REG - Chesnara PLC - Proposed Acquisition and Placing <Origin Href="QuoteRef">CSN.L</Origin> - Part 1

ChesnaraAnnouncement

03/12/2014 07:11

RNS Number : 6747Y
Chesnara PLC
03 December 2014
Chesnara plc
3 December 2014
NOT FOR RELEASE PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES
Chesnara plc
Proposed Acquisition of Waard Leven N.V., Hollands Welvaren Leven N.V., Waard Schade N.V. and Tadas Verzekeringen B.V. ("Waard Group") by Chesnara plc ("Chesnara" or the "Company") for 67.8 million (approximately 55.1 million) plus deferred performance related consideration (the "Acquisition"), and placing to raise approximately 35 million
Highlights
 Acquisition of the Waard Group, comprising three insurance companies and a servicing company, for a consideration of 67.8 million (55.1 million)(1)
 Estimated European Embedded Value ("EEV") of the Waard Group as at 30 June 2014 is 92.0m; the consideration of 67.8(1) million represents a discount of 26.3% to EEV
 The Waard Group businesses are strongly capitalised and the potential for phased, orderly capital extraction is a key attraction of the Acquisition
 The Dutch market offers significant consolidation potential and the servicing company being acquired provides an operating platform to facilitate this
 Placing of up to 11,504,765 new Ordinary Shares (the "Placing") to raise approximately 35 million before expenses to fund a proportion of the Acquisition, the balance of the consideration being provided by Chesnara's cash resources
 The Acquisition and the Placing are expected to immediately enhance Chesnara's EEV per share, on completion of the Acquisition ("Completion"), by approximately 2.2%
Canaccord Genuity Limited ("Canaccord Genuity") is acting as financial adviser to the Company in relation to the Acquisition, and joint bookrunner and joint underwriter in relation to the Placing. Panmure Gordon (UK) Limited ("Panmure Gordon") is acting as joint bookrunner and joint underwriter in relation to the Placing.
As also announced earlier this morning by the Company, Graham Kettleborough, Chief Executive Officer, has given notice of his intention to step down from the Board and resign from the Company. Graham has agreed to remain in his current role until, at least, 31 December 2014 and provide support and consultancy until 31 March 2015 to ensure a smooth handover to his successor.
The Company further announced that John Deane will join the Group today. On receipt of regulatory approval John will be appointed as an Executive Director and take up the role of Chief Executive.
Commenting on the Acquisition, Graham Kettleborough stated: "We are very excited to acquire an attractive business in the Dutch market. The Waard Group should generate attractive financial returns and also provide a platform with enough scale and operational knowledge to enable further acquisitions in the Dutch and continental European markets. The Company looks forward to working with our new colleagues in the Netherlands with a view to optimising our financial returns and identifying and acquiring other businesses."
(1) In addition to the headline consideration, deferred performance related consideration will accrue from 30 November 2014 to the date of Completion, expected to be during the first quarter of 2015, subject to a maximum capped value of 2.5 million (2.0 million). The deferred performance related consideration consists of two components: (i) an element that accrues at a fixed monthly rate to a maximum of 0.8 million (0.6 million) (with the maximum only being payable should the transaction not complete until or after 30 June 2015); and (ii) a potential maximum payment of 1.7 million (1.4 million) payable if the net assets of the Waard Group have increased as a result of certain agreed provision releases. The majority of any potential deferred performance related compensation is value neutral and hence, should the maximum deferred performance related consideration become payable, the discount to EEV would reduce only marginally to 25.0%.
Sterling and Euro conversions are based on the exchange rate of 1.00 : 1.23.
Further information on the Acquisition and Placing is given below. Appendix I sets out certain financial information on the Waard Group covering the three years and six months to 30 June 2014. Appendix II sets out the full terms and conditions of the Placing. Appendix III sets out the definitions of terms used in this announcement. 
Enquiries
Chesnara plc

Graham Kettleborough, Chief Executive
David Rimmington, Finance Director
+44 (0) 7799 407519
+44 (0) 7789 116807
Canaccord Genuity Limited - Financial adviser
Hugh Elwes
David Tyrrell
+44 (0) 207 665 4500
Canaccord Genuity Limited - Joint bookrunner and joint underwriter
Martin Green
Lucy Tilley
+44 (0) 207 523 8350
Panmure Gordon (UK) Limited - Joint bookrunner and joint underwriter
Hugh Morgan
Adam James
Charles Leigh-Pemberton
+44 (0) 207 886 2500


Newgate Threadneedle Limited

Roddy Watt
+44 (0) 207 653 9855
+44 (0) 7714 770493


Important Information 
Canaccord Genuity, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser, joint bookrunner and joint underwriter exclusively for Chesnara and is acting for no-one else in connection with the Placing and will not be responsible to anyone other than Chesnara for providing the protections afforded to clients of Canaccord Genuity nor for providing advice in connection with the Placing, or any other matter referred to herein.
Panmure Gordon, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as joint bookrunner and joint underwriter exclusively for Chesnara and for no one else in connection with the Placing and will not be responsible to anyone other than Chesnara for providing the protections afforded to clients of Panmure Gordon or for affording advice in relation to the Placing, or any other matter referred to herein.
This summary should be read in conjunction with the full text of the following announcement. Persons who have chosen to participate in the Placing, by making an oral or written offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including the Appendices), and to be making such offer on the terms and subject to the terms and conditions herein, and to be providing the representations, warranties and acknowledgements contained in Appendix II.
Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on Chesnara's current expectations, estimates and projections about its industry, its beliefs and assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond Chesnara's control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These factors include, amongst others, the ability to consummate the transaction; the ability of Chesnara to successfully integrate the Waard Group's operations and employees; the ability to realise anticipated synergies; dependence on key personnel; and financial and insurance risk management. Chesnara cautions Shareholders not to place undue reliance on these forward-looking statements, which reflect the view of Chesnara only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. Chesnara will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.
Chesnara plc
Proposed Acquisition of Waard Leven N.V., Hollands Welvaren Leven N.V., Waard Schade N.V. and Tadas Verzekeringen B.V. ("Waard Group") by Chesnara plc ("Chesnara" or the "Company") for 67.8 million (approximately 55.1 million) plus deferred performance related consideration (the "Acquisition"), and placing to raise approximately 35 million
Introduction
Chesnara is pleased to announce that it has entered into a conditional agreement to acquire the entire issued share capital (either directly or indirectly) of certain Netherlands-based insurance subsidiaries of DSB Beheer B.V. in bankruptcy ("DSB"). The consideration for the Acquisition comprises a purchase price of 67.8 million (55.1 million), plus a small element of deferred performance related consideration which will accrue for the period from 30 November 2014 to the date of Completion, expected to be during the first quarter of 2015, subject to a maximum capped value of 2.5 million (2.0 million). The deferred performance related consideration consists of two components: (i) an element that accrues at a fixed monthly rate to a maximum of 0.8 million (0.6 million) (with the maximum only being payable should the transaction not complete until or after 30 June 2015); and (ii) a potential maximum payment of 1.7 million (1.4 million) payable if the net assets of the Waard Group have increased as a result of certain agreed provision releases. The majority of any potential deferred performance compensation is value neutral and hence, should the maximum deferred performance related consideration become payable, the discount to EEV would reduce only marginally to 25.0%.
The entities that are the subject of the Acquisition consist of Waard Leven N.V. ("Waard Leven"), Hollands Welvaren Leven N.V. ("HW Leven"), Waard Schade N.V. ("Waard Schade"), and Tadas Verzekeringen B.V. ("Tadas")(Waard Leven, HW Leven, Waard Schade and Tadas together, the "Waard Group"). Chesnara will acquire the Waard Group via a wholly-owned subsidiary, Chesnara Holdings B.V., from DSB Ficoholding N.V. and DSB Bank N.V. in bankruptcy ("DSB Bank", an entity which entered bankruptcy on 19 October 2009 and, together with DSB Ficoholding N.V., the "Sellers"). The Sellers in turn are wholly-owned subsidiaries of DSB, a privately-owned Dutch financial services group which entered bankruptcy on 21 October 2009. The Acquisition is conditional upon, inter alia, receipt of regulatory approval, which includes a declaration of no objection, from De Nederlandsche Bank N.V. ("DNB"), the Dutch regulator, which is expected during the first quarter of 2015, and upon the Companynot having notified the Sellers by 6.00 p.m. (CET) on 3 December 2014 that the Company has not obtained sufficient funding under the Placing to enable the Acquisition to be made. In addition, the Acquisition is also subject to certain conditions which are usual for an acquisition of this nature.
The initial consideration for the Acquisition will be financed through a combination of existing cash resources of up to 20.1 million, together with the proceeds of a proposed placing of up to 11,504,765 new ordinary shares in the capital of the Companywith both existing and new institutional investors to raise approximately 35 million before expenses. The use of existing cash resources is supported by the deferral of repayment of the Company's existing 12.8 million bullet term loan from May 2015 to June 2018. The element of deferred performance related consideration will be financed by existing cash resources.
The Placing will be conducted by way of an accelerated bookbuild, commencing immediately. It is expected that books will close no later than 4.30 p.m. on 3 December 2014. Pricing and allocations are expected to be set as soon as practicable thereafter.The joint bookrunners reserve the right to alter the size of the Placing and to close the bookbuilding process and announce pricing and allocations at any earlier or later time.
Background to and reasons for the Acquisition
The Acquisition of the Waard Group is in line with Chesnara's stated strategic objective to acquire life and pensions businesses in the UK and Western Europe. The Board believes that the Acquisition will continue the Company's successful acquisition-based growth within its target markets and value range, while increasing the potential of the Group to make subsequent acquisitions within the Netherlands and continental Europe.
The Waard Group consists of the Netherlands-based insurance subsidiaries of DSB, namely Waard Leven, HW Leven, Waard Schade, and Tadas, HW Leven being a wholly-owned subsidiary of Waard Leven. DSB is a privately-owned Dutch financial services group which entered bankruptcy on 21 October 2009. The Waard Group is self-supporting and strongly capitalised, and is separate from the Sellers, having been operationally unwound from the bankruptcy process.
Waard Leven, HW Leven and Waard Schade are regulated insurance companies, whilst Tadas is a related company which supplies services to them. The insurance companies have been closed to new business since 2009, with the exception of a small number of new test policies written in 2014. The Waard Group is strongly capitalised: Waard Leven, HW Leven and Waard Schade held a capital surplus over regulatory minimum requirements of 46.6 million as at 31 December 2013, with solvency ratios of 655% (Waard Leven together with its subsidiary HW Leven), 392% and 304% respectively. In addition, Tadas held excess capital resources of 12.5 million over regulatory minimum requirements as at 31 December 2013. The Directors anticipate that each of the Waard Group companies, in addition to the surplus capital that they hold, has the potential to generate further positive cash flows over the near-to-medium term. The potential for phased orderly capital extraction is a key attraction of the Waard Group. Due diligence has identified that there will be no negative impact in the Waard Group companies' capital surpluses above the regulated minimum and target requirements from the upcoming introduction of Solvency II.
The consideration of 67.8 million (55.1 million) (excluding deferred performance related consideration post 30 November 2014) for the Acquisition represents a 26.3% discount to Chesnara's estimate of the Waard Group's EEV of 92.0 million (74.8 million) as at 30 June 2014. Further, it represents a discount of 14.9% to the Waard Group's IFRS net assets as at 30 June 2014. The Acquisition and Placing are anticipated to increase Chesnara's EEV by approximately 12.5% or 50.6 million, with an immediate EEV gain on Completion of approximately 16.0 million. This represents an EEV per share enhancement of approximately 8 pence, or 2.2%. In addition to the headline consideration, deferred performance related consideration will accrue for the period from 30 November 2014 to the date of Completion, expected to be during the first quarter of 2015, subject to a maximum capped value of 2.5 million (2.0 million). The deferred performance related consideration consists of two components: (i) an element that accrues at a fixed monthly rate to a maximum of 0.8 million (0.6 million) (with the maximum only being payable should the transaction not complete until or after 30 June 2015); and (ii) a potential maximum payment of 1.7 million (1.4 million) payable if the net assets of the Waard Group have increased as a result of certain agreed provision releases. The majority of any potential deferred performance compensation is value neutral and hence, should the maximum deferred performance related consideration become payable, the discount to EEV would reduce only marginally to 25.0%, and the discount to IFRS net assets would be 13.7%.
The Directors believe, based on market intelligence, that the Dutch insurance market is attractive as it is highly fragmented and therefore offers significant opportunity for consolidation as well as having a similar regulatory environment to that of the UK. The Acquisition provides Chesnara with a platform for further expansion in the Netherlands and continental Europe, and the Directors believe that there is a strong cultural fit between the businesses.
Furthermore, the Directors consider that there is the potential to benefit from operating leverage as the existing operations of the Waard Group have capacity for growth. In particular, the servicing company (Tadas) currently provides third-party administration services, and has the operational flexibility and capacity to grow.
Therefore, the Directors believe that the Waard Group represents an attractive and value-enhancing prospect when set against Chesnara's key assessment criteria for acquisitions of: cash generation, EEV enhancement, strategic optionality and risk profile.
The Acquisition is conditional upon, inter alia, the receipt of regulatory approval, which includes a declaration of no objection from DNB, the Dutch regulator, which is expected to be received during the first quarter of 2015, and upon the Companynot having notified the Sellers by 6.00 p.m. (CET) on 3 December 2014 that the Company has not obtained sufficient funding under the Placing to enable the Acquisition to be made. In addition, the Acquisition is also subject to certain conditions which are usual for an acquisition of this nature.
The Placing
The Placing is intended to part fund the Acquisition. The Placing will be limited to 11,504,765 new ordinary shares in the capital of Chesnara ("Placing Shares") representing approximately 9.99% of the current issued share capital of Chesnara. Chesnara has appointed Canaccord Genuity and Panmure Gordon as joint bookrunners to the Placing, and Canaccord Genuity is acting as financial adviser to the Company in relation to the Acquisition. The Placing will be effected, subject to the satisfaction of certain conditions, through an accelerated bookbuild process. The Placing will take place in accordance with the terms and conditions set out in Appendix II to this announcement.
Certain of the Directors of Chesnara (including all of the executive directors) intend to participate in the Placing. The extent of Director participation will be announced post completion of the accelerated bookbuild.
The Placing Shares will, when issued, be credited as fully paid and will rank equally in all respects with the existing ordinary shares of 5 pence each in the share capital of Chesnara, including the right to receive all dividends and other distributions declared, made or paid after the date of issue of the Placing Shares. Application will be made to the FCA for the Placing Shares to be admitted to the premium segment of the Official List maintained by the FCA and to the London Stock Exchange plc for the Placing Shares to be admitted to trading on its Main Market ("Admission").
Settlement for the Placing Shares, as well as Admission, is expected to become effective at or before 8.00 a.m. on 5 December 2014. Completion of the Placing is not conditional on Completion, which is anticipated to occur in the first quarter of 2015. In the unlikely event that Completion does not take place the Directors will examine the funding needs of the existing group and the prospects for further acquisitions before deciding on the Group's optimal financing structure and the potential need to return funds raised in the Placing to Shareholders.
The Placing will be fully underwritten by Canaccord Genuity and Panmure Gordon from announcement of completion of the accelerated bookbuild, subject to certain conditions set out in a placing agreement between Canaccord Genuity, Panmure Gordon and the Company.
Current Trading
The results and position of the Group subsequent to 30 June 2014 are in line with management's expectations given the generally adverse investment market conditions during the quarter to 30 September 2014. The Company's interim management statement, which was released on 19November 2014, states that the Company remained profitable and cash generative despite the adverse market conditions. The Directors believe this illustrates the resilience of the Group's financial model.
Further information on the Waard Group
Waard Leven's book of business consists of term-life insurance policies, along with a small number of unit-linked life insurance policies. 86% of its term-life policies are single premium. HW Leven focusses on unit-linked life insurance policies, along with a small number of term-life insurance policies. 94% of its unit-linked products have premiums that are paid monthly. Waard Schade's book of business consists of non-life insurance, such as occupational disability, unemployment and other accident cover. Nearly all of its policies are single premium. 
Tadas is the servicing entity for the three regulated insurance companies, providing all the administration and back office functions. It currently has 24 full-time equivalent staff. Tadas also carries out servicing activities for three third-party insurers, although this is not a material part of its business. 
Each of the Waard Group companies is solvent and strongly capitalised, with an overall capital surplus in the three regulated insurance companies over regulatory minimum requirements totalling 46.6 million as at 31 December 2013. Chesnara has discussed its strategic and capital management plans with DNB, and a positive working relationship has been established. An agreement in principle has been reached with DNB to operate each regulated entity at a minimum solvency level of 200% of the calculated requirement or 100% of the minimum calculated requirement if higher. On that basis, the Directors consider that the Waard Group presents the potential for phased orderly capital extraction.
The Directors have estimated an unaudited EEV of the Waard Group as at 30 June 2014 of 92.0 million (approximately 74.8 million). The purchase price of 67.8 million (excluding any deferred performance related consideration) represents a discount to EEV of 26.3%. The EEV is "net-worth rich", meaning the overall EEV can be distributed more readily by way of dividends than were it to be "value in-force rich", and reduces the time frame for converting the EEV into cash.
Embedded value is a term commonly used to refer to an economic valuation technique that has been in widespread use in the insurance industry for some time. An embedded value is an estimate of the economic value of a company, excluding the value of any future new business that the company may be expected to write. The embedded value of the business is the aggregate of the shareholder net worth and the present value of future shareholder cash flows from in-force covered business (value of in-force business) less deductions for (i) the cost of guarantees within the business, and (ii) the cost of required capital. It is stated after allowance has been made for aggregate risks in the business. Shareholder net worth comprises those amounts in the long-term business, which are either regarded as required capital or which represent surplus assets within the business. The components of the Directors' estimate of the Waard Group's unaudited estimated EEV, which has been prepared on a market-consistent basis, are as follows:
Directors' estimate of EEV

30 June 2014
(unaudited)


 million
Net worth

79.7
Value in-force 

12.3



EEV

92.0
EEV assumptions
The Directors have estimated the unaudited market-consistent EEV of the Waard Group as at 30 June 2014 based on projections of surplus which were derived from the actuarial systems of the Waard Group and using a methodology which is consistent with that used by Chesnara.
Solvency
As at 31 December 2013, the insurance businesses of the Waard Group were significantly over-capitalised: Waard Leven, HW Leven and Waard Schade held a capital surplus over regulatory minimum requirements of 46.6 million, with solvency ratios of 655% (Waard Leven together with its subsidiary HW Leven), 392% and 304%, respectively. This gives the Waard Group the opportunity to provide Chesnara with an immediately attractive dividend stream without compromising the protection that a strong solvency position gives to policyholders. The minimum solvency position (under Solvency II) has been agreed in principle with DNB.
Capital resources and solvency position by entity ( million)
as at 31 December 2013
Waard Leven*
HW Leven
Waard Schade
Tadas
Capital resources (Dutch regulatory basis)
49.1
14.5
7.6
13.3
Capital requirements
7.5
3.7
2.5
0.8
Excess
41.6
10.8
5.1
12.5
Solvency ratio
655%
392%
304%
1,563%
*includes HW Leven





In the financial year ended 31 December 2013, the Waard Group reported a profit before tax of 8.3 million on an unaudited consolidated IFRS basis. In the six months to 30 June 2014, the Waard Group reported a profit before tax of 3.4 million on an unaudited consolidated IFRS basis. The IFRS results of the Waard Group over the reported three and a half year period have been impacted by mis-selling and charging issues, which have affected the entire Dutch life assurance market. In particular, the loss in the financial year ended 31 December 2011 was driven by the establishment of a 22 million policyholder compensation provision in relation to unit-linked products. Whilst claims made by policyholders have been covered by this provision, the subsequent results have also been impacted by the revised charging structures on the products, which involve a reduction in the charges that are passed on to policyholders and therefore a reduction in the profits of the Waard Group. The results over the three and a half year period have also been impacted by movements in fair values of shareholder investments. The underlying profits of the Waard Group are largely driven by the emergence of mortality surpluses. These will reduce over time as the policies run off. The underlying annual cost base of the Group has decreased over the period from approximately 4.2 million to 3.7 million. As at 30 June 2014, the Waard Group had gross assets of 291.4million.
Certain unaudited financial information on the Waard Group covering the three years and six months to 30 June 2014, including notes,can be found in Appendix I of this announcement.
Summary information on Chesnara
Chesnara plc ("Chesnara") is primarily a life and pensions closed book consolidator, and is the owner of Countrywide Assured plc ("CA plc"), Protection Life Company Limited ("PL") and Movestic Livfrskringar AB ("Movestic"). Chesnara has been listed on the premium segment of the London Stock Exchange's Main Market since May 2004. 
The Company has a track record of identifying, completing and integrating acquisitions, as well as delivering growth and strong shareholder returns. During the period from 1 January 2009 to 31 December 2013, it generated a Total Shareholder Return of 261%. The Company currently has a strong financial position. As at 30 June 2014 the Company had a Group regulatory surplus of 74.0 million and a group solvency ratio of 192%. The Company operates according to five core strategic objectives, namely:
1) maximise value from the in-force book;
2) enhance value through new business;
3) acquire life and pensions businesses;
4) maintain a strong solvency position; and
5) adopt good regulatory practices at all times.
Chesnara's current acquisition strategy is to target UK and Western European opportunities which have an acquisition value ranging from 50 million to 200 million and are earnings accretive for the Company's shareholders. Opportunities are assessed on whether their business operations and risk profile are complementary to the Company. The impact of potential acquisitions on the quality and longevity of Chesnara's earnings is estimated according to their capital release potential, operational and tax synergies and value in-force unwind. 
The Acquisition Agreement
Pursuant to the Acquisition Agreement, dated 3 December 2014 (the "Signing Date"), a wholly-owned subsidiary of Chesnara plc has agreed to purchase the entire issued share capital (either directly or indirectly) of the Waard Group from the Sellers for a base purchase price of 66.8million (approximately 54.3million) plus an amount of deferred performance related consideration due to the Sellers in relation to the performance of the Waard Group as from 1 January 2014 (the "Purchase Price"). As at 30 November 2014, this amounted to 67.8 million (approximately 55.1million). On the date of Completion, the Purchase Price less any leakage (as specified in the Acquisition Agreement) from 1 January 2014 until Completion will be paid in cash. Completion is conditional upon, inter alia, the receipt of regulatory approval, which includes a declaration of no objection, from DNB, the Dutch regulator, which is expected during the first quarter of 2015, and upon the Companynot having notified the Sellers by 6.00 p.m. (CET) on 3 December 2014 that the Company has not obtained sufficient funding under the Placing to enable the Acquisition to be made. In addition, Completion is also subject to certain conditions which are usual for an acquisition of this nature. The Acquisition is a class 2 transaction for the purposes of the Listing Rules and as such is not conditional upon approval by Chesnara's shareholders at a general meeting.
The Acquisition Agreement contains customary warranties for an acquisition of this type which will be given as at the Signing Date and at Completion. Each of the Sellers has also given customary undertakings in relation to the conduct of the business of the Waard Group between the Signing Date and Completion and also certain restrictive covenants, for a period of two years from Completion, in relation to soliciting employees and customers of the Waard Group. 
The Sellers will indemnify the Company against any losses, damages, proceedings and other liabilities it is subjected to as a result of the on-going class action which arose due to certain actions and omissions of DSB Bank constituting violations of its "duty of care" in relation to policies manufactured by the Waard Group. In addition, certain unit-linked agreements written by HW Leven were found to lack transparency in relation to product features and costs, and as a result the Waard Group has been confronted with numerous complaints and proceedings. A compensation scheme has been put in place to cover current and future costs of customer redress. HW Leven has a provision as at 30 June 2014 of 8.9 million which will remain and be fully funded. The Sellers have agreed to make up any shortfall up to a further 15 million (subject to certain adjustments) to cover any additional policyholder claims. Further, the Acquisition Agreement states that should the provision not be required, and is consequently released, then HW Leven will repay the Sellers on a net asset neutral basis for the excess funding which backs the released element of the unutilised provision.
The Acquisition Agreement may only be terminated by (a) either party, if a declaration of no objection from DNB has not been obtained by 30 June 2015; or (b) the Company if there is a material breach by any of the Sellers of either (i) the warranties given by the Sellers; or (ii) the pre-Completion obligations of the Sellers which constitute a material adverse effect on the Waard Group which has or is likely to have an adverse impact of more than approximately 3.4 million on the Waard Group (save for any such material breach resulting from changes in the UK, Dutch or global economy, acts of God or as a result of law).
Save in the case of fraud and fraudulent concealment, the Sellers will be liable in respect of claims under the warranties for claims which, in aggregate, exceed 350,000, except for any claims arising from or in connection with a breach of fundamental warranty. Individual claims of less than 25,000 will not be taken into account when determining whether the threshold of 350,000 has been exceeded. The maximum aggregate liability of the Sellers arising from or in connection with the warranties, with the exception of any of the tax warranties and fundamental warranties shall not exceed 25 million, and any other claim under the Acquisition Agreement shall not exceed the Purchase Price. Any claim by the Company in respect of either breach of the warranties, the specific indemnities or the tax deed must be made by the Company by written notice to the relevant Seller as soon as possible, and any such claim shall be barred or unenforceable unless such claim is notified on or before 31 December 2017. 
Recent court settlement agreement
On 4 November 2014, the Amsterdam Court of Appeal (the "Court") declared a Collective Settlement Agreement generally binding to the (former) customers of DSB Bank, including those who are also policyholders of an insurance policy issued by one of the insurance subsidiaries within the Waard Group. It is noted that the Collective Settlement Agreement is not binding on customers who explicitly 'opt-out' within six months following the announcement of the court ruling in the newspapers, which has been done on 15 November 2014. This court ruling means a substantial limitation of further claims against the Waard Group and brings a high degree of certainty to the likely run-off trajectory of the insurance subsidiaries. The financial effects of the Collective Settlement Agreement and 'opt-out' period have been taken into account in the calculation of the provisions within the insurance companies and the way in which the Acquisition has been structured.
Effect of the Acquisition
The Directors anticipate that each of the Waard Group companies, in addition to the surplus capital that they hold, will be modestly cash generative on an on-going basis. The potential for phased, orderly capital extraction is a key attraction of the Waard Group. 
The consideration of 67.8 million (55.1 million) (excluding deferred performance related consideration post 30 November 2014) for the Acquisition represents a 26.3% discount to Chesnara's estimate of the Waard Group's EEV of 92.0 million (74.8 million) as at 30 June 2014. Further, it represents a discount of 14.9% to the Waard Group's IFRS net asset value. The Acquisition and Placing are anticipated to increase Chesnara's EEV by approximately 12.5% or 50.6 million (the Company's EEV as at 30 September 2014 was 405.7 million), with an immediate EEV gain on Completion of approximately 16.0 million. As a result of the Acquisition and the Placing to raise approximately 35 million, the EEV per share of the Enlarged Group is expected to be enhanced on Completion by approximately 8 pence, or 2.2%. Even if the maximum amount of deferred performance consideration became payable, the EEV per share enhancement would still be approximately 7 pence or 2.1% per share.
Embedded value per share is calculated by dividing the embedded value by the number of shares in issue. However this does not mean that the future embedded value per share of Chesnara will necessarily be lower, match or exceed its historical embedded value per share. The Directors believe that the Acquisition will be accretive to the cash flows of the Group and hence will enhance future cash flows available for distribution to shareholders.
Dividend Policy
The Group is committed to offering its Shareholders an attractive income stream arising from the profits of its life-assurance businesses. The Group has had a progressive dividend policy which it aims to continue to pursue. In its interim results, which were announced on 29 August 2014, the Group declared an interim dividend of 6.42 pence per share, an increase of 2.7% over the dividend of 6.25p declared for the comparable period in 2013. The interim dividend was paid on 15 October 2014.
Proposed corporate governance structure of the Waard Group
Chesnara, via a newly Dutch-incorporated holding company (the "HoldCo"), Chesnara Holdings B.V., will directly hold 100% of the ordinary shares of Waard Leven, Waard Schade and Tadas, and indirectly hold 100% of the ordinary shares of HW Leven. The HoldCo's governance will consist of a one-tier board of directors with executive and non-executive members. The Waard Group will be governed by a two-tier board which mirrors the current structure, consisting of: a supervisory board formed by the Waard Group's present supervisory board supplemented by an extra member from Chesnara; and the present board of the Waard Group. The Chesnara governance structure will be revised to ensure effective and consistent oversight across the UK, Swedish and Dutch operations. This will be achieved by way of changes to the organisation structure and also through relatively modest strengthening of the management team.
Risk Factors
Investors and prospective investors should consider carefully whether an investment in Chesnara is suitable for them in light of the information set out in this announcement.The risks and uncertainties summarised below may not be the only ones facing the Group, or following the Acquisition, the Enlarged Group. Additional risks and uncertainties not currently known to the Group or that the Group deems immaterial may also impair its business operations. The Group's business, prospects, financial condition and results of operations could be materially and adversely affected by any of these risks.
Risks relating to the Acquisition
 Completion of the Acquisition remains conditional on the approval, which includes a declaration of no objection, from DNB. Failure to complete the Acquisition may materially adversely affect the trading price of Chesnara's ordinary shares.
 It is possible that, between the execution of the Acquisition Agreement and Completion, there may be an adverse change in the financial condition of the Waard Group. If such change does not give rise to a right of the Company to terminate the Acquisition Agreement, the value of the Waard Group may be less than the consideration paid which could reduce the net assets of the Enlarged Group.
 The Enlarged Group may fail to realise the benefits of the Acquisition.
Risks relating to the Group, the Waard Group and, following the Acquisition, the Enlarged Group
 The primary insurance activity carried out by Chesnara and the Waard Group comprises the assumption of the risk of loss from persons that are directly subject to risk which in general relate to life, accident, health and financial perils that may arise from an insurable event. As such, the Group, and following the Acquisition the Enlarged Group, is exposed to the uncertainty surrounding the timing and severity of claims under related insurance contracts.
 The Group is and, following the Acquisition, the Enlarged Group will be, exposed to a range of financial risks through its insurance contracts, financial assets, including assets representing shareholder assets, financial liabilities, including investment contracts and borrowings, and its reinsurance assets: accordingly the key financial risk is that, in the long-term, its investment proceeds are not sufficient to fund the obligations arising from its insurance and investment contracts.
 Persistency risk is the risk that the policyholder cancels the contract or discontinues paying new premiums into the contract, thereby exposing the Group and the Enlarged Group to losses resulting from adverse movements in actual experience compared to that expected or from lower future levels of management fees.
 The effective management of expenses is critical to the Group and the Enlarged Group. Any significant variation in actual experience from that expected in product pricing will expose the Group, and following the Acquisition, the Enlarged Group to losses.
 Failure by the Group, and following the Acquisition the Enlarged Group, to comply with the relevant regulatory requirements applicable to its business could materially adversely affect the financial performance and the reputation of the Group and the Enlarged Group.
 The final form of the EU Commission's wide-ranging review in relation to solvency margins and reserves (the project known as "Solvency II") could have an impact on the reported results for the insurance businesses within the Group/Enlarged Group and hence any return on investment in such businesses, and could, among other things, result in the Group and the Enlarged Group being required to reserve additional capital in respect of its liabilities.
 A significant regulatory action against the Group and the Enlarged Group could have a material adverse effect on its business, results of operations and/or financial condition.
 Whilst the Group has and the Enlarged Group will have in place disaster recovery plans covering current critical business information systems requirements, interruptions (e.g. due to accidental or malicious damage) could have a material adverse effect on the Group and the Enlarged Group's operations, results of operations and/or financial condition.
 The Group and the Enlarged Group's continued success depends on its ability to attract, motivate and retain highly skilled managers and finance, actuarial, compliance, IT and customer services personnel. The loss of key personnel from the business may have a material adverse effect on the Group and the Enlarged Group's operations, results of operations and/or financial condition.
 Although Chesnara is confident that its operating systems and controls are robust, there can be no assurance that all historical operational errors have been identified, nor that operational errors will not arise in the future. The identification of previously unidentified historical errors or new operational errors may result in adverse publicity and may have a material adverse effect on the Group's and, following the Acquisition the Enlarged Group's, operations, results of operations and/or financial condition.
Additional risks relating to the Waard Group
 Both DSB Bank and DSB entered into bankruptcy proceedings in October 2009 and are currently in the process of being wound down. Although Chesnara is confident that full settlement (at book value) of all the existing amounts owed to the Waard Group by the Sellers will occur prior to Completion, there can be no guarantee that the Waard Group or the Enlarged Group will be able to recover part or all of these outstanding liabilities.
 Before and during its bankruptcy proceedings, DSB Bank was confronted with a large number of claims and actions from customers claiming to have suffered, or to potentially suffer, damage due to certain actions and omissions of DSB Bank constituting violations of its "duty of care" and/or the giving of improper advice in relation to policies written by the Waard Group. Whilst technically the liability resides with DSB Bank as provider of the advice, similar claims could also be instigated against the Waard Group potentially. The risk of claims against DSB Bank and the Waard Group has been substantially mitigated since the Court declared the Collective Settlement Agreement generally binding on 4 November 2014. Pursuant to the Collective Settlement Agreement, DSB Bank and the Waard Group, amongst others, are granted final discharge by all former customers of DSB Bank, except by those who explicitly chose to 'opt out'. Although this "discharge clause" covers most of the potential claims and the Sellers have agreed to an indemnity in this regard, there can be no absolute certainty that no potential claims against the Waard Group exist and the Enlarged Group may suffer a loss as a result.
 Certain unit-linked agreements written by HW Leven were found to lack transparency in relation to product features and costs, and as a result the Waard Group has been confronted with numerous complaints and proceedings. A compensation scheme has been put in place to cover current and future costs of customer redress. HW Leven has a provision of 8.9m as at 30 June 2014, and in addition the Sellers have agreed to make up any shortfall up to a further 15 million to cover any additional policyholder claims. Although Chesnara believe that this represents the maximum amount expected to be payable to policyholders, there can be no certainty as to the overall exposure of HW Leven and, following Completion, the Enlarged Group, to potential claims, and there can be no certainty as to the validity of the individual claims. HW Leven / the Enlarged Group may suffer losses as a result. 
 Although no claims have been brought by customers on other products manufactured by the Waard Group or specific risks identified by Chesnara, the general scrutiny of the Waard Group heightens the potential exposure. Therefore, there can be no certainty that the Waard Group or, following Completion, the Enlarged Group, will not be the subject of a legal action against it in relation to one or several of the Waard Group's other products. The Enlarged Group may suffer losses as a result.
 Both the purchase price and future capital extractions from the Waard Group are sensitive to movements in the British Pound to Euro exchange rate. Although Chesnara has put in place a currency option to give certainty of the purchase price, there can be no certainty that this arrangement will remain adequate.
Risks relating to Chesnara
 A counterparty default risk exists on cash deposits. Chesnara manages this risk through the maintenance of a well-diversified portfolio and through setting limits on exposure to individual counterparties.
 Exposure to exchange rate risk exists for the Company in connection with its Swedish subsidiary, Movestic, due to the presentation of Movestic's results in the consolidated financial statements in pounds sterling. Additionally, Chesnara's intention is to continue to finance the development of Movestic through capital contributions made by way of the transfer of Swedish Krona cash assets. However, Movestic is currently self-funding, as illustrated by the fact that no capital injection has been required in the past two years.
Risks relating to the ordinary shares
 The value of the Ordinary Shares could go down as well as up and may not always reflect the underlying asset value or prospects of the Group or (if applicable) the Enlarged Group.
 The ability of Chesnara to pay dividends on the Ordinary Shares is a function of its profitability, primarily linked to the performance of the Enlarged Group's investments. Chesnara can give no assurances that it will be able to continue with its undertaking to pursue an attractive dividend policy in the future.


Appendix I: Financial information on the Waard Group
Unaudited financial information for the six months ended 30 June 2014 and 2013, and for the years ended 31 December 2013, 2012 and 2011
Waard Group
Consolidated Statement of Comprehensive Income
Note
Six months ended
30 June
Year ended 31 December
2014
2013
2013
2012
2011
'000
'000
'000
'000
'000
Insurance premium revenue - Gross
4,153
5,190
9,976
12,019
12,744
Insurance premium revenue - Refunds
(809)
(1,919)
(3,217)
(2,644)
(2,110)
Insurance premium ceded to reinsurers
(1,060)
(1,054)
(2,120)
(1,717)
(2,415)
Net insurance premium revenue
1
2,284
2,217
4,639
7,658
8,219
Fee and commission income
280
310
1,041
1,024
385
Net investment return
2
2,959
6,692
20,528
16,208
779
Total revenue (net of reinsurance payable)
5,523
9,219
26,208
24,890
9,383
Net insurance contract claims and benefits
3
(2,031)
(5,960)
(16,386)
(9,574)
4,698
Fees, commission and other acquisition costs
(190)
112
(760)
(2,409)
(2,060)
Administrative expenses
4
(1,829)
(1,849)
(3,669)
(4,549)
(4,188)
Other operating expenses
(146)
(10)
(170)
(33)
(216)
Other income
5
84
-
271
2,291
249
Total expenses
(4,112)
(7,707)
(20,714)
(14,274)
(1,517)
Profit/(loss) before tax, non-recurring items and fair value movements
1,411
1,512
5,494
10,616
7,866
Non-recurring items
6
214
671
1,363
2,978
(17,734)
Movement in fair value of shareholder financial investments
1,800
342
1,454
8,533
(2,148)
Profit/(loss) before tax
3,425
2,525
8,311
22,127
(12,016)
Tax
(856)
(359)
(1,992)
(5,940)
3,446
Profit/(loss) for the period
2,569
2,166
6,319
16,187
(8,570)
Basis of preparation
The unaudited, summarised financial information has been prepared using accounting policies which are in accordance with International Financial Reporting Standards ("IFRS").
Notes:
Note 1 - Net insurance premium revenue
Insurance premiums predominantly related to regular premium business. There has been no material new business written since the bankruptcy of the DSB estate, and therefore, as policies lapse, this results in insurance premiums reducing over the years. 
Premium refunds are premiums paid back to the policyholder for policy lapses on single premium products, where the whole premium is paid up front. The policyholder has an option to cancel every fifth anniversary and upon cancellation receives a refund on a portion of the premiums paid. As the business is written in tranches, this balance is volatile and fluctuates depending on when the policies were sold. 
Note 2 - Net investment return
Net investment returns have fluctuated over the years and is mainly dependent on market conditions. In 2011 the business reported small investment returns largely as a result of unrealised losses on certain structured investments. Since then market conditions have generally improved, resulting in more positive investment returns. Investment returns in the first half of 2014 have been suppressed by the repayment of loans to other DSB group companies that were made in 2013, which yielded 4% return.
Note 3 - Net insurance contract claims and benefits
Net insurance claims and benefits can be a function of the net investment return, especially in relation to unit-linked policies. If net investment return increases, the value of the policyholders' assets increase and the resultant liability also increases. The balance was in credit in 2011 mainly as a result of a decrease in insurance contract provisions due to unfavourable investment return. 
Note 4 - Administrative expenses
Administrative expenses have remained broadly flat over the years. In 2013 the balance has decreased largely as a result of a reduction in personnel costs (due to a decrease in number of FTE's and retention bonuses).
Note 5 - Other operating income
The balance has increased to 2.3m in 2012 mainly as a result of the discount effect on the DSB receivables balance due to favourable interest rates.
Consolidated Statement of Comprehensive Income - Non-recurring Items*


Six months ended
30 June

Year ended 31 December



2014

2013

2013

2012

2011



'000

'000

'000

'000

'000

HW - Provision for compensation

-

-

-

-

(22,000)
1
WL - Release of loan to DSB 

-

-

-

1,547

3,276
2
Tadas - Release of provision for claw-back commission

214

671

1,363

1,432

990
3
Total

214

671

1,363

2,979

(17,734)

*This refers to non-IFRS financial information
Notes:
Note 1: HW Leven - Provision for compensation and release of provision for compensation
During 2011, an agreement was concluded with respect to a compensation scheme to policyholders, resulting in a one-off charge of 22m being recorded.
Note 2: Waard Leven - release of loan to DSB 
This relates to the financial impact of writing off a loan payable to DSB which was triggered by the bankruptcy proceedings. 
Note 3: Tadas - Release of provision for claw-back commission
The Tadas balance sheet includes a provision for liabilities in relation to claw-back commissions. Each reporting period, the provision is reassessed, with the reduction being reported in the income statement. Given the size of the provision reduction over time this has been reported separately.
Aggregated balance sheet
As at
30 June
As at 31 December
2014
2013
2012
2011
'000
'000
'000
'000
Intangible / fixed assets
158
196
330
501
Financial investments
163,166
182,259
190,272
200,269
Cash
93,201
85,154
82,436
53,827
Other current assets
34,916
37,165
36,513
41,900
Total assets
291,441
304,774
309,551
296,497
Bank overdrafts
10,973
13,089
21,125
26,494
Insurance contract provisions
187,560
201,232
205,002
204,241
Income taxes
6,423
5,686
4,177
1,893
Other payables
6,779
7,630
8,429
9,238
Total liabilities
211,735
227,637
238,733
241,866
Net assets
79,706
77,137
70,818
54,631
APPENDIX II: Terms and Conditions of the Placing
IMPORTANT INFORMATION FOR PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY CANACCORD GENUITY LIMITED ("CANACCORD GENUITY") AND/OR PANMURE GORDON (UK) LIMITED ("PANMURE GORDON" AND, TOGETHER WITH CANACCORD GENUITY, THE "PLACING AGENTS") WHO ARE "QUALIFIED INVESTORS", AS DEFINED IN ARTICLE 2.1(E) OF DIRECTIVE 2003/71/EC (THE "PROSPECTIVE DIRECTIVE") AND WHO ARE "INVESTMENT PROFESSIONALS" FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "FPO") OR "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" FALLING WITHIN ARTICLE 49(2) OF THE FPO OR TO PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS DOCUMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.
DISTRIBUTION OF THIS DOCUMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED OR PROHIBITED BY LAW. PERSONS DISTRIBUTING THIS DOCUMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.
THE ORDINARY SHARES THAT ARE THE SUBJECT OF THE PLACING (THE "PLACING SHARES") ARE NOT BEING OFFERED OR SOLD TO ANY PERSON IN THE EUROPEAN UNION, OTHER THAN TO "QUALIFIED INVESTORS" AS DEFINED IN ARTICLE 2.1(E) OF THE PROSPECTUS DIRECTIVE, WHICH INCLUDES LEGAL ENTITIES WHICH ARE REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (THE "FCA") OR ENTITIES WHICH ARE NOT SO REGULATED WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES.
The Placing Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the Placing Shares is being made in the United States. The Placing (as defined below) is being made outside the United States in offshore transactions (as defined in Regulation S under the Securities Act ("Regulation S")) meeting the requirements of Regulation S under the Securities Act. Persons receiving this document (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing.
This document does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan, the Republic of South Africa or any other jurisdiction in which such offer or solicitation is or may be unlawful (a "Prohibited Jurisdiction"). This document and the information contained herein are not for publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction. No action has been taken by the Company, Canaccord Genuity, Panmure Gordon or any of their respective Affiliates (as defined below) that would permit an offer of the Placing Shares or possession or distribution of this document or any other publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons receiving this document are required to inform themselves about and to observe any such restrictions.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this document should seek appropriate advice before taking any action.
Any indication in this document of the price at which the ordinary shares of the Company have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this document is intended to be a profit forecast and no statement in this document should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company. Canaccord Genuity, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for Chesnara plc and for no one else in connection with the Placing and will not be responsible to anyone other than Chesnara plc for providing the protections afforded to clients of Canaccord Genuity or for affording advice in relation to the Placing, or any other matters referred to herein.
Panmure Gordon, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for Chesnara plc and for no one else in connection with the Placing and will not be responsible to anyone other than Chesnara plc for providing the protections afforded to clients of Panmure Gordon or for affording advice in relation to the Placing, or any other matters referred to herein.
By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making an oral offer to take up Placing Shares is deemed to have read and understood this document in its entirety (including its Appendices) and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained herein.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, REGULATORY, TAX, BUSINESS AND RELATED ASPECTS OF A PURCHASE OF PLACING SHARES.
Details of the Placing Agreement and the Placing Shares
The Company has entered into a placing agreement (the "Placing Agreement") with Canaccord Genuity and Panmure Gordon as placing agents (the "Placing Agents" and each a "Placing Agent"), under which Canaccord Genuity and Panmure Gordon have, subject to the terms set out therein, agreed to use reasonable endeavours, as agents of the Company, to procure Placees for the Placing Shares (the "Placing").
In accordance with the terms of the Placing Agreement and a subscription and transfer agreement between the Company, Charlotte George Limited and the Placing Agents (the "Subscription and Transfer Agreement") and, subject to execution of terms of sale setting out the total number of Placing Shares and the final Placing Price following completion of the Bookbuilding Process (as defined below), if Placees procured by the Placing Agents fail to take up their allocation of Placing Shares at the Placing Price, the Placing Agents agree severally, and not jointly and severally, to subscribe for or acquire such Placing Shares themselves at the Placing Price on and subject to the terms set out in the Placing Agreement.
The Placing is conditional upon, inter alia, Admission becoming effective and on the Placing Agreement becoming unconditional and not being terminated in accordance with its terms. The Placing is also conditional upon the conditional agreement pursuant to which the Acquisition is to be effected (the "Acquisition Agreement") having been duly executed and not having lapsed or been terminated or rescinded and no condition thereto having become incapable of satisfaction, in each case prior to Admission, but the Placing is not otherwise conditional on Completion.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with each other.
The Placing Shares will be issued free of any encumbrance, lien or other security interest.
Application for listing and admission to trading
Application will be made to the FCA for admission of the Placing Shares to the premium segment of the Official List maintained by the FCA in accordance with section 74(1) of the Financial Services and Markets Act 2000 ("FSMA") for the purposes of part 4A of FSMA and to the London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the Placing Shares on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will become effective and that dealings will commence on 5December2014.
Bookbuild
Commencing today, the Placing Agents will be conducting an accelerated bookbuilding process (the "BookbuildingProcess") to determine demand for participation in the Placing by Placees. This document gives details of the terms and conditions of, and the mechanics of participation in, the Placing.
Participation in, and principal terms of, the Bookbuilding Process
Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by either of the Placing Agents. Each of the Placing Agents and their respective Affiliates is entitled to participate as a Placee in the Bookbuilding Process.
The Bookbuilding Process will establish a single price (the "Placing Price") payable to the Placing Agents by all Placees. Any discount to the market price of the Placing Shares of the Company will be determined in accordance with the Listing Rules as published by the UKLA pursuant to Part IV of FSMA.
The Bookbuilding Process is expected to close not later than 4.30 p.m. London time on 3 December 2014, but may be closed earlier at the sole discretion of the Placing Agents. A further announcement will be made following the close of the Bookbuilding Process detailing the Placing Price at which the Placing Shares are being placed (the "Pricing Announcement"). The Placing Agents may, in their sole discretion, accept bids that are received after the Bookbuilding Process has closed.
A bid in the Bookbuilding Process will be made on the terms and conditions in this document and will not be capable of variation or revocation after the close of the Bookbuilding Process.
A Placee who wishes to participate in the Bookbuilding Process should communicate its bid by telephone to the usual sales contact at Canaccord Genuity or Panmure Gordon. If successful, the relevant Placing Agent will re-contact and confirm orally to Placees following the close of the Bookbuilding Process the size of their respective allocations and a trade confirmation will be dispatched as soon as possible thereafter. The relevant Placing Agent's oral confirmation of the size of allocations and each Placee's oral commitments to accept the same will constitute an irrevocable legally binding agreement in favour of the Company and the relevant Placing Agent pursuant to which each such Placee will be required to accept the number of Placing Shares allocated to the Placee at the Placing Price set out in the Pricing Announcement and otherwise on the terms and subject to the conditions set out herein. 
The Placing Agents reserve the right to scale back the number of Placing Shares to be subscribed by any Placee in the event of an oversubscription under the Placing. The Placing Agents also reserve the right not to accept offers to subscribe for Placing Shares or to accept such offers in part rather than in whole. The acceptance of offers shall be at the absolute discretion of each of the Placing Agents. The Placing Agents shall be entitled to effect the Placing by such alternative method to the Bookbuilding Process as they shall in their absolute discretion determine. To the fullest extent permissible by law, neither Canaccord Genuity, nor Panmure Gordon, nor any holding company thereof, nor any subsidiary thereof, nor any subsidiary of any such holding company, nor any branch, affiliate or associated undertaking of any such company nor any of their respective directors, officers and employees (each an "Affiliate") nor any person acting on their behalf shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf shall have any liability (including, to the extent legally permissible, any fiduciary duties), in respect of its conduct of the Bookbuilding Process or of such alternative method of effecting the Placing as it may determine. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.
Each Placee's obligations will be owed to the Company and to the Placing Agents. The allotment and issue of Placing Shares to Placees by the Company will be in consideration for the transfer to the Company of certain shares in a Jersey-incorporated subsidiary of the Company ("Newco") by the Placing Agents. Following the oral confirmation referred to above, each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the Company and the relevant Placing Agent as agent of the Company, to pay to the relevant Placing Agent (or as such Placing Agent may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to acquire. The Placing Agents will procure the allotment of the Placing Shares to each Placee by effecting the necessary transfer to the Company of shares in Newco following each Placee's payment to the relevant Placing Agent of such amount.
All obligations of the Placing Agents under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing".
Conditions of the Placing
The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.
The obligations of each of the Placing Agents under the Placing Agreement are conditional, inter alia, on:
1. Terms of sale setting out, inter alia, the Placing Price and the number of Placing Shares (the "Terms of Sale") having been executed by the Company and the Placing Agents;
2. Admission becoming effective in accordance with paragraph 2.1 of the Admission and Disclosure Standards produced by the London Stock Exchange by no later than 8.00 a.m. on the date specified as the "Closing Date" in the Terms of Sale (the "Closing Date");
3. the Company complying with its obligations under the Placing Agreement to the extent that the same fall to be performed prior to Admission save to the extent that non-compliance is not in the good faith opinion of the Placing Agents, material in the context of the Placing, and there having occurred no breach of the warranties contained within the Placing Agreement which is material in the context of the Placing;
4. the Acquisition Agreement having been duly executed and not having lapsed or been terminated or rescinded and no condition thereto having become incapable of satisfaction, in each case prior to Admission;
5. the Placing Agreement becoming unconditional in all other respects and not having been terminated in accordance with its terms; and
6. the Company allotting the Placing Shares subject only to Admission in accordance with the terms of the Placing Agreement.
If (a) the conditions are not fulfilled (or to the extent permitted under the Placing Agreement waived by the Placing Agents), or (b) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and each Placee's rights and obligations hereunder shall cease and determine at such time and no claim may be made by a Placee in respect thereof. Neither of the Placing Agents, nor the Company, nor any of their respective Affiliates shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition in the Placing Agreement or in respect of the Placing generally.
By participating in the Placing, each Placee agrees that its rights and obligations hereunder terminate only in the circumstances described above and under "Right to terminate under the Placing Agreement" below, and will not be capable of rescission or termination by the Placee.
Right to terminate under the Placing Agreement
Either of the Placing Agents may, in its absolute discretion, at any time before Admission, terminate the Placing Agreement by giving notice to the Company if, inter alia:
1. there has been a breach of any warranty or undertaking in the Placing Agreement which is material in the context of the Placing, Admission or the obligations of the Placing Agents pursuant to the Placing Agreement or an event occurs or is likely to occur which, if the warranties and undertakings in the Placing Agreement were repeated immediately after that event, would give rise to a breach of them which is material in the context of the Placing, Admission or the issue of the Placing Shares;
2. there has been a change in or a development involving a prospective change in or affecting the condition (financial or otherwise), prospects, earnings, results of operations or business affairs of the Company or any group company which makes it inadvisable or impractical to proceed with the Placing or the delivery of the Placing Shares;
3. there has been: (i) any change or development involving a prospective change in the financial, political (including an outbreak or escalation of hostilities or act of terrorism), regulatory, economic or market conditions or currency exchange rates or exchange controls in the United Kingdom or elsewhere; (ii) any change or development involving a prospective change in taxation adversely affecting the Company or the issue or transfer of shares of the Newco or the Company (including the Placing Shares); or (iii) any other calamity or crisis, and in each case, which would be likely to prejudice dealings in the ordinary shares of the Company (including the Placing Shares); 
4. trading in any securities of the Company has been suspended or materially limited by the London Stock Exchange, or if trading generally on the London Stock Exchange has been suspended or materially limited, or minimum or maximum prices for trading in securities have been fixed, or maximum ranges for prices have been required, by the London Stock Exchange or by such system or by order of any governmental or regulatory authority; 
5. a general moratorium on commercial banking activities has been declared by the relevant authorities in the United Kingdom or if there has occurred a material disruption in commercial banking or securities settlement or clearance services in the United Kingdom; or
6. the Company has failed to comply with any of its obligations under the Placing Agreement in any respect which is material in the context of the Placing, Admission or the issue of the Placing Shares.
By participating in the Placing, each Placee agrees with the Placing Agents that the exercise by the Placing Agents of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of the Placing Agents and that neither of the Placing Agents need make any reference to the Placees in this regard and that, to the fullest extent permitted by law, neither of the Placing Agents shall have any liability whatsoever to the Placees in connection with any such exercise.
No Prospectus
No offering document or prospectus has been or will be prepared in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this document and any information previously published by or on behalf of the Company by notification to a Regulatory Information Service (as defined in the Listing Rules). Each Placee, by accepting a participation in the Placing, agrees that the content of this document is exclusively the responsibility of the Company and confirms to the Placing Agents and the Company that it has neither received nor relied on any information, representation, warranty or statement made by or on behalf of the Placing Agents (other than the amount of the relevant Placing participation in the oral confirmation given to Placees and the trade confirmation referred to below), any of their respective Affiliates, any persons acting on its behalf or the Company and neither of the Placing Agents nor any of their respective Affiliates, nor any persons acting on their behalf, nor the Company will be liable for the decision of any Placee to participate in the Placing based on any other information, representation, warranty or statement which the Placee may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons). By participating in the Placing, each Placee acknowledges to and agrees with the Placing Agents for itself and as agent for the Company that, except in relation to the information contained in this document, it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares (ISIN GB00B00FPT80) following Admission will take place within the CREST system, using the DVP mechanism, subject to certain exceptions. The Placing Agents reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means that they deem necessary, if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this document or would not be consistent with the regulatory requirements in the Placee's jurisdiction. 
Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation stating the number of Placing Shares allocated to it, the Placing Price, the aggregate amount owed by such Placee to the relevant Placing Agent and settlement instructions. Placees procured by Canaccord Genuity should settle against CREST ID: 288 and Placees procured by Panmure Gordon should settle against CREST ID: 83801; Member ID: 2013902. It is expected that such trade confirmation will be despatched on 3 December 2014 and that this will also be the trade date. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which it has in place with the relevant Placing Agent.
It is expected that settlement will be on 5December2014 on a DVP basis in accordance with the instructions set out in the trade confirmation unless otherwise notified by the Placing Agents.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of 2 percentage points above the base rate of Barclays Bank Plc.
Each Placee is deemed to agree that if it does not comply with these obligations, the Placing Agents may sell any or all of the Placing Shares allocated to the Placee on such Placee's behalf and retain from the proceeds, for the relevant Placing Agent's own account and profit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The Placee will, however, remain liable for any shortfall below the aggregate amount owed by such Placee and it may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent, the Placee should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in the Placee's name or that of its nominee or in the name of any person for whom the Placee is contracting as agent or that of a nominee for such person, such Placing Shares will, subject as provided below, be so registered free from any liability to PTM levy, stamp duty or stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax is payable in respect of the issue of the Placing Shares, neither the Placing Agents nor the Company shall be responsible for the payment thereof. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations and Warranties
By participating in the Placing, each Placee (and any person acting on such Placee's behalf):
1. represents and warrants that it has read and understood this document in its entirety (including the Appendices) and acknowledges that its participation in the Placing will be governed by the terms of this document (including the Appendices);
2. acknowledges that no prospectus or offering document has been prepared in connection with the placing of the Placing Shares;
3. acknowledges that the Placing is conditional on the Acquisition Agreement having been duly executed and not having lapsed or been terminated or rescinded and no condition thereto having become incapable of satisfaction, in each case prior to Admission, but that the Placing is not otherwise conditional on Completion;
4. agrees to indemnify on an after-tax basis and hold harmless each of the Company, the Placing Agents, their respective Affiliates and any person acting on their behalf from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this document and further agrees that the provisions of this document shall survive after completion of the Placing;
5. acknowledges that the new Placing Shares of the Company will be admitted to the Official List of the UK Listing Authority, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the London Stock Exchange/FCA (collectively, the "Exchange Information") and that the Placee is able to obtain or access the Exchange Information without undue difficulty; 
6. acknowledges that neither of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf has provided, and will not provide it with any material or information regarding the Placing Shares or the Company; nor has it requested either of the Placing Agents, nor any of their respective Affiliates nor or any person acting on their behalf to provide it with any such material or information;
7. acknowledges that the content of this document is exclusively the responsibility of the Company and that neither of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf will be responsible for or shall have any liability for any information, representation or statement relating to the Company contained in this document or any information previously published by or on behalf of the Company and neither of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf will be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this document or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing to subscribe for the Placing Shares is contained in this document and any Exchange Information, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares, and that it has relied on its own investigation with respect to the Placing Shares and the Company in connection with its decision to subscribe for the Placing Shares and acknowledges that it is not relying on any investigation that either of the Placing Agents, any of their respective Affiliates or any person acting on their behalf may have conducted with respect to the Placing Shares or the Company and none of such persons has made any representations to it, express or implied, with respect thereto;
8. acknowledges that it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has had sufficient time to consider and conduct its own investigation with respect to the offer and subscription for the Placing Shares, including the tax, legal and other economic considerations and has relied upon its own examination and due diligence of the Company and its affiliates taken as a whole, and the terms of the Placing, including the merits and risks involved;
9. represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting its invitation to participate in the Placing;
10. acknowledges that it has not relied on any information relating to the Company contained in any research reports prepared by either of the Placing Agents, its respective Affiliates or any person acting on its or any of its respective Affiliates' behalf and understands that (i) none of the Placing Agents, nor any of their respective Affiliates nor any person acting on their behalf has or shall have any liability for public information or any representation; (ii) none of the Placing Agents, nor any of their respective Affiliates, nor any person acting on their behalf has or shall have any liability for any additional information that has otherwise been made available to such Placee, whether at the date of publication, the date of this document or otherwise; and that (iii) none of the Placing Agents, nor any of their respective Affiliates, nor any person acting on their behalf makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such information, whether at the date of publication, the date of this document or otherwise;
11. represents and warrants that (i) it is entitled to acquire the Placing Shares under the laws and regulations of all relevant jurisdictions which apply to it; (ii) it has fully observed such laws and regulations and obtained all such governmental and other guarantees and other consents and authorities which may be required thereunder and complied with all necessary formalities; (iii) it has all necessary capacity to commit to participation in the Placing and to perform its obligations in relation thereto and will honour such obligations; (iv) it has paid any issue, transfer or other taxes due in connection with its participation in any territory; and (v) it has not taken any action which will or may result in the Company, either of the Placing Agents, any of their respective Affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing;
12. represents and warrants that the issue to the Placee, or the person specified by the Placee for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Placing Shares into a clearance system;
13. represents and warrants that it understands that the Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States (as defined below);
14. represents and warrants that neither it nor its Affiliates nor any person acting on its or their behalf have engaged or will engage in any "directed selling efforts" with respect to the Placing Shares;
15. represents and warrants that, it is, or at the time the Placing Shares are acquired, it will be, (a) the beneficial owner of such Placing Shares and is neither a person located in the United States of America, its territories or possessions, any state of the United States or the District of Columbia (the "United States") nor on behalf of a person in the United States, (b) acquiring the Placing Shares in an offshore transaction (as defined in Regulation S under the Securities Act) and (c) will not offer or sell, directly or indirectly, any of the Placing Shares in the United States except in accordance with Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act;
16. that, if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of the Managers has been given to the offer or resale;
17. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom prior to Admission except to "qualified investors" as defined in Article 2.1(e) of the Prospectus Directive;
18. it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission of Placing Shares except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (which means Directive 2003/71/EC, as amended, and includes any relevant implementing measure in any member state);
19. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which it is permitted to do so pursuant to section 21 of FSMA;
20. represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom;
21. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Anti-terrorism Crime and Security Act 2001 and the Money Laundering Regulations (2007) (the "Regulations") and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;
22. represents and warrants that it is (a) a person falling within Article 19(5) of the FPO or (b) a person falling within Article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
23. represents and warrants that it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive;
24. undertakes that it (and any person acting on its behalf) will pay for the Placing Shares acquired by it in accordance with this document on the due time and date set out herein against delivery of such Placing Shares to it, failing which the relevant Placing Shares may be placed with other Placees or sold as either Placing Agent may, in its absolute discretion, determine and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this document) which may arise upon the sale of such Placee's Placing Shares on its behalf;
25. acknowledges that neither of the Placing Agents, nor any of their Affiliates nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Placing, and acknowledges that neither of the Placing Agents, nor any of their Affiliates nor any person acting on their behalf has any duties or responsibilities to it for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of the Placing Agents' rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;
26. undertakes that (i) the person whom it specifies for registration as holder of the Placing Shares will be (a) the Placee or (b) the Placee's nominee, as the case may be, (ii) neither of the Placing Agents nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement and (iii) the Placee and any person acting on its behalf agrees to acquire the Placing Shares on the basis that the Placing Shares will be allotted to the CREST stock account of the relevant Placing Agent which will hold them as settlement agent as nominee for the Placee until settlement in accordance with its standing settlement instructions with payment for the Placing Shares being made simultaneously upon receipt of the Placing Shares in the Placee's stock account on a delivery versus payment basis;
27. acknowledges that any agreements entered into by it pursuant to these terms and conditions, and any non-contractual obligations arising out of or in connection with such agreements, shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter arising out of any such contract;
28. acknowledges that it irrevocably appoints any director of the relevant Placing Agent as its agent for the purposes of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Placing Shares agreed to be taken up by it under the Placing;
29. represents and warrants that it is not a resident of any Prohibited Jurisdiction and acknowledges that the Placing Shares have not been and will not be registered nor will a prospectus be cleared in respect of the Placing Shares under the securities legislation of any Prohibited Jurisdictions and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Prohibited Jurisdiction;
30. represents and warrants that any person who confirms to either Placing Agent on behalf of a Placee an agreement to subscribe for Placing Shares and/or who authorises either Placing Agent to notify the Placee's name to the Company's registrar, has authority to do so on behalf of the Placee;
31. acknowledges that the agreement to settle each Placee's acquisition of Placing Shares (and/or the acquisition of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to an acquisition by it and/or such person direct from the Company of the Placing Shares in question. Such agreement assumes that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor either of the Placing Agents will be responsible. If this is the case, the Placee should take its own advice and notify the Placing Agents accordingly;
32. acknowledges that the Placing Shares will be issued and/or transferred subject to the terms and conditions set out in this document (including the Appendices);
33. acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with the relevant Placing Agent, any money held in an account with the relevant Placing Agent on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FCA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Placing Agent money in accordance with the client money rules and will be used by the relevant Placing Agent in the course of its business; and the Placee will rank only as a general creditor of the relevant Placing Agent (as the case may be);
34. acknowledges and understands that the Company, the Placing Agents, and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, undertakings and acknowledgements;
35. acknowledges that the basis of allocation will be determined by the Placing Agents at their absolute discretion. The right is reserved to reject in whole or in part and/or scale back any participation in the Placing;
36. that it irrevocably authorises the Company and the Placing Agents to produce this announcement pursuant to, in connection with, or as maybe required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein; and
37. that its commitment to subscribe for Placing Shares on the terms set out herein will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing.
The acknowledgements, agreements, undertakings, representations and warranties referred to above are given to each of the Company and the Placing Agents (for their own benefit and, where relevant, the benefit of their respective Affiliates and any person acting on their behalf) and are irrevocable.
No claim shall be made against the Company, the Placing Agents, their respective Affiliates or any other person acting on behalf of any of such persons by a Placee to recover any damage, cost, charge or expense which it may suffer or incur by reason of or arising from the carrying out by it of the work to be done by it pursuant hereto or the performance of its obligations hereunder or otherwise in connection with the Placing.
No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued or transferred (as the case may be) into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee.
Any arrangements to issue or transfer the Placing Shares into a depositary receipts system or a clearance service or to hold the Placing Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Placing Shares in a clearance service, or any arrangements subsequently to transfer the Placing Shares, may give rise to stamp duty and/or stamp duty reserve tax, for which neither the Company nor the Placing Agents will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such stamp duty or stamp duty reserve tax undertakes to pay such stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and the Placing Agents in the event that any of the Company and/or either of the Placing Agents has incurred any such liability to stamp duty or stamp duty reserve tax.
In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.
All times and dates in this document may be subject to amendment.The Placing Agents shall notify the Placees and any person acting on behalf of the Placees of any such changes.
This document has been issued by the Company and is the sole responsibility of the Company.
Each Placee, and any person acting on behalf of the Placee, acknowledges that the Placing Agents do not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that the Placing Agents or any of their Affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
The rights and remedies of the Placing Agents and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise or partial exercise of one will not prevent the exercise of others.
Each Placee may be asked to disclose in writing or orally to either of the Placing Agents:
(a) if he is an individual, his nationality; or 
(b)if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.
Appendix III: Definitions
The following definitions apply throughout this Announcement unless the context otherwise requires:
"Acquisition"
the proposed acquisition by the Company of the Waard Group via its wholly-owned subsidiary Chesnara Holdings B.V. through the proposed acquisition of the entire issued ordinary share capital (either directly or indirectly) of Waard Leven, Waard Schade, HW Leven and Tadas pursuant to the Acquisition Agreement;
"Acquisition Agreement"
the conditional acquisition agreement between the Company, Chesnara Holdings B.V. and the Sellers dated 3 December 2014 relating to the Acquisition;
"Admission"
admission of the Placing Shares to the Official List of the FCA and to trading on the main market of the London Stock Exchange;
"CA plc"
Countrywide Assured plc;
"Chesnara" or the "Company"
Chesnara plc;
"CREST"
the relevant system (as defined in the Uncertificated Securities Regulations 2010) in respect of which Euroclear is the operator (as defined in The Uncertificated Securities Regulations 2010);
"Directors" or "Board"
the directors of the Company as at the date of this Announcement;
"DNB"
De Nederlandsche Bank N.V., the central bank of the Netherlands;
"DSB"
DSB Beheer B.V., a private company with limited liability in bankruptcy incorporated under the laws of the Netherlands;
"DSB Bank"
DSB Bank N.V., a public company in bankruptcy incorporated under the laws of the Netherlands;
"DSB Ficoholding"
DSB Ficoholding N.V., a public company incorporated under the laws of the Netherlands;
"Enlarged Group"
the Group as enlarged by the acquisition of the Waard Group;
"Euroclear" 
Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales;
"EEV"
European Embedded Value, an economic valuation technique which has widespread use in the life insurance industry;
"Financial Conduct Authority" or "FCA"
the Financial Conduct Authority of the UK for the purposes of Part 4A of FSMA and in the exercise of its functions in respect of admission to the Official List otherwise than in accordance with Part 4A of FSMA;
"FSMA"
the Financial Services and Markets Act 2000 of England and Wales, as amended;
"Group"
the Company and its existing subsidiary undertakings;
"HoldCo"
Chesnara Holdings B.V., a private company with limited liability incorporated under the laws of the Netherlands and a wholly-owned subsidiary of Chesnara;
"HW Leven"
Hollands Welvaren Leven N.V., a public company incorporated under the laws of the Netherlands;
"IFRS"
International Financial Reporting Standards;
"Listing Rules"
the listing rules made by the FCA under Part 4A of FSMA (as amended from time to time);
"London Stock Exchange"
London Stock Exchange plc;
"Movestic"
Movestic Livfrskringar AB and its subsidiary and associated companies;
"NewCo"
Charlotte George Limited, a company incorporated in Jersey having its registered address at 44 Esplanade Street, Hellier, Jersey JE4 9WG;
"Official List"
the Official List of the Financial Conduct Authority;
"Ordinary Shares"
Ordinary shares of five pence each in the capital of the Company;
"PL"
Protection Life Company Limited, a company incorporated under the laws of England and Wales with company number 02199286;
"Placing"
the placing by Canaccord Genuity Limited and Panmure Gordon (UK) Limited of the Placing Shares pursuant to the Placing Agreement;
"Placing Agreement"
the placing agreement dated 3 December 2014 between Canaccord Genuity Limited, Panmure Gordon (UK) Limited and Chesnara relating to the Placing;
"Placing Shares"
up to 11,504,765 new Ordinary Shares to be issued pursuant to the Placing;
"PRA"
the UK Prudential Regulation Authority;
"Sellers"
DSB Ficoholding and DSB Bank;
"Shareholder(s)"
holder(s) of Ordinary Shares;
"Tadas"
Tadas Verzekeringen B.V., a private company with limited liability incorporated under the laws of the Netherlands;
"Total Shareholder Return"
a measure of performance which combines share price appreciation and dividends paid, assuming that dividends are reinvested each time they are paid, and expressed as a percentage;
"UK" or "United Kingdom"
the United Kingdom of Great Britain and Northern Ireland;
"Waard Group"
certain insurance subsidiaries of DSB, consisting of Waard Leven, HW Leven, Waard Schade and Tadas;
"Waard Leven"
Waard Leven N.V., a public company incorporated under the laws of the Netherlands;
"Waard Schade"
Waard Schade N.V., a public company incorporated under the laws of the Netherlands.

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