REG - Non-Standard Finance - Acquisition of Everyday Loans for £235 million <Origin Href="QuoteRef">NSF.L</Origin> - Part 3
04/12/2015 07:11
- Part 3: For the preceding part double click ID:nRSD0022Ib
As at31 December 2013 As at 31 December 2014
£'000 £'000 £'000
Calledup,allottedandfully paid
29,535,298Ordinarysharesof£1each 29,535 29,535 29,535
Accumulatedlosses (30,600) (23,563) (27,353)
(1,065) 5,972 2,182
14. Cash flow from operating activities
Year ended 31 December 2012 Year ended 31 December 2013 Year ended 31 December 2014
£'000 £'000 £'000
Operating profit 5,757 9,480 4,132
Depreciationonplant,propertyandequipment 277 259 124
Amortisation on intangible fixed assets 82 39 83
Increaseinloans and advances to customers (7,201) (9,635) (15,229)
Decrease/(increase)inother receivables 24 (54) (323)
Increase/(decrease) in tradeandotherpayables 2,912 (2,356) 15,579
Netcashinflow/(outflow)fromoperatingactivities 1,851 (2,267) 4,366
Tax (paid)/received - - -
1,851 (2,267) 4,366
For the purposes of the cash flow statement, cash and cash equivalents comprises bank balances, with a maturity of less
than three months.
15. Contingent liabilities
As at 31 December 2014, the Group had no contingent liabilities (2013: £nil, 2012: £nil).
16. Related party transactions
Significant related parties of the Everyday Loans Group include all entities under common control of the ultimate parent
company, Arbuthnot Banking Group PLC, the directors of the Everyday Loans Group ("key management personnel") and
shareholders of Arbuthnot Banking Group PLC.
During the year to 31 December 2014 the Everyday Loans Group paid management charges to its immediate parent company,
Secure Trust Bank PLC, of £8,745,438 (2013: £nil, 2012: £nil) and paid an interim dividend of £5,021,001 (2013: £nil, 2012:
£nil).
Of the financial liabilities balance presented in the Statement of Financial Position at 31 December 2014, £88,328,960
(2013: £72,568,000, 2012: £72,114,687) is due to the immediate parent company of the Group.
During 2012 Secure Trust Bank PLC issued a debenture to the Everyday Loans Group giving Secure Trust Bank PLC a fixed and
floating charge over assets of the Everyday Loans Group.
On 8 June 2012, the Everyday Loans Group was purchased by Secure Trust Bank Plc from the previous owner, Alchemy Partners
Nominees Ltd. Following the acquisition of the Everyday Loans Group from the previous shareholders, £8,321,973 of accrued
interest owed to the previous shareholders was waived and recorded as a capital contribution.
Key management personnel
Short-term employee benefits of the key management personnel of the Everyday Loans Group for the year ended 31 December
2014 amounted to £1,178,665 (2013: £473,778, 2012: £2,317,072). In 2012 this included a bonus for the three executive
directors of the Group following the acquisition of the Everyday Loans Group on 8 June 2012. Post-employment benefits for
key management personnel for the year ended 31 December 2014 amounted to £27,825 (2013: £442,599, 2012: £116,355).
During the year ended 31 December 2013 a £175,000 payment in lieu of notice and an ex-gratia payment of £25,000 were made
to the departing Chief Executive Officer.
17. Financial commitments
Capital commitments
At 31 December 2014, 31 December 2013 and 31 December 2012, the Everyday Loans Group had no capital commitments contracted
but not provided for.
Operating lease commitments
At 31 December 2012, 31 December 2013 and 31 December 2014, the Everyday Loans Group had outstanding commitments under
non-cancellable operating leases which fall due as follows:
31 December 2012£'000 31 December 2013£'000 31 December 2014£'000
Within one year 540 633 606
1-2 years 1,677 1,240 849
2,217 1,873 1,455
18. Financial instruments
The Group's financial instruments comprise loan and advances due from customers, cash and cash equivalents, a financial
liability to the immediate parent company and items such as trade payable and trade receivables which arise directly from
its operations.
Key risks identified by the directors are formally reviewed and assessed at least once a year by the Board, in addition to
which key business risks are identified, evaluated and managed by operating management on an ongoing basis by means of
procedures such as physical controls, credit and other authorisation limits and segregation of duties.
The principal risks inherent in the Group's business are credit, market and liquidity risk.
Credit risk
The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full
when due. Impairment provisions are provided for losses that have been incurred at the Statement of Financial Position
date. Significant changes in the economy could result in losses that are different from those provided for at the Statement
of Financial Position date. The senior management of the Group therefore carefully manages its exposures to credit risk as
it considers this to be the most significant risk to the business.
The Group structures the levels of credit risk by placing limits on the amount of risk accepted in relation to individual
borrowers or groups of borrowers. The limits on the level of credit risk are approved periodically by the Board of
Directors.
Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential borrowers to meet
interest and capital repayment obligations and by changing these lending limits where appropriate. The assets undergo a
scoring process to mitigate risk and the results of the scoring process are monitored by the Board.
The Group's policy on forbearance is that a customer's account may be modified to assist customers who are in, or have
recently overcome financial difficulties and have demonstrated both the ability and willingness to meet the current or
modified loan contractual payments. These may be modified by way of a reschedule or deferment of repayments. Rescheduling
of debts retains the customers contractual due dates, whilst the deferment of repayments extends the payment schedule up to
a maximum of four payments in a 12 month period.
The following table shows the rescheduled and deferred loan balances.
31 December2012£'000 31 December2013£'000 31 December2014£'000
Rescheduled loans 12,315 13,896 14,713
Allowance for impairment (1,178) (1,127) (1,037)
11,137 12,769 13,676
Deferred loans 2,873 2,801 2,979
Allowance for impairment (366) (334) (351)
2,507 2,467 2,628
Market risk
Market risks arise from open positions in interest rate and currency products, all of which are exposed to general and
specific market movements.
(i) Currency risk
The Group has no exposures in foreign currencies.
(ii) Interest rate risk
Interest rate risk is the potential adverse impact on the Group's future cash flows from changes in interest rates and
arises from the differing interest rate risk characteristics of the Group's assets and liabilities. In particular, fixed
rate products expose the Group to the risk that a change in interest rates could cause either a reduction in interest
income or an increase in interest expense relative to variable rate interest flows. All of the Group's products are
contractually at variable rates, however changes to the rates charged can be made only in case of significant changes to
the Group's costs of funds.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due, or can only
do so at excessive cost. The Group's liquidity policy is to maintain sufficient liquid resources to cover cash flow
imbalances and fluctuations and to enable the Group to meet its obligations as they fall due.
The following table shows the maturity profile of the Group's financial assets.
Financial Assets
£'000
At 31 December 2012
Due within one year 23,846
Due between one and two years 17,626
Due between two and five years 17,927
Due in over five years 6,778
66,177
At 31 December 2013
Due within one year 30,298
Due between one and two years 23,916
Due between two and five years 20,030
Due in over five years 1,568
75,812
At 31 December 2014
Due within one year 35,206
Due between one and two years 30,270
Due between two and five years 24,274
Due in over five years 1,291
91,041
The following table shows the contractual maturities of the Group's liabilities (none of which are derivative financial
liabilities).
Trade and other payables Current Tax Liability Financial Liability Total
£'000 £'000 £'000 £'000
At 31 December 2012
Repayable on demand - - 72,115 72,115
Less than one year 5,069 - - 5,069
Total contractual cash flows 5,069 - 72,115 77,184
At 31 December 2013
Repayable on demand - - 72,568 72,568
Less than one year 3,950 192 - 4,142
Total contractual cash flows 3,950 192 72,568 76,710
At 31 December 2014
Repayable on demand - - 88,329 88,329
Less than one year 5,348 281 - 5,629
Total contractual cash flows 5,348 281 88,329 93,958
Financial Liabilities are amounts owed to the immediate parent company, Secure Trust Bank PLC. The loan is repayable on
demand and interest is charged at 3.445% (2013: 3.445%, 2012: 3.445%). Secure Trust Bank PLC has a fixed and floating
charge over the assets of the Group to secure the debt.
19. Events after the balance sheet date
On 30 November 2015 a dividend of £11.5m was declared and approved, payable to the immediate parent company.
SECTION B: CONSOLIDATED INTERIM FINANCIAL INFORMATION OF THE EVERYDAY LOANS GROUP
CONSOLIDATED INCOME STATEMENTS
Notes Unaudited6 months ended30 June 2014 Unaudited6 months ended30 June 2015
£'000 £'000
Continuing operations:
Revenue 18,751 21,163
Cost of sales (excluding interest) (297) (302)
Interest costs (1,242) (1,523)
Gross Profit 17,212 19,338
Administrative expenses (7,962) (9,928)
Impairment losses on loans and advances to customers (3,626) (3,328)
Operating profit 5,624 6,082
Finance income - 2
Profit before taxation 5,624 6,084
Taxation (1,258) (1,232)
Profit and total comprehensive income for the period 4,366 4,852
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share capital Retained earnings Total
£'000 £'000 £'000
Balance at 31 December 2013 (audited) 29,535 (23,563) 5,972
Comprehensive income for the financial period - 4,366 4,366
Dividends paid - (5,021) (5,021)
Balance at 30 June 2014 (unaudited) 29,535 (24,218) 5,317
Share capital Retained earnings Total
£'000 £'000 £'000
Balance at 31 December 2014 (audited) 29,535 (27,353) 2,182
Comprehensive income for the financial period - 4,852 4,852
Dividends paid - - -
Balance at 30 June 2015 (unaudited) 29,535 (22,501) 7,034
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Notes Audited31 December2014 Unaudited30 June 2015
£'000 £'000
ASSETS
Non-current assets
Intangible assets 160 147
Property, plant and equipment 312 491
Deferred tax asset 671 641
Loans and advances to customers 55,835 64,983
Total non-current assets 56,978 66,262
Current assets
Loans and advances to customers 35,206 37,269
Other receivables 3,149 3,475
Cash and cash equivalents 1,621 5
Total current assets 39,976 40,749
TOTAL ASSETS 96,954 107,011
EQUITY AND LIABILITIES
Equity attributable to equity holders
Share capital 3 29,535 29,535
Retained earnings 3 (27,353) (22,501)
Total equity attributable to equity holders 2,182 7,034
Current liabilities
Financial liabilities 8 88,329 92,858
Current tax liabilities 1,095 2,165
Trade and other payables 8 5,348 4,954
Total liabilities 94,772 99,977
TOTAL EQUITY AND LIABILITIES 96,954 107,011
CONSOLIDATED CASH FLOW STATEMENTS
Notes Unaudited6 months ended30 June 2014 Unaudited6 months ended30 June 2015
£'000 £'000
Cash flow from operating activities 4 7,710 (3,755)
Cash flow from investing activities
Purchase of non-current assets (106) (263)
Interest received - 2
Net cash outflow from investing activities (106) (261)
Cash flow from financing activities
Borrowings (2,580) 2,400
Interest paid - -
Dividends paid (5,021) -
Net cash inflow from financing activities (7,601) 2,400
Net (decrease)/increase in cash and cash equivalents 3 (1,616)
Cash and cash equivalents at beginning of the period 819 1,621
Cash and cash equivalents at the end of the period 822 5
Notes to the accounts
1. Accounting policies
The principal accounting policies adopted by Everyday Loans Holdings Limited, Everyday Loans Limited and Everyday Lending
Limited (together the "Everyday Loans Group" or the "Group") in the preparation of its Unaudited Consolidated Interim
Financial Information for the period ended 30 June 2015 and its comparatives for the period ended 30 June 2014 are as
disclosed in the Consolidated Historical Financial Information for the years ended 31 December 2014, 31 December 2013 and
31 December 2012. These policies have been consistently applied to all periods presented, unless otherwise stated.
1.1 General information
The Unaudited Consolidated Interim Financial Information has been prepared by consolidating the financial statements of
Everyday Loans Holdings Limited, Everyday Loans Limited and Everyday Lending Limited. This is done by applying the
principles underlying the consolidation procedures of IFRS 10 'Consolidated Financial Statements' ("IFRS 10") for each of
the periods ended 30 June 2015 and 30 June 2014. All intercompany transactions and balances within the operations of the
Everyday Loans Group have been eliminated.
The Everyday Loans Group comprises three private companies incorporated in the United Kingdom under the Companies Act 2006.
The address of the registered office of the Everyday Loans Group entities is One Arleston Way, Solihull, West Midlands, B90
4LH and their principal business address is Secure Trust House, Boston Drive, Bourne End, Bucks, SL8 5YS. All operations
are situated in the United Kingdom.
The Everyday Loans Group provides secured and unsecured personal instalment loans.
1.2 Basis of preparation
The Unaudited Consolidated Interim Financial Information for the period ended 30 June 2015 and its comparatives for the
period ended 30 June 2014 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the
European Union. They do not include all the disclosures that would otherwise be required in a complete set of financial
statements. They have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires judgement in the process of applying the Group's accounting policies. The areas involving a high degree of
judgement or complexity, or areas where assumptions and estimates are significant to the Unaudited Consolidated Interim
Financial Information are disclosed in note 1.3.
The Unaudited Consolidated Interim Financial Information has been prepared on a going concern basis.
New standards and interpretations adopted in the current year
The following new and revised standards and interpretations have been adopted in the current year.
§ IFRS 10 'Consolidated Financial Statements'
§ IFRS 11 'Joint Arrangements'
§ IFRS 12 'Disclosures of Interests in Other Entities'
§ IAS 27 'Separate Financial Statements'
§ IAS 28 'Investments in Associates and Joint Ventures'
The application of the above standards had no material effect on the Unaudited Consolidated Interim Financial Information
of the group for the period presented.
Future amendments to standards and interpretations
At the date of authorisation of this Unaudited Consolidated Interim Financial Information, the following standards and
interpretations, applicable to the group, which have not been applied in this Unaudited Consolidated Interim Financial
Information, were in issue but not yet mandatorily effective for the group.
§ IFRS 9 'Financial Instruments', effective for periods beginning on or after 1 January 2018 (not yet EU endorsed)
§ IFRS 15 'Revenue from Contracts with Customers', effective for periods beginning on or after 1 January 2017 (not yet EU
endorsed)
§ Amendments to IAS 16 'Property, Plant and Equipment' and IAS 38 'Intangible Assets', effective for periods beginning on
or after 1 January 2016 (not yet EU endorsed)
§ Amendments to IAS 1 'Presentation of Financial Statements', effective for periods beginning on or after 1 January 2016
(not yet EU endorsed)
IFRS 9 'Financial instruments' addresses the classification, measurement and recognition of financial assets and financial
liabilities. The final version of the standard was issued in July 2014. The standard primarily impacts the classification
and measurement of financial assets and liabilities and introduces the 'expected credit loss' model for the measurement of
the impairment of financial assets so it is no longer necessary for a credit event to have occurred before a credit loss is
recognised. The Group are in the process of assessing the impact of the standard and will adopt the standard in line with
the mandatory effective date of 1 January 2018, subject to endorsement by the EU.
The other standards and amendments to existing standards noted above are unlikely to have a material impact on the Group.
1.3 Critical accounting judgements and key sources of estimation uncertainty
The Group makes certain estimates and assumptions which affect the reported amounts of assets and liabilities. Estimates
and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
Impairment losses on loans and advances
The Group reviews its loan portfolios to assess impairment on a regular basis. In determining whether an impairment loss
should be recorded in the Statement of Comprehensive Income, the Company makes judgements as to whether there is any
observable data indicating that there is a measurable decrease in the estimate future cash flows from a portfolio of loans
before the decrease can be identified with an individual loan in that portfolio. Management uses estimates based on
historical loss experience for assets with similar credit risk characteristics and objective evidence of impairment similar
to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both
the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and
actual loss experience.
Provision for PPI claim costs and associated losses
The Group reviews its provision for PPI claim costs and associated losses on a regular basis. Management uses estimates
based on historical experience in determining the adequacy of the provision balance recorded within the balance sheet. The
Group also makes judgements as to whether there is any observable data indicating differences in the volume of recent
claims activity which may impact on the estimated volume of future claims against the existing loan portfolio. The
methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to
reduce any differences between provision estimates and actual costs incurred.
2. Operating segments
All of the Everyday Loans Group's assets and liabilities, revenue and profit before tax are attributable to the provision
of consumer credit.
No geographical analysis is presented because all operations are situated in the United Kingdom.
3. Share capital and reserves
AuditedAs at 31 December 2014 UnauditedAs at30 June 2015
£'000 £'000
Calledup,allottedandfully paid
29,535,298Ordinarysharesof£1each 29,535 29,535
Accumulatedlosses (27,353) (22,501)
2,182 7,034
4. Cash flow from operating activities
Unaudited6 months ended 30 June 2014 Unaudited6 months ended 30 June 2015
£'000 £'000
Operating profit 5,624 6,082
Depreciationonplant,propertyandequipment 77 52
Amortisation on intangible fixed assets 41 45
lncreaseinloans and advances to customers (5,626) (11,211)
Increaseinother receivables (141) (326)
Increase in tradeandotherpayables 7,735 1,735
Netcashinflow/(outflow)fromoperatingactivities 7,710 (3,623)
Tax paid - (132)
7,710 (3,755)
For the purposes of the cash flow statement, cash and cash equivalents comprises bank balances, with a maturity of less
than three months from the date of acquisition.
5. Contingent liabilities
As at 30 June 2015, the Group had no contingent liabilities (December 2014: £nil).
6. Related party transactions
Significant related parties of the Everyday Loans Group include all entities under common control of the ultimate parent
company, Arbuthnot Banking Group PLC, that were not transferred out with the Everyday Loans Group, the directors that
remain within the Everyday Loans Group ("key management personnel") and shareholders of Arbuthnot Bank Group PLC.
During the year to 31 December 2014 the Everyday Loans Group paid management charges to its immediate parent company,
Secure Trust Bank PLC, of £8,745,438. No such payment was made in the six month period to 30 June 2015.
Of the financial liabilities balance presented in the Statement of Financial Position at 30 June 2015, £92,858,048
(December 2014: £88,328,960) is due to the immediate parent company of the Group.
During 2012 Secure Trust Bank PLC issued a debenture to the Everyday Loans Group giving them a fixed and floating charge
over assets of the Group.
During the six month period to 30 June 2015 the Everyday Loans Group did not pay an interim dividend (six month period to
30 June 2014: £5,021,000). During the year ended 31 December 2014 the Group paid the immediate parent company a dividend of
£5,021,000.
Short-term employee benefits of the key management personnel for the period ended 30 June 2015 amounted to £378,129 (June
2014: £298,507). Post-employment benefits for key management personnel for the period ended 30 June 2015 comprised £12,265
(June 2014: £15,627).
7. Financial commitments
Capital commitments
At 30 June 2015 and 31 December 2014, the Group had no capital commitments contracted but not provided for.
Operating lease commitments
At 31 December 2014 and 30 June 2015, the Everyday Loans Group had outstanding commitments under non-cancellable operating
leases which fall due as follows:
Audited31 December 2014£'000 Unaudited30 June 2015£'000
Within one year 606 631
1-2 years 849 1,261
1,455 1,892
8. Financial instruments
The Group's financial instruments comprise loan and advances due from customers, cash and cash equivalents, a financial
liability to the immediate parent company and items such as trade payable and trade receivables which arise directly from
its operations.
Key risks identified by the directors are formally reviewed and assessed at least once a year by the Board, in addition to
which key business risks are identified, evaluated and managed by operating management on an ongoing basis by means of
procedures such as physical controls, credit and other authorisation limits and segregation of duties.
The principal risks inherent in the Group's business are credit, market and liquidity risk.
Credit risk
The Group takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full
when due. Impairment provisions are provided for losses that have been incurred at the Statement of Financial Position
date. Significant changes in the economy could result in losses that are different from those provided for at the Statement
of Financial Position date. The senior management of the Group therefore carefully manages its exposures to credit risk as
it considers this to be the most significant risk to the business.
The Group structures the levels of credit risk by placing limits on the amount of risk accepted in relation to individual
borrowers or groups of borrowers. The limits on the level of credit risk are approved periodically by the Board of
Directors.
Exposure to credit risk is managed through regular analysis of the ability of borrowers and potential borrowers to meet
interest and capital repayment obligations and by changing these lending limits where appropriate. The assets undergo a
scoring process to mitigate risk and are monitored by the Board.
The Group's policy on forbearance is that a customer's account may be modified to assist customers who are in, or have
recently overcome financial difficulties and have demonstrated both the ability and willingness to meet the current or
modified loan contractual payments. These may be modified by way of a reschedule or deferment of repayments. Rescheduling
of debts retains the customers contractual due dates, whilst the deferment of repayments extends the payment schedule up to
a maximum of four payments in a 12 month period.
The following table shows the rescheduled and deferred loan balances.
Audited31 December 2014£'000 Unaudited30 June 2015£'000
Rescheduled loans 14,713 14,837
Allowance for impairment (1,037) (893)
13,676 13,944
Deferred loans 2,979 3,356
Allowance for impairment (351) (397)
2,628 2,959
Market risk
Market risks arise from open positions in interest rate and currency products, all of which are exposed to general and
specific market movements.
(i) Currency risk
The Group has no exposures in foreign currencies.
(ii) Interest rate risk
Interest rate risk is the potential adverse impact on the Group's future cash flows from changes in interest rates and
arises from the differing interest rate risk characteristics of the Group's assets and liabilities. In particular, fixed
rate products expose the Group to the risk that a change in interest rates could cause either a reduction in interest
income or an increase in interest expense relative to variable rate interest flows. All of the Group's products are
contractually at variable rates; however any changes made to the rates charged are made at management's discretion.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due, or can only
do so at excessive cost. The Group's liquidity policy is to maintain sufficient liquid resources to cover cash flow
imbalances and fluctuations and to enable the Group to meet its obligations as they fall due.
The following table shows the maturity profile of the Group's financial assets.
Financial Assets
£'000
At 31 December 2014 (Audited)
Due within one year 35,206
Due between one and two years 30,270
Due between two and five years 24,274
Due in over five years 1,291
91,041
At 30 June 2015 (Unaudited)
Due within one year 37,269
Due between one and two years 34,368
Due between two and five years 29,424
Due in over five years 1,191
102,252
The following table shows the contractual maturities of the Group's liabilities (none of which are derivative financial
liabilities).
Trade and other payables Current Tax Liability Financial Liability Total
£'000 £'000 £'000 £'000
At 31 December 2014 (Audited)
Repayable on demand - - 88,329 88,329
Less than one year 5,348 1,095 - 6,443
Total contractual cash flows 5,348 1,095 88,329 94,772
At 30 June 2015 (Unaudited)
Repayable on demand - - 92,858 92,858
Less than one year 4,954 2,165 - 7,119
Total contractual cash flows 4,954 2,165 92,858 99,777
Financial Liabilities are amounts owed to the immediate parent company, Secure Trust Bank PLC. The loan is repayable on
demand and interest is charged at 3.445% (December 2014: 3.445%). Secure Trust Bank PLC has a fixed and floating charge
over the assets of the Group to secure the debt.
9. Events after the balance sheet date
On 30 November 2015 a dividend of £11.5m was declared and approved, payable to the immediate parent company.
APPENDIX
TERMS AND CONDITIONS
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE CONDITIONAL PLACING OF ORDINARY SHARES IN THE COMPANY (THE "NEW
ORDINARY SHARES") SUBJECT TO CLAWBACK TO SATISFY VALID APPLICATIONS BY QUALIFYING SHAREHOLDERS UNDER THE OPEN OFFER
(TOGETHER, THE "PLACING"). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE DIRECTED ONLY AT:
(A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF
ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, INCLUDING
BY DIRECTIVE 2010/73/EC, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS
DIRECTIVE") ("QUALIFIED INVESTORS"); AND (B) PERSONS IN THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS AND (I) HAVE
PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D)
("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE
BE LAWFULLY COMMUNICATED; OR (C) PERSONS IN JURISDICTIONS OTHER THAN IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA TO WHOM
IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS
APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT
PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT (INCLUDING THIS APPENDIX) MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO
SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF
CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.
THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US 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 OR SOLD, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE
WITH THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION OF THE UNITED STATES. SUBJECT TO CERTAIN EXCEPTIONS, THE
NEW ORDINARY SHARES ARE ONLY BEING OFFERED AND SOLD OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A SUBSCRIPTION FOR NEW
ORDINARY SHARES.
Persons who are invited to and who choose to participate in the Placing (the "Placees"), by making an oral or written offer
to subscribe for New Ordinary Shares at 85 pence per New Ordinary Share (the "Offer Price") pursuant to the terms of the
Placing, including any individuals, funds or others on whose behalf a commitment to subscribe for New Ordinary Shares in
the Placing is given, will (i) be deemed to have read and understood this Announcement, including this Appendix, and the
placing proof expected to be dated 4 December 2015 of a prospectus (the "Placing Proof") prepared by the Company in
accordance with the Prospectus Rules relating to the Placing and Open Offer, Admission and Readmission and made available
to Placees and made available to Placees, in their entirety; and (ii) be making such offer on the terms and conditions of
the Placing contained in this Appendix, the Placing Proof, this Announcement and the placing letter to be completed and
signed by Placees in connection with the Placing (the "Placing Letter"), including being deemed to be providing (and shall
only be permitted to participate in the Placing on the basis that they have provided) the representations, warranties,
acknowledgements and undertakings set out therein.
The New Ordinary Shares have not been, nor will they be, registered or offered under the relevant securities laws of any
state, province or territory of any Excluded Territory. Accordingly, the New Ordinary Shares may not be offered or sold,
resold, taken up, transferred, delivered or distributed, directly or indirectly, into or within any of the Excluded
Territories except pursuant to an applicable exemption from registration or qualification requirements. None of the terms
and conditions set out in this Appendix, the Placing Proof, or the Placing Letter is or constitutes an invitation or offer
to sell or the solicitation of an invitation or an offer to buy New Ordinary Shares in any jurisdiction in which such offer
to sell or solicitation is unlawful. Persons into whose possession these documents come should inform themselves about and
observe such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws
of any such jurisdiction.
The Banks (as defined below) do not make any representation to any Placees regarding an investment in the securities
referred to in this Announcement (including this Appendix), the Placing Proof or the Placing Letter.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward
a copy of this Appendix or the Announcement of which it forms part should seek appropriate advice before taking any
action.
Details of the Placing Agreement and of the New Ordinary Shares
J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan
Cazenove"), is acting as global co-ordinator, bookrunner and underwriter and Peel Hunt LLP ("Peel Hunt" and together with
J.P. Morgan Cazenove, the "Banks") is acting as lead manager in connection with the Placing and have entered into a placing
agreement (the "Placing Agreement") with the Company under which they have severally agreed to use their respective
reasonable endeavours to procure Placees to take up the New Ordinary Shares, on the terms and subject to the conditions set
out therein.
The commitments of Placees procured by the Banks are subject to clawback to satisfy valid applications by Qualifying
Shareholders under the Open Offer. Subject to fulfilment or (where applicable) waiver of the conditions referred to below
under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to
terminate under the Placing Agreement", any New Ordinary Shares which are offered and not applied for in respect of the
Open Offer will be issued to Placees procured by the Banks.
J.P. Morgan Cazenove has agreed with the Company, to the extent that Placees are not procured for New Ordinary Shares which
are not validly taken up by Qualifying Shareholders under the Open Offer, to take up such New Ordinary Shares at the Offer
Price (as defined below), or in the event of any default by any Placee in paying the Offer Price in respect of any New
Ordinary Shares allocated to it, to take up such New Ordinary Shares itself at the Offer Price, subject to the provisions
of the Placing Agreement.
The New Ordinary Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the
Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or
in respect of the Existing Ordinary Shares after the date of Admission, and will on issue be free of all claims, liens,
charges, encumbrances and equities.
Prospectus, applications for listing and admission to trading
The full terms and conditions of the Open Offer will be contained in the prospectus which is expected to be published by
the Company in connection with the Placing and Open Offer, Admission and Readmission (the "Prospectus") on or around 7
December 2015 following approval by the Financial Conduct Authority (the "FCA") in accordance with the Prospectus Rules and
the Listing Rules and, in respect of Qualifying Shareholders who hold their Existing Ordinary Shares in certified form, in
the Application Form.
Applications will be made to the FCA for admission of the New Ordinary Shares to be issued under the Placing to the
standard listing segment of the Official List of the FCA (the "Official List") and to trading on London Stock Exchange
plc's main market for listed securities. It is expected that Admission of the New Ordinary Shares will become effective at
or around 8.00 a.m. (London time) on 7 January 2016 (or such later time and/or date as J.P. Morgan Cazenove may agree with
the Company) (the "Admission Date") and that dealings in the New Ordinary Shares will commence at that time. It is
anticipated that, following completion of the Acquisition, the ordinary shares of the Company will be readmitted to the
standard listing segment of the Official List and to trading on London Stock Exchange plc's main market for listed
securities.
Bookbuild
The Banks will today commence the bookbuilding process in respect of the Placing (the "Bookbuild") to determine demand for
participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of
participation in, the Placing.
The Banks shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their
absolute discretion, following consultation with the Company, determine.
Participation in, and principal terms of, the Placing
1. J.P. Morgan Cazenove is acting as global co-ordinator, lead bookrunner and agent of the
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