National Storage Mechanism | Additional information

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This announcement is not an admission document or a prospectus and does not constitute or form part of an offer to sell or issue or a solicitation of an offer to subscribe for or buy any securities nor should it be relied upon in connection with any contract or commitment whatsoever. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except in compliance with applicable securities laws on the basis of the information in the admission document (the "Admission Document") to be published by Kitwave Group plc in connection with the placing of ordinary shares of one pence each (the "Ordinary Shares") by the Company and the proposed admission of its issued and to be issued Ordinary Shares to trading on AIM, a market operated by London Stock Exchange plc. Before any purchase of shares, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Admission Document when published. Copies of the Admission Document will, following publication, be available during normal business hours on any day (except Saturdays, Sundays and public holidays) from the registered office of the Company and on the Company's website.

7 May 2021

Kitwave Group plc

("Kitwave", the "Group" or the "Company")

Placing and Proposed Admission to Trading on AIM

Kitwave Group plc, the independent, delivered wholesale business, is pleased to announce its proposed admission to trading on AIM (the "Admission") and its placing conditional on Admission (the "Placing") of 42,666,677 new ordinary shares (the "Placing Shares") and 11,753,327 existing ordinary shares (the "Secondary Placing Shares") of 1 pence each ("Ordinary Shares"), both at a price of 150 pence per share (the "Placing Price") with institutional and other investors. The Placing of the Placing Shares will raise gross proceeds of £64.0 million for the Company and the Placing of the Secondary Placing Shares will raise gross proceeds of £17.6 million for the Selling Shareholders.

The Company has today published its Admission Document and will apply for Admission in due course. The full terms and conditions of the Placing and Admission are set out in the Admission Document. The terms and definitions used in this announcement will have the same meaning as ascribed to them in the Company's Admission Document unless otherwise stated.

Canaccord Genuity Limited is acting as Nominated Adviser, Sole Bookrunner and Sole Broker to the Company.

Key Highlights

· Based on the Placing Price, the market capitalisation of the Company will be approximately £105.0 million on Admission;

· On Admission, the Company will have 70,000,000 Ordinary Shares in issue and a free float of approximately 51.1 per cent.;

· The Placing attracted strong support from high quality institutional investors and was significantly over-subscribed;

· On Admission, the Directors and senior management of the Company will own approximately 22.3 per cent. of the issued Ordinary Shares;

· The Company intends to use the net proceeds of the Placing to reduce the Group's existing debt and to pay the Group's expenses in connection with the Placing;

· The Company will make an application, in due course, to the London Stock Exchange for Admission and commencement of dealings of 70,000,000 Ordinary Shares, with Admission expected to take place at 08:00 a.m. on 24 May 2021;

· The Company will trade under the ticker KITW. The Company's ISIN is GB00BNYKB709 and its SEDOL is BNYKB70.

Paul Young, Chief Executive Officer of Kitwave, commented:

"We are delighted with the strong support shown by our new investors, which we view as a highly positive endorsement of Kitwave's strategy to grow and capitalise upon the large addressable market that we are well positioned to serve.

"To date, we have executed a highly successful buy-and-build strategy, having acquired and integrated 10 wholesale distributors into the Group since 2011, and we are confident that trading on AIM will enable us to continue to support this strategy. Furthermore, the Directors believe that Admission will enhance the profile of the Group and its brands, improve Kitwave's position with key suppliers, strengthen the Group's balance sheet, and provide the Group with greater ability to incentivise and retain key employees going forward.

"Kitwave has worked hard to build its reputation as a trusted brand ambassador and provide the excellent levels of service that we pride ourselves on. We are confident that Admission to AIM will enable us to further improve our services to existing and prospective customers across the UK and globally.

"We look forward to an exciting future as a public company and generating shareholder value."

- Ends -

For further information please contact:

Kitwave Group plc

Paul Young, Chief Executive Officer

David Brind, Chief Financial Officer

www.kitwave.co.uk

Tel: +44 (0) 191 259 2277

Canaccord Genuity Limited
(Nominated Adviser, Sole Bookrunner and Sole Broker)

Bobbie Hilliam
Alex Aylen

Richard Andrews

Georgina McCooke

Tel: +44 (0) 20 7523 8150

Yellow Jersey PR
(Financial media and PR)

Sarah Hollins

Henry Wilkinson

Matthew McHale

Tel: +44 (0) 20 3004 9512

Business Overview

Kitwave Group plc is an independent, delivered wholesale business with approximately 1,100 employees and a network of 26 depots able to support delivery throughout the UK, specialising in selling impulse products (such as confectionery, soft drinks, snacks, ice cream), frozen and chilled foods, alcohol, groceries and tobacco to approximately 38,000, mainly independent, customers. Currently, the Group sells a broad portfolio of approximately 33,000 Ambient, Frozen & Chilled and Foodservice product Stock Keeping Units (SKUs).

The diverse customer base includes independent convenience retailers, leisure outlets, vending machine operators, foodservice providers and other wholesalers, as well as leading national retailers.

The Group was founded in 1987, following the acquisition of a single-site confectionery wholesale business based in North Shields, Tyne and Wear, United Kingdom.

The management team, led by Paul Young, has overseen significant growth in both revenue and operating profit with revenue and Adjusted EBITDA growing to £592.0 million and £27.6 million respectively in FP20 (an 18-month period). In the 12 months to 30 April 2020, the Group's revenue and Adjusted EBITDA was £399.0 million and £17.5 million respectively. This growth has been achieved both organically and through a strategy of acquiring smaller, predominantly family owned, complementary businesses in the fragmented UK Grocery and Foodservice Wholesale market. During the periods from FY18 to FP20, the Group achieved a revenue CAGR of approximately 6.0 per cent. and an Adjusted EBITDA (Pre IFRS-16) CAGR of approximately 4.4 per cent.

Key Strengths

The Directors believe that the Group has a number of key strengths that are important to the success of the business:

· A large addressable market estimated to be worth approximately £26.1 billion in 2020

In 2020, the UK Grocery and Foodservice Wholesaling market was estimated to be worth over approximately £28.0 billion (down from £28.6 billion in 2019) and is expected to grow to be worth approximately £32.6 billion by 2025, with the end markets in which the Group operates (being UK Retail & Convenience and UK Foodservice) representing the largest components of the UK market, with a total estimated value of approximately £26.1 billion in 2020 (down from £26.9 billion in 2019) (Source: IGD 2021 report). The UK Grocery and Foodservice Wholesaling market is forecast to grow at a CAGR of approximately 2.2 per cent. between 2019 (pre COVID-19) to 2025, with the Retail Customer segment expected to achieve a CAGR of 2.7 per cent. and the Catering and Foodservice segments expected to achieve a 0.8 per cent. CAGR during the same period.

· An established Group, with a track record of executing and integrating acquisitions to drive growth

Since 2011, the Group has acquired 10 wholesale distributors, which has driven a rapid scaling of the business, providing the Group with competitive scale advantages within its key product categories, in addition to establishing a robust nationwide delivery network.

· Expansive customer base, with low customer concentration

Facilitated by both organic and acquisitive growth, the Group has built a diverse network of approximately 38,000, mainly independent, customers across its 10 operating businesses. As a result, the Group has created minimal customer concentration, with its top 20 customers accounting for approximately 25 per cent. of FP20 Group revenue. There remain significant opportunities for the Group to further cross-sell and up-sell across its diverse customer base.

· A trusted brand ambassador, supplying a broad portfolio of branded and own brand products

The Group stocks approximately 33,000 different SKUs which are supplied from over 300 different suppliers across the Group's three divisions, providing the Group's customer base with expansive choice and limited single supplier reliance by the Group. Kitwave also has established strong brand relationships through its +30 year history, giving it a competitive position to negotiate better annual terms and rebates with key suppliers, whilst being viewed as a trusted brand ambassador and key partner for important brand owners such as Unilever, Molson Coors Brewing and Walkers Snacks.

· Extensive UK wide geographic coverage in key regions, with high customer service levels

The Group has established and operates from six main hubs within the United Kingdom, with a further 20 operating depots and approximately 400 delivery vehicles, allowing the Group to cover a large geographic area with next day delivery and the potential for international delivery capabilities. As a result of this scale, the Group has historically achieved high customer satisfaction and service levels.

· Well placed to capitalise on future in organic growth opportunities, within a highly fragmented market

There remains a significant pipeline of opportunities for Kitwave to continue its strategy of acquiring and integrating smaller regional players to increase its market share within higher margin sectors and drive further value enhancement for Shareholders.

· Multi-drop, low minimum order business model with next-day capability

Kitwave focuses on smaller, independent retailers and foodservice providers which are typically more difficult to service than larger regional and national accounts. The Group has developed a strong delivery network, systems and pricing model to provide its customers with order fulfilment and next-day deliveries at minimum order values from as low as £100, enabling the Group to capture a market that is not readily serviced by the large UK delivered wholesalers.

· Providing its customer base with supplementary value-add services

The Group uses its knowledge and expertise to provide its customers with supplementary value add specialist merchandising and range advice to support the growth of its underlying customer base, which in turn will drive future organic sales.

· Highly cash generative business model, with a disciplined approach to managing creditor and debtor days

The Group's strong cash generative business model provides it with the capital to support its buy-and-build strategy whilst paying a dividend for investors. The Group also operates a disciplined approach to managing its creditor and debtor payment days, supported by its working capital facilities, ensuring the Group remains in a strong working capital position throughout the year.

· Year-on-year earnings growth and margin improvements

The Group has seen a 9.1 per cent. CAGR increase in its gross profit from FY18 to FP20, delivering an Adjusted EBITDA (Pre IFRS-16) CAGR of over 4.4 per cent. over the same period. This has been driven by the expansion into higher margin areas such as Frozen & Chilled and Foodservice, resulting in a 1.3 per cent. increase in gross profit margin to 18.1 per cent.

· Strong balance sheet, progressive dividend policy and attractive yield

The Group will come to market with low and prudent levels of gearing. Furthermore, the Group proposes to implement a progressive dividend policy and intends to base its dividend policy for the financial period on a dividend yield of 4.5 per cent. based on the market capitalisation of the Company as at Admission.

· Highly experienced and ambitious Board and operational management team

The Board has significant experience and is supported by an operational management team that, together, has a combined experience in excess of over 100 years of industry knowledge and expertise. Furthermore, the Board and operational management team have set a target of doubling Adjusted EBITDA (Pre IFRS-16) in the coming years.

Reasons for Admission to AIM

The Directors believe that admission to AIM will provide an increased profile for the Group and its brands, a strengthened balance sheet that will see the Group's net leverage reduce to approximately one times Adjusted EBITDA (Pre IFRS-16) at IPO, in addition to lowering the Group's related interest expenses, support the Group's buy-and-build strategy, enhance the Group's position with key suppliers as a listed business and provide the Group with greater ability to incentivise and retain key employees going forward.

The Placing

Kitwave and its Selling Shareholders propose to raise total gross proceeds of £81.6 million by way of an IPO of the Group's Ordinary Shares on AIM of the London Stock Exchange.

The Group will raise gross proceeds of approximately £64.0 million by way of the Placing Shares, which will be used to:

· repay approximately £60.7 million of the Group's £76.0 million existing debt facilities (estimated amount to be drawn shortly before Admission), consisting of repaying £15.1 million of the Group's existing senior bank term loan facilities (£15.1 million as the estimated amount to be drawn shortly before Admission), all £35.9 million of the Group's existing mezzanine and subordinated unsecured loan facilities from the Investors (estimated amount to be drawn shortly before Admission) and reduce the drawn amount under the Group's existing working capital facilities by £9.7 million to approximately £8.3 million. The result of this will be a significant reduction in the Group's debt position. The Group drew approximately £5.5 million via the British Business Bank's Coronavirus Large Business Interruption Loan Scheme (CLBILS), ahead of the scheme being withdrawn at the end of March 2021. It is the Group's intention to repay this facility in full, at or shortly after Admission with the cash that was originally drawn under this facility which is currently held in a segregated bank account. This loan does not form part of the existing debt facilities referred to above;

· fund approximately £3.3 million in transaction related expenses.

The Selling Shareholders will raise gross proceeds of approximately £17.6 million via the Secondary Placing, which will:

· provide gross proceeds of £9.8 million which will facilitate a full exit for the Investors' interest in the Group;

· provide gross proceeds of £7.8 million providing a liquidity event for certain Directors and members of the senior management of the Group. The Group's Directors and senior management team will remain significantly invested in the Group following Admission, with each retaining between 52.8 per cent. and 79.5 per cent. of their existing stakes which equate, in aggregate, to approximately 75.0 per cent. of their interest in the Existing Ordinary Shares; and

· the Group's Directors and senior management team will retain an interest of 22.3 per cent. of the Enlarged Ordinary Share Capital at Admission;

Further details of the Placing are set out in the Admission Document.

Board of Directors

On Admission, the members of the Board and their positions will be:

Stephen ("Steve") Smith, Independent Non-Executive Chairman

Steve joined the Group as a Non-Executive Chairman following the investment by Pricoa Capital Group in 2016. He retired as CEO of Northgate plc in 2010, after a career of over 20 years. Steve now serves as a Non-Executive Director on two other Boards: Ramsdens Holdings Plc and Procomm Site Services Limited (Chairman). He is a chartered accountant and holds a degree in Economics from the London School of Economics. Steve is chairman of the Nomination Committee. Steve's appointment to the Board shall be conditional on and takes effect on Admission.

Paul Young, Chief Executive Officer

Paul co-founded the Group in 1987, initially as a single North East based cash and carry. During his 30-year tenure as Chief Executive, and majority shareholder, Paul has grown the business into a national delivered wholesale business with revenue over £590 million in FP20. Paul is a qualified Cost and Management Accountant (ACMA).

David Brind, Chief Financial Officer

David joined as Group Finance Director in 2011, following NVM Private Equity LLP's investment. He had a close relationship with the Group over a number of years up to the time of joining through his role at Barclays. Prior to his position with Barclays, David worked at Ward Hadaway as a Corporate Finance Director and, before this, Ernst & Young as Assistant Director in Corporate Finance. David moved to Ernst and Young shortly after qualifying as a chartered accountant and is a Fellow of the Institute of Chartered Accountants in England and Wales. He obtained a degree in Business Studies at the University of Hull.

Gerard Murray, Independent Non-Executive Director

Gerard is currently the CFO of Tharsus Group and director of Newrona Limited. Prior to this he has been either a Group Finance Director or Chief Financial Officer with Reg Vardy plc, Northgate plc, The Vardy Group of Companies, Immunodiagnostic Systems Holdings plc, Benfield Motor Group, Ardent Hire Solutions, Quantum Pharma plc and most recently Fairstone Holdings. Gerard has experience of initial public offerings and ongoing listed company operations, treasury activities, and been involved in over 100 corporate finance transactions of varying complexity and size. He is a Fellow of the Institute of Chartered Accountants in England and Wales, having qualified as a chartered accountant with Arthur Andersen, and holds a degree in Economics from the University of Leicester. Gerard will be the chairman of the Audit Committee and chairman of the Remuneration Committee. Gerard's appointment to the Board shall be conditional on and takes effect on Admission.

Placing Statistics

Existing share capital immediately prior to Admission
Number of Existing Ordinary Shares	27,333,323

Placing Shares
Placing Price	150 pence
Number of Placing Shares	42,666,677
Gross proceeds from the Placing Shares	£64.0 million
Net proceeds from the Placing Shares (receivable by the Company)	£60.7 million

Secondary Placing
Placing Price	150 pence
Number of Secondary Placing Shares	11,753,327
Gross proceeds from the Secondary Placing¹	£17.6 million

Upon Admission
Number of Ordinary Shares in issue at Admission	70,000,000
Percentage of Enlarged Ordinary Share Capital represented by the Placing Shares	61.0%
Percentage of Enlarged Ordinary Share Capital represented by the Secondary Placing Shares	16.8%
Estimated market capitalisation of the Company at Admission at the Placing Price	£105.0 million
TIDM	KITW
ISIN	GB00BNYKB709
SEDOL	BNYKB70
LEI	2138007DLCYPVY95UD40
Free Float	51.1 per cent.

Notes
1. The Company will not receive any of the proceeds from any sale of Secondary Placing Shares by the Selling Shareholders.

The Company's Admission Document, published on 7 May 2021, will be made available on the Company's website www.kitwave.co.uk from the date of Admission, subject to certain geographic restrictions.