KOOVS PLC. (Incorporated under the Companies Act 2006 and registered in England and Wales with registered number )

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or as to the action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser. If you have sold or otherwise transferred all of your Existing Ordinary Shares, please immediately forward this document, together with the accompanying Form of Proxy, to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. If you have sold only part of your holding of Existing Ordinary Shares, please contact your stockbroker, bank or other agent through whom the sale or transfer was effected immediately. The Directors (whose names and functions appear on page 6 of this document) and the Company (whose registered office appears on page 6 of this document) accept responsibility, both collectively and individually, for the information contained in this document and compliance with the AIM Rules. To the best of the knowledge and belief of the Directors and the Company (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. The Existing Ordinary Shares are admitted to trading on AIM. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the Official List of the United Kingdom Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. The London Stock Exchange has not itself examined or approved the contents of this document. Prospective investors should read this document in its entirety. This document contains no offer of transferable securities to the public within the meaning of section 102B of the FSMA, the Act or otherwise. Accordingly, this document does not constitute a prospectus within the meaning of the Prospectus Rules and has not been drawn up in accordance with the Prospectus Rules or approved by the FCA or any other competent authority. KOOVS PLC (Incorporated under the Companies Act 2006 and registered in England and Wales with registered number ) Authorisation to issue up to 18.9 million nominal principal amount of Convertible Loan Notes with an initial issue of 8.9 million nominal principal amount of Convertible Loan Notes and Notice of General Meeting PEEL HUNT LLP Nominated Adviser and Broker Your attention is drawn to the letter from the Chairman of the Company which is set out in Part 1 of this document and which contains, amongst other things, the Directors unanimous recommendation that you vote in favour of the Resolutions to be proposed at the General Meeting. Peel Hunt, which, in the United Kingdom, is authorised and regulated by the Financial Conduct Authority, is acting as nominated adviser and broker to the Company in connection with the Capital Raising and will not be acting for any other person (including a recipient of this document) or otherwise be responsible to any person for providing the protections afforded to clients of Peel Hunt or for advising any other person in respect of the Capital Raising or any transaction, matter or arrangement referred to in this document. Peel Hunt s responsibilities as the Company s nominated adviser and broker are owed solely to London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of his decision to acquire Ordinary Shares in the Company in reliance on any part of this document. Apart from the responsibilities and liabilities, if any, which may be imposed on Peel Hunt by the FSMA or the regulatory regime established thereunder, Peel Hunt does not accept any responsibility

2 whatsoever for the contents of this document, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Ordinary Shares, the Convertible Loan Notes or the Capital Raising. Peel Hunt accordingly disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) in respect of this document or any such statement. Notice of a general meeting of Koovs plc, to be held at the offices of Peel Hunt at Moor House, 120 London Wall, London EC2Y 5ET at a.m. on 14 August 2017, is set out at the end of this document. To be valid, the accompanying Form of Proxy for use in connection with the General Meeting should be completed, signed and returned as soon as possible and, in any event, so as to reach the Company s registrars, Capital Asset Services, PXS, 34 Beckenham Road, Kent BR3 4TU, by no later than a.m. on 10 August 2017 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a working day) before the time fixed for the adjourned meeting). Completion and return of Forms of Proxy will not preclude Shareholders from attending and voting at the General Meeting should they so wish. Shareholders who hold their Existing Ordinary Shares in uncertificated form in CREST may alternatively use the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual as explained in the notes accompanying the Notice of General Meeting at the end of this document. Proxies submitted via CREST must be received by Capita Asset Services (ID RA10) by no later than a.m. on 10 August 2017 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a working day) before the time fixed for the adjourned meeting). The appointment of a proxy using the CREST Proxy Voting Service will not preclude Shareholders from attending and voting in person at the General Meeting should they so wish. A copy of this document is available at the Company s website 2

3 IMPORTANT NOTICE Cautionary note regarding forward-looking statements This document includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can 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. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the Directors current intentions, beliefs or expectations concerning, among other things, the Group s results of operations, financial condition, liquidity, prospects, growth, strategies and the Group s markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forwardlooking statements in this document are based on certain factors and assumptions, including the Directors 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 Group s operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law, MAR or by the AIM Rules, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this document that may occur due to any change in the Directors expectations or to reflect events or circumstances after the date of this document. Notice to overseas persons The distribution of this document and/or the Form of Proxy in certain jurisdictions may be restricted by law and therefore persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Capital Raising Participation in the Capital Raising will be for invited subscribers only and members of the public are not eligible to take part in the Capital Raising. The details of the Capital Raising contained in this document are for information purposes only and do not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for New Ordinary Shares. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere. THE CAPITAL RAISING IS ONLY DIRECTED 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 DIRECTIVE 2003/71/EC AS AMENDED (INCLUDING ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE PROSPECTUS DIRECTIVE ); AND (WITHOUT PREJUDICE TO THE FOREGOING) (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) ( INVESTMENT PROFESSIONALS ) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE ORDER ); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ( HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC ) OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS IN (A) AND (B) TOGETHER BEING REFERRED TO AS RELEVANT PERSONS ). THE INFORMATION ON THE CAPITAL RAISING MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THE CAPITAL RAISING RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THE CAPITAL RAISING DOES NOT ITSELF CONSTITUTE AN OFFER FOR 3

4 SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THE CAPITAL RAISING WILL BE FOR INVITED RELEVANT PERSONS ONLY WHO WILL BE INVITED TO, AND WHO CHOOSE TO, PARTICIPATE IN THE CAPITAL RAISING AND BY WHOM OR ON WHOSE BEHALF A COMMITMENT TO SUBSCRIBE FOR NEW ORDINARY SHARES IS GIVEN. Presentation of financial information Certain data in this document, including financial, statistical and operational information has been rounded. As a result of the rounding, the totals of data presented in this document may vary slightly from the actual arithmetical totals of such data. Percentages in tables have been rounded and, accordingly, may not add up to 100 per cent. In this document, references to pounds sterling,, pence and p are to the lawful currency of the United Kingdom, references to rupee, INR and Rs are to the lawful currency of India (and a reference to crore is to 10 million rupees) and references to US$, $ or dollar are reference to the lawful currency of the United States of America. Unless otherwise stated, the basis of translation of Indian rupees into pounds sterling for the purposes of inclusion in this document is INR84.66/ 1.00 and the basis of translation of Indian rupees into US dollars for the purposes of inclusion in this document is INR64.44/US$1.00 (being the exchange rate prevailing on 25 July 2017 (being the latest practicable date prior to the publication of this document)). Presentation of market, economic and industry data Where information contained in this document originates from a third party source, it is identified where it appears in this document together with the name of its source. Such third party information has been accurately reproduced and, so far as the Company is aware and is able to ascertain from information published by the relevant third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. No incorporation of website information The contents of the Company s website or any hyperlinks accessible from the Company s website do not form part of this document and Shareholders should not rely on them. Interpretation Certain terms used in this document are defined and certain technical and other terms used in this document are explained at the section of this document under the heading Definitions. All times referred to in this document and the Form of Proxy are, unless otherwise stated, references to London time. All references to legislation in this document and the Form of Proxy are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation or regulation shall include any amendment, modification, re-enactment or extension thereof. Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender. 4

5 CONTENTS Page Directors, secretary and advisers 6 Capital Raising statistics 7 Expected timetable of principal events 7 Definitions 8 Letter from the Chairman of Koovs plc 10 Notice of General Meeting 19 5

6 DIRECTORS, SECRETARY AND ADVISERS Directors Lord Waheed Alli (Executive Chairman) Mary Turner (Chief Executive Officer) Robert Bready (Chief Creative Officer) Robert Pursell (Group Chief Financial Officer) Anant Nahata (Non-Executive Director) Dame Gail Rebuck (Non-Executive Director) Emily Sheffield (Non-Executive Director) All of whose business address is at the Company s registered and head office Registered and Head Office Company website Company Secretary Nominated Adviser and Broker Legal advisers to the Company Legal advisers to Nominated Adviser Registrars 4th Floor, York House 23 Kingsway London WC2B 6UJ Robert Pursell Peel Hunt LLP Moor House 120 London Wall London EC2Y 5ET Osborne Clarke LLP One London Wall London EC2Y 5EB Macfarlanes LLP 20 Cursitor Street London EC4A 1LT Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU 6

7 CAPITAL RAISING STATISTICS Number of Existing Ordinary Shares 175,383,691 Aggregate nominal amount of Convertible Loan Notes (1) 18.9 million Nominal amount of Initial Convertible Loan Notes 8.9 million Conversion Price of the Convertible Loan Notes 40p Number of Ordinary Shares into which the Initial Convertible Loan Notes convert (2) 22,250,000 Number of Ordinary Shares into which the Initial Convertible Loan Notes convert as a percentage of the Existing Ordinary Shares (2) 12.7% Number of Ordinary Shares in issue following conversion of the Initial Convertible Loan Notes (2) 197,633,691 Number of Ordinary Shares into which the Convertible Loan Notes convert (3) 47,250,000 Number of Ordinary Shares into which the Convertible Loan Notes convert as a percentage of the Existing Ordinary Shares (3) 26.9% Number of Ordinary Shares in issue following conversion of the Convertible Loan Notes (3) 222,633,691 Total proceeds of the Initial CLN Issue 8.9 million Estimated expenses (including VAT) of the Initial CLN Issue 0.1 million Estimated net proceeds of the Initial CLN Issue receivable by the Company 8.8 million Total proceeds of the Capital Raising (4) 18.9 million (1) Including the Initial Convertible Loan Notes. (2) Assuming the conversion of the full principal amount of 8.9 million of Initial Convertible Loan Notes but excluding the conversion of interest payable in kind in Ordinary Shares. (3) Assuming the issue of the full principal amount of 18.9 million of Convertible Loan Notes (including the Initial Convertible Notes) but excluding the conversion of interest payable in kind in Ordinary Shares. (4) Assuming the issue of the full principal amount of 18.9 million of Convertible Loan Notes (including the Initial Convertible Notes). EXPECTED TIMETABLE OF PRINCIPAL EVENTS Publication of this document Latest time and date for receipt of Forms of Proxy and CREST voting instructions General Meeting Completion of the Initial CLN Issue Where applicable, expected date for issue of certificates representing the Initial Convertible Loan Notes July a.m. on 10 August a.m. on 14 August 15 August 28 August 1 Note: each of the above times and/or dates is subject to change at the absolute discretion of the Company and Peel Hunt. If any of the above times and/or dates should change, the revised times and/or dates will be announced through a Regulatory Information Service. 7

8 DEFINITIONS The following definitions apply throughout this document unless the context otherwise requires: Act the Companies Act 2006 (as amended) AIM the AIM Market, operated by the London Stock Exchange AIM Rules the AIM Rules for Companies published by the London Stock Exchange from time to time Capita Asset Services a trading name of Capita Registrars Limited Capital Raising the issue of Convertible Loan Notes certificated form or in certificated form Company or Koovs Contribution Margins Convertible Loan Note Instrument Convertible Loan Notes Conversion Shares an Ordinary Share recorded on a company s share register as being held in certificated form (namely, not in CREST) Koovs plc, a company incorporated and registered in England and Wales under the Act with registered number revenues less costs of goods sold and delivery costs the convertible loan note instrument to be executed by the Company following the General Meeting the up to 18.9 million in nominal principal amount of convertible secured loan notes constituted by the Convertible Loan Note Instrument the Ordinary Shares to be issued to Noteholders on the conversion of their Convertible Loan Notes CREST the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in those regulations) CREST Regulations the Uncertificated Securities Regulations 2001 (S.I No. 3755) Dealing Day Directors or Board Euroclear Existing Ordinary Shares FCA Form of Proxy a day on which the London Stock Exchange is open for business in London the directors of the Company whose names are set out on page 6 of this document, or any duly authorised committee thereof Euroclear UK & Ireland Limited, the operator of CREST the 175,383,691 Ordinary Shares in issue at the date of this document, all of which are admitted to trading on AIM the UK Financial Conduct Authority the form of proxy for use in connection with the General Meeting which accompanies this document FSMA the Financial Services and Markets Act 2000 (as amended) FY16 the Company s financial year ended 31 March 2016 FY17 the Company s financial year ended 31 March 2017 FY18 the Company s financial year ended 31 March 2018 FY19 the Company s financial year ended 31 March 2019 FY20 the Company s financial year ended 31 March 2020 General Meeting the general meeting of the Company to be held at the offices of Peel Hunt at 120 London Wall, London EC2Y 5ET at a.m. on 14 August 2017, notice of which is set out at the end of this document Group the Company, its subsidiaries and its subsidiary undertakings Initial CLN Issue the issue of Initial Convertible Loan Notes to Noteholders Initial Convertible Loan Notes the 8.9 million nominal principal amount of Convertible Loan Notes to be issued to Noteholders, subject to the passing of Resolutions 1 and 2 8

9 KPI LIBOR London Stock Exchange MAR National Fibre Optics Network New Ordinary Shares Noteholders Notice of General Meeting Ordinary Shares Peel Hunt Prospectus Rules Regulatory Information Service Resolutions Shareholders UK US or United States uncertificated or in uncertificated form VAT Volume Weighted Average Price key performance indicator means the 3 month sterling LIBOR rate as quoted in the Financial Times (or, if that is not published on any relevant day, The Wall Street Journal) for each day during the Term on which there are Convertible Loan Notes outstanding London Stock Exchange plc Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse a project funded by Universal Service Obligation Fund of India to provide broadband connectivity in India the Conversion Shares a person who has conditionally agreed to subscribe for Convertible Loan Notes or may agree to subscribe for Convertible Loan Notes on or after the date of this Circular the notice convening the General Meeting which is set out at the end of this document ordinary shares of 1 pence each in the capital of the Company Peel Hunt LLP, the Company s nominated adviser and broker the prospectus rules made by the FCA pursuant to section 73A of the FSMA a service approved by the FCA for the distribution to the public of regulatory announcements and included within the list maintained on the FCA s website the resolutions set out in the Notice of General Meeting holders of Ordinary Shares the United Kingdom of Great Britain and Northern Ireland the United States of America, each State thereof, its territories and possessions (including the District of Columbia) and all other areas subject to its jurisdiction an Ordinary Share recorded on a company s share register as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST means United Kingdom value added tax means the average volume of shares traded on AIM over the relevant period as confirmed by the Company s broker 9

10 PART 1 LETTER FROM THE CHAIRMAN OF KOOVS PLC Koovs plc (Incorporated under the Companies Act 2006 and registered in England and Wales with registered number ) Directors: Registered office: Lord Waheed Alli (Executive Chairman) 4th Floor, York House Mary Turner (Chief Executive Officer) 23 Kingsway Robert Bready (Chief Creative Officer) London Robert Pursell (Group Chief Financial Officer) WC2B 6UJ Anant Nahata (Non-Executive Director) Emily Sheffield (Non-Executive Director) Dame Gail Rebuck (Non-Executive Director) 26 July 2017 To Shareholders Dear Shareholder, Authorisation to issue up to 18.9 million nominal of Convertible Loan Notes with an initial issue of 8.9 million nominal of Convertible Loan Notes and Notice of General Meeting 1. Introduction and summary The Board announced today that it proposes to raise gross proceeds of up to 18.9 million through the proposed issue of up to 18.9 million nominal principal amount Convertible Loan Notes of which subscriptions for an aggregate 8.9 million nominal principal amount of Convertible Loan Notes have been received as at today s date from certain Directors and other investors. The Company has also received a strong indication of interest for a further 7.5 million of Convertible Loan Notes, which the Company will seek to finalise in due course, and has the potential to secure up to a further 2.5 million. The Company is therefore seeking shareholder approval for the issuance of the total 18.9 million of Convertible Loan Notes, and will likely issue the Convertible Loan Notes in two tranches. The issue of the Convertible Loan Notes is conditional upon the passing of Resolutions 1 and 2 at the General Meeting. The proceeds of the Initial CLN Issue will be used to fund the delivery of its strategic objectives and will primarily be invested in marketing and product expansion to continue to build brand awareness, increase conversion and further enhance customer acquisition growth. With the proposed initial funding, together with the positive gross margins now being generated by the Company, the Directors believe the Company has the resources to continue to execute its strategic plan and the time required to close its remaining funding requirement. Participation in the Capital Raising will be for invited subscribers only and members of the public are not eligible to take part in the Capital Raising. The details of the Capital Raising contained in this document are for information purposes only and do not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for New Ordinary Shares. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere. The purpose of this document is, amongst other things, to provide you with information about the background to and the reasons for the Capital Raising, to explain why the Board considers the Capital Raising to be in the best interests of the Company and its Shareholders as a whole and why the Directors unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting, notice of which is set out at the end of this document. 10

11 2. Background to the Company and recent progress Introduction Koovs is an e-commerce western fashion company which designs and sells Koovs-branded fashion products, and also sells other recognised third-party branded products, to a target audience of young, style-conscious consumers in India. Other aspects of the Company s operations, including manufacturing and fulfilment, are outsourced. The Directors believe that Koovs is more than just an online shop, instead Koovs.com is a lifestyle brand. The Company s ambition is to become the number one online western fashion destination in India by 2020 by: 1. offering design-led online western fashion which is affordable, exclusive and aspirational; 2. being the fashion authority in India, offering London-designed collections, exclusive collaborations, selected brand edits and original editorial lifestyle content; and 3. being a brand curated for the style conscious 18 to 34 year-old Indian consumer. The Directors believe the Company s investment highlights can be summarised as follows: 1. operating in a high-growth fashion market, in which Koovs occupies a white space for affordable online western fashion; 2. ambitious growth strategy with strong growth metrics; 3. brand-led, innovative and cost-efficient marketing strategy with market-leading customer satisfaction; 4. design-led, affordable fashion, coupled with original editorial lifestyle content; 5. mobile-first and performance-based technology strategy; and 6. a financial performance which has demonstrated continued growth and out-performance of the market. Operating in a high growth market in which it occupies a white space The Directors believe the underlying retail, digital and social trends in India provide the Company with significant growth opportunities. India s retail market is expected to grow from approximately US$0.6 trillion in 2016 to US$1.1 trillion by , with e-commerce spend as a proportion of this overall retail market estimated to grow from approximately 2.2 per cent. in 2016 to 5.5 per cent. in Within this market, it is estimated that e-commerce spend on lifestyle products will grow from approximately US$3 billion in 2016 to US$15 billion in and that e-commerce spend on western-fashion products will grow from approximately US$0.6 billion to US$3.5 billion over the same period 4. Koovs, as a westernfashion e-commerce retailer, expects to benefit from these trends. The Directors believe that Koovs also benefits from occupying a clear white space for western fashion within the Indian retain market. No other online retailer in India is focused solely on western fashion, targeted at the 18 to 34 year-old consumer, with all private label designed in London. India is undergoing a digital transformation, which is expected to result in a significant increase in the number of internet users, which the Directors believe will be highly beneficial for Koovs as an e- commerce company. This growth is underpinned by the high levels of investment in India s digital infrastructure. The indicative investment cost for improving India s telecommunications networks via the National Optical Fibre Network project is approximately Rs20,100 crore (US$3 billion) for the period 2011 to Further, capital expenditure investment by mobile services operators in order to improve India s mobile networks is expected to reach US$34 billion for the period from 2012 to This investment sits alongside the Digital India Programme, a flagship Government of India 1 Report by Technopak: An Update on E-Commerce Market and Competition; Marketing Data Analysis & Strategy, dated 18 May Market numbers calculated by Koovs based on market data from reports by Technopak: An Update on E-Commerce Market and Competition; Marketing Data Analysis & Strategy, dated 18 May 2015; Technopak: Indian E-tailing and Online Fashion Market Overview, dated 10 August 2016; RedSeer Consulting: State of E-tailing In India, dated February 2017; RedSeer Consulting: Fashion E-tailing in India, dated March 2017; AT Kearney: Digital Retail in 2020 Rewriting the Rules, dated May 2016; and Boston Consulting Group: Fashion Forward 2020, dated March See footnote 2 4 See footnote 2 5 Universal Service Obligation Fund (website at 6 Report by GSMA The Mobile Economy India

12 programme with a vision to transform India into a digitally empowered and knowledge society, which includes investment of approximately Rs100,000 crore (US$16 billion) in on-going schemes. According to GSMA, the number of mobile internet users in India is forecast to grow from 430 million in mid to over 600 million by The Directors believe India s current socio-demographic make-up and its forecast trends will benefit the Company going forward: India is a young nation with 43 per cent. of the population aged between 15 and 39 with a median age of 27; and India s middle-class is expected to double by 2020 to comprise approximately 35 per cent. of the population 8. The Director s believe that all the above will benefit the Company given Koovs target audience are young, middle-class Indians. An ambitious growth strategy with strong growth metrics The Directors believe that the Company has an ambitious growth strategy which comprises four key pillars: 1. Expand product range; 2. Engage customers; 3. Amplify the brand; and 4. Extend into new territories. The Company has already achieved significant milestones against these pillars and has set itself various key targets as set out below: Expand product range Koovs aims to increase its product range each year. It is aiming to release over 20,000 new options per year by 2020 from both Koovs private label and third party-branded products. Approximately 70 per cent. of product options are exclusive to the Koovs website and approximately 40 per cent. of sales are Koovs private label branded products. Engage customers Koovs has over 2 million social followers receiving daily content. Koovs.com generates approximately 1.5 million content browsing sessions per year (e.g. how to wear, trend highlights). A session including content is 25 per cent. more likely to convert than one that does not. Amplify the brand Koovs brand awareness among its core market of 18 to 34 yearolds has increased from 1 per cent. in 2015 to 15 per cent today. Koovs has secured strategic media partnerships with The Times of India and The Hindustan Times which the Company will continue to leverage to further build brand awareness and affinity. Extend into new territories The Company has identified the Middle East and Asia-Pacific as growth markets in which to expand and drive scale. The Company intends to enter these markets in a low cost manner by leveraging the expertise of local partners. The Company intends to first launch in the Middle East through SOUQ.COM. Brand-led, innovative and cost-efficient marketing strategy with market-leading customer satisfaction The Company has adopted a marketing strategy which focuses on further building Koovs brand position and awareness in the market, with the ultimate objective of improving the overall efficiency of the Company s marketing spend. To date, the strategy has yielded impressive results, with the Company s brand awareness in its core market of 18 to 34 year-olds growing from 1 per cent. in 2015 to 15 per cent. today. The Directors believe this growth of brand awareness can be attributed not just to the increase in the Company s marketing spend, but also to its innovative marketing techniques, which the Directors 7 See footnote 6 8 Report by Goldman Sachs: The Asian Consumer, India Consumer Close-up, Tapping the spending power of a young connected Urban Mass, dated 1 June 2016 (based on the proportion of the population earning over $2,500 per annum) 12

13 believe resonate well with the brand s young, fashion-conscious target audience. In particular, the Company has successfully leveraged social media. For example, Koovs streamed a live fashion event on Facebook which attracted approximately 250,000 live participants and over 1 million views subsequently. Today, Koovs has approximately 1.7 million Facebook and 400,000 Instagram followers, and the highest engagement levels compared to its nearest competitors by a factor of three. The cost efficiency of the Company s marketing spend has benefitted from its strategic media partnerships with The Times of India and The Hindustan Times, who provide the Company with lower cost advertising in exchange for the equity positions taken in Koovs plc in The Company is also focused on achieving high levels of customer satisfaction. Currently the Company achieves a net promoter score of approximately 25 to 35 depending on the timing of sale periods, which compares favourably against the industry average for Q of approximately Design-led affordable fashion coupled with original editorial lifestyle content The Directors believe that Koovs offers an attractive customer proposition of design-led, affordable and exclusive products and that Koovs is fast becoming a fashion authority for 20- something, aspirational, style-conscious consumers in India. This offering is underpinned by a strong design and buying team, as well as a progressive buying strategy. Koovs design team comprises nine UK- based designers with an average of over 10 years design experience from leading brand names including River Island, Tommy Hilfiger and Miss Selfridge. The Company has adopted a progressive buying strategy which involves building closer strategic relationships with manufacturers and also consolidating its supply chain, which the Company believes will enable it to offer higher consistency of quality and better pricing. The Company targets a product architecture and mix which aims to grow and maintain the brand s fashion authority, as well as to help drive the Company s future profitability. The product architecture splits broadly 60 per cent. design-led fashion (designs inspired from the international stage); 30 per cent. must have trends (products which adopt recent trends); and 10 per cent. fashion basics (staple products adapted for the season). The split between Koovs private label and thirdparty brands is approximately 40 per cent. and 60 per cent. respectively. The current intake margin of Koovs private label products is approximately 54 per cent., but is expected to grow to approximately 70 per cent., with the benefit of scale, whilst third-party branded products currently achieve an intake margin of approximately 46 per cent., but is expected to grow to approximately 50 per cent. with the benefit of scale. The Company is also focused on generating content to drive customer engagement and ultimately sales. Examples of this content include Koovs website and social media feeds including celebrity style, how to wear and events such as the Facebook Live Koovs Style Sessions. Mobile-first and performance-based technology strategy The Company has adopted a mobile-first and performance-based technology strategy in order to create a scalable platform to support future growth and create cost efficiencies. The Company has made significant progress to date improving its technology infrastructure. The Company has a microservices platform which uses modular architecture enabling cost effective and fast updates to the Company s IT systems. In addition, the Company has developed a high performance mobile app, as well as algorithms for data analytics which can be used to optimise the Company s marketing performance and business intelligence. Furthermore, the Company has integrated with 14 leading payment gateways including PAYTM, PayUmoney, Oxigen and freecharge. The Company s strategy going forward is focused on four key elements: putting the mobile channel first; developing automated personalisation (i.e. a shopping experience tailored to the customer s historical behaviour); using voice activation and augmented reality; and developing website tools to help increase conversion rates and improve the customer journey. A financial performance which has demonstrated continued growth and outperformance of the market. The value of orders taken on Koovs.com increased by 87 per cent. to 18.6 million for the full year to 31 March 2017, with other key KPI s showing similar strong growth (as summarised in table below). The growth in order value is approximately five times the level of growth in the Indian e-tail market, reflecting the Company s continued ability to outperform the market. 9 Report by Redseer State of e- tailing in India published February

14 However, the Company s FY17 performance was adversely impacted by demonetisation in India, which saw the retraction from circulation of 500 rupee and 1,000 rupee bank notes representing approximately 86 per cent. of the currency in circulation. This, along with other measures aimed at reducing the cash economy, caused an immediate liquidity issue in the economy, an expected reduction in GDP growth, and a slowdown in the consumer market. This directly affected Koovs as well as most other e-commerce companies, as cash on delivery is the preferred payment option by e- commerce consumers. As a result of this demonetisation, market expectations for Koovs FY18 sales growth were reduced from previous expectations. The Company expects the market to recover from this demonetisation by the end of FY18 with growth returning to pre-demonitisation expectations in FY19. The Company aims to mitigate the impact of demonetisation through enhanced cost savings and through maintaining its target of positive gross margins by FY18. Key KPIs: FY16 FY17 Traffic 44.2m 78.5m Conversion 1.5% 1.6% Orders 0.7m 1.2m Gross order value 10.0m 18.6m Customers m 0.5m The Company aims to build on these strong KPIs to reach profitability and be cash flow positive by FY20. This is expected to be achieved primarily through building scale (driving brand awareness and increasing brand-driven traffic); improving Contribution Margins (improving intake margins and reducing markdowns); and controlling operational costs (including outsourcing certain operations and utilising existing capacity). 3. Current trading and prospects On 4 April 2017 the Company announced a trading update for the financial year to 31 March The following information below has been extracted without adjustment from that announcement: Financial & operational highlights: * Sales 11 up 87% to 18.6m (1.62Bn INR) * Units shipped and repeat customers up 100% * Registered users up 80% to 1.8m * Web traffic up 77% to over 78.45m * Social followers exceeding 2m Koovs strategy continues to deliver significant growth with sales 12 up by 87% to 18.6m for the full year to 31 March 2017, underpinned by a year-on-year 100% increase in both units shipped and repeat customers. While demonetisation 13 in India impacted the whole market, Koovs proactive approach on customer payment and delivery options, coupled with a strong Christmas trading period, means Koovs has delivered growth of more than 5x the Indian e-commerce market as a whole. The company continued to improve its gross margin position by improving intake margin and controlling the level of discounts given, and expects to generate positive gross margins in FY18. The Board is confident that the Company will make further progress during the rest of this year with results in line with market expectations. 4. The Capital Raising The Company proposes to issue up to 18.9 million nominal principal amount of Convertible Loan Notes. As at the date of this Circular, the Company has entered into subscription agreements pursuant to the Initial CLN Issue with investors who have agreed to subscribe for in aggregate Customers who have purchased through the koovs.com website 11 Gross sales order value placed through the koovs.com website including taxes. This does not represent the revenue of the Company 12 See footnote On 8 November, the Indian Government announced it would immediately replace the Rs500 and Rs1000 notes with new Rs500 and Rs2000 denominations. This was a significant move and caused short-term cash liquidity issues, including for e-commerce companies, as cash on delivery is standard practice in the Indian market 14

15 million nominal principal amount of Convertible Loan Notes conditional on the passing of Resolutions 1 and 2. Subject to Shareholder approval being obtained at the General Meeting, completion of the Initial CLN Issue is expected to occur on 15 August The Company has also received a strong indication of interest for a further 7.5 million of Convertible Loan Notes, which the Company will seek to finalise in due course, and has the potential to secure up to a further 2.5 million. If any more Convertible Loan Notes are issued, an appropriate announcement shall be made by the Company. The Company is therefore seeking shareholder approval for the issuance of the total 18.9 million of Convertible Loan Notes, and will likely issue the Convertible Loan Notes in two tranches. The total proceeds of the Initial CLN Issue net of expenses will be approximately 8.8 million. Participation in the Capital Raising will be for invited subscribers only and members of the public are not eligible to take part in the Capital Raising. The details of the Capital Raising contained in this document are for information purposes only and do not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for New Ordinary Shares. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere. The Convertible Notes (a) Amount of the Convertible Loan Notes The aggregate principal nominal amount of the Convertible Loan Notes is limited to 18.9 million. (b) (c) Term Unless converted or redeemed earlier in accordance with their terms, the Convertible Loan Notes have a term of two years (the Term ) from their date of issuance. Redemption If the Company shall at any time be in material breach of any of the terms and conditions of the Convertible Loan Note Instrument then any Noteholder or Noteholders may serve written notice upon the Company requiring it: * to remedy such breach (if capable of remedy) to the satisfaction of such Noteholder or Noteholders (acting reasonably) within 20 Business Days after the service such notice ( Grace Period ); or * failing that (whether such breach was capable of remedy or not) to redeem all the Convertible Loan Notes held by the relevant Noteholder or Noteholders who served the notice (so far as not already converted into Ordinary Shares (see below)) in the principal amount together with all accrued interest on such Convertible Loan Notes at the date 20 Business Days ( Redemption Date ) after the expiry of the Grace Period. The Convertible Loan Notes shall be immediately redeemed upon: * the occurrence of certain insolvency events; and * the expiry of the Term. Repayment of any Convertible Loan Notes so redeemed shall occur within 5 Business Days of the Redemption Date or the occurrence of any of the event leading to immediate redemption (as applicable). Upon redemption the Company shall repay to the relevant Noteholders the principal amount of the Convertible Loan Notes so redeemed, together with interest on such Notes (as further described at sub-paragraph (f) below). A redemption notice shall (unless the Company agrees otherwise) be irrevocable. (d) Conversion Terms During the Term, a Noteholder is entitled to convert all (but not some only) of their respective Convertible Loan Notes that have not already been converted or redeemed into Ordinary Shares upon 60 Business Days prior written notice to the Company. Conversion shall take place within 30 Business Days of the expiry of the notice. The Convertible Loan Notes will have a conversion price of 40 pence per Ordinary Share ( Conversion Price ), being a premium of 1.9 per cent. to the closing middle market price of pence per Existing Ordinary Share on 25 July 2017, being the latest Dealing Day prior to the publication of this document. 15

16 The Company shall have the option by notice in writing to the Noteholders to convert all outstanding Convertible Loan Notes and all accrued interest thereon into Ordinary Shares at the Conversion Price if: (i) at any time during the Term the three month Volume Weighted Average Price of the Ordinary Shares is equal to, or in excess of 0.75; or (ii) at the end of the Term if the five day Volume Weighted Average Price of the Ordinary Shares is equal to, or in excess of Following the General Meeting, the Company will have authority to issue the Conversion Shares. Any Conversion Shares arising on conversion will rank pari passu with the Ordinary Shares in issue at that time and application for admission to trading on AIM will be made at the appropriate time. If all the Initial Convertible Loan Notes were converted into Ordinary Shares, existing Shareholders would undergo a dilution of approximately 12.7 per cent. to their interests in the Company 14. (e) (f) Security The payment of the monies over to the Noteholders will be secured by a debenture constituting a fixed and floating charge over the UK assets of the Company. Interest Interest shall accrue monthly on the principal amount of the Convertible Loan Notes at the rate of LIBOR plus 6 per cent. per annum calculated on a daily basis and shall be payable in cash at the end of the Term (unless redeemed earlier as a result of material breach or an insolvency event). If the Convertible Loan Notes are converted into Ordinary Shares then the accrued interest payable on the principal amount shall be payable in kind in Ordinary Shares rounded down to the nearest whole Ordinary Share and, for these purposes only, valuing each Ordinary Share at (g) Not Quoted The Convertible Loan Notes will not be admitted to trading on AIM or any other exchange. The issue of the Convertible Loan Notes is conditional on the passing of Resolutions 1 and Use of proceeds The Directors intend that the net proceeds of the Initial CLN Issue of 8.8 million will be used as follows: Approximately 7.7 million investment in brand marketing, social engagement and market development; and Approximately 1.1 million investment in product options and inventory. The Directors believe that the net proceeds of the Initial CLN Issue will be sufficient for the Company to reach profitability and be cash flow positive by FY Related Party Transactions Lord Waheed Alli, a Director, and Silvergate Investments Limited (which is a company wholly owned by Lord Waheed Alli), together hold a total of 33,699,218 Existing Ordinary Shares representing 19.2 per cent. of the existing issued Ordinary Shares. Lord Waheed Alli and his connected persons have conditionally agreed to subscribe for 7,400,000 in nominal value of the Convertible Loan Notes in the Initial CLN Issue. Michinoko Limited holds a total of 19,617,805 Existing Ordinary Shares representing 11.2 per cent. of the existing issued Ordinary Shares. Michinoko Limited has conditionally agreed to subscribe for 1,500,000 in nominal value of the Convertible Loan Notes in the Initial CLN Issue. Lord Waheed Alli and Silvergate Investments Limited and Michinoko Limited will in each case be treated as a related party for the purposes of Rule 13 of the AIM Rules in relation to the participation by them (or their associates) in the Capital Raising. The Directors (excluding Lord Waheed Alli), having consulted with Peel Hunt in its capacity as the Company s nominated adviser for the purposes of the AIM Rules, consider the terms on which Lord 14 Assuming the issue of the full principal nominal amount of 8.9 million of Initial Convertible Loan Notes but excluding the conversion of interest payable in kind in Ordinary Shares 16

17 Waheed Alli and Silvergate Investments Limited and Michinoko Limited will subscribe for Convertible Loan Notes pursuant to the Initial CLN Issue to be fair and reasonable insofar as Shareholders are concerned. 7. The General Meeting Set out at the end of this document is a notice convening the General Meeting to be held on 14 August 2017 at the offices of Peel Hunt at 120 London Wall, London EC2Y 5ET at a.m., at which the Resolutions will be proposed. Resolution 1, which will be proposed as an ordinary resolution and which is conditional upon the passing of Resolution 2, is to authorise the Directors to allot Ordinary Shares or to grant rights to subscribe for or convert any security into Ordinary Shares up to an aggregate nominal amount of 538,650 (being 53,865,000 Ordinary Shares) in connection with the issue of the Convertible Loan Notes and the allotment of any Conversion Shares to be issued on the conversion of the Convertible Loan Notes. It is not possible at this stage to definitively calculate the number of Ordinary Shares that may be issued upon the conversion of the Convertible Loan Notes. This is because upon a conversion of the Convertible Loan Notes any interest payable will be paid in kind by way of the issuance of Conversion Shares. Accordingly the above-mentioned aggregate nominal amount includes additional headroom to ensure that the Company has sufficient allotment authority available to cover both the principal amount of and the interest accruing on the Convertible Loan Notes and taking into account estimated future increases in LIBOR during the Term. Resolution 2, which will be proposed as a special resolution and which is conditional upon the passing of Resolution 1, disapplies Shareholders statutory pre-emption rights in relation to the issue of the New Ordinary Shares pursuant to the Capital Raising. Resolution 3, which will be proposed as an ordinary resolution and which is conditional upon the passing of Resolution 4, is to authorise the Directors to allot Ordinary Shares or to grant rights to subscribe for or convert any security into Ordinary Shares up to an aggregate nominal amount of 578,766 (being 57,876,618 Ordinary Shares) representing approximately 33 per cent. of the nominal value of the issued ordinary share capital as at 25 July 2017 (being the latest practicable date prior to publication of this Circular). Resolution 4, which will be proposed as a special resolution and which is conditional upon the passing of Resolution 3, disapplies Shareholders statutory pre-emption rights in relation to the issue of the Ordinary Shares pursuant to Resolution 3. The authority and disapplication referred to in Resolutions 1 and 2 above will be in addition to any existing authority and disapplication granted to the Directors and will expire on 14 November 2017 (save that the Company may at any time before such expiry make an offer or agreement which would or might require such shares or rights to be allotted or granted after such expiry and the Directors may allot such shares or grant such rights in pursuance of such offer or agreement notwithstanding the authority hereby conferred has expired). The authority and disapplication referred to in Resolutions 3 and 4 above will be in substitution for the general authorities and disapplications granted to the Directors (save for the authorities and powers granted pursuant to Resolutions 1 and 2) and will expire on the earlier of the conclusion of the next annual general meeting of the Company and the date falling 18 months after the date of the passing of this resolution (save that the Company may at any time before such expiry make an offer or agreement which would or might require such shares or rights to be allotted or granted after such expiry and the Directors may allot such shares or grant such rights in pursuance of such offer or agreement notwithstanding the authority hereby conferred has expired). 8. Action to be taken A Form of Proxy for use at the General Meeting accompanies this document. The Form of Proxy should be completed and signed in accordance with the instructions thereon and returned to the Company s registrars, Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible, but in any event so as to be received by no later than a.m. on 10 August 2017 (or, if the General Meeting is adjourned, 48 hours (excluding any part of a day that is not a working day) before the time fixed for the adjourned meeting). If you hold your Existing Ordinary Shares in uncertificated form in CREST, you 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. Proxies 17