 to the Placing nor for 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 Numis.
Right to terminate under the Placing Agreement
Numis is entitled, at any time before Admission, to terminate the Placing Agreement by giving notice to the Company in certain circumstances, including, inter alia:
(a) The occurrence of a force majeure event which prevents a party not seeking to terminate from performing its obligations under the Placing Agreement;
(b) Any of the warranties contained in the Placing Agreement are, or would if repeated at any time prior to Admission, be untrue or inaccurate or misleading in any material respect;
(c) Any statement contained in any of the Placing documents is or has become, untrue, inaccurate, incomplete, or misleading in any respect which is material in the context of the Placing; 
(d) There has been a breach by the Company any of its obligations under the Placing Agreement or any applicable law or regulation in respect of the Placing; and
(f) There has occurred an adverse change to the business of the Company's group which is material in the context of the Placing.
Following Admission, the Placing Agreement is not capable of termination to the extent that it relates to the Placing of the Placing Shares.
The rights and obligations of the Placees shall terminate only in the circumstances described in these terms and conditions and in the Placing Agreement and will not be subject to termination by the Placee or any prospective Placee at any time or in any circumstances. By participating in the Placing, Placees agree that the exercise by Numis of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Numis, and that it need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise or decision not to exercise. Placees will have no rights against Numis, the Company or any of their respective directors or employees under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended).
No admission document or prospectus
The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require an admission document or prospectus in the United Kingdom or in any other jurisdiction. No offering document, admission 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, and Placees' commitments will be made solely on the basis of the information contained in the Announcement (including this Appendix) and the Exchange Information (as defined further below). Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information (other than the Exchange Information), representation, warranty, or statement made by or on behalf of the Company or Numis or any other person and neither Numis nor the Company 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 and, if given or made, such information, representation, warranty or statement must not be relied upon as having been authorised by Numis, the Company, or their respective officers, directors, employees or agents. 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. Neither the Company, nor Numis are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares (ISIN: GB00B11SZ269) following Admission will take place within CREST provided that, subject to certain exceptions, Numis reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that it deems 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 any Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation or contract note stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to Numis (as agent for the Company) and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the CREST or certificated settlement instructions that it has in place with Numis.
It is expected that settlement in respect of the Placing Shares will be on 20 October 2014 on a T+3 basis in accordance with the instructions set out in the trade confirmation.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by Numis.
Each Placee is deemed to agree that, if it does not comply with these obligations, Numis may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Numis' account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable and shall indemnify Numis on demand for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating a bid for Placing Shares, each Placee confers on Numis all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Numis lawfully takes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation or contract note is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations, warranties and further terms
By participating in the Placing each Placee (and any person acting on such Placee's behalf) makes the following representations, warranties, acknowledgements, agreements and undertakings (as the case may be) to the Company and Numis, namely that, each Placee (and any person acting on such Placee's behalf):
1. Represents and warrants that it has read and understood the Announcement, including this Appendix, in its entirety and that its subscription of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein and undertakes not to redistribute or duplicate this Announcement;
2. Acknowledges that no offering document, admission document or prospectus has been prepared in connection with the Placing and represents and warrants that it has not received and will not receive a prospectus, admission document or other offering document in connection therewith;
3. Acknowledges that the Ordinary Shares are admitted to trading on AIM, and the Company is therefore required to publish certain business and financial information in accordance with the AIM Rules (collectively Exchange Information), which includes the Company's most recent balance sheet and profit and loss account and the Company's announcements and circulars published in the past 12 months and that it is able to obtain or access such information without undue difficulty;
4. Acknowledges that none of Numis, the Company, any of their respective affiliates or any person acting on behalf of any of them has provided it, and will not provide it, with any material regarding the Placing Shares or the Company other than this Announcement; nor has it requested any of Numis, the Company, their respective affiliates or any person acting on behalf of any of them to provide it with any such information and has read and understood the Exchange Information;
5. Acknowledges that the content of this Announcement is exclusively the responsibility of the Company, and that none of Numis, its affiliates or any person acting on its or their behalf has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously or concurrently published by or on behalf of the Company, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement or otherwise. 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 the Placing Shares is contained in this Announcement and any Exchange Information, such information being all that it deems necessary 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 Numis, the Company or any of their respective directors, officers or employees or any person acting on behalf of any of them, or, if received, it has not relied upon any such information, representations, warranties or statements (including any management presentation that may have been received by any prospective Placee or any material prepared by the Research Department of Numis (the views of such Research Department not representing and being independent from those of the Company and the Corporate Finance Department of Numis and not being attributable to the same)), and neither Numis nor the Company 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. Each Placee further acknowledges and agrees that it may not place the same degree of reliance on this Announcement as it may otherwise place on a prospectus or admission document. Each Placee further acknowledges and agrees that it has relied solely on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and it will not rely on any investigation that Numis, its affiliates or any other person acting on its or their behalf has or may have conducted;
6. Represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting this invitation to participate in the Placing;
7. Acknowledges that Numis does not have any duties or responsibilities to it, or its clients, similar or comparable to the duties of "best execution" and "suitability" imposed by the Conduct of Business Sourcebook in the FCA's Handbook of Rules and Guidance and that Numis is not acting for it or its clients and that Numis will not be responsible for providing protections to it or its clients;
8. Acknowledges that none of Numis, any of its affiliates or any person acting on behalf of it or them has or shall have any liability for the Exchange Information, any publicly available or filed information or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;
9. That, save in the event of fraud on the part of Numis (and to the extent permitted by the Rules of the FCA), neither Numis, its ultimate holding company nor any direct or indirect subsidiary undertakings of that holding company, nor any of their respective directors and employees shall be liable to Placees for any matter arising out of Numis' role as placing agent or otherwise in connection with the Placing and that where any such liability nevertheless arises as a matter of law Placees will immediately waive any claim against any of such persons which they may have in respect thereof;
10. Represents and warrants that (a) (i) it is not in the United States and (ii) it is not acting for the account or benefit of a person in the United States, (b) (i) it is a QIB and accredited investor in the United States and (ii) has duly executed an investor letter in the form provided to it and delivered the same to the Company and Numis, (c) it is a dealer or other professional fiduciary in the United States acting on a discretionary basis for a non-US person (other than an estate or trust) in reliance on Regulation S under the Securities Act or (d) it is otherwise acquiring the Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the Securities Act. 
11. Acknowledges that (a) the Placing Shares are being offered and sold only in accordance with Regulation S under the Securities Act or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and (b) the Placing Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority, and agrees not to reoffer, resell, pledge or otherwise transfer the Placing Shares except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in accordance with any applicable securities laws of any state or jurisdiction of the United States;
12. Unless otherwise specifically agreed in writing with Numis, represents and warrants that neither it nor the beneficial owner of such Placing Shares is (or will be at the date on which any Placing Shares are issued and allotted to it) a resident of Canada, Australia, New Zealand, Japan, the Republic of Ireland or the Republic of South Africa;
13. Acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of Canada, Australia, New Zealand, Japan, the Republic of Ireland or the Republic of South Africa and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within those jurisdictions;
14. 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 transfer Placing Shares into a clearance system;
15. Represents and warrants that: (i) it has complied with its obligations under the Criminal Justice Act 1993 and Part VIII of FSMA; (ii) in connection with money laundering and terrorist financing, it has complied with its obligations under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the Money Laundering Regulations 2007; and (iii) it is not a person: (a) with whom transactions are prohibited under the US Foreign Corrupt Practices Act of 1977 or any economic sanction programmes administered by, or regulations promulgated by, the Office of Foreign Assets Control of the US Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations (together, the Regulations); and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such purchase, and it will provide promptly to Numis such evidence, if any, as to the identity or location or legal status of any person which Numis may request from it in connection with the Placing (for the purpose of complying with such Regulations or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by Numis on the basis that any failure by it to do so may result in the number of Placing Shares that are to be purchased by it or at its direction pursuant to the Placing being reduced to such number, or to nil, as Numis may decide at its sole discretion;
16. If a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of Numis has been given to the offer or resale;
17. Represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);
18. Represents and warrants 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;
19. Represents and warrants 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;
20. If in a Member State of the European Economic Area, unless otherwise specifically agreed with Numis in writing, represents and warrants that it is a Qualified Investor within the meaning of the Prospectus Directive;
21. If in the United Kingdom, represents and warrants that it is a person (i) who has professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order); (ii) falling 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 be lawfully communicated;
22. Represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities and has taken any other necessary actions to enable it to commit to its 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 Announcement) and will honour such obligations;
23. Where it is acquiring Placing Shares for one or more managed accounts, represents and warrants that it is authorised in writing by each managed account: (a) to acquire the Placing Shares for each managed account; (b) to make on its behalf the representations, warranties, acknowledgements, undertakings and agreements in this Appendix and the Announcement of which it forms part; and (c) to receive on its behalf any investment letter relating to the Placing in the form provided to it by Numis;
24. Undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Numis may in its sole discretion determine and without liability to such Placee and it will remain liable and will indemnify Numis on demand for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax or security transfer tax (together with any interest or penalties due pursuant to or referred to in these terms and conditions) which may arise upon the placing or sale of such Placee's Placing Shares on its behalf;
25. Acknowledges that none of Numis, any of its affiliates, or any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be treated for these purposes as a client of Numis and that Numis has no duties or responsibilities 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;
26. Undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither Numis nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company and Numis in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of Numis who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;
27. Acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreement 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 (including non-contractual matters) arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Numis 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;
28. Acknowledges that time shall be of the essence as regards its obligations pursuant to this Appendix;
29. Agrees that the Company, Numis and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to Numis on its own behalf and on behalf of the Company and are irrevocable and are irrevocably authorised to produce this Announcement or a copy thereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby;
30. Agrees to indemnify on an after-tax basis and hold the Company, Numis 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 the 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;
31. Acknowledges that no action has been or will be taken by any of the Company, Numis or any person acting on behalf of the Company or Numis 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;
32. Acknowledges that it is an institution that has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and in this sector and is aware that it may be required to bear, and it, and any accounts for which it may be acting, are able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved; 
33. Acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the trade confirmation or contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing;
34. Acknowledges that Numis or any of its affiliates acting as an investor for its own account may take up shares in the Company and in that capacity may retain, purchase or sell for its own account such shares and may offer or sell such shares other than in connection with the Placing;
35. Represents and warrants that, if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with all applicable laws and regulation; and
36. To the fullest extent permitted by law, it acknowledges and agrees to the disclaimers contained in the Announcement including this Appendix.
The representations, warranties, acknowledgments and undertakings contained in this Appendix are given to Numis and the Company and are irrevocable and shall not be capable of termination in any circumstances.
The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Numis will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Numis in the event that either of the Company and/or Numis has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify Numis accordingly.
In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that Numis does not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that Numis or any of its 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 Numis, any money held in an account with Numis on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Numis' money in accordance with the client money rules and will be used by Numis in the course of its own business and the Placee will rank only as a general creditor of Numis.
All times and dates in this Announcement may be subject to amendment. Numis shall notify the Placees and any person acting on behalf of the Placees of any changes.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.


Definitions
In this Appendix to the Announcement and, as the context shall admit, in the Announcement:
Act means the Companies Act 2006;
Admission means the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules;
AIM means the market of that name operated by the London Stock Exchange;
AIM Rulesmeans the provisions of the London Stock Exchange AIM Rules for Companies as amended from time to time governing, inter alia, admission to AIM and the continuing obligations of AIM companies; 
Announcement means this announcement (including the appendix to this announcement);
bpd barrels per day;
Board or Directors the board of directors of the Company as at the date of this Announcement;
Company means Velocys plc, registered in England and Wales with number 5712187, whose registered office is at 115e Olympic Avenue, Milton Park, Abingdon, Oxfordshire OX14 4SA;
CREST means the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the CREST Regulations);
Directors means the directors of the Company as at the date of this Announcement;
FCA means the Financial Conduct Authority of the United Kingdom;
FSMA means the Financial Services and Markets Act 2000 (as amended);
FT means Velocys' Fischer-Tropsch technology;
London Stock Exchangemeans London Stock Exchange plc;
General Meetingmeans the general meeting of the Company to be held at 1:30 p.m. on 17 October 2014, notice of which is set in the Notice of General Meeting;
GTL means a refinery process to convert natural gas or other gaseous hydrocarbons into longer chain hydrocarbons such diesel or jet fuel;
Notice of General Meetingmeans the notice convening the General Meeting, to be distributed to Shareholders on or around the date of this announcement;
Numis means Numis Securities Limited, registered in England and Wales with number 2285918, whose registered office is at 10 Paternoster Square, London EC4M 7LT;
Ordinary Sharesmeans the ordinary shares of 0.01 each in the capital of the Company;
Pinto Enegy means Pinto Energy LLC, a limited liability corporation established in Delaware, USA. Velocys plc and its subsidiaries are not affiliated with Cockrell Interests, LLC, Pinto Energy Partners, L.P., Pinto Energy Venice, LP, or Pinto Energy Partners- SR, LLC;
Placee means any person (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given;
Placing means the placing of the Placing Shares by Numis, on behalf of the Company, with Placees;
Placing Agreementmeans the placing agreement dated 29 September 2014 between the Company and Numis in respect of the Placing;
Placing Pricemeans 225 pence per Placing Share;
Placing Sharesmeans up to 23,111,111 new Ordinary Shares to be issued pursuant to the Placing;
Regulations means the UK Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended;
Resolutions means the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting;
Shareholders means the holders of Ordinary Shares from time to time, each individually being a Shareholder;
Prospectus Directivemeans the Directive of the European Parliament and of the Council of the European Union 2003/71/EC, as amended by European Directive 2010/73/EU, and includes any relevant implementing measure in EEA member states;
QIB means a qualified institutional buyer, as defined in Rule 144A under the Securities Act;
Securities Act means the US Securities Act of 1933, as amended;
United Kingdom or UK means the United Kingdom of Great Britain and Northern Ireland; 
United States or US means the United States of America, its territories and possessions, any state of the United States and the District of Columbia; and
Velocys means the Company, its subsidiaries and subsidiary undertakings.

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