Esken : Circular re Disposal, Proposed transfer and Executive Remuneration Scheme

shareholderenquiries@linkgroup.co.uk or you may call Link on 0371 664 0300 or +44 (0) 371 664 0300 if calling from outside the United Kingdom). Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. If you request a hard copy, please complete and sign it in accordance with the instructions printed on it and return it either (i) by post or, (ii) during normal business hours only, by hand, to the Company's registrar, Link Group, PXS1, Central Square, 29 Wellington Street, Leeds LS1 4DL, so as to be received as soon as possible and in any event not later than 9.30 a.m. (London time) on 22 November 2023, or, if the General Meeting is adjourned, the proxy form should be received not later than 48 hours (excluding non-working days) before the time fixed for the adjourned meeting.

A summary of the actions to be taken by Shareholders is set out on page 20 of this document and in the Notice of General Meeting set out at the end of this document.

This document is a circular relating to the proposed Disposal, the Proposed Transfer and the Executive Remuneration Scheme which has been prepared in accordance with the Listing Rules of the Financial Conduct Authority (the "FCA") made under section 73A of the Financial Services and Markets Act 2000, as amended ("FSMA"). This document has been approved by the FCA.

Canaccord Genuity Limited ("Canaccord"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company as Sponsor in connection with the Disposal and as financial adviser in connection with the Proposed Transfer and for no one else in connection with the Disposal, the Proposed Transfer, the content of this document and other matters described in this document and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Canaccord, nor for providing advice to any other person in relation to the Disposal, the Proposed Transfer, the content of this document or any other matters described in this document.

Save for the responsibilities and liabilities, if any, of Canaccord under FSMA or the regulatory regime established thereunder, Canaccord assumes no responsibility whatsoever and makes no representations or warranties, express or implied, in relation to the contents of this document, including its accuracy, completeness or verification or for any other statement made or purported to be made by the Company, or on the Company's behalf, or by Canaccord or on Canaccord's behalf and nothing contained in this document is, or shall be, relied on as a promise or representation in this respect, whether as to the past or the future, in connection with the Company, the Disposal, the Proposed Transfer, the Executive Remuneration Scheme or the content of this document. Canaccord disclaims, to the fullest extent permitted by law, all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this document or any such statement.

No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied on as having been so authorised. The delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in it is correct as of any subsequent time.

Capitalised terms have the meaning ascribed to them in Part 10 (Definitions) of this document.

This document is dated 6 November 2023.

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CONTENTS

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates in the table below is indicative only and may be subject to change. Please refer to the notes for this timetable set out below.(1)(2)(3)

Notes:

1. The times and dates set out in the expected timetable of principal events above and mentioned in this document and in any other document issued in connection with the Disposal
   and Proposed Transfer are subject to change by the Company, in which event details of the new times and dates will be notified to the FCA and, where appropriate, to Shareholders.
2. References to times in this document are to London time.
3. If you have any queries on the procedure for completion and submission of the proxy forms you should contact the Company registrar on 0371 664 0300 (or +44 (0) 371 664 0300 if calling from outside the United Kingdom). Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m. (London time),
   Monday to Friday excluding public holidays in England and Wales. Please note that the Company registrar cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.
4. Completion is subject to certain conditions as specified in Part 2 of this document (Summary of the Key Terms of the Disposal), which include, amongst others, shareholder approval at the General Meeting. The expected date of Completion is subject to change and Completion will not necessarily occur immediately following the General Meeting or necessarily before the expected effective date of the Proposed Transfer.

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IMPORTANT INFORMATION

Presentation of financial information

Unless otherwise indicated all references in this document to "pounds sterling", "GBP", "£", "pence" or "p" are to the lawful currency of the United Kingdom, all references to "US Dollar", "Dollars", "USD" or "$" are to the lawful currency of the United States of America and all references to "Euro", "EUR" or "€" are to the lawful currency of the Eurozone.

Rounding

Certain figures contained in this document or incorporated into this document by reference, including the financial information presented in a number of tables in this document, have been rounded to the nearest whole number or the nearest decimal place. Therefore, the sum of the numbers in a row or a column may not conform exactly to the total figure given for that row or column. In addition, certain percentages presented in this document reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers. Differences between figures set out in the text of this document are based on the differences between the relevant figures rounded to the nearest whole number or nearest decimal place. Such differences may not conform exactly to the relevant figures if the relevant calculations were based on the underlying information prior to rounding.

Sources of information

Financial information relating to Esken Renewables Limited for the years ended 28 February 2023, 28 February 2022 and 28 February 2021 has, unless otherwise stated, been extracted from the Historical Financial Information relating to Esken Renewables Limited, which is set out in Part 4 (Historical Financial Information relating to Esken Renewables) of this document.

Definitions

Certain terms used in this document, including all capitalised terms and certain technical and other terms, are defined and explained in Part 10 (Definitions) of this document.

Alternative performance measures ("APMs")

This document contains APMs, which are not defined or specified under the requirements of IFRS, including Adjusted EBITDA, Net Debt and Gearing.

APMs should not be considered in isolation and Shareholders should not consider such information as alternatives to revenue, profit before tax or cash flows from operations calculated in accordance with IFRS, as indications of operating performance or as measures of the Group's, or Esken Renewables', profitability or liquidity. Such financial information must be considered only in addition to, and not as a substitute for or superior to, financial information prepared in accordance with IFRS included elsewhere in this document. Shareholders are cautioned not to place undue reliance on these APMs and are also advised to review them in conjunction with the financial statements for the years ended 28 February 2023, 28 February 2022 and 28 February 2021.

APMs are used as they are considered to be both useful and necessary as well as enhancing the comparability of information between reporting periods. In certain circumstances, by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, certain APMs can aid users in understanding the Group's, or Esken Renewables', performance.

Consequently, APMs are used by the Directors and management for internal performance analysis, planning, reporting and incentive-setting purposes. The presentation of these measures facilitates comparability with other companies, although management's measures may not be calculated in the same way as similarly titled measures reported by other companies.

Adjusted EBITDA

Adjusted EBITDA is the key profitability measure used by management for performance review in the day-to-day operations of the Group.

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Adjusted EBITDA represents (loss)/profit for the year from continuing operations before the impact of depreciation, amortisation, impairments, finance costs (net) and tax. These items are set out on the face of the unaudited pro forma financial information contained in Section A of Part 5 (Pro Forma Financial Information Relating to the Continuing Group) where Adjusted EBITDA is referred to as EBITDA. A reconciliation of Adjusted EBITDA is presented below.

The Group presents Adjusted EBITDA because the Directors believe that this APM contributes to a better understanding of the Group's results of operations by providing additional information on what the Directors consider to be some of the drivers of the Group's financial performance. Furthermore, the Directors believe that this APM is widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance.

Net Debt and Gearing

Net Debt represents the Group's total current and non-current loans and borrowings and exchangeable bond less cash and cash equivalents. The Group presents Net Debt because the Directors believe that it contributes to a better understanding of the Group's liquidity and financial position by providing additional information in respect of the Group's ability to meet its financial obligations. Furthermore, the Directors believe that Net Debt is widely used by certain investors, securities analysts and other interested parties as a supplemental measure of liquidity and financial position.

Gearing represents the Group's Net Debt divided by Group shareholders' equity. The Group uses Gearing to monitor capital in light of its creditor rating to inform business decisions to maximise Shareholder value.

Unaudited pro forma financial information

In this document, any reference to 'pro forma' financial information is to information which has been extracted without material adjustment from the unaudited pro forma financial information contained in Section A of Part 5 (Pro Forma Financial Information Relating to the Continuing Group) of this document. The unaudited pro forma income statement and unaudited pro forma statement of net assets contained in that section is intended to show how the Disposal might have affected the income statement of Esken Limited for the year ended 28 February 2023 as if it had taken place at the beginning of the year ended 28 February 2023 and on the net assets of Esken Limited as at 28 February 2023 if it had taken place at that date. As such, the unaudited pro forma financial information contained in this Circular is intended to show the financial position of the Continuing Group, as if the Disposal had already occurred.

The unaudited pro forma financial information addresses a hypothetical situation and has been prepared for illustrative purposes only under the basis of preparation set forth in Section A of Part 5 (Pro Forma Financial Information Relating to the Continuing Group) of this document. The hypothetical financial position and results presented in the unaudited pro forma financial information does not represent the Continuing Group's actual financial position or results. Future results of operations may differ materially from those presented in the unaudited pro forma financial information due to various factors.

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', 'anticipates', 'targets', 'aims', 'continues', 'expects', 'intends', 'hopes', 'may', 'will', 'would', 'could' or 'should' or, in each case, their negative or other variations or comparable terminology.

These forward-looking statements include matters that are not facts. They appear in a number of places throughout this document and include statements regarding the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Group's and, following Completion, the Continuing Group's results of operations, financial condition, prospects, growth, strategies and the industries in which the Group and, following Completion, the Continuing Group operate. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances.

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A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: conditions in the markets; the market position of each of the Group and, following Completion, the Continuing Group; earnings, financial position, cash flows, return on capital and operating margins of the Group and, following Completion, the Continuing Group; anticipated investments and capital expenditures of the Group and, following Completion, the Continuing Group; changing business, regulatory or other market conditions; and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the Listing Rules, the Disclosure Guidance and Transparency Rules or any other applicable law or regulation, neither the Company nor Canaccord undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Shareholders should not place undue reliance on forward looking statements, which speak only as of the date of this document.

Shareholders should carefully review the risk factors which are set out in Part 3 (Risk Factors) of this document for a discussion of factors that could cause the Company's actual results to differ materially from those expected before making an investment decision. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this document and/or the information incorporated by reference into this document may not occur.

For the avoidance of doubt, nothing in this paragraph constitutes a qualification of the working capital statement set out in paragraph 6 of Part 7 (Additional Information) of this document.

Industry and market data

Unless the source is otherwise stated, the market, economic and industry data in this document constitutes the Directors' estimates, using underlying data that has been sourced from independent third parties. Market data and certain industry data and forecasts included in this document have been obtained from internal company surveys, consultant surveys, market research, publicly available information, reports of government agencies and industry publications and surveys. Where information in this document has been sourced from third parties, the source of such information has been clearly stated adjacent to the reproduced information.

Where information contained in this document has been sourced from a third party, the Company confirms that such information has been accurately reproduced and, so far as the Company is aware and able to ascertain from information published by third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. The Company has not independently verified any of the data from third-party sources, nor ascertained the underlying economic assumptions relied upon therein and the accuracy and completeness of such information is not guaranteed. Similarly, internal surveys, industry forecasts and market research, which the Company believes to be reliable based on the Directors' knowledge of the industry, have not been independently verified. Statements as to the Group's and, following Completion, the Continuing Group's market positions are based on recently available data.

Documents

Any Shareholder, person with information rights or other person to whom this document is sent may request a copy of each of the documents incorporated by reference into this document as set out in Part 9 (Documents Incorporated by Reference) of this document. Hard copies will only be sent where valid requests are received from such persons.

Requests for copies of any such document should be directed to the following address: Esken Limited at 3rd Floor, 15 Stratford Place, London W1C 1BE or by telephoning on 0203 911 0365 (or +44 203 911 0365 if telephoning from outside the United Kingdom). All valid requests will be dealt with as soon as possible and hard copies mailed by no later than two Business Days following such request.

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Website

The documents listed in paragraph 10 of Part 7 (Additional Information) of this document are available in 'read-only' format and can be printed from the Company's website at the following address: https://esken.com/ and are also available for inspection as provided in such section.

Unless otherwise specified in this document, neither the content of the Company's website (https:// esken.com), nor the content of any website accessible from hyperlinks on the Company's website, is incorporated into, or forms part of, this document, such content has not been scrutinised or approved by the FCA and Shareholders should not rely on them.

No profit forecasts or estimates

Nothing in this document is intended as a profit forecast or estimate for any period and no statement in this document should be interpreted to mean that earnings or earnings per share or dividend per share for the Company for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for the Company.

No offer or solicitation

This document is not a prospectus and does not constitute or form part of any offer or invitation to purchase, acquire, subscribe for, sell, dispose of or issue, or any solicitation of any offer to purchase, acquire, subscribe for, sell, dispose of or issue, any security.

General notice

This document is for your information only. Nothing contained in this document is intended to constitute investment, legal, tax, accounting or other professional advice. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

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DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

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PART 1

LETTER FROM THE CHAIRMAN OF ESKEN LIMITED

ESKEN LIMITED

(Incorporated and registered under the laws of Guernsey with registered number 39117)

Proposed disposal of Esken Renewables Limited, proposed transfer from Premium Listing to

Standard Listing and certain proposals for executive remuneration

Introduction

The Board announced on 1 November 2023 the proposed disposal by its subsidiary, Esken Holdings Limited (the "Seller"), of the entire issued share capital of Esken Renewables Limited ("Esken Renewables") to Pioneer Balmoral UK Limited (the "Purchaser"), a vehicle fully owned and funded by the sustainable infrastructure fund, Pioneer Infrastructure Partners SCSp, managed by Pioneer Point Partners LLP. The consideration for the entire issued share capital of Esken Renewables is £77.6 million, (the "Consideration"), plus reimbursement of the intercompany loan owed by Esken Renewables to Esken by way of (i) the Cash Sweep and (ii) repayment of the intercompany loan balance in excess of £5 million (the "Intercompany Loan Reimbursement"), expected to total £6.9 million, which represents an equity value of £84.5 million, to be satisfied in cash. This reflects an enterprise value of £107.7 million, with adjustments made for cash and debt like items (the "Disposal"). Further details of the Consideration are set out below and in Part 2 (Summary of the Key Terms of the Disposal). In addition, the Board intends to seek the approval of the Company's Shareholders to the Proposed Transfer, which will transfer the Company's listing from the Premium Listing segment (the "Proposed Transfer") of the Main Market of the London Stock Exchange plc to the Standard Listing segment. The Board also intends to introduce the Executive Remuneration Scheme which will facilitate certain incentive entitlements for its Executive Directors that fall outside the scope of the Company's current remuneration policy and seeks shareholder approval to implement the Executive Remuneration Scheme.

The purpose of this document is to (i) provide details of the Disposal and the effect of the Disposal on the Group and, following Completion, the Continuing Group, (ii) provide details of the Proposed Transfer, (iii) provide details of the Executive Remuneration Scheme; (iv) explain why your Directors believe that the Disposal, the Proposed Transfer and the Executive Remuneration Scheme are in the best interests of the Group and its Shareholders as a whole and (v) to seek the consent of Shareholders to the Disposal, the Proposed Transfer and the Executive Remuneration Scheme.

Pursuant to an agreement between the Purchaser and the Seller in relation to the Disposal ("Disposal Agreement"), details of which are set out in Part 2 (Summary of the Key Terms of the Disposal) of this document, the Seller has conditionally agreed that it will dispose of Esken Renewables to the Purchaser. Esken Renewables is the United Kingdom's largest supplier of waste wood fuel, with contracts in place to supply c.1.7 million tonnes of waste wood fuel to dedicated biomass plants across the United Kingdom. The Disposal will be satisfied in cash and the net

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