RNS announcement

12 March 2019

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EC NO. 596/2014) ("MAR")

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, BY ANY MEANS OR MEDIA TO US PERSONS OR IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL.

This announcement is an advertisement for the purposes of the Prospectus Rules of the UK Financial Authority ("FCA") and does not constitute a prospectus. Investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in a prospectus expected to be published later today by Warehouse REIT plc (the "Prospectus") in its final form and not in reliance on this announcement. A copy of the Prospectus will, following publication, be available for inspection from the Company's registered office and on its website (www.warehousereit.co.uk). This announcement does not constitute, and may not be construed as, an offer to sell or an invitation or recommendation to purchase, sell or subscribe for any securities or investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

Terms not otherwise defined in this announcement have the meanings that will be given to them in the Prospectus.

The contents of this announcement, which have been prepared by and are the sole responsibility of Warehouse REIT plc (the "Company"), have been approved by G10 Capital Limited (part of the Lawson Conner Group) (the "AIFM"), as a financial promotion solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 ("FSMA").

Warehouse REIT plc

(the "Company" or "Warehouse REIT")

Proposed Placing, Open Offer and Offer for Subscription and Notice of General Meeting

Further to its announcement on 5 March 2019, the Board of Directors (the "Board") of Warehouse REIT (ticker: WHR), the UK REIT that invests in and manages urban and 'last-mile' industrial warehouse assets in strategic locations in the UK, today announces the proposed issue of further Ordinary Shares ("New Ordinary Shares") in the Company to raise gross proceeds of up to £100.0 million (the "Issue"), the details of which will be set out in the Prospectus, expected to be published by the Company later today. The Issue will comprise a Placing, Open Offer and Offer for Subscription.

The Company has successfully deployed the £150.0 million of equity capital raised on its IPO in September 2017 and, consequently, on 5 March 2019, the Company announced that it has been contemplating an equity raise to fund further investments in line with its investment policy to drive further value creation for its Shareholders.
 

Summary

·   Issue of up to 97,087,378 New Ordinary Shares pursuant to a Placing, Open Offer and Offer for Subscription, targeting gross proceeds of approximately £100.0 million

·   Qualifying Shareholders are being offered the opportunity to participate in the Open Offer of up to 66,400,000 New Ordinary Shares on the basis of 2 New Ordinary Shares for every 5 Existing Ordinary Shares

·    Qualifying Shareholders are also being offered the opportunity to subscribe for New Ordinary Shares in addition to their Open Offer Entitlement under the Excess Application Facility

·    The Board has reserved the right to increase the size of the Issue by up to 24,271,844 New Ordinary Shares

·    The Issue Price is 103.0 pence per New Ordinary Share. This represents a discount of 2.6 per cent. to the Net Asset Value per Ordinary Share as at 30 September 2018 (unaudited) of 105.7 pence per Ordinary Share

·     The Issue Price represents a premium of 2.0 per cent. to the closing price per Ordinary Share on 11 March 2019 of 101.0 pence per Ordinary Share

·     Tilstone Partners Limited ("TPL"), the Company's investment advisor, has recently seen an increase in the range of acquisition opportunities which meet the Company's investment criteria, giving rise to a near term pipeline of capital deployment opportunities (including off-market assets identified through TPL's network)

·    TPL has identified a pipeline of investment opportunities with a target investment yield of 7.0 per cent. amounting to approximately £256.0 million, of which approximately £41.3 million are in exclusive or final negotiations or have solicitors instructed and approximately a further £214.7 million are in detailed negotiations

·     Once fully invested, the Issue is expected to be earnings accretive with improved income diversification

·     The Company increased its target dividend for the year ending 31 March 2019 to 6.0 pence per share from 5.5 pence per share as set out in the prospectus issued in connection with the IPO and is currently targeting a dividend for the year ending 31 March 2020 of at least 6.0 pence per share

·     The New Ordinary Shares will rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission including the interim dividend in relation to the three months to 31 March 2019

This summary should be read in conjunction with the full text of the announcement and the Prospectus, when available.

Neil Kirton, Chairman of Warehouse REIT, commented:

"The Company has made impressive progress since its AIM listing 18 months ago, having delivered, ahead of target, on its investment strategy to provide shareholders with a high quality portfolio of well-located urban warehouse assets. Active management, reflected in lettings successes, many of which have been achieved ahead of ERV, is helping to drive portfolio income and has supported us in achieving our target dividend. With robust and growing income streams from a focused investment into UK multi-let warehouse properties, the next phase for the Company is to scale the portfolio as it continues to both source and attract compelling deal flow within the asset class. Having carefully considered all funding options in order to grow, we believe that this potential share issue would be in the best interests of Shareholders and the success of the Company as a whole."

Andrew Bird, Managing Director of Tilstone Partners Limited, added:

"The market remains attractive, characterised by both constrained supply, as replacement costs remain significantly more than underlying values, as well as the broader structural shift towards online which shows no sign of slowing down. As a result we continue to see substantial and increasingly diverse tenant demand for good-quality, well-located urban warehouse assets. This share issue will enable the Company to capitalise on its identified pipeline of near term opportunities, sourced both on and off market, where we can apply our proven operating model to capture future upside and generate value for shareholders."

Warehouse REIT will shortly be publishing a Prospectus in connection with the Issue which will include a notice convening a General Meeting to approve certain matters necessary to implement the Issue (the "Notice of General Meeting"). The Prospectus will, when published, be available on the Company's website (www.warehousereit.co.uk), subject to certain access restrictions, for inspection at the Company's registered office at Beaufort House, 51 New North Road, Exeter, EX4 4EP, and at the National Storage Mechanism via www.morningstar.co.uk/uk/NSM.

Expected timetable of principal events

Each of the times and dates in the timetable above is subject to change without further notice. References to a time of day are to London time. Different deadlines and procedures may apply in certain cases.

If any of the times and/or dates change, the revised time and/or date will be notified through a Regulatory Information Service. For example, Shareholders who hold their Existing Ordinary Shares through a CREST member or other nominee may be set earlier deadlines by the CREST member or other nominee than the times and dates noted above.

Background to, and reasons for, the Issue

Overview of the Company, its objectives and investment characteristics

Since IPO, the Group has built a diversified property portfolio of UK located warehouse assets. As at 7 March 2019 (the "Latest Practicable Date"), the Group's investment portfolio was spread across 91 properties with a total of approximately 629 tenants, with a combined contracted rent roll of £21.5 million per annum and a weighted average unexpired lease term of 4.4 years (2.8 years to first break). The portfolio was valued at £284.3 million in aggregate as at 30 September 2018.

The Company has deliberately targeted the warehouse sector for its investment focus as this part of the UK commercial property market has historically demonstrated, and continues to demonstrate, a number of attractive characteristics:

·     increasing occupier demand driven by the rise in internet shopping and the "last mile" delivery sector;

·     sustainable current rental levels;

·     constrained supply (driven in part by the cost of replacement being higher than the investment value of the underlying buildings) of new stock being developed over the last 10 years and very little development being planned over the next five years, all of which has reduced occupier choice and resulted in rental growth;

·     the urban warehouse sector offers one of, if not the highest, initial yields of all UK commercial property sectors;

·    flexibility in building use (subject, where applicable, to applicable planning permissions) which has already evolved significantly over time and which provides potential value add opportunities;

·     low levels of building obsolescence; and

·     prevailing shorter WAULTs providing opportunities to improve income security and add value.

IPF Consensus forecasts anticipate that industrial property will continue to be the best performing UK commercial real estate sector over the next few years delivering total returns of 7.4 per cent. in 2019 and 7.5 per cent. per annum between 2018-22, ahead of an average of 4.5 per cent. per annum for all property over the same period.

The Company and TPL will continue to focus on the acquisition of assets most likely to benefit from rental growth. Rather than being a passive investor, the Company and TPL believe in acquiring assets with added value opportunities which are capable of being realised through pro-active management in accordance with the Company's investment policy. The Company will remain focused on small and medium individual unit sizes (less than 50,000 sq ft), and on buying properties at less than the rebuild cost of replacement.

Reasons for the Issue and Use of Proceeds

The Group continues to see opportunities to purchase assets at prices below replacement value, with the potential to secure robust and growing income streams which can be distributed to Shareholders through the Company's quarterly dividend programme. The Group's portfolio also offers continued potential for capital growth, and the possibility to supplement the income returns generated from the Group's assets.

The Company has seen a recent increase in the range of acquisition opportunities which meet the Group's investment criteria, giving rise to a near term pipeline of capital deployment opportunities.

Accordingly, the Company is seeking to capitalise on this pipeline of opportunities by raising additional finance through the Issue which it will seek to deploy, together with debt finance where appropriate, in line with its investment strategy.

The Directors intend to use the Net Issue Proceeds to acquire a diversified portfolio of additional properties in accordance with the Company's investment policy.  Pending the acquisition of the pipeline of investment opportunities, the Net Issue Proceeds will be used to pay down sums drawn on the Group's revolving credit facility, thereby creating immediate finance cost savings.

TPL has identified a pipeline of investment opportunities with a target investment yield of 7.0 per cent. amounting to approximately £256.0 million, of which approximately £41.3 million are in exclusive or final negotiations or have solicitors instructed and approximately a further £214.7 million are in detailed negotiations.

The Company believes that the pipeline stock selection will further diversify the Group's income, in addition to continuing to strengthen the portfolio's sustainability, quality and prospects for growth.  Location remains a key criteria when reviewing the pipeline as the Company continues to focus on economically-active geographical areas that will respond (in particular, in respect of rental growth) to active asset management initiatives and the circa £256.0 million of investment opportunities are spread across all regions of the UK and include approximately £9.0 million in Scotland.

Whilst the Company is in exclusive negotiations with the vendors of a number of these assets (and such assets have been taken off the market), neither the Company nor any member of its Group currently has any legally binding contractual obligation to purchase any of the assets. There is therefore no certainty that any of the potential investments in the pipeline as at the date of the Prospectus will be completed or will be invested in by the Company. However, TPL is continually screening further opportunities, with more expected to be identified in the near term, and is confident that suitable assets will be identified, assessed and acquired to substantially invest the Net Issue Proceeds within six months of Admission.

Benefits of the Issue

The Directors believe that growing the Property Portfolio via the Issue will:

·     allow the Company to further capitalise on opportunities in an attractive market;

·     be accretive to earnings once the proceeds are fully invested;

·     represent opportunities to grow income and create value through active asset management;

·     enhance the quality of the portfolio and further improve income diversification and growth prospects;

·     increase debt funding options and lower overall financing costs;

·     improve operational efficiency and cost ratios; and

·     potentially broaden the investor base and increase liquidity in the Ordinary Shares.

Current trading trends and prospects

At the Company's half year ended 30 September 2018, the portfolio was valued at £284.3 million, which reflected £15.0 million of disposals during the period representing an increase of 6.5 per cent. on the aggregate purchase price and a 1.6 per cent. like-for-like increase on the valuation at 31 March 2018, or a 2.9 per cent. capital return taking into account the disposed assets. In the six months to 30 September 2018, the Company completed 37 new lettings, generating an additional annual rent of £1.2 million, 6.9 per cent. ahead of 31 March 2018 ERVs and 12 lease renewals securing additional income of £500,000 and reflecting a 7.8 per cent. increase in headline rents. Portfolio occupancy at 30 September 2018 was 92.1 per cent. with a WAULT of 4.2 years (31 March 2018: 4.1 years) with 2.8 years to first break. During the same period, the Company acquired Burntbroom Court, Queenslie, Glasgow for £2.4 million reflecting an initial yield of 8.0 per cent..

During the period from 30 September 2018 to the date of this announcement, the Company completed 15 new lettings and 11 lease renewals across 210,200 sq ft of space, achieved at 14.4 per cent. ahead of 30 September 2018 ERVs, generating £691,000 per annum of additional contracted rent. In October 2018, the Company let 60,000 sq ft at Deeside Industrial Estate, Chester to A&D Recycling Ltd on a new 15 year lease, with a tenant only break at 10 years. The average rent over the initial five year lease term represents a 16.2 per cent. premium to the 30 September 2018 ERV.

In October 2018, the Company acquired an urban warehouse unit in Widnes, Cheshire, for £2.8 million reflecting a net initial yield of 7.3 per cent., which is let to a global internet retailer on a new five year lease. In the same month, planning permission was obtained for a major mixed-use development at Queenslie Business Park, Glasgow for an additional 250,000 sq ft of warehouse and ancillary uses, with a gross development value of £25 million. In addition, in February 2019 the Company acquired the multi let Air Cargo Centre at Glasgow Airport for £11.1 million, reflecting a net initial yield of 6.7 per cent..

The Company had bank debt of £109.5 million as at 30 September 2018, having reduced the loan to value ratio to 37.1 per cent. from 40.5 per cent. at 31 March 2018, and the Company paid or declared dividends, totalling 4.5 pence per share in the period from 1 April 2018 to 31 December 2018, on track for its target of 6.0 pence per share for the full year.

On 8 February 2019, the Company declared its interim dividend in respect of the third quarter of the financial year ending 31 March 2019 of 1.5 pence per ordinary share, payable on 29 March 2019 to shareholders on the register on 1 March 2019. The ex-dividend date was 28 February 2019.

Future Prospects

The UK warehouse sector continues to perform strongly and the Board believes the growth drivers are structural rather than cyclical with demand from a diverse range of occupiers. Market expectations are for rental growth of 2.5 per cent. per annum, for all industrial assets between 2018 and 2022, according to IPF Consensus Forecasts, but the Board's expectation is that rental growth will be stronger for smaller multi-let estates, the part of the market the Company is focused on, rather than large distribution warehouses driven by a favourable supply/demand imbalance. There are also good prospects to outperform wider market expectations through active asset management to increase rental income and lease durations. The Board sees no sign of any change in these positive dynamics, but remains alert to the potential for geopolitical or financial events to affect both occupier and investor sentiment.

Principal Terms of the Capital Raising

The Company is proposing to raise gross proceeds of up to £100.0 million (approximately £98.0 million net of expenses) by the issue of 97,087,378 New Ordinary Shares at 103.0 pence per New Ordinary Share, although the Directors have the ability to increase the size of the Issue by up to 25.0 per cent. such that the gross proceeds would be approximately £125.0 million. The actual number of New Ordinary Shares to be issued pursuant to the Issue, and therefore the Gross Issue Proceeds are not known as at the date of this announcement but will be notified by the Company via a Regulatory Information Service prior to Admission.  The Board considers the Placing, Open Offer and Offer for Subscription to be a suitable fundraising structure as it will allow access to a wide variety of new investors to broaden the Company's shareholder base, whilst providing existing Shareholders with the opportunity to participate in the fundraising through the Open Offer and the Offer for Subscription.

The Issue Price represents a premium of 2.0 per cent. to the Closing Price of 101.0 pence per Ordinary Share on 11 March 2019 and a discount of 2.6 per cent. to the EPRA NAV per share of 105.7 pence at 30 September 2018. The Issue Price has been set by the Directors following their assessment of market conditions and following discussion with a number of institutional investors. The Directors are in agreement that the level of discount and method of issue are appropriate to secure the investment sought.

The New Ordinary Shares will rank in full for all dividends and other distributions declared, made or paid on Ordinary Shares after Admission including the interim dividend in relation to the three months to 31 March 2019.

The Issue is not underwritten. The Directors have the discretion to scale back the Placing and/or the Offer for Subscription in favour of the Open Offer by reallocating New Ordinary Shares that would otherwise be available under the Placing and/or the Offer for Subscription to Qualifying Shareholders under the Open Offer (including, where applicable, to Qualifying Shareholders under the Excess Application Facility). Any New Ordinary Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to their Open Offer Entitlements or under the Excess Application Facility will be reallocated to the Placing and/or the Offer for Subscription and be available thereunder.

The Placing

Peel Hunt, as placing agent of the Company, will use reasonable endeavours to place the Placing Shares with institutional investors at the Issue Price. The Placing Shares represent up to 100.0 per cent. of the New Ordinary Shares and up to 37.0 per cent. of the Enlarged Share Capital. The Placing may be scaled back to satisfy valid applications by Qualifying Shareholders under the Open Offer by allocating New Ordinary Shares that could otherwise be available under the Placing to such Qualifying Shareholders. The Placing may also be scaled back at the Directors' discretion (in consultation with Peel Hunt and TPL) in order to satisfy valid applications under the Offer of Subscription.

The Open Offer

Qualifying Shareholders have the opportunity under the Open Offer to subscribe for New Ordinary Shares at the Issue Price, payable in full on application and free of expenses, pro rata to their existing shareholdings, on the basis of:

2 New Ordinary Shares for every 5 Existing Ordinary Shares

held by them and registered in their names at the Record Time. Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer Entitlement will be rounded down to the nearest whole New Ordinary Share. Fractional entitlements to New Ordinary Shares will be aggregated and will ultimately accrue for the benefit of the Company.

The Directors fully recognise the importance of pre-emption rights to Shareholders and consequently up to 66,400,000 New Ordinary Shares are being offered to existing Shareholders by way of the Open Offer. The Directors consider this appropriate and in the best interests of Shareholders.

The Excess Application Facility

Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility. Qualifying Non-CREST Shareholders wishing to apply to subscribe for Excess Shares may do so by completing the relevant sections on the Open Offer Application Form. Qualifying CREST Shareholders who wish to apply to subscribe for more than their Open Offer Entitlements will have Excess Open Offer Entitlements credited to their stock account in CREST and should refer to the Prospectus for information on how to apply for Excess Shares pursuant to the Excess Application Facility.

The Excess Application Facility will comprise Open Offer Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements. Applications by Qualifying Shareholders for Excess Shares will, therefore, only be satisfied to the extent that other Qualifying Shareholders do not take up their Open Offer Entitlements in full and shall in any event be at the discretion of the Board (in consultation with Peel Hunt and TPL). If there is an over-subscription resulting from excess applications, allocations in respect of such excess applications will be scaled-back at the absolute discretion of the Board in consultation with Peel Hunt and TPL, who will have regard to the pro rata number of Excess Shares applied for by Qualifying Shareholders under the Excess Application Facility in addition to the number of Placing Shares and Offer for Subscription Shares applied for by such Qualifying Shareholders. No assurances can therefore be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full, in part or at all.

Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non- CREST Shareholders should note that their Open Offer Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST and be enabled for settlement, the Open Offer Entitlements and Excess Open Offer Entitlements will not be tradeable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. New Ordinary Shares for which application has not been made under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up their entitlements will have no rights nor receive any benefit under the Open Offer. Any Open Offer Shares which are not applied for under the Open Offer (whether pursuant to a Qualifying Shareholder's Open Offer Entitlements or Excess Open Offer Entitlements) may be allocated to Placees under the Placing or anyone subscribing for Offer for Subscription Shares under the Offer for Subscription.

Offer for Subscription

New Ordinary Shares are also available at the Issue Price under the Offer for Subscription. Further information on the Offer for Subscription and the terms and conditions of the Offer for Subscription, including the procedure for application and payment, are set out in the Prospectus.

The number of Offer for Subscription Shares issued may be scaled back to satisfy valid applications by Qualifying Shareholders under the Open Offer including, where applicable, under the Excess Application Facility. The Offer for Subscription may also be scaled back at the Directors' discretion (in consultation with Peel Hunt and TPL) to satisfy applications under the Placing by allocating New Ordinary Shares that could otherwise be available under the Offer for Subscription to Placees under the Placing.

Dilution

Following the issue of New Ordinary Shares to be allotted pursuant to the Issue, Qualifying Shareholders who take up their full Open Offer Entitlements will suffer a dilution of 12.0 per cent. to their interests in the Company (assuming Gross Issue Proceeds of £100.0 million).

Qualifying Shareholders who do not take up any of their Open Offer Entitlements will suffer a dilution of 37.0 per cent. to their interests in the Company (assuming Gross Issue Proceeds of £100.0 million).

Basis of Allocation

The Placing may be scaled back in favour of the Open Offer and/or the Offer for Subscription and the Offer for Subscription may be scaled back in favour of the Placing and/or the Open Offer. The Open Offer is being made on a pre-emptive basis to Qualifying Shareholders and is not subject to scaling back in favour of either the Placing or the Offer for Subscription. The Directors have the discretion to scale back the Placing and/or the Offer for Subscription in favour of the Open Offer by reallocating New Ordinary Shares that would otherwise be available under the Placing and/or the Offer for Subscription to Qualifying Shareholders through the Excess Application Facility under the Open Offer. Any New Ordinary Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to their Basic Entitlements and under the Excess Application Facility will be reallocated to the Placing and/or the Offer for Subscription and be available thereunder.

The Directors have the discretion to determine the basis of allotment between Qualifying Shareholders under the Excess Application Facility and any scaling back of or reallocation of Open Offer Shares to the Placing and/or the Offer for Subscription. In exercising this discretion, the Directors generally intend to give priority to existing Shareholders over prospective new Shareholders, although the Directors will seek to balance the benefits to the Company of allowing existing Shareholders to maintain or increase the size of their relative shareholdings with expanding the Shareholder base of the Company.

Conditionality

The Issue is conditional upon, among other things:

·     Resolutions 1 and 2 being passed by Shareholders at the General Meeting (without material amendment);

·   the Placing and Open Offer Agreement becoming unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms before Admission; and

·     Admission becoming effective by not later than 8.00 a.m. on 2 April 2019 or such later time and/or date as Peel Hunt may at its sole discretion determine (being not later than 8.00 a.m. on 16 April 2019).

Accordingly, if any of the conditions are not satisfied, or, if applicable, waived, the Issue will not proceed and any Open Offer Entitlements and Excess Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies will be returned (at the applicant's risk) without interest as soon as possible.

Resolution 1 grants the Directors authority to allot equity securities under the Act to effect the Issue. Accordingly, this resolution will be proposed as an Ordinary Resolution to ensure that the Directors have authority under section 551 of the Act to issue the New Ordinary Shares. This authority will expire at the earlier of the Company's next AGM and the date falling 15 months following the passing of this resolution.  

The Company currently does not have sufficient authority to allot shares under the Act to effect the Issue on a non pre-emptive basis. Accordingly, Resolution 2 is a Special Resolution conditional upon the passing of Resolution 1 to empower the Directors, pursuant to section 570 of the Act, to allot New Ordinary Shares up to a maximum aggregate nominal amount of £1,213,593 (or such lower amount as reflects the New Ordinary Shares to be issued pursuant to the Issue) on a non-pre-emptive basis pursuant to the Issue. This authority will expire at the earlier of the Company's next AGM and the date falling 15 months following the passing of this resolution.

Directors' and TPL Participation

The Directors, their immediate family members and persons connected with them, are interested in an aggregate of 13,727,528 Existing Ordinary Shares (representing approximately 8.0 per cent. of the Existing Ordinary Shares). Each of the Directors, their immediate family members and persons connected with them intend to participate in the Issue and will in aggregate subscribe for 977,426 New Ordinary Shares.

The senior managers of TPL, their immediate family members and persons connected with them, are interested in an aggregate of 11,209,438 ¹ Existing Ordinary Shares (representing approximately 7.0 per cent. of the Existing Ordinary Shares). The senior managers of TPL, their immediate family members and persons connected with them, intend to participate in the Issue and will in aggregate subscribe for 476,455 ¹  New Ordinary Shares.

¹ - Includes Ordinary Shares held and intended to be subscribed for by Simon Hope, a Director, his immediate family members and persons connected with him,

Admission

Application will be made for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and dealings in the New Ordinary Shares will commence by 8.00 a.m. on 2 April 2019 (whereupon an announcement will be made by the Company to a Regulatory Information Service).

General Meeting

The Issue is subject to a number of conditions, including approval of Resolutions 1 and 2 to be proposed at the General Meeting. The General Meeting will be held at 11.00 a.m. on 28 March 2019.

All Shareholders are entitled to attend and vote at the General Meeting. In accordance with the Articles, all Shareholders present in person or by proxy shall upon a show of hands have one vote and upon a poll shall have one vote in respect of each Ordinary Share held.

A Form of Proxy for use at the General Meeting is not automatically being provided to Shareholders and will not accompany the Prospectus.   Shareholders wishing to submit a proxy vote can do so online at www.signalshares.com. To register, Shareholders will need their Investor Code, which can be found on the letter or email sent to them announcing the General Meeting. Once logged on, Shareholders can click on the 'Vote Online Now' button to vote. The Form of Proxy should be submitted as early as possible and, in any event, no later than 48 hours before the start of the meeting (excluding weekends and public holidays), or, if the General Meeting is adjourned, 48 hours before the time fixed for the adjourned meeting (excluding any part of a day that is not a working day).  Shareholders may request a hard copy Form of Proxy directly from the Company's Registrars, Link Asset Services on 0871 664 0321. Calls cost 12p per minute plus your operator's network access charge. If you are outside the United Kingdom, please call 44 371 664 0321. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00 a.m. to 5.30 p.m., Monday to Friday, excluding public holidays in England and Wales.

Shareholders who hold your Existing Ordinary Shares in uncertificated form in CREST may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual. Further details are also set out in the notes accompanying the Notice of General Meeting at the end of this Prospectus. Proxies submitted via CREST must be received by the Company's agent (ID: RA10) by no later than 11.00 a.m. on 26 March 2019.

The completion and return of a Form of Proxy or the use of the CREST Proxy Voting service will not prevent Shareholders from attending and voting at the General Meeting in person should they wish to.The Notice of General Meeting will be set out in the Prospectus.

Appendix 1: DEFINITIONS

In this announcement, the following expressions have the following meanings unless the context requires otherwise:

Important notice

Disclaimer

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.

This announcement is an advertisement and not a prospectus and investors should not purchase any shares referred to in this announcement except on the basis of information in the Prospectus.

This announcement has been issued by and is the sole responsibility of the Company.

The material in this announcement is for informational purposes only and does not constitute an offer of securities for sale or a solicitation of any offer to buy securities in the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other jurisdiction in which such an offer or solicitation is unlawful.  The securities referred to herein 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 other jurisdiction of the United States, and may not be offered or sold 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 any applicable securities laws of any state or other jurisdiction of the United States.  No public offering of securities will be made in the United States. The securities have not been approved or disapproved by the United States Securities Exchange Commission, the securities commission of any state of the United States, or any other regulatory authority of the United States.

Any purchase of Ordinary Shares in the proposed Issue should be made solely on the basis of the information contained in the final Prospectus to be issued by the Company in connection with the Issue and Admission. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment when the definitive Prospectus is published. In particular, the proposals referred to herein are tentative and are subject to verification, material updating, revision and amendment.

The timetable for the Issue, including the date of Admission, may be influenced by a range of circumstances such as market conditions. There is no guarantee that the Issue and the Admission will occur and you should not base your financial decisions on the Company's intentions in relation to the Issue and Admission at this stage. Acquiring Ordinary Shares to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Issue. The value of Ordinary Shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of the Issue for the person concerned. Past performance or information in this announcement or any of the documents relating to the Issue cannot be relied upon as a guide to future performance.

G10 is authorised and regulated by the Financial Conduct Authority. TPL is an appointed representative of G10 which is authorised and regulated by the FCA. Each of G10 and Peel Hunt is authorised and regulated in the United Kingdom by the FCA and is acting exclusively for the Company and no-one else in connection with the Issue and Admission. They will not regard any other person as their respective clients in relation to the Issue and Admission and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the Issue and Admission, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the Issue and Admission, Peel Hunt and any of its respective affiliates, acting as investors for their own accounts, may purchase Ordinary Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Ordinary Shares and other securities of the Company or related investments in connection with the Issue and the Admission or otherwise. Accordingly, references in the Prospectus, once published, to the Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by Peel Hunt and any of their affiliates acting as investors for their own accounts. Peel Hunt does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Peel Hunt, which is authorised and regulated by the FCA in the United Kingdom, is acting as nominated adviser and broker for the Company in connection with the Issue and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Peel Hunt nor for providing advice in relation to the Issue and/or any other matter referred to in this Announcement.

None of the Company, TPL, G10 or Peel Hunt nor any of their respective affiliates or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, TPL, G10 and Peel Hunt and their respective affiliates accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's board of directors' current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, the results of operations, financial condition prospects, growth and dividend policy of the Company and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.

These forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. Forward looking statements speak only as of the date of this announcement.

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

Each of the Company, TPL, G10 and Peel Hunt and their respective affiliates expressly disclaim any responsibility, obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) MiFID II; (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that the New Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, it should be noted that: (i) the price of the New Ordinary Shares may decline and investors could lose all or part of their investment; (ii) New Ordinary Shares offer no guaranteed income and no capital protection; and (iii) an investment in New Ordinary 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 Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to New Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and for determining appropriate distribution channels.