REG - Workspace Grp PLC McKay Securities - Recommended acquisition of McKay Securities

WorkspaceAnnouncement

02/03/2022 08:45

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RNS Number : 3562D  Workspace Group PLC  02 March 2022

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

FOR IMMEDIATE
RELEASE.

2 March 2022

RECOMMENDED OFFER

for

MCKAY SECURITIES PLC

by

WORKSPACE GROUP PLC

to be effected by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

Summary

The boards of directors of McKay Securities Plc ("McKay") and Workspace Group
Plc ("Workspace") are pleased to announce that they have reached agreement on
the terms and conditions of a recommended offer to be made by Workspace for
the entire issued, and to be issued, ordinary share capital of McKay. It is
intended that the Acquisition will be implemented by way of a scheme of
arrangement under Part 26 of the Companies Act.

Key Terms

Under the terms of the Acquisition, each McKay Shareholder will be entitled to
receive:

              for each McKay Share:         209 pence in
cash

 
and

 
0.115 New Workspace Shares

On the basis of the Closing Price per Workspace Share of 769 pence on 1 March
2022, being the last Business Day prior to the date of this Announcement, the
Acquisition values each McKay Share at 297 pence and the entire issued and to
be issued share capital of McKay at approximately £272 million on a fully
diluted basis.

On the basis of the 3-month VWAP of 818 pence per Workspace Share on 1 March
2022, being the last Business Day prior to the date of this Announcement, the
Acquisition values each McKay Share at 303 pence and the entire issued and to
be issued share capital of McKay at approximately £277 million on a fully
diluted basis.

The Acquisition represents, based on the 3-month VWAP of 818 pence per
Workspace Share on 1 March 2022 (being the last Business Day prior to the date
of this Announcement):

o a premium of approximately 36.2 per cent. to the Closing Price of 223
pence per McKay Share on 1 March 2022 (being the last Business Day prior to
the date of this Announcement);

o a premium of approximately 34.5 per cent. to the 3-month VWAP of 225 pence
per McKay Share on 1 March 2022 (being the last Business Day prior to the date
of this Announcement); and

o a discount of approximately 7.0 per cent. to McKay's estimated Net Tangible
Assets, adjusted for prepayment costs in relation to the Aviva Term Loan, of
326 pence per McKay Share as at 31 January 2022.

Immediately following completion of the Acquisition, existing Workspace
Shareholders will hold approximately 95 per cent. of the Enlarged Group and
McKay Shareholders will hold approximately 5 per cent. of the Enlarged Group.

Background to and reasons for the Acquisition

The Workspace Board believes there is a strong strategic, operational and
financial rationale for the Acquisition, providing a highly attractive
investment case. In particular:

·    Workspace will be a larger and more resilient company with enhanced
income and capital growth prospects and gross property assets of £2.9
billion, comprising 84 per cent. London office, 10 per cent. light industrial,
5 per cent. South-East office and 1 per cent. other;

·   the Acquisition will, by applying Workspace's proven operational model
and flexible lease offer,  increase Workspace's ability to capture the strong
demand in London and selectively extend its reach into the South-East;

·      the Acquisition will provide the opportunity to unlock corporate
and operational synergies;

·     the Acquisition is expected to be earnings accretive from year two
and the Workspace Board believes it will enhance earnings and dividend growth
over the medium term; and

·    Workspace will continue to operate with a conservative level of
leverage. While the Acquisition will initially take the Enlarged Group's loan
to value (LTV) to 32 per cent. on a pro forma basis, the Workspace Board is
committed to maintaining LTV below 30 per cent. in the medium term.

Recommendation, Irrevocable Undertakings and Letter of Intent

The McKay Directors, who have been so advised by Rothschild & Co as to the
financial terms of the Acquisition, consider the terms of the Acquisition to
be fair and reasonable. In providing its financial advice, Rothschild & Co
has taken into account the commercial assessments of the McKay Directors.
Rothschild & Co is providing independent financial advice to the McKay
Directors for the purposes of Rule 3 of the Code.

Accordingly, the McKay Directors intend to recommend unanimously that McKay
Shareholders vote in favour of the Scheme at the Court Meeting and the
Resolutions to be proposed at the General Meeting, as the McKay Directors have
irrevocably undertaken to do in respect of their own legal and/or beneficial
holdings which are under their control of 298,280 McKay Shares in aggregate,
representing approximately 0.3 per cent. of McKay's issued share capital on 1
March 2022 (being the last Business Day prior to the date of this
Announcement).

In addition to the irrevocable undertakings referred to above, Workspace has
received irrevocable undertakings to vote in favour of the Scheme at the Court
Meeting and the Resolutions to be proposed at the General Meeting from McKay
Shareholders in respect of 19,639,879 McKay Shares, representing approximately
21.8 per cent. of McKay's issued share capital as at 1 March 2022 (being the
last Business Day prior to the date of this Announcement).

In addition, Aberforth Partners LLP has given to Workspace a non-binding
letter of intent to vote in favour of the Scheme at the Court Meeting and the
Resolutions to be proposed at the General Meeting in respect of 13,402,943
McKay Shares representing approximately 14.9 per cent. of McKay's issued share
capital as at 1 March 2022 (being the last Business Day prior to the date of
this Announcement).

Accordingly, Workspace has received irrevocable undertakings and a letter of
intent in respect of a total of 33,341,102 McKay Shares representing, in
aggregate, approximately 37.0 per cent. of McKay's issued share capital on 1
March 2022 (being the last Business Day prior to the date of this
Announcement). Further details of the irrevocable undertakings are set out in
Appendix 3 to this Announcement.

Information on Workspace

Workspace is a FTSE 250 REIT and one of London's leading providers of flexible
office space. Workspace owns and manages approximately four million sq. ft. of
business space across 59 properties in dynamic London locations. Workspace is
home to thousands of London's brightest businesses, including fast-growing and
established brands across a wide range of sectors.

Workspace delivers capital and income growth from its distinctive flexible
operating model, expertise in urban regeneration, active asset management and
a focus on customer experience. It drives rental growth on its like-for-like
portfolio, executes an ongoing programme of refurbishments and redevelopments
to sustainably enhance and expand assets in line with customers' changing
requirements, as well as growing its footprint through selective acquisitions.

Information on McKay

McKay is a commercial property investment company with REIT status
specialising in the development, refurbishment and management of office,
industrial and logistics property in the South East and London.

McKay's strategy is to invest in well located, quality commercial real estate
assets with income and capital growth potential over the longer term,
realisable through active portfolio management, refurbishment and development.

Transaction Structure and Timetable

It is intended that the Acquisition will be implemented by way of a
Court-sanctioned scheme of arrangement of McKay under Part 26 of the Companies
Act, further details of which are contained in the full text of this
Announcement and full details of which will be set out in the Scheme Document.
However, Workspace reserves the right, subject to the terms of the
Co-operation Agreement and with the consent of the Panel, to implement the
Acquisition by way of a Takeover Offer.

The Acquisition will be subject to the Conditions and certain further terms
set out in Appendix 1 to this Announcement and to the full terms and
conditions which will be set out in the Scheme Document, including the
approval of the Scheme by the Scheme Shareholders and the sanction of the
Scheme by the Court.

The Scheme Document will include full details of the Scheme and the
Acquisition, together with notices of the Court Meeting and the General
Meeting and the expected timetable of the Scheme, and will specify the action
to be taken by McKay Shareholders. It is expected that the Scheme Document
will be despatched to McKay Shareholders in March 2022 and in any event within
28 days of this Announcement (unless otherwise agreed by the Panel, Workspace
and McKay).

The Scheme is expected to become Effective during May 2022, subject to the
satisfaction or, where applicable, waiver of the Conditions and certain
further terms set out in Appendix 1 to this Announcement.

 

Commenting on the Acquisition, Richard Grainger, Chair of McKay said:

"The McKay Board's recommendation of the Acquisition follows a detailed and
rigorous review during which we considered a broad range of options to unlock
value for McKay Shareholders and which determined Workspace's proposal to be
the most attractive. The offer from Workspace provides McKay Shareholders with
an opportunity to receive a return which values the business substantially
above where it has been trading historically with a substantial proportion of
this return payable in cash. It also provides McKay Shareholders with the
opportunity to participate in the future success of the enlarged and well
capitalised Workspace Group, whose business model is well placed to meet post
Covid-19 demand for high quality, flexible business space."

Commenting on the Acquisition, Graham Clemett, Chief Executive Officer of
Workspace said:

"The market for office space is shifting, with businesses prioritising greater
flexibility and the right location for their teams. This Acquisition is a
fantastic opportunity to accelerate our growth plans by capturing more of the
strong demand we are seeing for our flexible offer in London, whilst
selectively extending our reach into attractive commercial locations in the
South-East. We will be a larger, more resilient company with an enhanced
financial profile, and by applying our proven operational model and expertise,
we expect to generate strong returns from McKay's portfolio of high-quality
assets over the medium term."

 

Analyst and investor presentation

Workspace will host a presentation for analysts and investors at 9.45 a.m. (UK
time) today to discuss the Acquisition.

To join the webcast: https://secure.emincote.com/client/workspace/workspace019

To join via conference call: please register at the following link and you
will be provided with dial-in details and a unique access code:

https://secure.emincote.com/client/workspace/workspace019/vip_connect

 

This summary should be read in conjunction with, and is subject to, the full
text of this Announcement and the Appendices.

The Acquisition will be subject to the Conditions and certain further terms of
the Acquisition set out in Appendix 1 to this Announcement and to the full
terms and conditions to be set out in the Scheme Document. Appendix 2 contains
the sources and bases of certain information and the bases of calculations
used in this summary and this Announcement. Appendix 3 contains details of the
irrevocable undertakings and letter of intent given to Workspace in relation
to the Acquisition.

Appendix 4 to this Announcement contains property valuations supported by
valuation reports for each of Workspace and McKay as at 31 January 2022
pursuant to the requirements of Rule 29 of the Code. These property valuation
reports will, subject to the requirements of the Code, be reproduced in the
Scheme Document. Each of CBRE and Knight Frank has given and not withdrawn its
consent to the publication of its valuation report in this Announcement in the
form and context in which it is included.

Appendix 5 contains the definitions of certain terms used in this
Announcement.

 

Enquiries:

Workspace

Graham Clemett, Chief Executive Officer
                                                       +44
20 7138 3300

Dave Benson, Chief Financial Officer

Paul Hewlett, Director of Strategy & Corporate Development

Clare Marland, Head of Corporate Communications

 

J.P. Morgan Cazenove (Sole Financial Adviser and Corporate Broker to
Workspace)

Matt
Smith
+44 20 7742 4000

Jonty Edwards

Paul Pulze

 

Finsbury (PR Adviser to Workspace)

Chris
Ryall
+44 20 7251 3801

Guy Lamming

 

McKay

Simon Perkins, Chief Executive Officer
                                   +44 118 950 2333

Giles Salmon, Chief Financial Officer

 

Rothschild & Co (Sole Financial Adviser to McKay)

Alex Midgen
 
       +44 20 7280 5000

Sam Green

Jake Shackleford

 

Stifel Nicolaus Europe Limited (Corporate Broker to McKay)

Mark
Young
+44 20 7710 7600

Stewart Wallace

Jack McAlpine

 

FTI Consulting (PR Adviser to McKay)

Dido
Laurimore
+44 7801 654 424

Ellie Sweeney

 

Herbert Smith Freehills LLP is acting as legal adviser to Workspace in
connection with the Acquisition.

Slaughter and May is acting as legal adviser to McKay in connection with the
Acquisition.

 

Further Information

This Announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire, subscribe for,
sell or otherwise dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise nor
shall there be any sale, issuance or transfer of securities of McKay in any
jurisdiction in contravention of applicable laws.

The Acquisition will be implemented solely pursuant to the terms of the Scheme
Document (or, in the event that the Acquisition is to be implemented by means
of a Takeover Offer, the Offer Document), which, together with the Forms of
Proxy, will contain the full terms and conditions of the Acquisition,
including details of how to vote in respect of the Acquisition. Any decision
by McKay Shareholders in respect of, or other response to, the Acquisition
(including any vote in respect of the Resolutions to approve the Acquisition,
the Scheme or related matters), should be made only on the basis of the
information contained in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document).

This Announcement does not constitute a prospectus or a prospectus equivalent
document.

This Announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation. The person responsible for arranging for the
release of this Announcement on behalf of Workspace is Carmelina Carfora,
Company Secretary, and on behalf of McKay is Giles Salmon, Chief Financial
Officer.

Information Relating to McKay Shareholders

Please be aware that addresses, electronic addresses and certain other
information provided by McKay Shareholders, persons with information rights
and other relevant persons in connection with the receipt of communications
from McKay may be provided to Workspace during the offer period as required
under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c).

Overseas Jurisdictions

The release, publication or distribution of this Announcement in or into
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about, and observe any
applicable legal or regulatory requirements. In particular, the ability of
persons who are not resident in the United Kingdom to vote their McKay Shares
with respect to the Scheme at the Court Meeting, or to execute and deliver
Forms of Proxy appointing another to vote at the Court Meeting on their
behalf, may be affected by the laws of the relevant jurisdictions in which
they are located. Any failure to comply with the applicable restrictions may
constitute a violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law the companies and persons involved
in the Acquisition disclaim any responsibility or liability for the violation
of such restrictions by any person. This Announcement has been prepared for
the purpose of complying with English law, the Code, the Market Abuse
Regulation and the Disclosure Guidance and Transparency Rules and the
information disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with the laws
of jurisdictions outside the United Kingdom.

Unless otherwise determined by Workspace or required by the Code, and
permitted by applicable law and regulation, the New Workspace Shares to be
issued pursuant to the Acquisition to McKay Shareholders will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Acquisition by any such use, means, instrumentality or
form within a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction. Accordingly,
copies of this Announcement and any formal documentation relating to the
Acquisition are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction or any other jurisdiction where to do so would constitute a
violation of the laws of that jurisdiction, and persons receiving such
documents (including custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send such documents in or into or from any
Restricted Jurisdiction. Doing so may render invalid any related purported
vote in respect of the Acquisition. If the Acquisition is implemented by way
of a Takeover Offer (unless otherwise permitted by applicable law and
regulation), the Takeover Offer may not be made directly or indirectly, in or
into, or by the use of mails or any means or instrumentality (including, but
not limited to, facsimile, e-mail or other electronic transmission or
telephone) of interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of any Restricted Jurisdiction
and the Acquisition will not be capable of acceptance by any such use, means,
instrumentality or facilities or from within any Restricted Jurisdiction.

The availability of New Workspace Shares pursuant to the Acquisition to McKay
Shareholders who are not resident in the United Kingdom or the ability of
those persons to hold such shares may be affected by the laws or regulatory
requirements of the relevant jurisdictions in which they are resident. Persons
who are not resident in the United Kingdom should inform themselves of, and
observe, any applicable legal or regulatory requirements. McKay Shareholders
who are in any doubt about such matters should consult an appropriate
independent professional adviser in the relevant jurisdiction without delay.

Further details in relation to McKay Shareholders in overseas jurisdictions
will be contained in the Scheme Document.

The Acquisition will be subject to the applicable requirements of the Code,
the Panel, the London Stock Exchange and the FCA.

Additional Information for US Investors

Shareholders in the United States should note that the Acquisition relates to
the shares of an English company and is proposed to be made by means of a
scheme of arrangement provided for under, and governed by, English law.
Neither the proxy solicitation nor the tender offer rules under the US
Securities Exchange Act of 1934, as amended, will apply to the Scheme.
Moreover the Scheme will be subject to the disclosure requirements and
practices applicable in the UK to schemes of arrangement, which differ from
the disclosure requirements of the US proxy solicitation rules and tender
offer rules.  Financial information included in this Announcement and the
Scheme Document has been or will be prepared in accordance with accounting
standards applicable in the UK and may not be comparable to financial
information of US companies or companies whose financial statements are
prepared in accordance with generally accepted accounting principles in the
United States. If Workspace exercises its right to implement the Acquisition
by way of a Takeover Offer in accordance with the terms of the Cooperation
Agreement and determines to extend the offer into the United States, such
offer will be made in compliance with applicable United States securities laws
and regulations.

McKay and Workspace are each organised under the laws of England. Some or all
of the officers and directors of McKay and Workspace are residents of
countries other than the United States. It may not be possible to sue McKay
and Workspace in a non-US court for violations of US securities laws. It may
be difficult to compel McKay, Workspace and their respective affiliates to
subject themselves to the jurisdiction and judgment of a US court.

The receipt of cash and shares by a US holder of McKay Shares as consideration
for the transfer of its Scheme Shares pursuant to the Scheme may be a taxable
transaction for United States federal income tax purposes and under applicable
United States state and local, as well as foreign and other, tax laws. Each
McKay Shareholder (including US holders) is urged to consult its independent
professional adviser immediately regarding the tax consequences of the
Acquisition applicable to them.

This announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.

Neither the US Securities and Exchange Commission nor any securities
commission of any state or other jurisdiction of the United States has
approved the Acquisition, passed upon the fairness of the Acquisition, or
passed upon the adequacy or accuracy of this document. Any representation to
the contrary is a criminal offence in the United States.

Notes regarding New Workspace Shares

The New Workspace Shares to be issued pursuant to the Scheme have not been and
will not be registered under the relevant securities laws of Japan and the
relevant clearances have not been, and will not be, obtained from the
securities commission of any province of Canada.  No prospectus in relation
to the New Workspace Shares has been, or will be, lodged with, or registered
by, the Australian Securities and Investments Commission.  Accordingly, the
New Workspace Shares are not being, and may not be, offered, sold, resold,
delivered or distributed, directly or indirectly in or into a Restricted
Jurisdiction or any other jurisdiction if to do so would constitute a
violation of relevant laws of, or require registration thereof in, such
jurisdiction (except pursuant to an exemption, if available, from any
applicable registration requirements or otherwise in compliance with all
applicable laws).

The New Workspace Shares have not been and will not be registered under the US
Securities Act of 1933, as amended (the "US Securities Act"), or under the
securities laws of any state or other jurisdiction of the United States, and
may not be offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the US Securities
Act and in compliance with any applicable securities laws of any state or
other jurisdiction of the United States. It is expected that the New Workspace
Shares will be issued in reliance upon the exemption from the registration
requirements of the US Securities Act of 1933 (as amended) provided by Section
3(a)(10) thereof. For the purpose of qualifying for the exemption provided by
Section 3(a)(10) of the US Securities Act, Workspace will advise the Court
that its sanctioning of the Scheme will be relied on by Workspace for purposes
of a Section 3(a)(10) exemption following a hearing on the fairness of the
Scheme to McKay Shareholders.

Important Notices Relating to the Financial Advisers and Corporate Brokers

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove, is authorised by the Prudential Regulation Authority
and regulated by the FCA and the Prudential Regulation Authority in the United
Kingdom. J.P. Morgan Cazenove is acting exclusively as financial adviser to
Workspace and no one else in connection with the Acquisition and will not
regard any other person as its client in relation to the matters set out in
this Announcement and will not be responsible to anyone other than Workspace
for providing the protections afforded to clients of J.P. Morgan Cazenove or
its affiliates, or for providing advice in relation to the contents of this
announcement or any other matter referred to herein.

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the FCA in the United Kingdom, is acting
exclusively for McKay and for no one else in connection with the Acquisition
and will not regard any other person as its client in relation to the
Acquisition and will not be responsible to anyone other than McKay for
providing the protections afforded to clients of Rothschild & Co, nor for
providing advice in relation to any matter referred to in this Announcement.
Neither Rothschild & Co nor any of its affiliates (nor their respective
directors, officers, employees or agents) owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether in contract,
in tort, under statute or otherwise) to any person who is not a client of
Rothschild & Co in connection with this Announcement, any statement
contained herein, the Acquisition or otherwise. No representation or warranty,
express or implied, is made by Rothschild & Co as to the contents of this
Announcement.

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting as
corporate broker exclusively for McKay and no-one else in connection with the
matters referred to in this Announcement and will not regard any other person
as its client in relation to such matters and will not be responsible to
anyone other than McKay for providing the protections afforded to clients of
Stifel, nor for providing advice in relation to any matter referred to in this
Announcement.

Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk (http://www.thetakeoverpanel.org.uk) , including
details of the number of relevant securities in issue, when the offer period
commenced and when any offeror was first identified. You should contact the
Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any
doubt as to whether you are required to make an Opening Position Disclosure or
a Dealing Disclosure.

Forward-looking statements

This Announcement (including information incorporated by reference in this
Announcement), oral statements made regarding the Acquisition, and other
information published by Workspace and McKay contain statements which are, or
may be deemed to be, "forward-looking statements". Forward-looking statements
are prospective in nature and are not based on historical facts, but rather on
current expectations and projections of the management of Workspace and McKay
about future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. The forward-looking
statements contained in this Announcement may include statements relating to
the expected effects of the Acquisition on Workspace and McKay, the expected
timing of the Acquisition and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified by the use
of forward-looking words such as "plans", "expects" or "does not expect", "is
expected", "is subject to", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Although Workspace and McKay believe that the
expectations reflected in such forward-looking statements are reasonable,
Workspace and McKay can give no assurance that such expectations will prove to
be correct. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. There are a number of factors which could cause
actual results and developments to differ materially from those expressed or
implied by such forward looking statements, including, among others the
enactment of legislation or regulation that may impose costs or restrict
activities; the re-negotiation of contracts or licences; fluctuations in
demand and pricing in the commercial property industry; changes in government
policy and taxations; changes in political conditions, economies and markets
in which Workspace and McKay operate; changes in the markets from which
Workspace and McKay raise finance; the impact of legal or other proceedings;
changes in accounting practices and interpretation of accounting standards
under IFRS; changes in interest and exchange rates; industrial disputes; war
and terrorism. These forward-looking statements speak only as at the date of
this document.

Other unknown or unpredictable factors could cause actual results to differ
materially from those in the forward-looking statements. Such forward-looking
statements should therefore be construed in the light of such factors. Neither
Workspace nor McKay, nor any of their respective associates or directors,
officers or advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward-looking
statements in this Announcement will actually occur. You are cautioned not to
place undue reliance on these forward-looking statements. Other than in
accordance with their legal or regulatory obligations (including under the
Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA),
neither Workspace or McKay is under any obligation, and Workspace and McKay
expressly disclaim any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

No profit forecasts, estimates or quantified benefits statements

No statement in this Announcement is intended as a profit forecast, profit
estimate or quantified benefits statement for any period and no statement in
this Announcement should be interpreted to mean that earnings or earnings per
share for McKay or Workspace for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share for McKay or Workspace respectively.

Publication of this Announcement

A copy of this Announcement will be available subject to certain restrictions
relating to persons resident in Restricted Jurisdictions on
www.workspace.co.uk/investors/investor-centre/recommended-offer-for-mckay-securities-plc
and www.mckaysecurities.plc.uk by no later than 12 noon (London time) on the
Business Day following this Announcement.

The contents of Workspace's website and McKay's website are not incorporated
into and do not form part of this Announcement.

Requesting hard copy documents

In accordance with Rule 30.3 of the Code, McKay Shareholders, persons with
information rights and participants in McKay Share Plans may request a hard
copy of this Announcement by writing to McKay Securities Plc, 20 Greyfriars
Road, Reading Berkshire RG1 1NL or contacting McKay's Company Secretary,
during business hours on +44 (0)118 950 2333. In accordance with Rule 30.3 of
the Code, a person so entitled may also request that all future documents,
announcements and information be sent to them in relation to the Acquisition
should be in hard copy form. For persons who receive a copy of this
Announcement in electronic form or via a website notification, a hard copy of
this Announcement will not be sent unless so requested. Such persons may also
request that all future documents, announcements and information to be sent to
them in relation to the Acquisition should be in hard copy form.

If you are in any doubt about the contents of this Announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 (as amended).

Rounding

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.

Rule 2.9 of the Code

For the purposes of Rule 2.9 of the Code, McKay confirms that, as at 1 March
2022 (being the last Business Day prior to the date of this Announcement), it
had in issue 90,089,313 ordinary shares of 20 pence each. The ISIN for the
shares is GB0005522007.

 

For the purposes of Rule 2.9 of the Code, Workspace confirms that, as at 1
March 2022 (being the last Business Day prior to the date of this
Announcement), it had in issue 181,123,659 ordinary shares of one pound each.
The ISIN for the shares is GB00B67G5X01.

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

FOR IMMEDIATE
RELEASE.

2 March 2022

RECOMMENDED OFFER

for

MCKAY SECURITIES PLC

by

WORKSPACE GROUP PLC

to be effected by means of a Scheme of Arrangement

under Part 26 of the Companies Act

 

1.         Introduction

The boards of directors of McKay Securities plc ("McKay") and Workspace Group
Plc ("Workspace") are pleased to announce that they have reached agreement on
the terms and conditions of a recommended offer to be made by Workspace for
the entire issued, and to be issued, ordinary share capital of McKay. It is
intended that the Acquisition will be implemented by way of a scheme of
arrangement under Part 26 of the Companies Act.

2.         The Acquisition

Under the terms of the Acquisition, which will be subject to the Conditions
and further terms set out in this Announcement and to the full terms and
conditions which will be set out in the Scheme Document, each McKay
Shareholder will be entitled to receive:

              for each McKay Share:             209
pence in cash

 
and

 
0.115 New Workspace Shares

On the basis of the Closing Price per Workspace Share of 769 pence on 1 March
2022, being the last Business Day prior to the date of this Announcement, the
Acquisition values each McKay Share at 297 pence and the entire issued and to
be issued share capital of McKay at approximately £272 million on a fully
diluted basis.

On the basis of the 3-month VWAP of 818 pence per Workspace Share on 1 March
2022, being the last Business Day prior to the date of this Announcement, the
Acquisition values each McKay Share at 303 pence and the entire issued and to
be issued share capital of McKay at approximately £277 million on a fully
diluted basis.

The Acquisition represents, based on the 3-month VWAP of 818 pence per
Workspace Share on 1 March 2022 (being the last Business Day prior to the date
of this Announcement):

o  a premium of approximately 36.2 per cent. to the Closing Price of 223
pence per McKay Share on 1 March 2022 (being the last Business Day prior to
the date of this Announcement);

o  a premium of approximately 34.5 per cent. to the 3-month VWAP of 225 pence
per McKay Share on 1 March 2022 (being the last Business Day prior to the date
of this Announcement); and

o a discount of approximately 7.0 per cent. to McKay's estimated Net Tangible
Assets, adjusted for prepayment costs in relation to the Aviva Term Loan, of
326 pence per McKay Share as at 31 January 2022.

Immediately following completion of the Acquisition, existing Workspace
Shareholders will hold approximately 95 per cent. of the Enlarged Group and
McKay Shareholders will hold approximately 5 per cent. of the Enlarged Group.

It is intended that the Acquisition will be implemented by means of a
Court-sanctioned scheme of arrangement of McKay under Part 26 of the Companies
Act, further details of which are contained in paragraph 13 below.

If any dividend or other distribution or return of value is proposed,
declared, made, paid or becomes payable by McKay in respect of a McKay Share
on or after the date of this Announcement and prior to the Effective Date,
Workspace will have the right to reduce the value of the consideration payable
for each McKay Share by up to the amount per McKay Share of such dividend,
distribution or return of value except where the McKay Share is or will be
acquired pursuant to the Scheme on a basis which entitles Workspace to receive
the dividend, distribution or return of value and to retain it. If any such
dividend or distribution or return of value is paid or made after the date of
this Announcement and Workspace exercises its rights described above, any
reference in this Announcement to the consideration payable under the Scheme
shall be deemed to be a reference to the consideration as so reduced.

Appendix 4 contains property valuations supported by valuation reports for
each of Workspace and McKay as at 31 January 2022 pursuant to the requirements
of Rule 29 of the Code. Appendix 2 contains a schedule of adjustments made to
each of Workspace's and McKay's investment property valuation in order to
calculate Workspace's and McKay's estimated Net Tangible Assets as at 31
January 2022 respectively. These property valuations will be reproduced in the
Scheme Document, which is expected to be sent to McKay Shareholders in March
2022 and in any event within 28 days of this Announcement (unless otherwise
agreed by the Panel, Workspace and McKay).

3.         Background to and reasons for the Acquisition

As one of London's leading providers of flexible office space operating for
over 30 years, Workspace has pioneered a distinctive offer, letting space on
flexible terms to a wide range of small and medium-sized enterprise customers.
Workspace owns its properties, typically large, character buildings in
well-connected locations across London, and allows customers to fit out their
own office space to reflect their own identity and culture while also
providing significant areas of communal space and an attractive range of
support facilities.

Workspace's sustainable model of employment-led regeneration, extensive
pipeline of refurbishment and redevelopment projects and selective
acquisitions, alongside its successful operational platform, have delivered an
attractive combination of dividend and capital growth over the long term.

The Covid-19 pandemic has highlighted the attraction of flexible office space,
as well as the importance for businesses of choosing the right office
environment to attract and retain talent. Importantly Workspace's flexible
lease terms allow customers to expand and contract quickly in line with their
business needs.

Against this backdrop, the Acquisition represents an attractive opportunity
for Workspace to accelerate its existing growth strategy and create value for
shareholders. The Acquisition will grow Workspace's office market share across
London and selectively extend its reach into well-connected commercial
locations in the surrounding South-East, while also adding an attractive
portfolio of light industrial properties. Workspace has a long track record of
managing and maximising value from office and light industrial assets.

The Workspace Board believes the Acquisition will create significant value
through increased economies of scale, the application of Workspace's proven
operating model and flexible lease offer and, where appropriate, the recycling
of assets for reinvestment. As it has done successfully and continues to do
with its existing portfolio, Workspace will apply the most appropriate
business plan to each McKay asset in order to deliver the best returns.

The Workspace Board also believes there is a good cultural fit between the two
companies and recognises the value of the 'McKay Way' customer service
commitment, the 'McKay +' offer and McKay's wider portfolio of refurbishment
and redevelopment opportunities. Taking this cultural fit and portfolio
opportunity alongside Workspace's strong balance sheet and its strategic focus
on customer-led growth, operational excellence and sustainability puts the
Enlarged Group in a strong position to create further value for shareholders.

The Workspace Board believes the Acquisition will support Workspace's ambition
to deliver total returns that outperform the market over the long-term.
Workspace will continue to:

·      take advantage of the economies of scale available from its
operating platform;

·      maintain an intensive approach to asset management;

·      execute its extensive refurbishment and redevelopment pipeline;

·      make acquisitions with attractive existing or potential income
profiles; and

·      maintain a firm discipline on recycling assets where appropriate.

The Workspace Board believes there is a strong strategic, operational and
financial rationale for the Acquisition, providing a highly attractive
investment case. In particular:

·    Workspace will be a larger and more resilient company with enhanced
income and capital growth prospects and gross property assets of £2.9
billion, comprising 84 per cent. London office, 10 per cent. light industrial,
5 per cent. South-East office and 1 per cent. other;

·    the Acquisition will, by applying Workspace's proven operational
model and flexible lease offer,  increase Workspace's ability to capture the
strong demand in London and selectively extend its reach into the South-East;

·      the Acquisition will provide the opportunity to unlock corporate
and operational synergies;

·      the Acquisition is expected to be earnings accretive from year
two and the Workspace Board believes it will enhance earnings and dividend
growth over the medium term; and

·    Workspace will continue to operate with a conservative level of
leverage. While the Acquisition will initially take the Enlarged Group's loan
to value (LTV) to 32 per cent. on a pro forma basis, the Workspace Board is
committed to maintaining LTV below 30 per cent. in the medium term.

4.         Recommendation

The McKay Directors, who have been so advised by Rothschild & Co as to the
financial terms of the Acquisition, consider the terms of the Acquisition to
be fair and reasonable. In providing its financial advice, Rothschild & Co
has taken into account the commercial assessments of the McKay Directors.
Rothschild & Co is providing independent financial advice to the McKay
Directors for the purposes of Rule 3 of the Code.

Accordingly, the McKay Directors intend unanimously to recommend that McKay
Shareholders vote in favour of the Scheme at the Court Meeting and the
Resolutions to be proposed at the General Meeting as the McKay Directors have
irrevocably undertaken to do in respect of their own legal and/or beneficial
holdings which are under their control of 298,280 McKay Shares in aggregate,
representing approximately 0.33 per cent. of McKay's issued share capital on 1
March 2022 (being the last Business Day prior to the date of this
Announcement).

5.         Background to and reasons for the Recommendation

McKay is the only UK REIT specialising entirely in the South East and London
office, industrial and logistics markets. As at 31 January 2022, McKay's
property portfolio comprised 34 properties valued at £490.4 million, 64.2 per
cent. of which comprised South East and London offices, 31.6 per cent. South
East industrial/logistics assets and developments and 4.2 per cent. other
assets.

In January 2014, McKay placed equity at a price of 189 pence per share,
raising gross proceeds of £86.7 million to increase the scale and
diversification of its property portfolio, including for acquisitions,
refurbishments and development projects.

McKay's strategy since its 2014 capital raising has been to build upon its
long established expertise in its core London and South East markets,
including its reputation with occupiers, to deliver attractive income and
capital returns from its property portfolio of quality assets within
established and resilient markets, with conservative levels of gearing on a
risk-adjusted basis. In particular, McKay's property strategy includes: (i)
the rolling refurbishment and repositioning of selected assets to enhance and
realise reversionary rental value; (ii) growing the 'McKay +' offering of
flexible, semi-fitted office space to reduce office voids and increase rental
tone; (iii) undertaking significant development projects, for example the
speculative development and leasing to Amazon of 135 Theale Logistics Park;
(iv) capital re-cycling including selective disposals; and (v) selective
value-add acquisitions (for example Evergreen Studios, Richmond).

Capital investment in the property portfolio has been supported by capital
re-cycling and selective disposals, which have maintained a strong balance
sheet position and prudent loan-to-value (LTV) of 35.1 per cent. as at 31
January 2022. Successful recent disposals have included, for example, the sale
of 30 Lombard Street in 2020 for £68.5 million in net sale proceeds, above
its 31 March 2020 book value and at a net initial yield of 4.16 per cent. on a
topped-up basis, and the sale of Great Brighams Mead announced on 2 February
2022, having achieved a residential planning consent, for £19.0 million, 21.0
per cent. above its 30 September 2021 book value.

McKay has delivered robust returns on its property portfolio since its 2014
capital raising, generating an average annualised total accounting return of
7.8 per cent. over the approximately 8 year period from 31 March 2014 to 31
January 2022.

Notwithstanding McKay's successful delivery against its property strategy,
McKay's share price has traded at a persistent discount to EPRA Net Tangible
Assets. McKay's trading discount has averaged 20.9 per cent. over the last 8
years, 25.8 per cent. over the last 5 years and 28.6 per cent. over the last 3
years, even when adjusting for the period of maximum Covid-19 related equity
market disruption from 16 March 2020 to 2 November 2020.

The McKay Directors believe the following factors contribute to the persistent
trading discount:

·      the small scale of McKay relative to the listed real estate
sector;

·      McKay's relatively high overhead cost proportion compared to net
rental income, particularly following recent disposals;

·      the relatively low levels of liquidity in McKay Shares and its
concentrated shareholder register; and

·     the relatively low distributable income yield with an average
dividend yield of 3.8 per cent. over the last 5 years and an average dividend
yield versus EPRA Net Tangible Assets of 2.8 per cent. over the same time
period.

During the summer of 2021, McKay appointed Rothschild & Co to undertake a
review of McKay's strategy in relation to the positioning of its business
generally and options to narrow the trading discount. In assessing the offer
from Workspace, the McKay Directors have had regard to the alternative options
identified as part of the strategic review, including opportunities to invest
and scale the business over the medium term, as well as the possibility of
returning capital to McKay Shareholders, as discussed further below.

The offer from Workspace follows the receipt of indicative offers for McKay
from two parties, including Workspace, which were negotiated in late 2021 and
early 2022. Workspace's current offer represents a material increase relative
to its initial indicative proposal.

Whilst the McKay Board remains confident in its property strategy, the
resilience of its assets and the outlook in its core London and South East
markets, the McKay Board also believes that the structural factors impacting
on McKay's share price are likely to persist, and that the share price is
likely to remain depressed relative to its fundamental value. As such,
following careful consideration, the McKay Board is recommending the
Acquisition to McKay Shareholders. The McKay Board considered the following in
arriving at its recommendation:

·      on the basis of the 3-month VWAP of 818 pence per Workspace Share
on 1 March 2022, being the last Business Day prior to the date of this
Announcement, the Acquisition price of 209 pence in cash and 0.115 in New
Workspace Shares per McKay Share represents:

o  a premium of approximately 36.2 per cent. to the Closing Price of 223
pence per McKay Share on 1 March 2022 (being the last Business Day prior to
the date of this Announcement);

o  a premium of approximately 34.5 per cent. to the 3-month VWAP of 225 pence
per McKay Share on 1 March 2022 (being the last Business Day prior to the date
of this Announcement); and

o  a discount of approximately 7.0 per cent. to McKay's estimated Net
Tangible Assets, adjusted for prepayment costs in relation to the Aviva Term
Loan, of 326 pence per McKay Share as at 31 January 2022, which compares
favourably with McKay's 5-year average trading discount. The McKay Board
believes that, notwithstanding its confidence in McKay's property strategy and
returns that may be generated from McKay's property portfolio, the trading
discount is likely to persist;

·     70 per cent. of total consideration for the Acquisition will be
payable in cash, which provides McKay Shareholders with the opportunity to
realise a significant proportion of their otherwise illiquid shareholdings in
cash;

·     30 per cent. of total consideration for the Acquisition will be
payable in New Workspace Shares, which provides McKay Shareholders with
on-going participation in the success of the Enlarged Group. Immediately
following completion of the Acquisition, McKay Shareholders will hold
approximately 5 per cent. of the Enlarged Group and will benefit from a more
liquid shareholding in a large and well capitalised group;

·    the Board of McKay believes the Enlarged Group will be more
resilient, with stronger income and capital value growth prospects, and the
Acquisition is expected to unlock corporate and operational synergies to the
benefit of all shareholders of the Enlarged Group; and

·     the Board of McKay believes that the certainty of the Acquisition
offers an attractive risk adjusted outcome for McKay Shareholders relative to
McKay's long term prospects and alternative strategies as an independent
company. In particular, the McKay Directors believe that a managed capital
return strategy over time has certain risks, including meaningfully reduced
scale and liquidity, which itself has contributed historically to the trading
discount.

The McKay Directors have also taken into account Workspace's intentions for
the McKay business, as well as Workspace's intentions for McKay's management,
employees, pension scheme and other stakeholders.

Accordingly, following careful consideration of the above factors, the McKay
Directors intend unanimously to recommend the Acquisition to McKay
Shareholders.

6.         Information on Workspace

Workspace is a FTSE 250 REIT and one of London's leading providers of flexible
office space. Workspace owns and manages approximately four million sq. ft. of
business space across 59 properties in dynamic London locations. Workspace is
home to thousands of London's brightest businesses, including fast-growing and
established brands across a wide range of sectors.

Workspace delivers capital and income growth thanks to its distinctive
flexible operating model, expertise in urban regeneration, active asset
management and a focus on customer experience. It drives rental growth on its
like-for-like portfolio, executes an ongoing programme of refurbishments and
redevelopments to sustainably enhance and expand assets in line with
customers' changing requirements, as well as growing its footprint through
selective acquisitions.

As at 31 January 2022, the estimated rolled-forward Net Tangible Assets was
969 pence per Workspace Share, up by 4.4 per cent. since 30 September 2021.
Based on the valuation by CBRE, Workspace's total property valuation increased
by £131 million in the four months to 31 January 2022 to £2,402 million,
reflecting an increase in the underlying valuation of 3.2 per cent.,
predominantly driven by yield shift. Net debt was £573 million as at 31
January 2022, with LTV of 24 per cent.

7.         Information on McKay

McKay is a commercial property investment company with REIT status
specialising in the development, refurbishment and management of office,
industrial and logistics property in the South East and London.

McKay's strategy is to invest in well located, quality commercial real estate
assets with income and capital growth potential over the longer term,
realisable through active portfolio management, refurbishment and development.
McKay has a long track record of delivering shareholder value through the
development, refurbishment and management of commercial property. Its
operational business model involves the active management of assets in-house,
rather than using third party managing agents, enabling it to build strong
relationships and work in partnership with its occupiers and local supply
chains. ESG considerations continue to play an integral part in McKay's
strategy and operating practices, based on its 2019 Sustainability Framework
and 2021 Net Zero Carbon Pathway.

McKay's portfolio, as at 31 January 2022, comprises 34 properties located in
established areas, valued at £490.4 million. Its property portfolio is
weighted to the M4 corridor, where McKay has deep expertise, with a focus on
growing satellite towns benefitting from strong connectivity to London and
robust demand amongst leading occupiers.

The largest segment of McKay's property portfolio comprises South East and
London offices (64.2 per cent. by value as at 31 January 2022). South East
industrial/logistics and developments comprise a further 31.6 per cent. and
4.2 per cent. respectively (each as at 31 January 2022).

8.         Irrevocable undertakings and letter of intent to vote in
favour of the Acquisition

Workspace has received irrevocable undertakings from each of the McKay
Directors in respect of their own legal and/or beneficial holdings of McKay
Shares which are under their control to vote in favour of the Scheme at the
Court Meeting and the Resolutions to be proposed at the General Meeting, in
respect of a total of 298,280 McKay Shares representing, in aggregate,
approximately 0.3 per cent. of McKay's issued share capital as at 1 March 2022
(being the last Business Day prior to the date of this Announcement).

In addition to the irrevocable undertakings referred to above, Workspace has
received irrevocable undertakings to vote in favour of the Scheme at the Court
Meeting and the Resolutions to be proposed at the General Meeting from McKay
Shareholders in respect of 19,639,879 McKay Shares representing, in aggregate,
approximately 21.8 per cent. of McKay's issued share capital as at 1 March
2022 (being the last Business Day prior to the date of this Announcement).

In addition, Aberforth Partners LLP has given to Workspace a non-binding
letter of intent to vote in favour of the Scheme at the Court Meeting and the
Resolutions to be proposed at the General Meeting in respect of 13,402,943
McKay Shares representing approximately 14.9 per cent. of McKay's issued share
capital as at 1 March 2022 (being the last Business Day prior to the date of
this Announcement).

Accordingly, Workspace has received irrevocable undertakings and a letter of
intent to vote in favour of the Scheme at the Court Meeting and to vote in
favour of the Resolutions at the General Meeting in respect of 33,341,102
McKay Shares representing, in aggregate, approximately 37.0 per cent. of
McKay's issued share capital as at 1 March 2022 (being the last Business Day
prior to the date of this Announcement).

Further details of the irrevocable undertakings and letter of intent described
above are set out in Appendix 3.

9.         Directors, management, employees, pensions and locations

Workspace's strategic plans for McKay

Workspace recognises the high quality of, and opportunity within, the
portfolio of assets that McKay owns and manages. As set out in paragraph 3
above, Workspace believes the Acquisition of McKay represents a highly
attractive opportunity for Workspace to accelerate its existing growth
strategy and create value for shareholders.

Workspace will apply the most appropriate business plan to deliver the best
returns for each of the McKay properties. Taking into account, amongst other
factors, the location of the property, the suitability of the buildings and
anticipated demand for a flexible lease offering, Workspace will:

·      adapt the McKay properties to Workspace's business centre model;

·      adopt Workspace's proven operating model and flexible lease
offer;

·    use Workspace's extensive experience of active asset management to
optimise the leasing strategy for the McKay properties, complementing its
flexible model with a focus on the duration and terms of new leases and
ensuring a customer mix that is consistent with Workspace's strategy for each
property; and/or

·     take advantage of attractive opportunities to recycle capital into
other assets, which may result in the disposal of certain assets, including
light industrial properties.

Board, management and employees

Workspace and McKay recognise the importance of the skills and experience of
the existing management and employees of McKay. Workspace intends to support
the McKay management team and save for (i) the expectation that Simon Perkins
(Chief Executive Officer), Giles Salmon (Chief Financial Officer) and Tom
Elliott (Property Director and Head of Sustainability) will leave their
current roles following a period of handover and (ii) any rationalisation of
employees identified as part of the evaluation of McKay's operations described
further below, Workspace has no intention to make any change to the continued
employment of the 18 employees and management of McKay, including any material
changes to the terms and conditions of employment or in the balance of skills
and functions of the management and employees of the McKay organisation as a
result of the Acquisition.

The Chairman and Non-Executive Directors of McKay will step down from the
Enlarged Group upon completion of the Acquisition. It is intended that,
following completion of the Acquisition and a period of handover, Simon
Perkins, Giles Salmon and Tom Elliott will each leave their respective roles
as Chief Executive Officer, Chief Financial Officer, and Property Director and
Head of Sustainability of McKay.

Workspace intends to undertake an evaluation of McKay and its operations
within six months following completion of the Acquisition and has agreed not
to issue any notice of termination by reason of redundancy or invite voluntary
redundancies during such six month period. The evaluation will include an
assessment of any overlap of roles currently undertaken by McKay and
Workspace, including in respect of certain corporate functions which exist in
relation to McKay's status as a premium-listed publicly traded company which
will no longer be required on a standalone basis or will be reduced in scope,
which may result in a rationalisation of employee roles. Workspace has not yet
developed proposals as to how any such headcount reductions could be
implemented.

Conditions of employment

Workspace confirms that, following completion of the Acquisition, the existing
contractual and statutory rights and terms and conditions of employment,
including pension obligations, of the management and employees of McKay will
be fully safeguarded in accordance with applicable law. In addition, Workspace
has agreed that for 12 months following completion of the Acquisition, if any
McKay employee is made redundant they will be entitled to redundancy payments
on no less favourable terms than under the applicable McKay redundancy
practices.

Incentivisation arrangements

Following completion of the Acquisition, managers (including the three
executive directors) and employees of McKay will participate in Workspace's
current annual bonus arrangements and Long Term Incentive Plan. For the
financial year in which completion of the Acquisition occurs, the bonus
opportunities and Long Term Incentive Plan grant levels for such managers and
employees will be those that would have applied had McKay operated its usual
arrangements.

As required by, and solely for the purposes of, Rule 16.2 of the Takeover
Code, Rothschild & Co has (in its capacity as independent adviser to the
McKay Directors for the purposes of Rule 3 of the Takeover Code) reviewed the
terms of the arrangements described in the paragraph above and has confirmed
that, in its opinion, that those arrangements are fair and reasonable as far
as McKay's Shareholders are concerned. In providing this advice to the McKay
Directors, Rothschild & Co has taken into account the commercial
assessments of the McKay Directors.

Pensions

McKay operates and participates in a defined benefit pension scheme in the UK,
the McKay Securities Plc Pension and Life Assurance Scheme (the "DB Scheme").
The DB Scheme is closed to new members and future accrual. It has six members,
all of whom are pensioners. The last full actuarial valuation of the DB Scheme
was undertaken as at March 2020, and revealed a funding level of 78 per cent.
on a technical provisions basis (a shortfall of £1.38 million).

Workspace has engaged in constructive discussions with the Pension Trustees.
Workspace has agreed that, pursuant to the Pension Trustee Letter summarised
at paragraph 11 below, the employer will to continue to make contributions in
line with the current schedule of contributions and recovery plan and shall
also procure that additional contributions are made equal to 50 per cent. of
the current annual contributions payable (an increase of £120,000 per annum).
These increased contributions will be payable until the agreement of the next
triennial valuation as at 31 March 2023. Workspace has also agreed to provide
a parent company guarantee up to the amount of the DB Scheme's deficit from
time to time on an insurance company buy-out basis. Workspace does not intend
to re-open the DB Scheme to new members or future accrual.

In addition, Workspace does not intend to make any change to the benefits
provided by McKay's defined contribution pension schemes and intends for the
employer to continue to make contributions in line with the current
arrangements.

Headquarters, locations, research and development and fixed assets

Following completion of the Acquisition the headquarters of McKay will be at
Workspace's offices in London. As part of the evaluation of McKay's operations
referred to above, Workspace will review the continuing business need to
retain McKay's Reading office and the appropriate size for the office if it is
to be retained. The existing head office functions of McKay will also be
considered as part of this review and may be retained at McKay's Reading
office or moved to Workspace's London office depending on the outcome of the
review.

McKay has no research and development function and Workspace has no plans in
this regard.

Other than as set out above under the heading Workspace's strategic plans for
McKay, Workspace has no other plans to make changes to the fixed assets of
McKay.

Trading facilities

The McKay Shares are currently listed on the premium listing segment of the
Official List and are admitted to trading on the London Stock Exchange's Main
Market for listed securities. Subject to the Scheme becoming Effective,
applications will be made to the FCA and the London Stock Exchange to cancel
the listing of the McKay Shares on the Official List and trading on the Main
Market, following which McKay will be re-registered as a private limited
company.

No statements in this paragraph 9 constitute "post-offer undertakings" for the
purposes of Rule 19.5 of the Takeover Code.

10.       Financing of the Acquisition

Workspace has entered into a loan facility agreement with Banco Santander
S.A., London Branch, HSBC UK Bank plc and National Westminster Bank plc as
original lenders and National Westminster Bank plc as agent dated 2 March 2022
(the "Facility Agreement"), pursuant to which a £200,000,000 credit facility
is being made available to Workspace to finance the cash payable to McKay
Shareholders under the terms of the Acquisition. Further details in respect of
the Facility Agreement and these financing arrangements will be included in
the Scheme Document.

J.P. Morgan Cazenove, in its capacity as financial adviser to Workspace, is
satisfied that sufficient cash resources are available to Workspace to satisfy
in full the cash consideration payable to McKay Shareholders under terms of
the Acquisition.

Further information on the financing of the Acquisition will be set out in the
Scheme Document.

11.       Offer-related arrangements

Co-operation Agreement

McKay and Workspace have entered into a Co-operation Agreement dated 2 March
2022, pursuant to which McKay and Workspace have agreed: (i) to co-operate and
provide each other with reasonable information, assistance and access in
relation to the filings, submissions and notifications to be made in relation
to regulatory clearances and authorisations (if any) that are required in
connection with the Acquisition; (ii) to provide each other with reasonable
information, assistance and access for the preparation of certain parts of the
key shareholder documentation; and (iii) to certain provisions if the Scheme
should switch to a Takeover Offer. Workspace has also agreed to provide McKay
with certain information for the purposes of the Scheme Document and to
otherwise assist with the preparation of the Scheme Document.

The Co-operation Agreement records the intention of Workspace and McKay to
implement the Acquisition by way of the Scheme, subject to Workspace's right
to switch to a Takeover Offer in certain circumstances.

The Co-operation Agreement may be terminated with immediate effect in the
following circumstances, among others:

·      if McKay and Workspace so agree in writing;

·   upon notice by Workspace to McKay if: (i) a competing proposal is
publicly recommended by the McKay Directors; (ii) a competing proposal
completes, becomes effective or becomes, or is, declared, unconditional in all
respects; or (iii) the McKay Directors cease to recommend the Acquisition to
McKay Shareholders (in certain circumstances as described therein); and

·     upon notice by McKay to Workspace or by Workspace to McKay if: (i)
prior to the Long Stop Date, a Condition has been invoked by Workspace where
permitted by the Panel; (ii) a third party announces a firm intention to make
an offer or revised offer;  (iii) the Acquisition is withdrawn, terminated or
lapses in accordance with its terms prior to the Long Stop Date and, where
required, with consent of the Panel (except in certain circumstances
prescribed therein); (iv) the Scheme is not approved by the requisite majority
of holders of Scheme Shares at the Court Meeting or by McKay Shareholders at
the General Meeting, or the Court definitively refuses to sanction the Scheme;
or (v) unless otherwise agreed by Workspace and McKay in writing or required
by the Panel, if the Effective Date has not occurred by the Long Stop Date.

The Co-operation Agreement also contains provisions that will apply in respect
of the McKay Share Plans.

McKay Confidentiality Agreement

On 30 November 2021, McKay and Workspace entered into a confidentiality
agreement pursuant to which Workspace undertook, among other things, to keep
certain information relating to McKay and the Acquisition confidential and not
to disclose it to third parties (other than permitted parties) unless required
by law or regulation, among other exceptions. These confidentiality
obligations will remain in force until the earlier of: (i) 24 months from the
date of the McKay Confidentiality Agreement; and (ii) the date of completion
of the Acquisition, subject to certain exceptions.

Workspace Confidentiality Agreement

On 9 February 2022, McKay and Workspace entered into a confidentiality
agreement pursuant to which McKay undertook, among other things, to keep
certain information relating to Workspace confidential and not to disclose it
to third parties (other than permitted parties) unless required by law or
regulation, among other exceptions. These confidentiality obligations will
remain in force until the earlier of: (i) 24 months from the date of the
Workspace Confidentiality Agreement; and (ii) the date of completion of the
Acquisition, subject to certain exceptions.

Pension Trustee Confidentiality Agreement

On 14 February 2022, Workspace, and certain of the Pension Trustees, entered
into a confidentiality agreement pursuant to which such Pension Trustees
undertook, among other things, to keep certain information relating to
Workspace confidential and not to disclose it to third parties (other than
permitted parties) unless required by law or regulation, among other
exceptions. These confidentiality obligations will remain in force until the
date which is five years after the date of the Pension Trustee Confidentiality
Agreement (unless terminated by Workspace prior to that date).

Pension Trustee Letter

On 25 February 2022, Workspace entered into an agreement with the Pension
Trustees and McKay pursuant to which Workspace has agreed that the employer
under the McKay Securities Plc Pension and Life Assurance Scheme will continue
to make contributions in line with the current schedule of contributions and
recovery plan and shall also procure that additional contributions are made
equal to 50 per cent. of the current annual contributions payable (an increase
of £120,000 per annum). These increased contributions will be payable until
the agreement of the next triennial valuation as at 31 March 2023. Workspace
has also agreed to provide a parent company guarantee up to the amount of the
DB Scheme's deficit from time to time on an insurance company buy-out basis.

12.       McKay Share Plans

Participants in the McKay Share Plans will be contacted regarding the effect
of the Acquisition on their options under the McKay Share Plans.

The Scheme will extend to any McKay Shares which are unconditionally allotted
or issued before the Scheme Record Time, including those allotted, issued or
transferred to satisfy the exercise of options under the McKay Share Plans.

The Scheme will not extend to McKay Shares issued on or after the Scheme
Record Time. However, it is proposed to amend McKay's articles of association
at the General Meeting to provide that, if the Acquisition becomes Effective,
any McKay Shares issued to any person on or after the Scheme Record Time
(including in satisfaction of an option exercised under one of the McKay Share
Plans) will be automatically transferred to Workspace in consideration for the
payment by Workspace to such persons of 209 pence in cash and 0.115 New
Workspace Shares for each McKay Share so transferred.

13.       Structure of the Acquisition

The Scheme

It is intended that the Acquisition will be implemented by means of a
Court-sanctioned scheme of arrangement between McKay and the Scheme
Shareholders under Part 26 of the Companies Act.

The purpose of the Scheme is to provide for Workspace to become the owner of
the entire issued and to be issued share capital of McKay. In order to achieve
this, the Scheme Shares will be transferred to Workspace under the Scheme. In
consideration for this transfer, the Scheme Shareholders will receive 209
pence in cash and 0.115 New Workspace Shares on the basis set out in paragraph
2 above. The transfer to Workspace of the Scheme Shares will result in McKay
becoming a wholly owned subsidiary of Workspace.

The Acquisition is subject to the Conditions and further terms set out in
Appendix 1 of this Announcement and to be set out in the Scheme Document.

In order for the Scheme to become Effective:

(a)          the Scheme must be approved by Scheme Shareholders by
the passing of a resolution at the Court Meeting. This resolution must be
approved by a majority in number of the Scheme Shareholders (or relevant
classes thereof) present and voting (and entitled to vote) at the Court
Meeting, and any separate class meeting(s) which may be required by the Court
either in person or by proxy, representing not less than 75 per cent. in value
of the Scheme Shares held by such Scheme Shareholders (or relevant classes
thereof);

(b)          Resolutions to deal with certain ancillary matters in
connection with the Scheme must be passed at the General Meeting to be held
immediately after the Court Meeting;

(c)           following the Court Meeting, the Scheme must also be
sanctioned by the Court; and

(d)          following the sanction by the Court, a copy of the Court
Order must be delivered to the Registrar of Companies for registration.

The Scheme will only become Effective if, among other things, the events
described in the paragraph immediately above occur no later than the Long Stop
Date.

Additionally, the Scheme will lapse if, amongst other things:

(a)         the Court Meeting and General Meeting are not held on or
before the 22(nd) day after the expected date of such meetings, which will be
set out in the Scheme Document in due course (or such later date as may be
agreed by Workspace and McKay with the consent of the Panel and, if required,
the Court);

(b)         the Court Sanction Hearing is not held on or before the
22(nd) day after the expected date of such hearing, which will be set out in
the Scheme Document in due course (or such later date as may be agreed by
Workspace and McKay with the consent of the Panel and, if required, the
Court); or

(c)           the Scheme does not become Effective on or before the
Long Stop Date,

Any Scheme Shareholder is entitled to attend the Court Sanction Hearing in
person or through counsel to support or oppose the sanctioning of the Scheme.

Once the Scheme becomes Effective, it will be binding on all Scheme
Shareholders, whether or not they voted at the Court Meeting and/or the
General Meeting and, if they did vote, whether or not they voted in favour of
or against the resolutions proposed at those meetings.

The terms of the Scheme will provide that the McKay Shares will be acquired
under the Scheme fully paid and free from all liens, equitable interests,
charges, encumbrances, options, rights of pre-emption and any other third
party rights or interests of any nature whatsoever and together with all
rights attaching thereto, including the right to receive and retain all
dividends and other distributions and returns of value declared, paid or made
after the Effective Date.

If any dividend or other distribution or return of value is proposed,
declared, made, paid or becomes payable by McKay in respect of a McKay Share
on or after the date of this Announcement and prior to the Scheme becoming
Effective Workspace will have the right to reduce the value of the
consideration payable for each McKay Share by up to the amount per McKay Share
of such dividend, distribution or return of value except where the McKay Share
is or will be acquired pursuant to the Scheme on a basis which entitles
Workspace to receive the dividend, distribution or return of value and to
retain it.

If any such dividend, distribution or return of value is paid or made after
the date of this Announcement and Workspace exercises its rights described
above, any reference in this Announcement to the consideration payable under
the Scheme shall be deemed to be a reference to the consideration as so
reduced. Any exercise by Workspace of its rights referred to in this paragraph
shall be the subject of an announcement and, for the avoidance of doubt, shall
not be regarded as constituting any revision or variation of the terms of the
Scheme.

Further details of the Scheme, including an indicative timetable for its
implementation, will be set out in the Scheme Document. It is expected that
the Scheme Document will be despatched to McKay Shareholders in March 2022 and
in any event within 28 days of this Announcement (unless otherwise agreed by
the Panel, Workspace and McKay).

Subject, among other things, to the satisfaction or waiver of the Conditions,
it is expected that the Scheme will become Effective during May 2022.

Workspace reserves the right, subject to the terms of the Co-operation
Agreement and with the prior consent of the Panel, to elect to implement the
Acquisition by way of a Takeover Offer. In such event, such Takeover Offer
will be implemented on the same terms, so far as applicable, as those which
would apply to the Scheme.  Furthermore, if such Takeover Offer is made and
Workspace receives acceptances pursuant to such Takeover Offer, or otherwise
acquires, 90 per cent. or more of the McKay Shares to which the Takeover Offer
relates, it is the intention of Workspace to exercise its rights under the
provisions of section 979 of the Companies Act to acquire compulsorily any
outstanding McKay Shares in respect of which valid acceptances have not been
provided.

14.       De-listing and re-registration

It is expected that the last day of dealings in, and for registration of
transfers of, McKay Shares (other than the registration of the transfer of the
Scheme Shares to Workspace pursuant to the Scheme) will be the last Business
Day prior to the Effective Date, following which all of the McKay Shares will
be suspended from the Official List and from trading on the London Stock
Exchange's Main Market for listed securities, and McKay Shares will be
disabled in CREST.

After the Scheme Record Time and before the Scheme becomes Effective,
entitlements to McKay Shares in CREST will be cancelled and such entitlements
rematerialised. On the Effective Date, all share certificates in respect of
McKay Shares will cease to be valid and should be destroyed.

Applications will be made to the FCA for the cancellation of the listing of
the McKay Shares on the Official List and to the London Stock Exchange for the
cancellation of the admission to trading of McKay Shares on the London Stock
Exchange's Main Market for listed securities. It is expected that such
delisting and cancellation of admission to trading would take effect on the
first Business Day following the Effective Date.

Following the Scheme becoming Effective, Workspace intends to re-register
McKay as a private company as soon as is appropriate.

15.       Settlement, listing and dealing of New Workspace Shares

Applications will be made to the FCA for the New Workspace Shares to be issued
to McKay Shareholders under the Scheme to be admitted to the premium listing
segment of the Official List and to the London Stock Exchange for the New
Workspace Shares to be admitted to trading on the London Stock Exchange's Main
Market for listed securities.

It is expected that Admission will become effective and that unconditional
dealings in the New Workspace Shares will commence on the London Stock
Exchange, at 8.00 a.m. (London time) on the first Business Day following the
date on which the Scheme becomes Effective.

Details of how McKay Shareholders can hold, access and trade in Workspace
Shares will be set out in the Scheme Document. McKay Shareholders resident in
the United Kingdom will be able to hold their Workspace Shares through any of
the ways currently available to McKay Shareholders, including through an
intermediary of their own choice should they wish to do so.

16.       Overseas McKay Shareholders

The distribution of this Announcement to, and the availability of the New
Workspace Shares to be issued pursuant to the Acquisition to, persons who are
not resident in the United Kingdom may be affected by the laws of their
relevant jurisdiction. Such persons should inform themselves of and observe
any applicable legal or regulatory requirements of their jurisdiction. Further
details in relation to McKay Shareholders who are not resident in the United
Kingdom will be set out in the Scheme Document.

This Announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities, nor is it a solicitation of any
vote or approval in any jurisdiction, nor will there be any purchase or
transfer of the securities referred to in this Announcement in any
jurisdiction in contravention of applicable law or regulation.

17.       McKay Share Buy Back Programme

On 8 March 2021, McKay announced the launch of a share buy-back programme with
a total size of up to £10.0 million, or approximately 5 per cent. of McKay's
issued ordinary share capital (the "Programme").  The Programme initially ran
from 8 March 2021 until 1 July 2021, and was subsequently extended on 6 July
2021 to run until the Company's 2022 AGM, unless completed earlier.

Consistent with the McKay Directors' stated intention to keep the Programme
under review and in light of the proposed Acquisition, McKay is today
terminating the Programme with effect from 4 March 2022.

18.       Disclosure of Interests

As at the close of business on 1 March 2022, being the last Business Day prior
to the publication of this Announcement, save for the irrevocable undertakings
referred to in paragraph 8 above, neither Workspace, nor any of the Workspace
Directors, nor, so far as Workspace is aware, any person acting in concert
(within the meaning of the Code) with Workspace has:

(a)       any interest in, or right to subscribe for, any McKay Shares nor
does any such person have any short position in McKay Shares, including any
short position under a derivative, any agreement to sell, any delivery
obligation or right to require another person to purchase or take delivery of
McKay Shares; or

(b)        borrowed or lent any McKay Shares or entered into any
financial collateral arrangements relating to McKay Shares; or

(c)        any dealing arrangement of the kind referred to in Note 11
on the definition of acting in concert in the Code in relation to McKay Shares
or in relation to securities convertible or exchangeable into McKay Shares,

and "interests in securities" for these purposes arise, in summary, when a
person has long economic exposure, whether absolute or conditional, to changes
in the price of securities (and a person who only has a short position in
securities is not treated as interested in those securities).

19.       Expected timetable

Further details of the Scheme will be contained in the Scheme Document which
is expected to be sent to McKay Shareholders in March 2022 and in any event
within 28 days of this Announcement unless otherwise agreed by the Panel,
Workspace and McKay.

Further details on the timetable for implementation of the Scheme will be set
out in the Scheme Document, which will also include the notices of the Court
Meeting and the General Meeting and specify the necessary actions to be taken
by McKay Shareholders. It is expected that the Court Meeting and General
Meeting will be held during April 2022.

Subject to the satisfaction or waiver of the relevant Conditions as set out in
Appendix 1 to this Announcement, the Scheme is expected to become Effective
during May 2022.

20.       Valuations

For the purposes of Rule 29.5 of the Code, the Workspace Directors confirm
that CBRE has confirmed to them that an updated valuation of Workspace's
assets as at the date of this Announcement would not be materially different
to the valuation contained in CBRE's valuation report set out in Appendix 4).

For the purposes of Rule 29.5 of the Code, the McKay Directors confirm that
Knight Frank has confirmed to them that an updated valuation of McKay's assets
as at the date of this Announcement would not be materially different to the
valuation contained in Knight Frank's valuation report set out in Appendix 4).

In the event that either Workspace's or McKay's property portfolio was to be
sold at the valuations contained in the valuation reports set out in Appendix
4, any gains realised on such disposals may be subject to taxation in the UK.
Generally, capital gains arising from disposals by a UK REIT of assets used in
its property rental business and shares in UK property rich companies should
be exempt from UK corporation tax, however there are specific rules which can
result in assets within the property rental business being subject to tax on
disposal (for example when a property is materially developed and sold within
three years of completion of that development or where a property has been
used partly for the purposes of property rental business and partly for other
purposes).

21.       Documents available on website

Copies of the following documents will, by no later than 12 noon (London time)
on the Business Day following this Announcement, be published on Workspace's
website at
www.workspace.co.uk/investors/investor-centre/recommended-offer-for-mckay-securities-plc
and on McKay's website at www.mckaysecurities.plc.uk:

(a)        this Announcement;

(b)        the irrevocable undertakings and letter of intent listed in
Appendix 3 to this Announcement;

(c)        the Facility Agreement;

(d)        the Co-operation Agreement;

(e)        the McKay Confidentiality Agreement;

(f)         the Workspace Confidentiality Agreement

(g)        the Pension Trustee Confidentiality Agreement;

(h)        the Pension Trustee Letter;

(i)         the CBRE valuation report;

(j)         the Knight Frank valuation report;

(k)        an investor presentation provided to certain Workspace
Shareholders; and

(l)         consent letters from each of J.P. Morgan Cazenove,
Rothschild & Co, CBRE and Knight Frank.

The contents of these websites and any websites accessible from hyperlinks on
these websites are not incorporated into and do not form part of this
Announcement.

22.       General

Each of J.P. Morgan Cazenove, Rothschild & Co, CBRE and Knight Frank has
given and not withdrawn their consent to the publication of this Announcement
with the inclusion herein of the references to their opinions and names in the
form and context in which they are included.

 

The Conditions and certain further terms of the Acquisition are set out in
Appendix 1 to this Announcement.  Appendix 2 contains the sources and bases
of certain information and the bases of calculations used in this summary and
this Announcement. Appendix 3 contains details of the irrevocable undertakings
and letter of intent given to Workspace.

Appendix 4 to this Announcement contains property valuations supported by
valuation reports for each of Workspace and McKay as at 31 January 2022
pursuant to the requirements of Rule 29 of the Code. These property valuation
reports will, subject to the requirements of the Code, be reproduced in the
Scheme Document. Each of CBRE and Knight Frank has given and not withdrawn its
consent to the publication of its valuation report in this Announcement in the
form and context in which it is included.

Appendix 5 contains the definitions of certain terms used in this
Announcement.

 

Analyst and investor presentation

Workspace will host a presentation for analysts and investors at 9.45 a.m. (UK
time) today to discuss the Acquisition.

To join the webcast: https://secure.emincote.com/client/workspace/workspace019

To join via conference call: please register at the following link and you
will be provided with dial-in details and a unique access code:

https://secure.emincote.com/client/workspace/workspace019/vip_connect

 

Enquiries:

Workspace

Graham Clemett, Chief Executive Officer
                              +44 20 7138 3300

Dave Benson, Chief Financial Officer

Paul Hewlett, Director of Strategy & Corporate Development

Clare Marland, Head of Corporate Communications

 

J.P. Morgan Cazenove (Sole Financial Adviser and Corporate Broker to
Workspace)

Matt
Smith                                                                                                        +44
20 7742 4000

Jonty Edwards

Paul Pulze

 

Finsbury (PR Adviser to Workspace)

Chris Ryall
 
        +44 20 7251 3801

Guy Lamming

 

McKay

Simon Perkins, Chief Executive Officer
                                  +44 118 950 2333

Giles Salmon, Chief Financial Officer

 

Rothschild & Co (Sole Financial Adviser to McKay)

Alex Midgen
 
      +44 20 7280 5000

Sam Green

Jake Shackleford

 

Stifel Nicolaus Europe Limited (Corporate Broker to McKay)

Mark Young
 
     +44 20 7710 7600

Stewart Wallace

Jack McAlpine

 

FTI Consulting (PR Adviser to McKay)

Dido Laurimore
 
   +44 7801 654 424

Ellie Sweeney

 

Herbert Smith Freehills LLP is acting as legal adviser to Workspace in
connection with the Acquisition.

Slaughter and May is acting as legal adviser to McKay in connection with the
Acquisition.

 

Further Information

This Announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer or invitation to purchase, or otherwise acquire, subscribe for,
sell or otherwise dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise nor
shall there be any sale, issuance or transfer of securities of McKay in any
jurisdiction in contravention of applicable laws.

The Acquisition will be implemented solely pursuant to the terms of the Scheme
Document (or, in the event that the Acquisition is to be implemented by means
of a Takeover Offer, the Offer Document), which, together with the Forms of
Proxy, will contain the full terms and conditions of the Acquisition,
including details of how to vote in respect of the Acquisition. Any decision
by McKay Shareholders in respect of, or other response to, the Acquisition
(including any vote in respect of the Resolutions to approve the Acquisition,
the Scheme or related matters), should be made only on the basis of the
information contained in the Scheme Document (or, if the Acquisition is
implemented by way of a Takeover Offer, the Offer Document).

This Announcement does not constitute a prospectus or a prospectus equivalent
document.

This Announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation. The person responsible for arranging for the
release of this Announcement on behalf of Workspace is Carmelina Carfora,
Company Secretary and on behalf of McKay is Giles Salmon, Chief Financial
Officer.

Information Relating to McKay Shareholders

Please be aware that addresses, electronic addresses and certain other
information provided by McKay Shareholders, persons with information rights
and other relevant persons in connection with the receipt of communications
from McKay may be provided to Workspace during the offer period as required
under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c).

Overseas Jurisdictions

The release, publication or distribution of this Announcement in or into
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about, and observe any
applicable legal or regulatory requirements. In particular, the ability of
persons who are not resident in the United Kingdom to vote their McKay Shares
with respect to the Scheme at the Court Meeting, or to execute and deliver
Forms of Proxy appointing another to vote at the Court Meeting on their
behalf, may be affected by the laws of the relevant jurisdictions in which
they are located. Any failure to comply with the applicable restrictions may
constitute a violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law the companies and persons involved
in the Acquisition disclaim any responsibility or liability for the violation
of such restrictions by any person. This Announcement has been prepared for
the purpose of complying with English law, the Code, the Market Abuse
Regulation and the Disclosure Guidance and Transparency Rules and the
information disclosed may not be the same as that which would have been
disclosed if this Announcement had been prepared in accordance with the laws
of jurisdictions outside the United Kingdom.

Unless otherwise determined by Workspace or required by the Code, and
permitted by applicable law and regulation, the New Workspace Shares to be
issued pursuant to the Acquisition to McKay Shareholders will not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Acquisition by any such use, means, instrumentality or
form within a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of that jurisdiction. Accordingly,
copies of this Announcement and any formal documentation relating to the
Acquisition are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction or any other jurisdiction where to do so would constitute a
violation of the laws of that jurisdiction, and persons receiving such
documents (including custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send such documents in or into or from any
Restricted Jurisdiction. Doing so may render invalid any related purported
vote in respect of the Acquisition. If the Acquisition is implemented by way
of a Takeover Offer (unless otherwise permitted by applicable law and
regulation), the Takeover Offer may not be made directly or indirectly, in or
into, or by the use of mails or any means or instrumentality (including, but
not limited to, facsimile, e-mail or other electronic transmission or
telephone) of interstate or foreign commerce of, or of any facility of a
national, state or other securities exchange of any Restricted Jurisdiction
and the Acquisition will not be capable of acceptance by any such use, means,
instrumentality or facilities or from within any Restricted Jurisdiction.

The availability of New Workspace Shares pursuant to the Acquisition to McKay
Shareholders who are not resident in the United Kingdom or the ability of
those persons to hold such shares may be affected by the laws or regulatory
requirements of the relevant jurisdictions in which they are resident. Persons
who are not resident in the United Kingdom should inform themselves of, and
observe, any applicable legal or regulatory requirements. McKay Shareholders
who are in any doubt about such matters should consult an appropriate
independent professional adviser in the relevant jurisdiction without delay.

Further details in relation to McKay Shareholders in overseas jurisdictions
will be contained in the Scheme Document.

The Acquisition will be subject to the applicable requirements of the Code,
the Panel, the London Stock Exchange and the FCA.

Additional Information for US Investors

Shareholders in the United States should note that the Acquisition relates to
the shares of an English company and is proposed to be made by means of a
scheme of arrangement provided for under, and governed by, English law.
Neither the proxy solicitation nor the tender offer rules under the US
Securities Exchange Act of 1934, as amended, will apply to the Scheme.
Moreover the Scheme will be subject to the disclosure requirements and
practices applicable in the UK to schemes of arrangement, which differ from
the disclosure requirements of the US proxy solicitation rules and tender
offer rules.  Financial information included in this Announcement and the
Scheme Document has been or will be prepared in accordance with accounting
standards applicable in the UK and may not be comparable to financial
information of US companies or companies whose financial statements are
prepared in accordance with generally accepted accounting principles in the
United States. If Workspace exercises its right to implement the Acquisition
by way of a Takeover Offer in accordance with the terms of the Cooperation
Agreement and determines to extend the offer into the United States, such
offer will be made in compliance with applicable United States securities laws
and regulations.

McKay and Workspace are each organised under the laws of England. Some or all
of the officers and directors of McKay and Workspace are residents of
countries other than the United States. It may not be possible to sue McKay
and Workspace in a non-US court for violations of US securities laws. It may
be difficult to compel McKay, Workspace and their respective affiliates to
subject themselves to the jurisdiction and judgment of a US court.

The receipt of cash and shares by a US holder of McKay Shares as consideration
for the transfer of its Scheme Shares pursuant to the Scheme may be a taxable
transaction for United States federal income tax purposes and under applicable
United States state and local, as well as foreign and other, tax laws. Each
McKay Shareholder (including US holders) is urged to consult its independent
professional adviser immediately regarding the tax consequences of the
Acquisition applicable to them.

This announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.

Neither the US Securities and Exchange Commission nor any securities
commission of any state or other jurisdiction of the United States has
approved the Acquisition, passed upon the fairness of the Acquisition, or
passed upon the adequacy or accuracy of this document. Any representation to
the contrary is a criminal offence in the United States.

Notes regarding New Workspace Shares

The New Workspace Shares to be issued pursuant to the Scheme have not been and
will not be registered under the relevant securities laws of Japan and the
relevant clearances have not been, and will not be, obtained from the
securities commission of any province of Canada.  No prospectus in relation
to the New Workspace Shares has been, or will be, lodged with, or registered
by, the Australian Securities and Investments Commission.  Accordingly, the
New Workspace Shares are not being, and may not be, offered, sold, resold,
delivered or distributed, directly or indirectly in or into a Restricted
Jurisdiction or any other jurisdiction if to do so would constitute a
violation of relevant laws of, or require registration thereof in, such
jurisdiction (except pursuant to an exemption, if available, from any
applicable registration requirements or otherwise in compliance with all
applicable laws).

The New Workspace Shares have not been and will not be registered under the US
Securities Act of 1933, as amended (the "US Securities Act"), or under the
securities laws of any state or other jurisdiction of the United States, and
may not be offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the US Securities
Act and in compliance with any applicable securities laws of any state or
other jurisdiction of the United States. It is expected that the New Workspace
Shares will be issued in reliance upon the exemption from the registration
requirements of the US Securities Act of 1933 (as amended) provided by Section
3(a)(10) thereof. For the purpose of qualifying for the exemption provided by
Section 3(a)(10) of the US Securities Act, Workspace will advise the Court
that its sanctioning of the Scheme will be relied on by Workspace for purposes
of a Section 3(a)(10) exemption following a hearing on the fairness of the
Scheme to McKay Shareholders.

Important Notices Relating to the Financial Advisers and Corporate Brokers

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove, is authorised by the Prudential Regulation Authority
and regulated by the FCA and the Prudential Regulation Authority in the United
Kingdom. J.P. Morgan Cazenove is acting exclusively as financial adviser to
Workspace and no one else in connection with the Acquisition and will not
regard any other person as its client in relation to the matters set out in
this Announcement and will not be responsible to anyone other than Workspace
for providing the protections afforded to clients of J.P. Morgan Cazenove or
its affiliates, or for providing advice in relation to the contents of this
Announcement or any other matter referred to herein.

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is
authorised and regulated by the FCA in the United Kingdom, is acting
exclusively for McKay and for no one else in connection with the Acquisition
and will not regard any other person as its client in relation to the
Acquisition and will not be responsible to anyone other than McKay for
providing the protections afforded to clients of Rothschild & Co, nor for
providing advice in relation to any matter referred to in this Announcement.
Neither Rothschild & Co nor any of its affiliates (nor their respective
directors, officers, employees or agents) owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether in contract,
in tort, under statute or otherwise) to any person who is not a client of
Rothschild & Co in connection with this Announcement, any statement
contained herein, the Acquisition or otherwise. No representation or warranty,
express or implied, is made by Rothschild & Co as to the contents of this
Announcement.

Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated
in the United Kingdom by the Financial Conduct Authority, is acting as
corporate broker exclusively for McKay and no-one else in connection with the
matters referred to in this Announcement and will not regard any other person
as its client in relation to such matters and will not be responsible to
anyone other than McKay for providing the protections afforded to clients of
Stifel, nor for providing advice in relation to any matter referred to in this
Announcement.

Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk (http://www.thetakeoverpanel.org.uk) , including
details of the number of relevant securities in issue, when the offer period
commenced and when any offeror was first identified. You should contact the
Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any
doubt as to whether you are required to make an Opening Position Disclosure or
a Dealing Disclosure.

Forward-looking statements

This Announcement (including information incorporated by reference in this
Announcement), oral statements made regarding the Acquisition, and other
information published by Workspace and McKay contain statements which are, or
may be deemed to be, "forward-looking statements". Forward-looking statements
are prospective in nature and are not based on historical facts, but rather on
current expectations and projections of the management of Workspace and McKay
about future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. The forward-looking
statements contained in this Announcement may include statements relating to
the expected effects of the Acquisition on Workspace and McKay, the expected
timing of the Acquisition and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified by the use
of forward-looking words such as "plans", "expects" or "does not expect", "is
expected", "is subject to", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Although Workspace and McKay believe that the
expectations reflected in such forward-looking statements are reasonable,
Workspace and McKay can give no assurance that such expectations will prove to
be correct. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. There are a number of factors which could cause
actual results and developments to differ materially from those expressed or
implied by such forward looking statements, including, among others the
enactment of legislation or regulation that may impose costs or restrict
activities; the re-negotiation of contracts or licences; fluctuations in
demand and pricing in the commercial property industry; changes in government
policy and taxations; changes in political conditions, economies and markets
in which Workspace and McKay operate; changes in the markets from which
Workspace and McKay raise finance; the impact of legal or other proceedings;
changes in accounting practices and interpretation of accounting standards
under IFRS; changes in interest and exchange rates; industrial disputes; war
and terrorism. These forward-looking statements speak only as at the date of
this document.

Other unknown or unpredictable factors could cause actual results to differ
materially from those in the forward-looking statements. Such forward-looking
statements should therefore be construed in the light of such factors. Neither
Workspace nor McKay, nor any of their respective associates or directors,
officers or advisers, provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any forward-looking
statements in this Announcement will actually occur. You are cautioned not to
place undue reliance on these forward-looking statements. Other than in
accordance with their legal or regulatory obligations (including under the
Listing Rules and the Disclosure Guidance and Transparency Rules of the FCA),
neither Workspace or McKay is under any obligation, and Workspace and McKay
expressly disclaim any intention or obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

No profit forecasts, estimates or quantified benefits statements

No statement in this Announcement is intended as a profit forecast, profit
estimate or quantified benefits statement for any period and no statement in
this Announcement should be interpreted to mean that earnings or earnings per
share for McKay or Workspace for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
share for McKay or Workspace respectively.

Publication of this Announcement

A copy of this Announcement will be available subject to certain restrictions
relating to persons resident in Restricted Jurisdictions on
www.workspace.co.uk/investors/investor-centre/recommended-offer-for-mckay-securities-plc
 and www.mckaysecurities.plc.uk by no later than 12 noon (London time) on the
Business Day following this Announcement.

The contents of Workspace's website and McKay's website are not incorporated
into and do not form part of this Announcement.

Requesting hard copy documents

In accordance with Rule 30.3 of the Code, McKay Shareholders, persons with
information rights and participants in McKay Share Plans may request a hard
copy of this Announcement by writing to McKay Securities Plc, 20 Greyfriars
Road, Reading, Berkshire RG1 1NL or by contacting McKay's Company Secretary,
during business hours on +44 (0)118 950 2333. In accordance with Rule 30.3 of
the Code, a person so entitled may also request that all future documents,
announcements and information be sent to them in relation to the Acquisition
should be in hard copy form. For persons who receive a copy of this
Announcement in electronic form or via a website notification, a hard copy of
this Announcement will not be sent unless so requested. Such persons may also
request that all future documents, announcements and information to be sent to
them in relation to the Acquisition should be in hard copy form.

Rounding

Certain figures included in this Announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of figures that precede them.

Rule 2.9 of the Code

For the purposes of Rule 2.9 of the Code, McKay confirms that, as at 1 March
2022 (being the last Business Day prior to the date of this Announcement), it
had in issue 90,089,313 ordinary shares of 20 pence each. The ISIN for the
shares is GB0005522007.

For the purposes of Rule 2.9 of the Code, Workspace confirms that, as at 1
March 2022 (being the last Business Day prior to the date of this
Announcement), it had in issue 181,123,659 ordinary shares of one pound each.
The ISIN for the shares is GB00B67G5X01.

 

 

 

APPENDIX 1

CONDITIONS AND CERTAIN FURTHER TERMS OF THE ACQUISITION

Part 1 Conditions of the Scheme and Acquisition

1.         The Acquisition will be conditional upon the Scheme
becoming unconditional and becoming Effective, subject to the provisions of
the Code, on or before the Long Stop Date.

Scheme Conditions

2.         The Scheme will be conditional upon:

(a)       its approval by a majority in number of the Scheme Shareholders
(or relevant class or classes thereof) present and voting (and entitled to
vote) at the Court Meeting and any separate class meeting which may be
required by the Court, or at any adjournment of such meetings, either in
person or by proxy, representing not less than 75 per cent. in value of the
Scheme Shares held by such Scheme Shareholders (or relevant class or classes
thereof);

(b)         all Resolutions being duly passed by the requisite majority
or majorities of the McKay Shareholders at the General Meeting, or at any
adjournment thereof;

(c)       the Court Meeting and the General Meeting being held on or
before the 22nd day after the expected date of such meetings to be set out in
the Scheme Document in due course (or such later date (if any) as Workspace
and McKay may agree (with the consent of the Panel) and the Court may approve,
if such approval is required);

(d)       the sanction of the Scheme by the Court (with or without
modifications, but subject to any modifications being on terms acceptable to
McKay and Workspace);

(e)        the Court Sanction Hearing being held on or before the 22nd day
after the expected date of the Court Sanction Hearing to be set out in the
Scheme Document in due course (or such later date (if any) as Workspace and
McKay may agree (with the consent of the Panel) and the Court may approve, if
such approval is required); and

(f)           a copy of the Court Order being delivered for
registration to the Registrar of Companies.

General Conditions

3.         Subject as stated in Part 2 below and to the requirements
of the Panel, the Acquisition is also conditional on the following Conditions
having been satisfied or, where applicable, waived and accordingly the
necessary actions to make the Scheme Effective will not be taken unless such
Conditions have been so satisfied or waived:

Admission of New Workspace Shares

(a)           (i)     the FCA having acknowledged to Workspace or
its agent (and such acknowledgement not having been withdrawn) that the
application for the admission of the New Workspace Shares to the Official List
with a premium listing has been approved and (after satisfaction of any
conditions to which such approval is expressed to be subject ("listing
conditions")) will become effective as soon as a dealing notice has been
issued by the FCA and any listing conditions having been satisfied; and

(ii)      the London Stock Exchange having acknowledged to Workspace or its
agent (and such acknowledgement not having been withdrawn) that the New
Workspace Shares will be admitted to trading on the London Stock Exchange's
Main Market for listed securities;

Official authorisations, regulatory clearances and third party clearances

(b)      the waiver (or non-exercise within any applicable time limits) by
any relevant government or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body, court, trade
agency, association, institution, any entity owned or controlled by any
relevant government or state, or any other body or person whatsoever in any
jurisdiction (each a "Third Party") of any termination right, right of
pre-emption, first refusal or similar right (which is material in the context
of the Wider McKay Group taken as a whole) arising as a result of or in
connection with the Acquisition including, without limitation, its
implementation and financing or the proposed direct or indirect Acquisition of
any shares or other securities in, or control or management of, McKay by
Workspace or any member of the Wider Workspace Group;

(c)           (i) all necessary filings or applications having been
made in connection with the Acquisition and all statutory or regulatory
obligations in any jurisdiction having been complied with in connection with
the Acquisition or the acquisition by any member of the Wider Workspace Group
of any shares or other securities in, or control of, McKay and all
authorisations, orders, grants, recognitions, determinations, confirmations,
consents, licences, clearances, permissions, exemptions and approvals
reasonably deemed necessary by Workspace or any member of the Wider Workspace
Group for or in respect of the Acquisition (including without limitation, its
implementation and financing or the proposed direct or indirect acquisition of
any shares or other securities in, or control of, McKay or any member of the
Wider McKay Group by any member of the Wider Workspace Group), in each case,
having been obtained from all appropriate Third Parties or persons with whom
any member of the Wider McKay Group has entered into contractual arrangements
and in each case, where the consequence of a failure to make such filing or
application, comply with such statutory or regulatory obligation or obtain
such material authorisations, orders, grants, recognitions, determinations,
confirmations, consents, licences, clearances, permissions, exemptions and
approvals would be unlawful in any jurisdiction, and (ii) all such material
authorisations, orders, grants, recognitions, determinations, confirmations,
consents, licences, clearances, permissions, exemptions and approvals
necessary or appropriate to carry on the business of any member of the Wider
McKay Group which is material in the context of the Workspace Group or the
McKay Group as a whole or of the financing of the Acquisition remaining in
full force and effect and all filings necessary for such purpose having been
made and there being no written notice of any intention to revoke or not to
renew any of the same at the time at which the Acquisition becomes otherwise
unconditional;

(d)          no Third Party having given notice of a decision to
take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference (and, in each case, not having withdrawn
the same), or having enacted, made or proposed any statute, regulation,
decision or order, or change to published practice or having taken any other
steps, and there not continuing to be outstanding any statute, regulation,
decision or order, which in each case would reasonably be expected to:

(i)      require, prevent or delay the divestiture, or materially alter the
terms envisaged for any proposed divestiture by any member of the Wider
Workspace Group or any member of the Wider McKay Group of all or any portion
of their respective businesses, assets or property or impose any limitation on
the ability of any of them to conduct their respective businesses (or any of
them) or to own any of their respective assets or properties or any part
thereof which, in any such case, is material in the context of the Wider
Workspace Group or the Wider McKay Group in either case taken as a whole;

(ii)       require, prevent or delay the divestiture by any member of the
Wider Workspace Group of any shares or other securities in McKay;

(iii)        impose any material limitation on, or result in a delay
in, the ability of any member of the Wider Workspace Group directly or
indirectly to acquire or to hold or to exercise effectively any rights of
ownership in respect of shares or loans or securities convertible into shares
or any other securities (or the equivalent) in any member of the Wider McKay
Group or the Wider Workspace Group or to exercise voting or management control
over any such member;

(iv)     otherwise adversely affect the business, assets, profits or
prospects of any member of the Wider Workspace Group or of any member of the
Wider McKay Group to an extent which is material in the context of the Wider
Workspace Group or the Wider McKay Group in either case taken as a whole;

(v)     make the Acquisition or its implementation or the Acquisition or
proposed Acquisition by Workspace or any member of the Wider Workspace Group
of any shares or other securities in, or control of McKay void, illegal,
and/or unenforceable under the laws of any jurisdiction, or otherwise,
directly or indirectly, restrain, restrict, prohibit, delay or otherwise
interfere with the same, or impose additional conditions or obligations with
respect thereto;

(vi)       except pursuant to the implementation of the Acquisition
and/or, if applicable, sections 974 to 991 of the Companies Act, require any
member of the Wider Workspace Group or the Wider McKay Group to offer to
acquire any shares or other securities (or the equivalent) or interest in any
member of the Wider McKay Group or the Wider Workspace Group owned by any
third party;

(vii)       impose any limitation on the ability of any member of the
Wider McKay Group to co-ordinate its business, or any part of it, with the
businesses of any other members which is adverse to and material in the
context of the Wider McKay Group taken as a whole or in the context of the
Acquisition; or

(viii)     result in any member of the Wider McKay Group ceasing to be able
to carry on business under any name under which it presently does so,

and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could institute, implement or
threaten any action, proceeding, suit, investigation, enquiry or reference or
any other step under the laws of any jurisdiction in respect of the
Acquisition or proposed acquisition of any McKay Shares having expired, lapsed
or been terminated, in each case, where the consequence of a failure to wait
for the expiry, lapse or termination of such waiting or time period would be
unlawful in any jurisdiction;

Certain matters arising as a result of any arrangement, agreement etc.

(e)           save as Disclosed, there being no provision of any
agreement, arrangement, licence, permit or other instrument to which any
member of the Wider McKay Group is a party or by or to which any such member
or any of its assets may be bound, entitled or subject, or any circumstance
which in consequence of the Acquisition or the proposed acquisition of any
shares or other securities (or equivalent) in McKay or because of a change in
the control or management of McKay or otherwise, could result in any of the
following to an extent which is material and adverse in the context of the
Wider McKay Group, or the Wider Workspace Group, in either case taken as a
whole, or in the context of the Acquisition:

(i)         any moneys borrowed by or any other indebtedness or
liabilities (actual or contingent) of, or grant available to any such member,
being or becoming repayable or capable of being declared repayable immediately
or earlier than their or its stated maturity date or repayment date or the
ability of any such member to borrow moneys or incur any indebtedness being
withdrawn or inhibited or being capable of becoming or being withdrawn or
inhibited;

(ii)     any such agreement, arrangement, licence, permit or instrument or
the rights, liabilities, obligations or interests of any such member
thereunder being terminated or adversely modified or affected or any
obligation or liability arising or any action being taken or arising
thereunder;

(iii)      any asset or interest of any such member being or failing to be
disposed of or charged or ceasing to be available to any such member or any
right arising under which any such asset or interest could be required to be
disposed of or charged or could cease to be available to any such member
otherwise than in the ordinary course of business;

(iv)       other than liens arising in the ordinary course of business
the creation or enforcement of any mortgage, charge or other security interest
over the whole or any part of the business, property, assets or interest of
any such member;

(v)      the rights, liabilities, obligations or interests of any such
member, or the business of any such member with, any person, firm, company or
body (or any arrangement or arrangements relating to any such interest or
business) being terminated, adversely modified or affected or any adverse
action being taken or any onerous obligation or liability arising thereunder;

(vi)      the value of any such member or its financial or trading position
or prospects being prejudiced or adversely affected;

(vii)       any such member ceasing to be able to carry on business
under any name under which it presently does so; or

(viii)     the creation or acceleration of any liability, actual or
contingent, by any such member (including any material tax liability or any
obligation to obtain or acquire any material authorisation, notice, waiver,
concession, agreement or exemption from any Third Party or any person) other
than trade creditors or other liabilities incurred in the ordinary course of
business or in connection with the Acquisition,

and no event having occurred which, under any provision of any agreement,
arrangement, licence, permit or other instrument to which any member of the
Wider McKay Group is a party or by or to which any such member or any of its
assets may be bound, entitled or subject, would or might reasonably be
expected to result in any of the events or circumstances as are referred to in
sub-paragraphs (i) to (viii) of this Condition;

Certain events occurring since Last Accounts Date

(f)           save as Disclosed, no member of the Wider McKay Group
having, since the Last Accounts Date:

(i)       save as between McKay and wholly-owned subsidiaries of McKay or
for McKay Shares issued under or pursuant to the exercise of options and
vesting of awards granted under the McKay Share Plans, issued or agreed to
issue, authorised or proposed the issue of additional shares of any class;

(ii)        save as between McKay and wholly-owned subsidiaries of
McKay or for the grant of options and awards and other rights under the McKay
Share Plans, issued or agreed to issue, authorised or proposed the issue of
securities convertible into shares of any class or rights, warrants or options
to subscribe for, or acquire, any such shares or convertible securities;

(iii)      other than to another member of the McKay Group, prior to
completion of the Acquisition, recommended, declared, paid or made any
dividend or other distribution payable in cash or otherwise or made any bonus
issue;

(iv)       save for intra-McKay Group transactions, merged or demerged
with any body corporate or acquired or disposed of or transferred, mortgaged
or charged or created any security interest over any assets or any right,
title or interest in any asset (including shares and trade investments) or
authorised or proposed or announced any intention to propose any merger,
demerger, disposal, transfer, mortgage, charge or security interest, in each
case, other than in the ordinary course of business and, in each case, to the
extent which is material in the context of the Wider McKay Group taken as a
whole;

(v)        save for intra-McKay Group transactions, made or authorised
or proposed or announced an intention to propose any change in its loan
capital in each case, to the extent which is material in the context of the
Wider McKay Group taken as a whole;

(vi)       issued, authorised or proposed the issue of, or made any
change in or to, any debentures or (save for intra-McKay Group transactions),
save in the ordinary course of business, incurred or increased any material
indebtedness or become subject to any material contingent liability;

(vii)     purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
or, save in respect to the matters mentioned in sub-paragraphs (i) or (ii)
above, made any other change to any part of its share capital in each case, to
the extent which is material in the context of the Wider McKay Group taken as
a whole (excluding, for the avoidance of doubt, any such actions taken in
connection with McKay's share buyback programme announced on 8 March 2021, as
extended);

(viii)    save for intra-McKay Group transactions, implemented, or
authorised, proposed or announced its intention to implement, any
reconstruction, merger, demerger, amalgamation, scheme, commitment or other
transaction or arrangement otherwise than in the ordinary course of business;

(ix)       entered into or varied or authorised, proposed or announced
its intention to enter into or vary any contract, transaction or commitment
(whether in respect of capital expenditure or otherwise) which is of a long
term, onerous or unusual nature or magnitude or which involves or could
involve an obligation of such a nature or magnitude other than in the ordinary
course of business, in each case, to the extent which is material in the
context of the Wider McKay Group taken as a whole;

(x)        (other than in respect of a member which is dormant and was
solvent at the relevant time) taken any corporate action or steps or had any
legal proceedings started or threatened against it in relation to the
suspension of payments, a moratorium of any indebtedness, its winding-up,
dissolution or reorganisation or for the appointment of a receiver,
administrative receiver, administrator, manager, trustee or similar officer of
all or any part of its assets or revenues or any analogous proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction or had any
such person appointed, in each case, to the extent which is material in the
context of the Wider McKay Group taken as a whole;

(xi)    entered into any contract, transaction or arrangement which would be
restrictive on the business of any member of the Wider McKay Group or the
Wider Workspace Group other than of a nature and extent which is normal in the
context of the business concerned;

(xii)       waived or compromised any claim otherwise than in the
ordinary course of business which is material in the context of the Wider
McKay Group taken as a whole;

(xiii)   made any material alteration to its memorandum or articles of
association or other incorporation documents (in each case, other than in
connection with the Scheme or where any such alteration does not introduce
unusual or onerous provisions which are material in the context of the
Acquisition);

(xiv)    been unable, or admitted in writing that it is unable, to pay its
debts or commenced negotiations with one or more of its creditors with a view
to rescheduling or restructuring any of its indebtedness, or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or
ceased or threatened to cease carrying on all or a substantial part of its
business;

(xv)    entered into any contract, commitment, arrangement or agreement
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to or
announced any intention to, or proposed to, effect any of the transactions,
matters or events referred to in this Condition;

(xvi)      (except in relation to changes made or agreed as a result of,
or arising from, applicable law or changes to applicable law and/or pursuant
to the terms of the Pension Trustee Letter) made or agreed or consented to any
change to:

a)   the terms of the trust deeds constituting the pension scheme(s)
established by any member of the Wider McKay Group for its directors,
employees or their dependents, including the McKay Securities Plc Pension and
Life Assurance Scheme;

b)    the contributions payable to any such scheme(s) or to the benefits
which accrue or to the pensions which are payable thereunder;

c)  the basis on which qualification for, or accrual or entitlement to, such
benefits or pensions are calculated or determined; or

d)    the basis upon which the liabilities (including pensions) of such
pension schemes are funded, valued or made,

in each case, to the extent which is material in the context of the Wider
McKay Group taken as a whole;

(xvii)     except pursuant to the terms of the Co-operation Agreement
proposed, agreed to provide or modified the terms of any of the McKay Share
Plans or other benefit constituting a material change relating to the
employment or termination of employment of a material category of persons
employed by the Wider McKay Group or which constitutes a material change to
the terms or conditions of employment of any senior employee of the Wider
McKay Group, save as agreed by the Panel (if required) and by Workspace;

(xviii)    on or after the date of this Announcement, and other than with
the consent of Workspace and (if required) the Panel, taken (or agreed or
proposed to take) any action which requires, or would require the approval of
McKay Shareholders in general meeting in accordance with, or as contemplated
by, Rule 21.1 of the Code;

(xix)    except pursuant to the terms of the Co-operation Agreement, entered
into, or varied in a material way the terms of, any contract, agreement or
arrangement with any of the directors or senior executives of any members of
the Wider McKay Group; or

(xx)      waived or compromised any claim which is material in the
context of the Wider McKay Group taken as a whole, otherwise than in the
ordinary course.

No adverse change, litigation or regulatory enquiry

(g)          save as Disclosed, since the Last Accounts Date:

(i)       no adverse change or deterioration having occurred in the
business, assets, financial or trading position or profits or prospects or
operational performance of any member of the Wider McKay Group which, in any
such case, is material in the context of the Wider McKay Group taken as a
whole and no circumstances have arisen which would reasonably be expected to
result in such adverse change or deterioration;

(ii)      no litigation, arbitration proceedings, prosecution or other
legal proceedings to which any member of the Wider McKay Group is or may
become a party (whether as a plaintiff, defendant or otherwise) and no
enquiry, review or investigation by, or complaint or reference to, any Third
Party or other investigative body against or in respect of any member of the
Wider McKay Group having been instituted, announced, implemented or threatened
by or against or remaining outstanding in respect of any member of the Wider
McKay Group which in any such case has had or would reasonably be expected to
have a material and adverse effect on the Wider McKay Group taken as a whole
or in the context of the Acquisition;

(iii)      no contingent or other liability of any member of the Wider
McKay Group having arisen or become apparent to Workspace or increased which
has had or would reasonably be expected to have a material and adverse effect
on the Wider McKay Group taken as a whole; or in the context of the
Acquisition;

(iv)       no enquiry or investigation by, or complaint or reference to,
any Third Party having been threatened, announced, implemented, instituted by
or remaining outstanding against or in respect of any member by or the Wider
McKay Group which in any case is material in the context of the Wider McKay
Group taken as a whole;

(v)     no member of the Wider McKay Group having conducted its business in
breach of any applicable laws and regulations and which is material in the
context of the Wider McKay Group as a whole or material in the context of the
Acquisition; and

(vi)    no steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any licence or permit
held by any member of the Wider McKay Group which is necessary for the proper
carrying on of its business and the withdrawal, cancellation, termination or
modification of which has had, or would reasonably be expected to have, a
material and adverse effect on the Wider McKay Group taken as a whole;

No discovery of certain matters

(h)           save as Disclosed, Workspace not having discovered:

(i)      that any financial, business or other information concerning the
Wider McKay Group as contained in the information publicly disclosed at any
time by or on behalf of any member of the Wider McKay Group is materially
misleading, contains a material misrepresentation of fact or omits to state a
fact necessary to make that information not misleading and which was not
subsequently corrected before the date of this Announcement by disclosure
either publicly or otherwise to Workspace or its professional advisers, in
each case, to the extent which is material in the context of the Wider McKay
Group taken as a whole;

(ii)        that any member of the Wider McKay Group or partnership,
company or other entity in which any member of the Wider McKay Group has a
significant economic interest and which is not a subsidiary undertaking of
McKay, is subject to any liability (contingent or otherwise) which is not
disclosed in the annual report and accounts for McKay for the financial year
ended 31 March 2021, in each case, to the extent which is material in the
context of the Wider McKay Group taken as a whole; or

(iii)      any information which affects the import of any information
disclosed at any time by or on behalf of any member of the Wider McKay Group
and which is material in the context of the Wider McKay Group taken as a
whole;

(i)            save as Disclosed, Workspace not having discovered
that:

(i)         any past or present member of the Wider McKay Group has
failed to comply with any and/or all applicable legislation or regulation, of
any jurisdiction with regard to the use, treatment, handling, storage,
carriage, disposal, spillage, release, discharge, leak or emission of any
waste or hazardous substance or any substance likely to impair the environment
or harm human health or animal health or otherwise relating to environmental
matters or the health and safety of humans, or that there has otherwise been
any such use, treatment, handling, storage, carriage, disposal, spillage,
release, discharge, leak or emission (whether or not the same constituted a
non-compliance by any person with any such legislation or regulations, and
wherever the same may have taken place) any of which storage, carriage,
disposal, spillage, release, discharge, leak or emission would be likely to
give rise to any liability (actual or contingent) or cost on the part of any
member of the Wider McKay Group and which is material in the context of the
Wider McKay Group taken as a whole;

(ii)        there is, or is likely to be, for any reason whatsoever,
any liability (actual or contingent) of any past or present member of the
Wider McKay Group to make good, remediate, repair, reinstate or clean up any
property or any controlled waters now or previously owned, occupied, operated
or made use of or controlled by any such past or present member of the Wider
McKay Group (or on its behalf) or by any person for which a member of the
Wider McKay Group is or has been responsible, or in which any such member may
have or previously have had or be deemed to have had an interest, under any
environmental legislation, regulation, notice, circular or order of any Third
Party and which is material in the context of the Wider McKay Group taken as a
whole or the Acquisition;

(iii)        circumstances exist (whether as a result of the making of
the Acquisition or otherwise) which would be reasonably likely to lead to any
Third Party instituting, or whereby any member of the Wider Workspace Group or
any present or past member of the Wider McKay Group would be likely to be
required to institute, an environmental audit or take any other steps which
would in any such case be reasonably likely to result in any liability
(whether actual or contingent) to improve, modify existing or install new
plant, machinery or equipment or carry out changes in the processes currently
carried out or make good, remediate, repair, re-instate or clean up any land
or other asset currently or previously owned, occupied or made use of by any
past or present member of the Wider McKay Group (or on its behalf) or by any
person for which a member of the Wider McKay Group is or has been responsible,
or in which any such member may have or previously have had or be deemed to
have had an interest which is material in the context of the Wider McKay Group
taken as a whole or the Acquisition; or

(iv)       circumstances exist whereby a person or class of persons
would be likely to have any claim or claims in respect of any product or
process of manufacture or materials used therein currently or previously
manufactured, sold or carried out by any past or present member of the Wider
McKay Group which claim or claims would be likely, materially and adversely,
to affect any member of the Wider McKay Group and which is material in the
context of the Wider McKay Group taken as a whole or the Acquisition; and

Anti-corruption, economic sanctions, criminal property and money laundering

(j)            save as Disclosed, Workspace not having discovered
that:

(i)         (A) any past or present member, director, officer or
employee of the Wider McKay Group is or has at any time engaged in any
activity, practice or conduct which would constitute an offence under the
Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other
applicable anti-corruption or anti-bribery law, rule or regulation or any
other applicable law, rule, or regulation concerning improper payments or
kickbacks or (B) any person that performs or has performed services for or on
behalf of the Wider McKay Group is or has at any time engaged in any activity,
practice or conduct in connection with the performance of such services which
would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt
Practices Act of 1977 or any other applicable anti-corruption or anti-bribery
law, rule or regulation or any other applicable law, rule, or regulation
concerning improper payments or kickbacks; or

(ii)        any asset of any member of the Wider McKay Group
constitutes criminal property as defined by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that definition) or proceeds
of crime under any other applicable law, rule, or regulation concerning money
laundering or proceeds of crime or any member of the Wider McKay Group is
found to have engaged in activities constituting money laundering under any
applicable law, rule, or regulation concerning money laundering; or

(iii)        any past or present member, director, officer or employee
of the Wider McKay Group, or any other person for whom any such person may be
liable or responsible, is or has engaged in any conduct which would violate
applicable economic sanctions or dealt with, made any investments in, made any
funds or assets available to or received any funds or assets from:

(a)    any government, entity or individual in respect of which US, UK or
European Union persons, or persons operating in those territories, are
prohibited from engaging in activities or doing business, or from receiving or
making available funds or economic resources, by US, UK or European Union laws
or regulations, including the economic sanctions administered by the United
States Office of Foreign Assets Control, or HMRC; or

(b)     any government, entity or individual targeted by any of the
economic sanctions of the United Nations, the United States, the United
Kingdom, the European Union or any of its member states, save that this shall
not apply if and to the extent that it is or would be unenforceable by reason
of breach of any applicable Blocking Law; or

(iv)       any past or present member, director, officer or employee of
the Wider McKay Group, or any other person for whom any such person may be
liable or responsible:

(a)      has engaged in conduct which would violate any relevant
anti-terrorism laws, rules, or regulations, including but not limited to the
U.S. Anti-Terrorism Act;

(b)    has engaged in conduct which would violate any relevant anti-boycott
law, rule, or regulation or any applicable export controls, including but not
limited to the Export Administration Regulations administered and enforced by
the U.S. Department of Commerce or the International Traffic in Arms
Regulations administered and enforced by the U.S. Department of State;

(c)     has engaged in conduct which would violate any relevant laws,
rules, or regulations concerning human rights, including but not limited to
any law, rule, or regulation concerning false imprisonment, torture or other
cruel and unusual punishment, or child labour; or

(d)    is debarred or otherwise rendered ineligible to bid for or to perform
contracts for or with any government, governmental instrumentality, or
international organization or found to have violated any applicable law, rule,
or regulation concerning government contracting or public procurement; or

(v)       any member of the Wider McKay Group is or has been engaged in
any transaction which would cause Workspace to be in breach of any law or
regulation upon its Acquisition of McKay, including but not limited to the
economic sanctions of the United States Office of Foreign Assets Control, or
HMRC, or any other relevant government authority.

For the purposes of these Conditions the "Wider McKay Group" means McKay and
its subsidiary undertakings, associated undertakings and any other undertaking
in which McKay and/or such undertakings (aggregating their interests) have a
significant interest and the "Wider Workspace Group" means Workspace and its
subsidiary undertakings, associated undertakings and any other undertaking in
which Workspace and/or such undertakings (aggregating their interests) have a
significant interest and for these purposes subsidiary undertaking and
undertaking have the meanings given by the Companies Act, associated
undertaking has the meaning given by paragraph 19 of Schedule 6 to the Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008,
other than paragraph 19(1)(b) of Schedule 6 to those regulations which shall
be excluded for this purpose, and significant interest means a direct or
indirect interest in 20 per cent. or more of the total voting rights conferred
by the equity share capital (as defined in section 548 of the Companies Act).

 

Part 2 Waiver and invocation of Conditions

1.            The Acquisition will be subject to the satisfaction
(or waiver, if permitted) of the Conditions set out in this Appendix 1, to the
further terms set out in this Appendix 1, and to the full terms and conditions
which will be set out in the Scheme Document.

2.            Subject to the requirements of the Panel, Workspace
reserves the right to waive, in whole or in part, all or any of the Conditions
set out in Part 1 of Appendix 1 above, except for the Conditions set out at
paragraphs 1, 2(a), 2(b), 2(d) and 2(f), which cannot be waived. The deadlines
in the Conditions set out at paragraphs 2(c) and 2(e) may also be extended to
such later date as may be agreed in writing by Workspace and McKay (with the
Panel's consent and approval of the Court, if required). If any of the
Conditions set out at paragraphs 2(c) and 2(e) are not satisfied by the
relevant deadline specified in the relevant Condition, Workspace shall make an
announcement by 8.00 a.m. on the Business Day following such deadline
confirming whether, subject to paragraph 3 below, it has invoked the relevant
Condition, waived the relevant deadline or agreed with McKay to extend the
relevant deadline.

3.            Workspace shall be under no obligation to waive (if
capable of waiver), to determine to be or remain satisfied or to treat as
satisfied any of Conditions set out in paragraphs 3 (b) to (j) (inclusive) by
a date earlier than the latest date specified above for the fulfilment of the
relevant Condition, notwithstanding that the other Conditions to the
Acquisition may at such earlier date have been waived or fulfilled and that
there are at such earlier date no circumstances indicating that any such
Condition(s) may not be capable of fulfilment.

4.            Under Rule 13.5(a) of the Code, Workspace may only
invoke a Condition to the Acquisition so as to cause the Acquisition not to
proceed or to be withdrawn with the consent of the Panel. The Panel will
normally only give its consent if the circumstances which give rise to the
right to invoke the Condition are of material significance to Workspace in the
context of the Acquisition. This will be judged by reference to the facts of
each case at the time that the relevant circumstances arise.

5.            Any Condition that is subject to Rule 13.5(a) of the
Code may be waived by Workspace.

6.       The Conditions set out in paragraphs 1, 2(a), 2(b), 2(d) and 2(f)
(and, if applicable, any offer acceptance condition adopted on the basis
specified in paragraph 1 of Part 3 below if the Acquisition is implemented by
way of a Takeover Offer) are not subject to Rule 13.5(a) of the Code.

7.         Each of the Conditions shall be regarded as a separate
Condition and shall not be limited by reference to any other Condition.

Conditions 3 (b) to (j) (inclusive) must be fulfilled, be determined by
Workspace to be or remain satisfied or (if capable of waiver) be waived by
Workspace by 11.59 p.m. on the date immediately preceding the Court Sanction
Hearing, failing which the Scheme shall lapse.

Part 3 Certain further terms of the Acquisition

1.         Workspace reserves the right to elect to implement the
Acquisition by way of a Takeover Offer, subject to the Panel's consent and the
terms of the Co-operation Agreement. In such event, such Takeover Offer will
(unless otherwise determined by Workspace and subject to the consent of the
Panel,) be implemented on the same terms and conditions as those which would
apply to the Scheme subject to appropriate amendments to reflect the change in
method of effecting the Acquisition, which may include (without limitation and
subject to the consent of the Panel and subject and without prejudice to the
terms of the Co-operation Agreement for so long as it is continuing) an
acceptance condition that is set at 90 per cent. (or such lesser percentage,
being more than 50 per cent., as Workspace may decide) of the voting rights
attaching to McKay Shares, including, for this purpose, any such voting rights
attaching to McKay Shares that are unconditionally allotted or issued before
the Takeover Offer becomes or is declared unconditional, whether pursuant to
the exercise of any outstanding subscription or conversion rights or
otherwise.

2.         If Workspace is required by the Panel to make an offer for
McKay Shares under the provisions of Rule 9 of the Code, Workspace may make
such alterations to any of the above Conditions as are necessary to comply
with the provisions of that Rule.

3.         The Scheme and the Acquisition and any dispute or claim
arising out of, or in connection with, them (whether contractual or
non-contractual in nature) will be governed by English law and will be subject
to the jurisdiction of the Courts of England. The Acquisition will be subject
to the applicable requirements of the Code, the Panel, the London Stock
Exchange, the FCA and the Listing Rules.

4.         The McKay Shares will be acquired under the Acquisition
fully paid and free from all liens, equitable interests, charges,
encumbrances, options, rights of pre-emption and any other third party rights
or interests of any nature whatsoever and together with all rights attaching
thereto, including the right to receive and retain all dividends and other
distributions and returns of value declared, paid or made after the Effective
Date. If any dividend or other distribution or return of value is proposed,
declared, made, paid or becomes payable by McKay in respect of a McKay Share
on or after the date of this Announcement and prior to the Effective Date,
Workspace will have the right to reduce the value of the consideration payable
for each McKay Share by up to the amount per McKay Share of such dividend,
distribution or return of value except where the McKay Share is or will be
acquired pursuant to the Scheme on a basis which entitles Workspace to receive
the dividend, distribution or return of value and to retain it. If any such
dividend or distribution or return of value is paid or made after the date of
this Announcement and Workspace exercises its rights described above, any
reference in this Announcement to the consideration payable under the Scheme
shall be deemed to be a reference to the consideration as so reduced. Any
exercise by Workspace of its rights referred to in this paragraph shall be the
subject of an Announcement and, for the avoidance of doubt, shall not be
regarded as constituting any revision or variation of the terms of the Scheme.
 

5.         The availability of the New Workspace Shares to persons not
resident in the United Kingdom may be affected by the laws of the relevant
jurisdictions. Persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about and observe any
applicable requirements.

6.         The New Workspace Shares to be issued under the Scheme will
be issued credited as fully paid and will rank pari passu with the issued
ordinary shares in Workspace, including the right to receive in full all
dividends and other distributions, if any, declared, made or paid after Scheme
Effective Time.

7.        Fractions of New Workspace Shares will not be allotted or
issued to accepting McKay Shareholders.  Fractional entitlements to New
Workspace Shares will be aggregated and sold in the market and the net
proceeds of sale distributed pro rata to the McKay Shareholders entitled
thereto.

 

 

APPENDIX 2

Sources and bases of information and bases of calculation

 

In this Announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used:

1.   All Closing Prices for Workspace Shares and McKay Shares have been
derived from Bloomberg;

2.   All VWAPs are derived from Bloomberg for the relevant time periods;

3.   Issued and to be issued share capital of McKay Shares, being 91,418,263
McKay Shares, is calculated as at 1 March 2022 (being the last Business Day
prior to the date or this Announcement) on the basis of:

a. the 90,089,313 McKay Ordinary Shares in issue as at 1 March 2022 (being
the last Business Day prior to the date or this Announcement); and

b.   the 1,328,950 McKay Ordinary Shares expected to be issued under the
McKay Share Plans;

4.   The financial information relating to McKay has been extracted or
derived (without adjustment) from the:

a.   audited consolidated financial statements of McKay for the year ended
31 March 2021; and

b.   unaudited consolidated interim financial statements contained in the
interim results of McKay for the period ended 30 September 2021;

5.   The financial information relating to Workspace is extracted or derived
(without adjustment) from the:

a.   audited consolidated financial statements of Workspace for the year
ended 31 March 2021;

b.   unaudited consolidated interim financial statements contained in the
interim results of Workspace for the period ended 30 September 2021; and

c.   management estimates in respect of the net debt and LTV values as at 31
January 2022;

6.   Property portfolio and valuation information relating to McKay is from
the valuation report produced by Knight Frank as set out in  Appendix 4 to
this Announcement;

7.   Property portfolio and valuation information relating to Workspace is
from the valuation report produced by CBRE as set out in  Appendix 4 to this
Announcement;

8.   The figure of £68.5 million of net sale proceeds for the sale of 30
Lombard Street as set out in paragraph 5 of this Announcement is net of
outstanding tenant incentives, tax and sale costs.

9.   For the purposes of Rule 29.1(d) of the Code, an updated valuation of
Workspace's investment properties has been obtained. This has been used to
calculate Workspace's estimated Net Tangible Assets per Workspace Share as at
31 January 2022:

 Summary Balance Sheet               31 Jan 2022((1))
                                     Net assets  No' of shares((5))  Net assets
                                     £'m         million             per share
                                                                     pence
 Investment properties((2))          2,401.8
 Net borrowings((3))                 573.2
 Other liabilities((4))              66.2
 Net Tangible Assets                 1,762.4     181.9               969

(1) Estimated figures

(2) Investment property value is presented as per CBRE valuation

(3) As at 31 January 2022

(4) Other liabilities include: trade and other receivables, trade and other
payables and other investments

(5) 30 September 2021 diluted shares

The estimated Net Tangible Assets as at 31 January 2022, and the adjustments
referred to above, have been derived from Workspace's estimate of the
financial position of Workspace as at 31 January 2022. The estimated Net
Tangible Assets per Workspace Share has been calculated on the basis of the
Workspace Shares in issue at 30 September 2021.

10. For the purposes of Rule 29.1(d) of the Code, an updated valuation of
McKay's investment properties has been obtained. This has been used to
calculate McKay's estimated Net Tangible Assets per McKay Share and adjusted
Net Tangible Assets per McKay Share, each as at 31 January 2022:

 Summary Balance Sheet                                    31 Jan 2022((1))
                                                          Net assets  No' of shares  Net assets
                                                          £'m         million        per share
                                                                                     pence
 Investment properties((2))                               486.5
 Other assets((3))                                        12.6
 Net borrowings                                           (172.3)
 Other liabilities((4))                                   (18.9)
 Net Tangible Assets                                      307.8       90.69          339p
 Estimated Aviva term loan prepayments cost((5))          (12.1)
 Adjusted Net Tangible Assets                             295.7       90.69          326p

 

(1) Estimated figures

(2) Investment property value is presented in accordance with the Company's
accounting policies and previous disclosures. The difference between this
figure and the Knight Frank valuation of wholly owned investment properties of
£490.4m is made up of the following items; IFRS 16 adjustments for rent free
periods and tenant incentives (£-7.9m) and the grossing up of headlease
liabilities (£3.6m)

(3) Other assets include: fixed assets, trade and other receivables and IFRS
16 rent free and incentives debtor

(4) Other liabilities include: trade and other payables, rent received in
advance, lease liabilities and provisions

(5) Calculated as at 31-Jan-22 in line with the lenders Standard Method

The estimated Net Tangible Assets as at 31 January 2022, and the adjustments
referred to above, have been derived from McKay's estimate of the financial
position of McKay as at 31 January 2022. The estimated Net Tangible Assets per
McKay Share has been calculated on the basis of the McKay Shares in issue at
31 January 2022.

11. Certain figures in this announcement have been subject to rounding
adjustments.

 

 

 

APPendix 3

IRREVOCABLE UNDERTAKINGS AND LETTER OF INTENT

 

(A)        Irrevocable undertakings from McKay Directors

The following McKay Directors have given irrevocable undertakings to, amongst
other things, vote in favour of the Scheme at the Court Meeting and the
Resolutions to be proposed at the General Meeting in relation to the following
McKay Shares currently held by them as well as any further McKay Shares which
they may become the registered or beneficial owner of or otherwise interested
in:

 

 Name               Number of McKay Shares  Percentage of issued share capital of McKay (%)
 Richard Grainger   57,638                  0.06%
 Simon Perkins      55,245                  0.06%
 Giles Salmon       103,702                 0.12%
 Thomas Elliott     33,030                  0.04%
 Jonathan Austen    25,350                  0.03%
 Helen Sachdev      0                       0.00%
 Jeremy Bates       0                       0.00%
 Nicholas Shepherd  23,315                  0.03%
 TOTAL              298,280                 0.33%

 

The obligations of the McKay Directors under the irrevocable undertakings they
have given shall lapse and cease to have effect if:

·   the Scheme Document is not despatched to the McKay Shareholders within
28 days from the date of the irrevocable undertakings except as permitted by
the Code, or such later date as may be agreed by the Panel provided that
Workspace has not subsequently elected (in accordance with and subject to the
terms of the Cooperation Agreement) to proceed with the implementation of the
Offer by way of a Takeover Offer;

·    where Workspace has elected (in accordance with and subject to the
terms of the Co-operation Agreement) to proceed with the implementation of the
Acquisition by way of a Takeover Offer, the Offer Document is not despatched
to McKay Shareholders within 28 days of the date of the publication of the
announcement made in accordance with the requirements of paragraph 8 of
Appendix 7 of the Code (or such other date as the Panel may require);

·    the Scheme lapses (other than in circumstances where Workspace has,
in accordance with and subject to the terms of the Co-operation Agreement,
announced a firm intention to proceed with the implementation of the
Acquisition by way of a Takeover Offer);

·   Workspace announces, with the consent of the Panel, that it does not
intend to make or proceed with the Acquisition and no new replacement Scheme
or Takeover Offer is announced by Workspace in accordance with Rule 2.7 of the
Code at the same time; or

·    any competing offer for the entire issued and to be issued ordinary
share capital of McKay becomes or is declared unconditional in all respects
(if implemented by way of a Takeover Offer) or becomes effective (if
implemented by way of a Scheme).

 

(B)        Irrevocable undertakings from other McKay Shareholders

 

The following holders, controllers and/or beneficial owners of McKay Shares
have given irrevocable undertakings that they shall or shall procure that the
registered holder of such McKay Shares shall, amongst other things, vote in
favour of the Scheme at the Court Meeting and the Resolutions to be proposed
at the General Meeting in relation to the following McKay Shares currently
held by them as well as any further McKay Shares which they may become the
registered or beneficial owner of or otherwise interested in:

 

                                                                                                                             Number of McKay Shares  Percentage of issued share capital of McKay (%)

 Registered Holder                               Beneficial Holder
 Alistair McKay                                  Alistair McKay                                                              557,558                 0.62%
 Andrew McKay                                    Andrew McKay                                                                621,645                 0.69%
 Iain McKay                                      Iain McKay                                                                  242,858                 0.27%
 GF McKay Marriage Settlement                    Alistair McKay, Andrew McKay, Charlotte McKay and Catriona Littlehales      654,782                 0.73%
 Iain McKay Discretionary Grandchildren's Trust  Eleanor and  James McKay, Matilda  and Jemima Littlehales,  Alastair,       536,192                 0.60%
                                                 Andrew and  Charlotte McKay and  Catriona Littlehales
 Sutherland Securities Limited                   Sutherland Securities  Limited                                              2,712,551               3.01%
 Smith & Williamson Nominees Limited             Brompton 35 Limited                                                         2,712,552               3.01%
 Margaret Chilton                                                                                                            2,590,429               2.88%

                                                 GF McKay Fund on  behalf of Margaret  Chilton, Sacha Chilton,  Candida
                                                 Waters,  Fenella Nicholas and  Alexander Chilton
 Candida Waters                                  Chilton 2015 Trust on behalf of Chilton family members                      1,450,816               1.61%
 TR Property Investment Trust plc                TR Property Investment Trust plc                                            7,560,496               8.39%
 TOTAL                                                                                                                       19,639,879              21.80%

 

The obligations of the McKay Shareholders under the irrevocable undertakings
they have given shall lapse and cease to have effect if:

·   the Scheme Document is not despatched to the McKay Shareholders within
28 days from the date of the irrevocable undertakings except as permitted by
the Code, or such later date as may be agreed by the Panel provided that
Workspace has not subsequently elected (in accordance with and subject to the
terms of the Cooperation Agreement) to proceed with the implementation of the
Offer by way of a Takeover Offer;

·    where Workspace has elected (in accordance with and subject to the
terms of the Co-operation Agreement) to proceed with the implementation of the
Acquisition by way of a Takeover Offer, the Offer Document is not despatched
to McKay Shareholders within 28 days of the date of the publication of the
announcement made in accordance with the requirements of paragraph 8 of
Appendix 7 of the Code (or such other date as the Panel may require);

·    the Scheme lapses (other than in circumstances where Workspace has,
in accordance with and subject to the terms of the Co-operation Agreement,
announced a firm intention to proceed with the implementation of the
Acquisition by way of a Takeover Offer);

·   Workspace announces, with the consent of the Panel, that it does not
intend to make or proceed with the Acquisition and no new replacement Scheme
or Takeover Offer is announced by Workspace in accordance with Rule 2.7 of the
Code at the same time; or

·   any competing offer for the entire issued and to be issued ordinary
share capital of McKay becomes or is declared unconditional in all respects
(if implemented by way of a Takeover Offer) or becomes effective (if
implemented by way of a Scheme).

 

In addition, the McKay Shareholders other than TR Property Investment Trust
may accept a competing offer for the entire issued and to be issued ordinary
share capital of McKay or exercise their voting rights in favour of a
competing offer for the entire issued and to be issued ordinary share capital
of McKay provided that in the reasonable opinion of the McKay Board the offer
represents a value per McKay Share of not less than 327 pence and Workspace
has not announced a firm intention to make a revised offer for the entire
issued and to be issued share capital of McKay for an equivalent or improved
consideration to that available under such competing offer by 5.00 p.m. on the
fifteenth business day after the date of the announcement made under Rule 2.7
of the Code of such competing offer.

 

TR Property Investment Trust may accept a competing offer for the entire
issued and to be issued ordinary share capital of McKay or exercise its voting
rights in favour of a competing offer for the entire issued and to be issued
ordinary share capital of McKay provided that in its reasonable opinion the
offer represents a value per McKay Share of not less than 300 pence.

 

(C)        Letter of Intent

 

Aberforth Partners LLP has given to Workspace a non-binding letter of intent
to vote in favour of the Scheme at the Court Meeting and the Resolutions to be
proposed at the General Meeting (or, if the Acquisition is to be implemented
by way of a Takeover Offer accept or procure the acceptance of any such
Takeover Offer) in respect of 13,402,943 McKay Shares representing
approximately 14.9 per cent. of McKay's issued share capital as at 1 March
2022 (being the last Business Day prior to the date of this Announcement).

 

 

APPENDIX 4

 

VALUATION REPORTS

 

PART A: VALUATION REPORT OF CBRE LIMITED IN RESPECT OF WORKSPACE GROUP PLC
PROPERTIES

 

condensed

VALUATION

REPORT

Valuation Date: 31 January 2022

Report Date: 1 March 2022

 In respect of:
 Workspace Group plc Portfolio
 On behalf of:
 The Addressees as stated below

 

 

 Introduction

 Report Date                                                 1 March 2022
 Valuation Date                                              31 January 2022
 Addressee                                                   The Directors

                                                             Workspace Group plc

                                                             (herein after referred to as "Workspace")

                                                             and

                                                             J.P. Morgan Securities plc

                                                             25 Bank Street

                                                             London E14 5JP

                                                             (in its capacity as Financial Adviser to the Company)

                                                             (and the above collectively referred to hereinafter as the "Addressees")

 The Properties                                              The properties held by Workspace Group plc as listed in the Schedule of Assets
                                                             below (the "Properties").
 Instruction                                                 To value the unencumbered freehold, heritable and leasehold interests (as
                                                             applicable) in the Properties on the basis of Market Value as at the Valuation
                                                             Date in accordance with the terms of engagement entered into between CBRE and
                                                             the Addressees dated 1 March          2022.
 Capacity of Valuer                                          External Valuer, as defined in the current version of the RICS Valuation -
                                                             Global Standards.
 Purpose                                                     The purpose of our valuation and the Appendices to it will be to assess the
                                                             Market Value of the freehold, heritable and leasehold interests in the
                                                             Properties (together the "Valuation Report") for inclusion in an announcement
                                                             to be made under Rule 2.7 of the Takeover Code and for inclusion in a
                                                             subsequent offer document or scheme document (as applicable) (the "Purpose").

                                                             This Valuation Report has been prepared in accordance with Rule 29 of the
                                                             Takeover Code.

                                                             The effective date of valuation is 31 January 2022.
 Market Value of Workspace's Interest in the Properties      £2,401,835,000 (TWO BILLION FOUR HUNDRED AND ONE MILLION EIGHT HUNDRED AND

                                                           THIRTY FIVE THOUSAND POUNDS) exclusive of VAT, as shown in Schedule of Assets
                                                             below.

                                                             Appendix A contains details of the Properties that are in the course of
                                                             development or held for development as required by Rule 29 of the Takeover
                                                             Code.

                                                             We are required to show the split of values between freehold (and heritable)
                                                             and leasehold property, and to report separately on properties held for
                                                             investment and held for development.

                                                             The Company has expressly instructed us not to disclose the individual values
                                                             or rents of the Properties which it considers commercially sensitive.

                                                             Our opinion of Market Value is based upon the Scope of Work and Valuation
                                                             Assumptions attached, and has been primarily derived using comparable recent
                                                             market transactions on arm's length terms.

                     Freehold        Leasehold              Sub-total

                                                                               £                £                         £

                                                             Central London       955,000,000     280,950,000  1,235,950,000
                                                             Inner London         892,195,000     63,325,000   955,520,000
                                                             Industrial/Workshop  60,165,000      -            60,165,000
                                                             Development          127,700,000     22,500,000   150,200,000
                                                             Totals               2,035,060,000   366,775,000  2,401,835,000

In accordance with Note 3 of Rule 29.4 of the Takeover Code, please find
                                                             additional figures relating to the development Properties attached at Appendix
                                                             A to this report.
                                                                                                                                           We
                                                                                                                                           have
                                                                                                                                           valu
                                                                                                                                           ed
                                                                                                                                           the
                                                                                                                                           Prop
                                                                                                                                           erti
                                                                                                                                           es
                                                                                                                                           indi
                                                                                                                                           vidu
                                                                                                                                           ally
                                                                                                                                           and
                                                                                                                                           no
                                                                                                                                           acco
                                                                                                                                           unt
                                                                                                                                           has
                                                                                                                                           been
                                                                                                                                           take
                                                                                                                                           n of
                                                                                                                                           any
                                                                                                                                           disc
                                                                                                                                           ount
                                                                                                                                           or
                                                                                                                                           prem
                                                                                                                                           ium
                                                                                                                                           that
                                                                                                                                           may
                                                                                                                                           be
                                                                                                                                           nego
                                                                                                                                           tiat
                                                                                                                                           ed
                                                                                                                                           in
                                                                                                                                           the
                                                                                                                                           mark
                                                                                                                                           et
                                                                                                                                           if
                                                                                                                                           all
                                                                                                                                           or
                                                                                                                                           part
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           port
                                                                                                                                           foli
                                                                                                                                           o
                                                                                                                                           was
                                                                                                                                           to
                                                                                                                                           be
                                                                                                                                           mark
                                                                                                                                           eted
                                                                                                                                           simu
                                                                                                                                           ltan
                                                                                                                                           eous
                                                                                                                                           ly,
                                                                                                                                           eith
                                                                                                                                           er
                                                                                                                                           in
                                                                                                                                           lots
                                                                                                                                           or
                                                                                                                                           as a
                                                                                                                                           whol
                                                                                                                                           e.
                                                                                                                                           Wher
                                                                                                                                           e a
                                                                                                                                           prop
                                                                                                                                           erty
                                                                                                                                           is
                                                                                                                                           owne
                                                                                                                                           d
                                                                                                                                           thro
                                                                                                                                           ugh
                                                                                                                                           an
                                                                                                                                           indi
                                                                                                                                           rect
                                                                                                                                           inve
                                                                                                                                           stme
                                                                                                                                           nt
                                                                                                                                           stru
                                                                                                                                           ctur
                                                                                                                                           e or
                                                                                                                                           a
                                                                                                                                           join
                                                                                                                                           t
                                                                                                                                           tena
                                                                                                                                           ncy
                                                                                                                                           in a
                                                                                                                                           trus
                                                                                                                                           t
                                                                                                                                           for
                                                                                                                                           sale
                                                                                                                                           ,
                                                                                                                                           our
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           repr
                                                                                                                                           esen
                                                                                                                                           ts
                                                                                                                                           the
                                                                                                                                           rele
                                                                                                                                           vant
                                                                                                                                           appo
                                                                                                                                           rtio
                                                                                                                                           ned
                                                                                                                                           perc
                                                                                                                                           enta
                                                                                                                                           ge
                                                                                                                                           of
                                                                                                                                           owne
                                                                                                                                           rshi
                                                                                                                                           p of
                                                                                                                                           the
                                                                                                                                           valu
                                                                                                                                           e of
                                                                                                                                           the
                                                                                                                                           whol
                                                                                                                                           e
                                                                                                                                           prop
                                                                                                                                           erty
                                                                                                                                           ,
                                                                                                                                           assu
                                                                                                                                           ming
                                                                                                                                           full
                                                                                                                                           mana
                                                                                                                                           geme
                                                                                                                                           nt
                                                                                                                                           cont
                                                                                                                                           rol.
                                                                                                                                           Our
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           ther
                                                                                                                                           efor
                                                                                                                                           e is
                                                                                                                                           unli
                                                                                                                                           kely
                                                                                                                                           to
                                                                                                                                           repr
                                                                                                                                           esen
                                                                                                                                           t
                                                                                                                                           the
                                                                                                                                           valu
                                                                                                                                           e
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           inte
                                                                                                                                           rest
                                                                                                                                           s in
                                                                                                                                           the
                                                                                                                                           indi
                                                                                                                                           rect
                                                                                                                                           inve
                                                                                                                                           stme
                                                                                                                                           nt
                                                                                                                                           stru
                                                                                                                                           ctur
                                                                                                                                           e
                                                                                                                                           thro
                                                                                                                                           ugh
                                                                                                                                           whic
                                                                                                                                           h
                                                                                                                                           the
                                                                                                                                           prop
                                                                                                                                           erty
                                                                                                                                           is
                                                                                                                                           held
                                                                                                                                           .

                                                                                                                                           Our
                                                                                                                                           opin
                                                                                                                                           ion
                                                                                                                                           of
                                                                                                                                           Mark
                                                                                                                                           et
                                                                                                                                           Valu
                                                                                                                                           e is
                                                                                                                                           base
                                                                                                                                           d
                                                                                                                                           upon
                                                                                                                                           the
                                                                                                                                           Scop
                                                                                                                                           e of
                                                                                                                                           Work
                                                                                                                                           and
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n

                                                                                                                                           Assu
                                                                                                                                           mpti
                                                                                                                                           ons
                                                                                                                                           atta
                                                                                                                                           ched
                                                                                                                                           and
                                                                                                                                           has
                                                                                                                                           been
                                                                                                                                           prim
                                                                                                                                           aril
                                                                                                                                           y
                                                                                                                                           deri
                                                                                                                                           ved
                                                                                                                                           usin
                                                                                                                                           g
                                                                                                                                           comp
                                                                                                                                           arab
                                                                                                                                           le
                                                                                                                                           rece
                                                                                                                                           nt

                                                                                                                                           mark
                                                                                                                                           et
                                                                                                                                           tran
                                                                                                                                           sact
                                                                                                                                           ions
                                                                                                                                           on
                                                                                                                                           arm'
                                                                                                                                           s
                                                                                                                                           leng
                                                                                                                                           th
                                                                                                                                           term
                                                                                                                                           s.

                                                                                                                                           We
                                                                                                                                           here
                                                                                                                                           by
                                                                                                                                           conf
                                                                                                                                           irm
                                                                                                                                           that
                                                                                                                                           as
                                                                                                                                           at
                                                                                                                                           the
                                                                                                                                           date
                                                                                                                                           of
                                                                                                                                           this
                                                                                                                                           repo
                                                                                                                                           rt,
                                                                                                                                           we
                                                                                                                                           are
                                                                                                                                           not
                                                                                                                                           awar
                                                                                                                                           e of
                                                                                                                                           any

                                                                                                                                           mate
                                                                                                                                           rial
                                                                                                                                           chan
                                                                                                                                           ges
                                                                                                                                           to
                                                                                                                                           the
                                                                                                                                           Prop
                                                                                                                                           erti
                                                                                                                                           es
                                                                                                                                           whic
                                                                                                                                           h
                                                                                                                                           woul
                                                                                                                                           d
                                                                                                                                           affe
                                                                                                                                           ct
                                                                                                                                           our
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           betw
                                                                                                                                           een
                                                                                                                                           the

                                                                                                                                           effe
                                                                                                                                           ctiv
                                                                                                                                           e
                                                                                                                                           date
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           and
                                                                                                                                           the
                                                                                                                                           date
                                                                                                                                           of
                                                                                                                                           this
                                                                                                                                           repo
                                                                                                                                           rt.
 Development Assets                                          The development Properties have been valued by way of a discounted cashflow

                                                             and residual appraisals. These methods of valuation are very sensitive to
                                                             changes in key inputs. Small changes in variables such as sales volumes or
                                                             build costs will have a disproportionate effect on land value as demonstrated
                                                             below. Site values can therefore be susceptible to considerable variances as a
                                                             result of changes in market conditions.
 Compliance with                                             The Valuation has been prepared in accordance with the latest version of the

                                                           RICS Valuation - Global Standards (incorporating the International Valuation
 Valuation Standards                                         Standards) and the UK national supplement (the "Red Book") current as at the
                                                             Valuation Date.
                                                                                                                                           The
                                                                                                                                           Prop
                                                                                                                                           erti
                                                                                                                                           es
                                                                                                                                           have
                                                                                                                                           been
                                                                                                                                           valu
                                                                                                                                           ed
                                                                                                                                           by a
                                                                                                                                           valu
                                                                                                                                           er
                                                                                                                                           who
                                                                                                                                           is
                                                                                                                                           qual
                                                                                                                                           ifie
                                                                                                                                           d
                                                                                                                                           for
                                                                                                                                           the
                                                                                                                                           purp
                                                                                                                                           ose
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n in
                                                                                                                                           acco
                                                                                                                                           rdan
                                                                                                                                           ce
                                                                                                                                           with
                                                                                                                                           the
                                                                                                                                           Red
                                                                                                                                           Book
                                                                                                                                           . We
                                                                                                                                           conf
                                                                                                                                           irm
                                                                                                                                           that
                                                                                                                                           we
                                                                                                                                           have
                                                                                                                                           suff
                                                                                                                                           icie
                                                                                                                                           nt
                                                                                                                                           loca
                                                                                                                                           l
                                                                                                                                           and
                                                                                                                                           nati
                                                                                                                                           onal
                                                                                                                                           know
                                                                                                                                           ledg
                                                                                                                                           e of
                                                                                                                                           the
                                                                                                                                           part
                                                                                                                                           icul
                                                                                                                                           ar
                                                                                                                                           prop
                                                                                                                                           erty
                                                                                                                                           mark
                                                                                                                                           et
                                                                                                                                           invo
                                                                                                                                           lved
                                                                                                                                           and
                                                                                                                                           have
                                                                                                                                           the
                                                                                                                                           skil
                                                                                                                                           ls
                                                                                                                                           and
                                                                                                                                           unde
                                                                                                                                           rsta
                                                                                                                                           ndin
                                                                                                                                           g to
                                                                                                                                           unde
                                                                                                                                           rtak
                                                                                                                                           e
                                                                                                                                           the
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           comp
                                                                                                                                           eten
                                                                                                                                           tly.
                                                                                                                                           Wher
                                                                                                                                           e
                                                                                                                                           the
                                                                                                                                           know
                                                                                                                                           ledg
                                                                                                                                           e
                                                                                                                                           and
                                                                                                                                           skil
                                                                                                                                           l
                                                                                                                                           requ
                                                                                                                                           irem
                                                                                                                                           ents
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           Red
                                                                                                                                           Book
                                                                                                                                           have
                                                                                                                                           been
                                                                                                                                           met
                                                                                                                                           in
                                                                                                                                           aggr
                                                                                                                                           egat
                                                                                                                                           e by
                                                                                                                                           more
                                                                                                                                           than
                                                                                                                                           one
                                                                                                                                           valu
                                                                                                                                           er
                                                                                                                                           with
                                                                                                                                           in
                                                                                                                                           CBRE
                                                                                                                                           , we
                                                                                                                                           conf
                                                                                                                                           irm
                                                                                                                                           that
                                                                                                                                           a
                                                                                                                                           list
                                                                                                                                           of
                                                                                                                                           thos
                                                                                                                                           e
                                                                                                                                           valu
                                                                                                                                           ers
                                                                                                                                           has
                                                                                                                                           been
                                                                                                                                           reta
                                                                                                                                           ined
                                                                                                                                           with
                                                                                                                                           in
                                                                                                                                           the
                                                                                                                                           work
                                                                                                                                           ing
                                                                                                                                           pape
                                                                                                                                           rs,
                                                                                                                                           toge
                                                                                                                                           ther
                                                                                                                                           with
                                                                                                                                           conf
                                                                                                                                           irma
                                                                                                                                           tion
                                                                                                                                           that
                                                                                                                                           each
                                                                                                                                           name
                                                                                                                                           d
                                                                                                                                           valu
                                                                                                                                           er
                                                                                                                                           comp
                                                                                                                                           lies
                                                                                                                                           with
                                                                                                                                           the
                                                                                                                                           requ
                                                                                                                                           irem
                                                                                                                                           ents
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           Red
                                                                                                                                           Book
                                                                                                                                           .
                                                                                                                                           This
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n is
                                                                                                                                           a
                                                                                                                                           prof
                                                                                                                                           essi
                                                                                                                                           onal
                                                                                                                                           opin
                                                                                                                                           ion
                                                                                                                                           and
                                                                                                                                           is
                                                                                                                                           expr
                                                                                                                                           essl
                                                                                                                                           y
                                                                                                                                           not
                                                                                                                                           inte
                                                                                                                                           nded
                                                                                                                                           to
                                                                                                                                           serv
                                                                                                                                           e as
                                                                                                                                           a
                                                                                                                                           warr
                                                                                                                                           anty
                                                                                                                                           ,
                                                                                                                                           assu
                                                                                                                                           ranc
                                                                                                                                           e or
                                                                                                                                           guar
                                                                                                                                           ante
                                                                                                                                           e of
                                                                                                                                           any
                                                                                                                                           part
                                                                                                                                           icul
                                                                                                                                           ar
                                                                                                                                           valu
                                                                                                                                           e of
                                                                                                                                           the
                                                                                                                                           subj
                                                                                                                                           ect
                                                                                                                                           Prop
                                                                                                                                           erti
                                                                                                                                           es.
                                                                                                                                           Othe
                                                                                                                                           r
                                                                                                                                           valu
                                                                                                                                           ers
                                                                                                                                           may
                                                                                                                                           reac
                                                                                                                                           h
                                                                                                                                           diff
                                                                                                                                           eren
                                                                                                                                           t
                                                                                                                                           conc
                                                                                                                                           lusi
                                                                                                                                           ons
                                                                                                                                           as
                                                                                                                                           to
                                                                                                                                           the
                                                                                                                                           valu
                                                                                                                                           e of
                                                                                                                                           the
                                                                                                                                           subj
                                                                                                                                           ect
                                                                                                                                           Prop
                                                                                                                                           erti
                                                                                                                                           es.
                                                                                                                                           This
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n is
                                                                                                                                           for
                                                                                                                                           the
                                                                                                                                           sole
                                                                                                                                           purp
                                                                                                                                           ose
                                                                                                                                           of
                                                                                                                                           prov
                                                                                                                                           idin
                                                                                                                                           g
                                                                                                                                           the
                                                                                                                                           inte
                                                                                                                                           nded
                                                                                                                                           user
                                                                                                                                           with
                                                                                                                                           the
                                                                                                                                           valu
                                                                                                                                           er's
                                                                                                                                           inde
                                                                                                                                           pend
                                                                                                                                           ent
                                                                                                                                           prof
                                                                                                                                           essi
                                                                                                                                           onal
                                                                                                                                           opin
                                                                                                                                           ion
                                                                                                                                           of
                                                                                                                                           the
                                                                                                                                           valu
                                                                                                                                           e of
                                                                                                                                           the
                                                                                                                                           subj
                                                                                                                                           ect
                                                                                                                                           Prop
                                                                                                                                           erti
                                                                                                                                           es
                                                                                                                                           as
                                                                                                                                           at
                                                                                                                                           the
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           Date
                                                                                                                                           .
                                                                                                                                           In
                                                                                                                                           acco
                                                                                                                                           rdan
                                                                                                                                           ce
                                                                                                                                           with
                                                                                                                                           the
                                                                                                                                           RICS
                                                                                                                                           Valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           Glob
                                                                                                                                           al
                                                                                                                                           Stan
                                                                                                                                           dard
                                                                                                                                           s
                                                                                                                                           (202
                                                                                                                                           0)
                                                                                                                                           ("Re
                                                                                                                                           d
                                                                                                                                           Book
                                                                                                                                           ")
                                                                                                                                           we
                                                                                                                                           have
                                                                                                                                           made
                                                                                                                                           cert
                                                                                                                                           ain
                                                                                                                                           disc
                                                                                                                                           losu
                                                                                                                                           res
                                                                                                                                           in
                                                                                                                                           conn
                                                                                                                                           ecti
                                                                                                                                           on
                                                                                                                                           with
                                                                                                                                           this
                                                                                                                                           valu
                                                                                                                                           atio
                                                                                                                                           n
                                                                                                                                           inst
                                                                                                                                           ruct
                                                                                                                                           ion
                                                                                                                                           and
                                                                                                                                           our
                                                                                                                                           rela
                                                                                                                                           tion
                                                                                                                                           ship
                                                                                                                                           with
                                                                                                                                           the
                                                                                                                                           Addr
                                                                                                                                           esse
                                                                                                                                           es.
 Assumptions                                                 The Properties details on which each Valuation are based are as set out in
                                                             this report. We have made various assumptions as to tenure, letting, taxation,
                                                             town planning, and the condition and repair of buildings and sites - including
                                                             ground and groundwater contamination - as set out below.

                                                             If any of the information or assumptions on which the Valuation is based are
                                                             subsequently found to be incorrect, the Valuation figures may also be
                                                             incorrect and should be reconsidered.
 Variations and/or                                           None.

 Departures from

 Standard Assumptions
 Novel Coronavirus (COVID-19)                                The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health
                                                             Organisation as a "Global Pandemic" on the 11 March 2020, has impacted many
                                                             aspects of daily life and the global economy. However, in UK Industrial
                                                             Logistics, as at the Valuation Date, transaction volumes provided enough
                                                             up-to-date comparable market evidence upon which to base opinions of value.
                                                             Given the unknown future impact of COVID-19 on the real estate market and the
                                                             difficulty in differentiating between short-term impacts and longer-term
                                                             structural market changes, we recommend that you keep the Valuation contained
                                                             in this report under frequent review.
 Sustainability Considerations                               Wherever appropriate, sustainability and environmental matters are an integral
                                                             part of the valuation approach. 'Sustainability' is taken to mean the
                                                             consideration of such matters as environment and climate change, health and
                                                             well-being and corporate responsibility that can or do impact on the valuation
                                                             of an asset. In a valuation context, sustainability encompasses a wide range
                                                             of physical, social, environmental, and economic factors that can affect
                                                             value. The range of issues includes key environmental risks, such as flooding,
                                                             energy efficiency and climate, as well as matters of design, configuration,
                                                             accessibility, legislation, management, and fiscal considerations - and
                                                             current and historic land use.

                                                             Sustainability has an impact on the value of an asset, even if not explicitly
                                                             recognised. Valuers reflect markets, they do not lead them. Where we recognise
                                                             the value impacts of sustainability, we are reflecting our understanding of
                                                             how market participants include sustainability requirements in their bids and
                                                             the impact on market valuations.
 Climate Risk Legislation                                    The UK Government is currently producing legislation which enforces the
                                                             transition to net zero by 2050, and the stated 78% reduction of greenhouse
                                                             gases by 2035 (based on a 1990 baseline).

                                                             We understand this to include an update to the Minimum Energy Efficiency
                                                             Standards, stated to increase the minimum requirements from an E (since 2018)
                                                             to a B in 2030. The government also intends to introduce an operational
                                                             rating. It is not yet clear how this will be legislated, but fossil fuels used
                                                             in building, such as natural gas for heating, are incompatible with the UK's
                                                             commitment to be Net Zero Carbon by 2050.

                                                             This upcoming legislation could have a potential impact to future asset
                                                             value.

                                                             We also note that the UK's introduction of mandatory climate related
                                                             disclosures (reporting climate risks and opportunities consistent with
                                                             recommendations by the "Task Force for Climate Related Financial Disclosure"
                                                             (TCFD)), including the assessment of so-called physical and transition climate
                                                             risks, will potentially have an impact on how the market views such risks and
                                                             incorporates them into the sale of letting of assets.

                                                             The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
                                                             impact on UK asset values due to the requirements in reporting to European
                                                             investors.
 Independence                                                CBRE currently value the Properties as part of a wider mandate for financial

                                                             reporting purposes on behalf of the Company. CBRE Ltd have had no other
                                                             previous material involvement with any of the Properties.

                                                             The total fees, including the fee for this assignment, earned by CBRE Ltd (or
                                                             other companies forming part of the same group of companies within the UK)
                                                             from the Company (or other companies forming part of the same group of
                                                             companies) is less than 5.0% of the total UK revenues.
 Responsibility                                              We are responsible for this Valuation Report and accept responsibility for the
                                                             information contained in this Valuation Report and confirm that to the best of
                                                             our knowledge the information contained in this Valuation Report is in
                                                             accordance with the facts and contains no omissions likely to affect its
                                                             import.
 Reliance                                                    This Valuation Report will be relied upon by the Addressees.

                                                             No reliance may be placed upon the contents of this Valuation Report by any
                                                             party for any purpose other than in connection with the Purpose.
                                                             Yours faithfully                                                              Yours faithfully

                                                             Nick Knight                                                                   James Hughes MRICS

                                                             Executive Director                                                            Director

                                                             RICS Registered Valuer                                                        RICS Registered Valuer

                                                             For and on behalf of CBRE Limited                                             For and on behalf of CBRE Limited

                                                             Henrietta House                                                               Henrietta House

                                                             Henrietta Place                                                               Henrietta Place

                                                             London                                                                        London

                                                             W1G 0NB                                                                       W1G 0NB

                                                             +44 2071822897                                                                +44 207182 2000

                                                             Nick.Knight@cbre.com                                                          James.Hughes3@cbre.com

In accordance with Note 3 of Rule 29.4 of the Takeover Code, please find
additional figures relating to the development Properties attached at Appendix
A to this report.

We have valued the Properties individually and no account has been taken of
any discount or premium that may be negotiated in the market if all or part of
the portfolio was to be marketed simultaneously, either in lots or as a whole.

Where a property is owned through an indirect investment structure or a joint
tenancy in a trust for sale, our Valuation represents the relevant apportioned
percentage of ownership of the value of the whole property, assuming full
management control. Our Valuation therefore is unlikely to represent the value
of the interests in the indirect investment structure through which the
property is held.

 

Our opinion of Market Value is based upon the Scope of Work and Valuation

Assumptions attached and has been primarily derived using comparable recent

market transactions on arm's length terms.

 

We hereby confirm that as at the date of this report, we are not aware of any

material changes to the Properties which would affect our Valuation between
the

effective date of the Valuation and the date of this report.

Development Assets

The development Properties have been valued by way of a discounted cashflow

and residual appraisals. These methods of valuation are very sensitive to
changes in key inputs. Small changes in variables such as sales volumes or
build costs will have a disproportionate effect on land value as demonstrated
below. Site values can therefore be susceptible to considerable variances as a
result of changes in market conditions.

Compliance with

Valuation Standards

The Valuation has been prepared in accordance with the latest version of the
RICS Valuation - Global Standards (incorporating the International Valuation
Standards) and the UK national supplement (the "Red Book") current as at the
Valuation Date.

The Properties have been valued by a valuer who is qualified for the purpose
of the Valuation in accordance with the Red Book. We confirm that we have
sufficient local and national knowledge of the particular property market
involved and have the skills and understanding to undertake the Valuation
competently.

Where the knowledge and skill requirements of the Red Book have been met in
aggregate by more than one valuer within CBRE, we confirm that a list of those
valuers has been retained within the working papers, together with
confirmation that each named valuer complies with the requirements of the Red
Book.

This Valuation is a professional opinion and is expressly not intended to
serve as a warranty, assurance or guarantee of any particular value of the
subject Properties.  Other valuers may reach different conclusions as to the
value of the subject Properties. This Valuation is for the sole purpose of
providing the intended user with the valuer's independent professional opinion
of the value of the subject Properties as at the Valuation Date.

In accordance with the RICS Valuation Global Standards (2020) ("Red Book") we
have made certain disclosures in connection with this valuation instruction
and our relationship with the Addressees.

Assumptions

The Properties details on which each Valuation are based are as set out in
this report. We have made various assumptions as to tenure, letting, taxation,
town planning, and the condition and repair of buildings and sites - including
ground and groundwater contamination - as set out below.

 

If any of the information or assumptions on which the Valuation is based are
subsequently found to be incorrect, the Valuation figures may also be
incorrect and should be reconsidered.

Variations and/or

Departures from

Standard Assumptions

None.

Novel Coronavirus (COVID-19)

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health
Organisation as a "Global Pandemic" on the 11 March 2020, has impacted many
aspects of daily life and the global economy. However, in UK Industrial
Logistics, as at the Valuation Date, transaction volumes provided enough
up-to-date comparable market evidence upon which to base opinions of value.
Given the unknown future impact of COVID-19 on the real estate market and the
difficulty in differentiating between short-term impacts and longer-term
structural market changes, we recommend that you keep the Valuation contained
in this report under frequent review.

Sustainability Considerations

Wherever appropriate, sustainability and environmental matters are an integral
part of the valuation approach. 'Sustainability' is taken to mean the
consideration of such matters as environment and climate change, health and
well-being and corporate responsibility that can or do impact on the valuation
of an asset. In a valuation context, sustainability encompasses a wide range
of physical, social, environmental, and economic factors that can affect
value. The range of issues includes key environmental risks, such as flooding,
energy efficiency and climate, as well as matters of design, configuration,
accessibility, legislation, management, and fiscal considerations - and
current and historic land use.

Sustainability has an impact on the value of an asset, even if not explicitly
recognised. Valuers reflect markets, they do not lead them. Where we recognise
the value impacts of sustainability, we are reflecting our understanding of
how market participants include sustainability requirements in their bids and
the impact on market valuations.

Climate Risk Legislation

The UK Government is currently producing legislation which enforces the
transition to net zero by 2050, and the stated 78% reduction of greenhouse
gases by 2035 (based on a 1990 baseline).

We understand this to include an update to the Minimum Energy Efficiency
Standards, stated to increase the minimum requirements from an E (since 2018)
to a B in 2030. The government also intends to introduce an operational
rating. It is not yet clear how this will be legislated, but fossil fuels used
in building, such as natural gas for heating, are incompatible with the UK's
commitment to be Net Zero Carbon by 2050.

This upcoming legislation could have a potential impact to future asset
value.

We also note that the UK's introduction of mandatory climate related
disclosures (reporting climate risks and opportunities consistent with
recommendations by the "Task Force for Climate Related Financial Disclosure"
(TCFD)), including the assessment of so-called physical and transition climate
risks, will potentially have an impact on how the market views such risks and
incorporates them into the sale of letting of assets.

The European Union's "Sustainable Finance Disclosure Regulations" (SFDR) may
impact on UK asset values due to the requirements in reporting to European
investors.

Independence

CBRE currently value the Properties as part of a wider mandate for financial

reporting purposes on behalf of the Company. CBRE Ltd have had no other
previous material involvement with any of the Properties.

 

The total fees, including the fee for this assignment, earned by CBRE Ltd (or
other companies forming part of the same group of companies within the UK)
from the Company (or other companies forming part of the same group of
companies) is less than 5.0% of the total UK revenues.

Responsibility

We are responsible for this Valuation Report and accept responsibility for the
information contained in this Valuation Report and confirm that to the best of
our knowledge the information contained in this Valuation Report is in
accordance with the facts and contains no omissions likely to affect its
import.

Reliance

This Valuation Report will be relied upon by the Addressees.

No reliance may be placed upon the contents of this Valuation Report by any
party for any purpose other than in connection with the Purpose.

 

Yours faithfully

 

 

Yours faithfully

 

Nick Knight

Executive Director

RICS Registered Valuer

For and on behalf of CBRE Limited

Henrietta House

Henrietta Place

London

W1G 0NB

+44 2071822897

Nick.Knight@cbre.com

James Hughes MRICS

Director

RICS Registered Valuer

For and on behalf of CBRE Limited

Henrietta House

Henrietta Place

London

W1G 0NB

+44 207182 2000

James.Hughes3@cbre.com

 

 

 

 
 
 
 
 
 

 Schedule of Assets

 Address                                                  Tenure
 AVRO HOUSE & HEWLETT HOUSE, Havelock Terrace      Freehold
 ANGEL HOUSE, London EC1                           Freehold
 ARCHER STREET, London W1                          Freehold
 BARLEY MOW CENTRE, Chiswick W4                    Freehold
 55 BENDON VALLEY, London SW18                     Freehold
 BRICKFIELDS, London E2                            Freehold
 CANALOT STUDIOS, London W10                       Freehold
 CANNON WHARF, Pell St, Surrey Quays               Virtual Freehold
 CARGO WORKS (was Enterprise House, London SE1     Freehold
 CENTRO BUILDINGS & CENTRO 1&2, London             Freehold
 CHINA WORKS, London SE1                           Freehold
 CHISWICK STUDIOS, Chiswick                        Freehold
 CHOCOLATE FACTORY, Wood Green N22                 Freehold
 CLERKENWELL WORKSHOPS, London                     Freehold
 E1 Studios, 1-15 WHITECHAPEL HOUSE, London E1     Freehold
 EAST LONDON WORKS, London E1                      Freehold
 EDINBURGH HOUSE, Kennington                       Leasehold
 EXMOUTH HOUSE, London EC1                         Leasehold
 160 FLEET STREET, London EC4                      Leasehold
 FUEL TANK, Deptford                               Freehold
 60 GRAY'S INN ROAD, London                        Freehold
 GRAND UNION STUDIOS, London W10                   Freehold
 HIGHWAY BUS PARK, London E1                       Freehold
 INK ROOMS, EASTON STREET, London WC1              Freehold
 KENNINGTON PARK, Kennington                       Freehold
 LEATHERMARKET, London SE1                         Freehold
 LEROY HOUSE, London N1                            Freehold
 LIGHTBOX (111 POWER ROAD), Chiswick               Freehold
 LIGHT BULB, Wandsworth SW18                       Freehold
 LOCK STUDIOS, London                              Freehold
 MALLARD PLACE, Wood Green N22                     Leasehold
 MARE STREET STUDIOS, London                       Part Freehold &

                                                   & Part Leasehold
 MECCA BINGO SITE, Garratt Lane, Wandsworth        Freehold
 METAL BOX FACTORY, Southwark SE1                  Freehold
 MIRROR WORKS, Stratford, E15                      Freehold
 MORIE STREET (NO 1), London SW18                  Freehold
 PALL MALL DEPOSIT, London W10,                    Freehold
 PARKHALL TRAD EST, London SE21                    Freehold
 PARMA HOUSE, Wood Green N22                       Freehold
 PEER HOUSE, 8-14 Verulam St, London               Freehold
 PILL BOX, London E2                               Freehold
 POPLAR BUS PARK, London E14                       Freehold
 PRINTROOMS, London SE1                            Freehold
 Q WEST, Brentford                                 Freehold
 RAINBOW IND PARK, Raynes Park SW20                Freehold
 RECORD HALL, London                               Freehold
 RIVERSIDE BUS CENTRE (EXCL 55), London SW18       Freehold
 SALISBURY HOUSE, London                           Leasehold
 SCREENWORKS, N5                                   Freehold
 SHAFTESBURY CENTRE, London W10                    Freehold
 SHEPHERDS BUILDING, W14                           Freehold
 TAPERS STUDIO, London SE1                         Freehold
 THE BISCUIT FACTORY, London SE16                  Freehold
 THE BUSWORKS, London, N7                          Leasehold
 THE FRAMES, London                                Freehold
 THE OLD DAIRY, EC2A                               Part Freehold & Part Leasehold
 THURSTON ROAD IND EST, London SE13                Freehold
 VOX STUDIOS, London SE11                          Freehold
 WENLOCK BUSINESS PARK, WHARF ROAD, London N1      Freehold
 WESTBOURNE STUDIOS, London W10                    Leasehold

 

Source of Information and Scope of Works

 

 
 Sources of Information        We have carried out our work based upon information supplied to us by
                               Workspace, as set out within this report, which we have assumed to be correct
                               and comprehensive.
 The Properties                Our report contains a brief summary of the Property details on which our
                               Valuation has been based.
 Inspection                    In accordance with your instructions, we have not re-inspected the Properties
                               for the purposes of this valuation.

                               We have inspected all the Properties internally within the last three years
                               under the terms of the Workspace's instructions for us to value the Properties
                               for financial reporting purposes.

                               Following the outbreak of the Novel Coronavirus (COVID-19) declared by the
                               World Health Organisation as a "Global Pandemic" on 11(th) March 2020, we were
                               unable to carryout internal inspections between 25 March 2020 and 18 May 2020.

                               Subsequent to this, internal inspections need to comply with new UK
                               Government, PHE, Regional and local guidance.

                               With some properties it has not been possible to arrange an inspection in
                               compliance with the new guidelines and we have been unable to inspect these
                               assets internally within the last 12 months. We have therefore valued these
                               Properties subject to an external inspection, adopting the assumptions
                               concerning the state of these Properties as set out within this report.

                               Workspace has confirmed that it is not aware of any material changes to the
                               physical attributes of these properties, since the last inspection.  We have
                               assumed this advice to be correct.

                               Where valuations are undertaken on a desktop basis, the valuer will not carry
                               out the usual range of enquiries performed during an inspection of these
                               Properties and will make the appropriate assumptions based on the information
                               provided or available that, without inspection, cannot be verified. There are
                               heightened and inherent uncertainty and risks relying upon a valuation
                               prepared on a desktop basis
 Areas                         We have not measured the Properties but have relied upon the floor areas
                               provided to us by Workspace and their professional advisors, which we have
                               assumed to be correct and comprehensive, and which Workspace has advised us
                               have been calculated using theNet Internal Area (NIA) or International
                               Property Measurement Standard (IPMS) 3 - Office, measurement methodology as
                               set out in the latest edition of the RICS Property Measurement Standards.
 Environmental Considerations  Unless otherwise stated above, we have not undertaken, nor are we aware of the
                               content of, any environmental audit or other environmental investigation or
                               soil survey which may have been carried out on the Properties and which may
                               draw attention to any contamination or the possibility of any such
                               contamination.

                               We have not carried out investigation into past uses, either of the property
                               or of any adjacent lands, to establish whether there is any potential for
                               contamination from such uses or sites, or other environmental risk factors and
                               have therefore assumed that none exists.
 Services and Amenities        We understand that the Properties are located in an area served by mains gas,
                               electricity, water and drainage.

                               None of the services have been tested by us.

                               Enquiries regarding the availability of utilities/services to any proposed
                               developments are outside the scope of our report.
 Repair and Condition          We have not carried out building surveys, tested services, made independent
                               site investigations, inspected woodwork, exposed parts of the structure which
                               were covered, unexposed or inaccessible, nor arranged for any investigations
                               to be carried out to determine whether or not any deleterious or hazardous
                               materials or techniques have been used, or are present, in any part of the
                               Properties. We are unable, therefore, to give any assurance that the
                               Properties are free from defect.
 Town Planning                 We have not undertaken planning enquiries.
 Titles, Tenures and Lettings  Details of title/tenure under which the Properties are held and of lettings to
                               which it is subject are as supplied to us. We have not generally examined nor
                               had access to all the deeds, leases or other documents relating thereto. Where
                               information from deeds, leases or other documents is recorded in this report,
                               it represents our understanding of the relevant documents. We should
                               emphasise, however, that the interpretation of the documents of title
                               (including relevant deeds, leases and planning consents) is the responsibility
                               of your legal adviser.

                               We have not conducted credit enquiries on the financial status of any tenants.
                               We have, however, reflected our general understanding of purchasers' likely
                               perceptions of the financial status of tenants

 

Valuation Assumptions

 

 
 Capital Values                                                         Each valuation has been prepared on the basis of "Market Value"), which is
                                                                        defined in the Red Book as:

                                                                        "The estimated amount for which an asset or liability should exchange on the
                                                                        Valuation Date between a willing buyer and a willing seller in an arm's length
                                                                        transaction, after proper marketing and where the parties had each acted
                                                                        knowledgeably, prudently and without compulsion."

                                                                        The Valuation represents the figure that would appear in a hypothetical
                                                                        contract of sale at the Valuation Date. No adjustment has been made to this
                                                                        figure for any expenses of acquisition or realisation - nor for taxation which
                                                                        might arise in the event of a disposal.

                                                                        No account has been taken of any inter-company leases or arrangements, nor of
                                                                        any mortgages, debentures or other charge.

                                                                        No account has been taken of the availability or otherwise of capital based
                                                                        Government or European Community grants.
 Taxation, Costs and Realisation Costs                                  As stated above, no allowances have been made for any expenses of realisation
                                                                        nor for taxation which might arise in the event of a disposal.
                                                                        Our valuations reflect purchasers' statutory and other normal acquisition
                                                                        costs.
 VAT                                                                    We have not been advised whether the properties are elected for VAT.
                                                                        All rents and capital values stated in this report are exclusive of VAT.
 Passing Rent                                                           Passing rents quoted in this report are the rents which are currently payable
                                                                        under the terms of the leases.  Passing rents exclude service charges and VAT
                                                                        and are prior to deduction of any non-recoverable costs.  Passing rents
                                                                        exclude turnover rents, mall incomes and other miscellaneous incomes.
 Net Annual Rent                                                        Net annual rent is defined for the purposes of this transaction as "the
                                                                        current income or income estimated by the valuer:
                                                                        (i)   ignoring any special receipts or deduction arising from the property;
                                                                        (ii)  excluding Value Added Tax and before taxation (including tax on profits
                                                                        and any allowances for interest on capital or loans); and
                                                                        (iii)  after making deductions for superior rents (but not for amortisation),
                                                                        and any disbursements including, if appropriate, expenses of managing the
                                                                        property and allowances to maintain it in a condition to command its rent".
 Estimated Net Annual Rental Value                                      The estimated net annual rental value is based on the current rental value of
                                                                        each of the Properties.  The rental value reflects the terms of the leases
                                                                        where the Properties, or parts thereof, are let at the date of valuation.
                                                                        Where the Properties, or parts thereof, are vacant at the date of valuation,
                                                                        the rental value reflects the rent we consider would be obtainable on an open
                                                                        market letting as at the date of valuation.
 Rental Values                                                          Unless stated otherwise rental values indicated in our report are those which
                                                                        have been adopted by us as appropriate in assessing the capital value and are
                                                                        not necessarily appropriate for other purposes, nor do they necessarily accord
                                                                        with the definition of Market Rent in the Red Book, which is as follows:

                                                                        "The estimated amount for which an interest in real property should be leased
                                                                        on the Valuation Date between a willing lessor and a willing lessee on
                                                                        appropriate lease terms in an arm's length transaction, after proper marketing
                                                                        and where the parties had each acted knowledgeably, prudently and without
                                                                        compulsion."
 Fixtures, Fittings and Equipment                                       Where appropriate we have regarded the shop fronts of retail and showroom
                                                                        accommodation as forming an integral part of the building.

                                                                        Landlord's fixtures such as lifts, escalators, central heating and other
                                                                        normal service installations have been treated as an integral part of the
                                                                        building and are included within our Valuations.

                                                                        Process plant and machinery, tenants' fixtures and specialist trade fittings
                                                                        have been excluded from our Valuations.

                                                                        All measurements, areas and ages quoted in our report are approximate.
 Environmental Matters                                                  In the absence of any information to the contrary, we have assumed that:

                                                                        a)   the Properties are not contaminated and is not adversely affected by
                                                                        any existing or proposed environmental law;

                                                                        b)   any processes which are carried out on the Properties which are
                                                                        regulated by environmental legislation are properly licensed by the
                                                                        appropriate authorities;

                                                                        c)   in England and Wales, the Properties possesses current Energy
                                                                        Performance Certificates (EPCs) as required under the Government's Energy
                                                                        Performance of Buildings Directive - and that they have an energy efficient
                                                                        standard of 'E', or better. We would draw your attention to the fact that
                                                                        under the Energy Efficiency (Private Rented Property) (England and Wales)
                                                                        Regulations 2015 it became unlawful for landlords to rent out a business
                                                                        premise from 1st April 2018 - unless the site has reached a minimum EPC rating
                                                                        of an 'E', or secured a relevant exemption.

                                                                        d)   In January 2021 the Government closed the consultation period that
                                                                        focused on its latest proposals in England and Wales for 'improving the energy
                                                                        performance of privately rented homes'. The key tenets of the proposals are
                                                                        to; reduce emissions; tackle fuel poverty; improve asset quality; reduce
                                                                        energy bills; enhance energy security; and support associated employment. The
                                                                        proposals are wide ranging and they introduce new demands on residential
                                                                        landlords through Energy Performance Certificates ('EPCs'). Existing PRS
                                                                        Regulations set a minimum standard of EPC Band E for residential units to be
                                                                        lettable. The Government proposals see this threshold being raised to EPC Band
                                                                        C for all new tenancies created from 01 April 2025 and for all existing
                                                                        tenancies by 01 April 2028. The principle for relevant building works is to be
                                                                        'fabric first' meaning maximisation of components and materials that make up
                                                                        the building fabric to enhance, for example, insulation, ventilation and
                                                                        air-tightness. The proposals also cite; compliance measures and penalties for
                                                                        landlords, letting agents and local authorities; and affordability support for
                                                                        carrying out necessary works. The implication is (as with the existing EPC
                                                                        Band E requirement) that private rented units may effectively be rendered
                                                                        unlettable if they fail to meet or exceed the minimum EPC requirement. It is
                                                                        expected that the Government will respond to the consultation process in Q2/Q3
                                                                        2021 with any new regulations taking effect in Q3/Q4 2021. At present it is
                                                                        not clear how the market would respond to these proposals were they to be
                                                                        implemented as currently drafted; neither do we have any visibility of changes
                                                                        that may be made to the proposals following the consultation process. Our
                                                                        Valuation reflects market conditions and regulations effective at the
                                                                        Valuation date; we make no additional allowances for any future works that may
                                                                        be required in order to ensure that the subject assets would remain lettable
                                                                        under revised regulations;

                                                                        e)   the Properties are either not subject to flooding risk or, if it is,
                                                                        that sufficient flood defences are in place and that appropriate building
                                                                        insurance could be obtained at a cost that would not materially affect the
                                                                        capital value; and

                                                                        f)    invasive species such as Japanese Knotweed are not present on the
                                                                        Properties.

                                                                        High voltage electrical supply equipment may exist within, or in close
                                                                        proximity of, the Properties. The National Radiological Protection Board
                                                                        (NRPB) has advised that there may be a risk, in specified circumstances, to
                                                                        the health of certain categories of people. Public perception may, therefore,
                                                                        affect marketability and future value of the Properties. Our Valuation
                                                                        reflects our current understanding of the market and we have not made a
                                                                        discount to reflect the presence of this equipment.
 Repair and Condition                                                   In the absence of any information to the contrary, we have assumed that:

                                                                        a)   there are no abnormal ground conditions, nor archaeological remains,
                                                                        present which might adversely affect the current or future occupation,
                                                                        development or value of the Properties;

                                                                        b)   the Properties are free from rot, infestation, structural or latent
                                                                        defect;

                                                                        c)   no currently known deleterious or hazardous materials or suspect
                                                                        techniques, including but not limited to Composite Panelling, ACM Cladding,
                                                                        High Alumina Cement (HAC), Asbestos, have been used in the construction of, or
                                                                        subsequent alterations or additions to, the Properties; and

                                                                        d)   the services, and any associated controls or software, are in working
                                                                        order and free from defect.

                                                                        We have otherwise had regard to the age and apparent general condition of the
                                                                        Properties. Comments made in the property details do not purport to express an
                                                                        opinion about, or advise upon, the condition of uninspected parts and should
                                                                        not be taken as making an implied representation or statement about such
                                                                        parts.
 Title, Tenure, Lettings, Planning, Taxation and Statutory & Local      Unless stated otherwise within this report, and in the absence of any
 Authority Requirements                                                 information to the contrary, we have assumed that:

                                                                        a)   the Properties possesses a good and marketable title free from any
                                                                        onerous or hampering restrictions or conditions;

                                                                        b)   the building has been erected either prior to planning control, or in
                                                                        accordance with planning permissions, and has the benefit of permanent
                                                                        planning consents or existing use rights for their current use;

                                                                        c)   the Properties is not adversely affected by town planning or road
                                                                        proposals;

                                                                        d)   the building complies with all statutory and local authority
                                                                        requirements including building, fire and health and safety regulations, and
                                                                        that a fire risk assessment and emergency plan are in place;

                                                                        e)   only minor or inconsequential costs will be incurred if any
                                                                        modifications or alterations are necessary in order for occupiers of the
                                                                        Properties to comply with the provisions of the Disability Discrimination Act
                                                                        1995 (in Northern Ireland) or the Equality Act 2010 (in the rest of the UK);

                                                                        f)    all rent reviews are upward only and are to be assessed by reference
                                                                        to full current market rents;

                                                                        g)   there are no tenant's improvements that will materially affect our
                                                                        opinion of the rent that would be obtained on review or renewal;

                                                                        h)   tenants will meet their obligations under their leases, and are
                                                                        responsible for insurance, payment of business rates, and all repairs, whether
                                                                        directly or by means of a service charge;

                                                                        i)    there are no user restrictions or other restrictive covenants in
                                                                        leases which would adversely affect value;

                                                                        j)    where more than 50% of the floorspace of the Properties is in
                                                                        residential use, the Landlord and Tenant Act 1987 (the "Act") gives certain
                                                                        rights to defined residential tenants to acquire the freehold/head leasehold
                                                                        interest in the Properties. Where this is applicable, we have assumed that
                                                                        necessary notices have been given to the residential tenants under the
                                                                        provisions of the Act, and that such tenants have elected not to acquire the
                                                                        freehold/head leasehold interest. Disposal on the open market is therefore
                                                                        unrestricted;

                                                                        k)   where appropriate, permission to assign the interest being valued
                                                                        herein would not be withheld by the landlord where required;

                                                                        l)    vacant possession can be given of all accommodation which is unlet or
                                                                        is let on a service occupancy; and

                                                                        m)  Land Transfer Tax (or the local equivalent) will apply at the rate
                                                                        currently applicable.

                                                                        In the UK, Stamp Duty Land Tax (SDLT) in England and Northern Ireland will
                                                                        apply at the rate currently applicable.

 

 

 

Appendix A: Development Properties Details

The figures below are provided in accordance with Note 3 of Rule 29.4 of the
Takeover Code.

 Property                         Description, age and tenure                                                     Letting profile of new development                                               Estimated total cost to complete  Estimated Date of Completion and let  Market Value as at 31/01/2022 on completion of the development  SOURCES AND BASES OF INFORMATION AND BASES OF CALCULATION
 Chocolate Factory / Parma House  This is a proposed partial demolition of an existing business centre at         The new development will consist of private residential units to be sold off     £40,000,000                       Completion - October 2024             £67,500,000                                                     £68,000,000
                                  Chocolate Factory and the demolition of Parma House, to provide a mixed use     and an extension to the retained block at Chocolate Factory and new space

                                  residential led scheme.                                                         totalling 7,900 sq ft. This space will be let on flexible terms consistent                                         Let - June 2025

                                                                               with Workspace's exiting model.
                                  Planning Permission for 230 residential units and 20,100 sq ft of commercial
                                  space was granted in February 2019.

                                  Tenure: Mixture of Freehold and Leasehold.
 Poplar Business Park             This is the second phased development of an existing light industrial estate    The new development will consist of private and social residential units to be   £61,500,000                       Completion - March 2026               £118,000,000                                                    £118,500,000
                                  to provide a residential led mixed-use scheme.                                  sold off and an office building totalling 58,000 sq ft. This space will be let

                                                                               on flexible terms consistent with Workspace's exiting model.                                                       Let - September 2026
                                  Planning Permission for 222 residential units and 58,000 sq ft of commercial
                                  space in the second phase was granted in October 2013. The first phase of
                                  development is completed.

                                  Tenure: Freehold
 Rainbow Industrial Park          This is a proposed demolition of an industrial estate to provide a residential  The new development will consist of private and social residential units to be   £60,000,000                       Completion - July 2027                £120,000,000                                                    £121,000,000
                                  led mixed use scheme.                                                           sold off and mixed commercial uses totalling 14,000 sq ft. This space will be

                                                                               let on flexible terms consistent with Workspace's exiting model.                                                   Let - January 2028
                                  Planning Permission for 224 residential units and 33,000 sq ft of commercial
                                  space was granted in December 2014.

                                  The first phase of commercial development has been completed providing 19,000
                                  sq ft of light industrial units.

                                  Tenure: Freehold
 Riverside Business Centre        This is a proposed demolition of a mixed commercial use site to provide a       The new development will consist of private and social residential units to be   £185,000,000                      Completion - January 2024             £300,000,000                                                    £310,000,000
                                  residential led mixed use scheme.                                               sold off and mixed commercial uses totalling 170,000 sq ft. This space will be

                                                                               let on flexible terms consistent with Workspace's exiting model.                                                   Let - January 2026
                                  Planning Permission for 402 residential units and 170,000 sq ft of commercial
                                  space was granted in July 2021 2014.

                                  Tenure: Freehold

 

 

 

PART B: VALUATION REPORT OF KNIGHT FRANK LLP IN RESPECT OF MCKAY SECURITIES
PLC PROPERTIES

 

 

 McKay Securities Plc

 20 Greyfriars Road

 Reading, Berks

 RG1 1NL

 United Kingdom

("McKay Securities")

 N.M. Rothschild & Sons Limited

 New Court, St Swithin's Lane

 London EC4N 8AL

 ("Rothschild & Co")

 Date of issue:  2 March 2022

 

Dear Sirs

McKay Securities Portfolio

Valuation as at 31 January 2022

1.        Basis of Instruction

1.1       Under the terms of the Engagement Letter dated 28 February 2022
("Engagement Letter") we have valued the freehold and leasehold properties as
listed below ("Properties"), as at 31st January 2022, for the purposes as set
out in section 2 below.

Client

1.2       Our client for this instruction is McKay Securities (the
"Client", "you", "your"). Our Valuation Report is addressed to you and
Rothschild & Co (together the "Addressees").

1.3     The Addressees shall be entitled to rely on this Valuation Report
subject to the terms of the Engagement.

2.       Purpose of Valuation and Valuation Report

2.1          The Valuation and This Valuation Report are each
provided solely for the purpose (the "Purpose") of:

a     inclusion in any announcement (including an announcement made under
Rule 2.7 of the Code), scheme document, offer document, response circular or
any other document or supplementary circular (the "Code Documentation", and
"Code Document" shall mean any one of them) that may be published or made
available by the Client in connection with a possible offer or offer for the
Client or merger by the Client with another party in accordance with the Code
(the "Proposed Transaction") and any further document which the Client is
required to publish under the Code; and

b     (i) publication on the Client's website; and (ii) the website of any
other party required in accordance with the Code.

2.2          The Valuation and this Valuation Report may not be used
for any other purpose without our express written consent.

Valuation standards

2.3        The Valuation (as defined in the General Terms) has been
undertaken in accordance with, and This Valuation Report has been prepared in
accordance with, in each case, the current editions of RICS Valuation - Global
Standards, which incorporate the International Valuation Standards, and the
RICS UK National Supplement.  References to the "Red Book" refer to either or
both of these documents, as applicable. In this context "current edition"
means the version in force at the Valuation Date

2.4         The Valuation (as defined in the General Terms) and This
Valuation Report, each as applicable to the Purpose (as defined in Section 2
above), together with any Code Documentation (as defined above) comply with
Rule 29 of the City Code on Takeovers and Mergers (the "Code") as issued by
The Takeover Panel.

2.5        In accordance with your instructions we have inspected the
Properties internally / by going onto the site, as well as externally, within
the last year.  We have not undertaken any building surveys or environmental
audits and are therefore unable to report that the Properties are free of any
structural fault, rot, infestation or defects of any other nature, including
inherent weaknesses due to the use in construction of materials now suspect.
No tests were carried out on any of the technical services. However, we have
reflected any apparent wants of repair in our opinion of value as appropriate.

3.       Compliance and Independence

Status of valuer and disclosure of any conflicts of interest

3.1          For the purposes of the Red Book, we are acting as
External Valuers, as defined therein.

3.2         Knight Frank LLP was appointed in the role as valuer for
accounts purposes on 12 July 2017. These valuations have been undertaken under
the overall supervision of Simon Gillespie MRICS, RICS Registered Valuer and
Chris Galloway MRICS, RICS Registered Valuer, who have been responsible for
this instruction since that date.

3.3         In relation to Knight Frank LLP's preceding financial
year, the proportion of the total fees paid by the Client to the total fee
income of Knight Frank LLP was less than 5%.

3.4         We recognise and support the RICS Rules of Conduct, have
established procedures for identifying conflicts of interest and a valuer
rotation policy in accordance with the RICS Valuation - Professional
Standards.

3.5          We confirm that we do have a material connection or
involvement giving rise to a potential conflict of interest, as set out below:

·       We have valued the Properties for you within the last 2 years
for accounts purposes.

·       We have valued some of the Properties for third party finance
providers within the last 2 years

·       We have been instructed to provide Building Insurance
Valuations

3.6          We have previously disclosed this to you and you have
confirmed that notwithstanding this matter, you are content for us to proceed
with this instruction.  We confirm that we have had no previous material
interest in McKay Securities or material connection or involvement with any of
the Properties other than as set out above, and accordingly, are in a position
to provide an objective and unbiased valuation.

3.7       Accordingly, we confirm that: (i) we are not aware of any reason
why we would not satisfy the requirements of Rule 29.3(a)(i) of the Code; and
(ii) during the term of the Engagement, we shall not do anything that could
reasonably be expected to cause us not to satisfy the requirements of Rule
29.3(a)(i) of the Code.

3.8      Please note that if you subsequently request, and we agree to,
This Valuation Report being re-addressed to another party other than the
Addressees (for which we shall make an additional charge), the Valuation may
not meet their requirements, having originally been requested by you.  We
will only readdress This Valuation Report once we have received a signed
reliance letter in our standard format from the new addressee.  Please note
also that no update or alterations will be made to the Valuation prior to its
release to any new addressee.

Valuer and competence disclosure

3.9      The valuer, on our behalf, with responsibility for the Valuation
is Simon Gillespie MRICS, RICS Registered Valuer (the "Lead Valuer").

3.10        We confirm that we meet the requirements of the Red Book in
having sufficient current knowledge of the particular market and the skills
and understanding to undertake the Valuation competently.

3.11        Additionally, the Lead Valuer and any additional valuers
who value the Properties are qualified for the purposes of the Valuation as
required by Rule 29.3(a)(ii) of the Code and have sufficient current knowledge
of the property market and the necessary skills to prepare this Valuation
Report as required by Rule 29.3(a)(iii) of the Code.

4.       Valuation

4.1       The basis for the Valuation as required by the Code is Market
Value, as defined in the Red Book. Additionally, in relation to any Properties
comprising land being developed or with immediate development potential (as
referred to in Note 3 to Rule 29.4 of the Code), this Valuation Report
includes (in relation to those Properties) the additional matters set out in
Note 3 to Rule 29.4.

4.2          The Properties have been valued on the basis of Market
Value, which is set out in the RICS Valuation - Professional Standards VPS4
(1.2) as follows:

"The estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm's length
transaction after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion".

4.3        In our opinion, the adoption of the required Market Value basis
does not result in any material difference in the value reported from that
derived under the definition of Fair Value in accordance with the RICS
Valuation - Professional Standards VPS4 (1.5) Fair Value and VPGA 1 Valuations
for Inclusion in financial statements, which adopt the definition of Fair
Value adopted by the International Accounting Standards Board:

"The price that would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at the
measurement date."

4.4          No allowance has been made for expenses of realisation
or for any taxation which might arise, and our valuations are expressed
exclusive of any Value Added Tax that may become chargeable.

4.5          Our valuations reflect usual deductions in respect of
purchaser's costs and, in particular, full liability for UK Stamp Duty as
applicable at the valuation date.  Save as otherwise disclosed, it has been
assumed for the purpose of valuation, that the relevant interests in the
Properties are free of mortgage, charge or other debt security and no
deduction has been made for such charge or debt.

4.6          The Properties have been valued individually and not as
part of a portfolio. Disposal as a portfolio, or by other prudent lotting, may
result in either a premium or discount, depending upon market conditions. Our
report does not seek to address this.

4.7          Our Opinion of Value is stated in GBP (£ Sterling).

4.8        We are of the opinion that the aggregate Market Value of
McKay Securities' interests in the Properties, as at 31 January 2022, was
£490,400,000 (Four Hundred and Ninety Million, Four Hundred Thousand Pounds).

4.9          In the appendices we attach a list of all properties,
split of value by Freehold and Leasehold assets, details of valuation by asset
type in line with the detail presented in McKay Securities' financial
reporting, a schedule of those properties with a value of 5% or more of the
total portfolio valuation and details of the development property, as required
under Rule 29 of The Code.

4.10        Our Valuation is subject to the Engagement Letter, dated 28
February 2022, and our General Terms of Business for Valuations attached
thereto. For the avoidance of doubt, should there be any conflict between the
assumptions and conditions set out in the Engagement Letter and Terms, then
those contained within the Engagement Letter shall take precedence.

4.11        The outbreak of COVID-19, declared by the World Health
Organisation as a "Global Pandemic" on the 11th March 2020, has and continues
to impact many aspects of daily life and the global economy - with some real
estate markets having experienced lower levels of transactional activity and
liquidity. Travel, movement and operational restrictions have been implemented
by many countries. In some cases, "lockdowns" have been applied to varying
degrees and to reflect further "waves" of COVID-19; although these may imply a
new stage of the crisis, they are not unprecedented in the same way as the
initial impact.

4.12     The pandemic and the measures taken to tackle COVID-19 continue to
affect economies and real estate markets globally. Nevertheless, as at the
valuation date property markets are mostly functioning again, with transaction
volumes and other relevant evidence at levels where an adequate quantum of
market evidence exists upon which to base opinions of value. Accordingly, and
for the avoidance of doubt, our valuation is not reported as being subject to
'material valuation uncertainty' as defined by VPS 3 and VPGA 10 of the RICS
Valuation - Global Standards.

4.13    For the avoidance of doubt this explanatory note has been included
to ensure transparency and to provide further insight as to the market context
under which the valuation opinion was prepared. In recognition of the
potential for market conditions to move rapidly in response to changes in the
control or future spread of COVID-19 we highlight the importance of the
valuation date.

5.       Valuation Methodology

5.1        Our valuations have been undertaken using appropriate valuation
methodology and our professional judgement.

Investment Method

5.2         In undertaking our valuation of a property, we have made
our assessment on the basis of a collation and analysis of appropriate
comparable investment, rental and sale transactions, together with evidence of
demand within the vicinity of the subject property. With the benefit of such
transactions we have then applied these to the property, taking into account
size, location, terms, covenant and other material factors.

Residual Method

5.3       Our opinion of the Market Value of the site in its existing
condition is arrived at using the residual method which is a generally
accepted method for valuing properties that are considered to have possible
development potential.  Having formed an opinion of the value of the
completed development (Gross Development Value), using the Investment Method
described above, we deduct from it the total costs of development and an
allowance for developer's profit.

5.4      For properties actually in the course of development, we have
reflected the stage reached in construction and the costs remaining to be
spent at the date of valuation.  We have had regard to the contractual
liabilities of the parties involved in the developments and any cost estimates
that have been provided by professional advisors to the projects.  For
recently completed developments we have, as instructed, made deductions in our
valuations for retention monies and any outstanding development costs, fees,
or other expenditure for which there may be a liability and of which we have
been notified.

6.       Valuation Assumptions

6.1         As agreed, our valuations are based on information provided
by McKay Securities, upon which we have relied, and which has not been
verified by us. Our assumptions (as defined in the RICS Red Book) relating to
this information are set out below.

6.2         Our valuations are based on measurements, which have been
provided by McKay Securities.  We have assumed that these measurements have
been undertaken in accordance with the current RICS Code of Measuring
Practice.

6.3          The adoption of IPMS (International Property Measurement
Standards), for the office sector, became mandatory with effect from 1st
January 2016 for all RICS members replacing NIA (Net Internal Area) as set out
under the current Code of Measurement Practice (Sixth Edition).  It has been
agreed with you that until the new definition of measurement has been adopted
by the leasing market, rental analysis for the office sector will continue to
be shown on a net internal area basis.  As or when buildings are re-measured,
we will present our analysis on a dual basis, namely IPMS and NIA.

6.4      Our valuations assume that the Properties have good and marketable
titles and are free of any undisclosed onerous burdens, outgoings or
restrictions. We have not seen planning consents and, except where advised to
the contrary, have assumed that the properties have been erected and are being
occupied and used in accordance with all requisite consents and that there are
no outstanding statutory notices.

6.5        As stated in our General Terms of Business for Valuations, we
do not undertake searches or inspections of any kind (including web based
searches) for title or price paid information in any publicly available land
registers, including the Land Registry for England & Wales, Registers of
Scotland and Land & Property Services in Northern Ireland.

6.6          As agreed, we have not read documents of title or leases
and, for the purpose of our valuations, have accepted the details of tenure,
tenancies and all other relevant information with which we have been supplied
by McKay Securities.  When considering the covenant strength of individual
tenants we have not carried out credit enquiries but have reflected in our
valuations our general understanding of purchasers' likely perceptions of
tenants' financial status.

6.7        We were not instructed to carry out structural surveys of the
Properties, nor to test the services, but have reflected in our valuations,
where necessary, the general condition of the Properties as observed during
the course of our inspections or of which we have been advised.  Our
valuations assume the buildings contain no deleterious materials and that the
sites are unaffected by adverse soil conditions, except where we have been
notified to the contrary.

6.8        We have not carried out any investigations into past or present
uses of either the Properties or any neighbouring land to establish whether
there is any potential for contamination from these uses or sites to the
subject properties.  Unless we have been provided with information to the
contrary, we have assumed that the Properties are not, nor are likely to be,
affected by land contamination and that there are no ground conditions which
would affect the present or future uses of the Properties.

6.9          Our valuations assume that the Properties would, in all
respects, be insurable against all usual risks including terrorism, flooding
and rising water table at normal, commercially acceptable premiums.

6.10     Save as otherwise disclosed; it has been assumed for the purpose
of valuation that the relevant interests in the Properties are free of
mortgage, charge or other debt security and no deduction has been made for
such charge or debt.

6.11        In all cases, we have assumed that, unless notified by the
Client to the contrary, there have not been any material changes to the
information provided by them.

7.        Observations

7.1          The possible effects of electric and magnetic fields
from high voltage electrical supply apparatus has been the subject of
occasional media coverage.  As a result, there is a risk that adverse public
and investor perception may affect the marketability of properties situated
close to high voltage supply equipment.

Third party reliance and liability

7.2         Save for: (a) the Addressees; and (b) any responsibility
to any person arising under Rule 29.4 of the Code, in accordance with Clauses
3 & 4 of the General Terms and to the fullest extent permitted by law, we
do not assume any responsibility and will not accept any liability to any
other person for any loss suffered by any such other person as a result of,
arising out of, or in accordance with This Valuation Report or our statement,
required by and given solely for the purposes of complying with Rule 29.4 of
the Code.

Disclosure

7.3       Clauses 4.3 to 4.6 of the General Terms limit disclosure and
generally prohibits publication of the Valuation and This Valuation Report.
As stated therein, the Valuation is confidential to you and the Addressees and
neither the whole, nor any part, of the Valuation nor any reference thereto
may be included in any published document, circular or statement, nor
published in any way, without our prior written consent and approval of the
form or context in which it may appear, except as set out below.

7.4          Our final Valuation Report will be included in the
relevant Code Documentation to be published by the Client. We will review the
sections of the relevant Code Documentation relating to the Valuation and this
Valuation Report and you agree to not publish any Code Document containing
This Valuation Report until you have received a consent letter (in the form
set out in Annex 2 of our Engagement Letter) from us. We further hereby
consent to our Valuation Report being made available on the Client's website
(and the website of any other party referred to in any Code Document) in
accordance with the Code.

Disclosure under the Code

7.5          This Valuation Report complies with Rule 29 of The Code
and we understand that the publication or reproduction by you of This
Valuation Report and/or the information contained herein as required by Rules
26 and 29 the Code will be necessary, including in any Code Document.

Consent

7.6          Knight Frank has given and has not withdrawn its consent
to the inclusion of This Valuation Report in the Code Documentation published
by McKay Securities in the form and context in which it is included.

Responsibility

7.7          For the purposes of the Code, we are responsible for
this Valuation Report and accept responsibility for the information contained
in this Valuation Report and confirm that to the best of our knowledge (having
taken all reasonable care to ensure that such is the case), the information
contained in this Valuation Report is in accordance with the facts and
contains no omissions likely to affect its import. This Valuation Report
complies with, and is prepared in accordance with, and on the basis of, the
Code. We authorise its contents for the purpose of Rule 29 of the Code.

8.       General Conditions

8.1          This report and our valuations have been prepared on the
basis that there has been full disclosure of all relevant information and
facts which may affect them.

8.2         Our report and valuation is for the use only of the party to
whom it is addressed and no liability is accepted to any third party for the
whole or any part of its contents.  If our opinion of value is disclosed to
persons other than the addressee of this report, the basis of valuation should
be stated.  Neither the whole or any part of This Valuation Report nor any
reference thereto may be included in any published document, circular or
statement nor published in any way whatsoever whether in hard copy or
electronically (including on any web-site) without our prior written approval
of the form and context in which it may appear.

 

Yours faithfully

 Simon Gillespie MRICS                   Chris Galloway MRICS

 RICS Registered Valuer                  RICS Registered Valuer

 Partner, Valuation & Advisory           Partner, Valuation & Advisory

 For and on behalf of Knight Frank LLP   For and on behalf of Knight Frank LLP

 

Appendix 1   Schedule of Property Types

 

 

Portfolio overview based on the catagoristion used within McKay Securities Plc
financial reporting

 

 

 Property Types                    No.of Properties  Market Value as at 31(st) January 2022
 London Offices                    3                   55,350,000

 South East Office                 18                259,300,000

 Total (excl.dev)                  21                314,650,000
 South East Industrial /Logistics  8                 141,750,000
 Other                             4                   20,700,000
 Total (excl.dev)                  12                162,450,000
 Developments                      1                   13,300,000
 Total Portfolio                   34                490,400,000

 

 Included above there are two long leaseholds with over 50 years to run
 London  Offices:
 Portsoken House    £24,750,000
 Other:
 Parkside             £4,450,000

 

Portfolio Overview based on the catagoristion used within Workspace Group Plc
financial reporting

 

 

 

 Property Types     No. of Properties  Market Value as at 31(st) January 2022
 London Offices     7                  160,250,000
 South East Office  14                 154,400,000
 Total Offices      21                 314,650,000

 Light Industrial   9                  155,050,000
 Other              4                    20,700,000
 Total Portfolio    34                 490,400,000

 

Included above are two long leaseholds with over 50 years to run:

London Offices:

Portsoken House
£24,750,000

Other:

Parkside
£4,450,000

Appendix 2   Property List

 Property                                                           Town         Region        Sector       Tenure

Name
Type
 Lower Cherwell, Lower Cherwell Street                              Banbury      South East    Industrial   Freehold
 329 Bracknell, Doncastle Road                                      Bracknell    South East    Office       Freehold
 The Mille, 1000 Great West Road                                    Brentford    South East    Office       Freehold
 Land                                                               Chobham      South East    Other        Freehold
 Pegasus Place                                                      Crawley      South East    Office       Freehold
 Oakwood Trade Park, Gatwick Road                                   Crawley      South East    Industrial   Freehold
 Corinthian House                                                   Croydon      South East    Office       Freehold
 Columbia House, Apollo Rise                                        Farnborough  South East    Industrial   Freehold
 One Fleet & Centaur, Ancells Road                                  Fleet        South East    Office       Freehold
 3 Acre Estate, Park Farm                                           Folkestone   South East    Industrial   Freehold
 Five Acre Estate, Park Farm Road                                   Folkestone   South East    Industrial   Freehold
 Ashcombe House, 5 The Crescent                                     Leatherhead  South East    Office       Freehold
 Parkside, Flats 20/20a & East Penthouse Knightsbridge              London       Inner London  Other        Leasehold
 Switchback                                                         Maidenhead   South East    Office       Freehold
 Strawberry Hill                                                    Newbury      South East    Other        Freehold
 McKay Trading Estate, Blackthorne Road                             Poyle        South East    Industrial   Freehold
 Gt Brighams Mead                                                   Reading      South East    Office       Freehold
 9 Greyfriars Road, 9 Greyfriars Road                               Reading      South East    Office       Freehold
 20-30 Greyfriars Road, 20-30 Greyfriars Road                       Reading      South East    Office       Freehold
 Prospero, 73 London Road                                           Redhill      South East    Office       Freehold
 Mallard Court, Market Square                                       Staines      South East    Office       Freehold
 Cygnet House                                                       Staines      South East    Office       Freehold
 135 Theale Logistics Park, Brunel Road                             Theale       South East    Industrial   Freehold
 Units 1 & 2, Sopwith Drive                                         Weybridge    South East    Development  Freehold
 Swan Court, 11-17 Worple Road                                      Wimbledon    South East    Office       Freehold
 Gainsborough House                                                 Windsor      South East    Office       Freehold
 One Crown Square                                                   Woking       South East    Office       Freehold
 The Planets, Crown Square                                          Woking       South East    Other        Freehold
 Castle Lane, 1 & 2 Castle Lane                                     London       Inner London  Office       Freehold
 Portsoken House, 155-157 Minories & 83-86 Aldgate High Street      London       Inner London  Office       Leasehold
 66 Wilson Street, 66 Wilson Street                                 London       Inner London  Office       Freehold
 Rivergate House, Newbury Business Park                             Newbury      South East    Office       Freehold
 Willoughby Road, Willoughby Road                                   Bracknell    South East    Industrial   Freehold
 Evergreen Studios, Evergreen Studios                               Richmond     South East    Office       Freehold

 

Appendix 3   Schedule of Properties worth 5% of MV

 Property                                                                       Tenure                                                                         Description                                                                    Current Rent (Gross)  Market Rent  Market Value as at 31(st) January 2022
 135 Theale Logistics Park, Brunel Road, Theale                                 Freehold                                                                       Industrial Unit of 135,094 sq ft built in 2020 and entirely let to Amazon      1,513,053             1,655,000    45,700,000
 Swan Court, 11-17 Worple Road, Wimbledon                                       Freehold                                                                       Office building built in 2005 over ground and 5 upper floors totalling 57,498  1,627,813             2,797,337    41,750,000
                                                                                                                                                               sq ft. Let to one tenant with vacant ground and 1(st) floors under-going
                                                                                                                                                               refurbishment.
 The Mille, 1000 Great West Road, Brentford                                     Freehold                                                                       Office building and advertising hoardings alongside M4. Built in the 1970s     2,465,672             2,994,453    35,200.000
                                                                                                                                                               totalling 96,919 sq ft over ground and 12 upper floors. Multi-let to 24
                                                                                                                                                               tenants with a WAULT of 3.62 yrs
 McKay Trading Estate, Blackthorne Road, Poyle                                  Freehold                                                                       Industrial estate built in 1970s of 9 units totalling 73,954 sq ft. Multi-let  779,289               1,060,000    28,750,000
                                                                                                                                                               to 5 tenants with a WAULT of 4.19 yrs
 Portsoken House, 155-157 Minories & 83-86 Aldgate High Street, London EC3      Leasehold - 96 yrs remain at 15.5% of rents receivable - current head rent is  Office building with 3 retail units built in the 1920s over basement, ground   911,341               2,484,380    24,750,000
                                                                                £230,000 pa                                                                    and eight upper floors totalling 49,351 sq ft. Subject to a recent and
                                                                                                                                                               on-going rolling refurbishment. Multi-let to 11 tenants with a WAULT of 2.35
                                                                                                                                                               yrs

 

 

 

Appendix 4   Development Schedule

 Property       Description                                                                 Market Value as at 31(st) January 2022  GDV - Completed  GDV - Completed & Let      Costs to Complete

Expected Date
Estimated Date
 Sopwith Drive  1990s built distribution unit of 62,802 sq ft let on a short-term basis to  £13,300,000                             £28,650,000      £33,000,000                £9,600,000

              Hermes - expiry April 2022. Initial Planning discussions held regarding a
April 2023
October 2023
 Weybridge      75,000 sq ft unit.

 KT13 0UX

 

 

 

 

APPENDIX 5

DEFINITIONS

 

The following definitions apply throughout this Announcement unless the
context requires otherwise:

 "Acquisition"                                 the proposed acquisition by Workspace of the entire issued and to be issued
                                               share capital of McKay to be implemented by means of the Scheme or, should
                                               Workspace so elect (with the consent of the Panel and subject to the terms of
                                               the Co-operation Agreement), by means of the Takeover Offer and, where the
                                               context admits, any subsequent revision, variation, extension or renewal
                                               thereof
 "Admission"                                   admission of the New Workspace Shares to the premium segment of the Official
                                               List and to trading on the London Stock Exchange
 "Announcement"                                this announcement made pursuant to Rule 2.7 of the Code
 "Aviva Term Loan"                             the facility agreement made between, among others, McKay and Aviva Commercial
                                               Finance Limited, as amended and restated on 26 March 2018
 "Blocking Law"                                any provision of Council Regulation (EC) No. 2271/1996 of 22 November 1996 (or
                                               any law implementing such Regulation in any member state of the European
                                               Union) or any similar blocking or anti-boycott law
 "Business Day"                                a day (other than a Saturday, Sunday, public or bank holiday in England) on
                                               which banks are open for general business in London
 "CBRE"                                        CBRE Limited (a private limited company incorporated in England and Wales with
                                               registered number 03536032) whose registered office is St Martin's Court, 10
                                               Paternoster Row, London, EC4M 7HP
 "Closing Price"                               the closing middle market quotations of a share derived from the daily
                                               official list of the London Stock Exchange on any particular date
 "Code"                                        the City Code on Takeovers and Mergers, as amended from time to time
 "Companies Act"                               the Companies Act 2006, as amended from time to time
 "Conditions"                                  the conditions to the implementation of the Acquisition (including the Scheme)
                                               which are set out in Appendix 1 to this Announcement and to be set out in the
                                               Scheme Document
 "Co-operation Agreement"                      the co-operation agreement between McKay and Workspace dated 2 March 2022, a
                                               summary of which is set out in paragraph 11 of this Announcement
 "Court"                                       Her Majesty's High Court of Justice in England and Wales
 "Court Meeting"                               the meeting(s) of Scheme Shareholders to be convened by an order of the Court
                                               under section 896 of the Companies Act, notice of which will be set out in the
                                               Scheme Document, to consider and if thought fit approve the Scheme (with or
                                               without amendment) including any adjournment, postponement or reconvening
                                               thereof
 "Court Order"                                 the order of the Court sanctioning the Scheme under Part 26 of the Companies
                                               Act
 "Court Sanction Hearing"                      the hearing of the Court to sanction the Scheme under Part 26 of the Companies
                                               Act
 "CREST"                                       the relevant system (as defined in the Uncertificated Securities Regulations
                                               2001 (SI 2001/3755), including as it forms part of the domestic law of the
                                               United Kingdom by virtue of the European Union (Withdrawal) Act 2018) in
                                               respect of which Euroclear UK & Ireland Ltd is the Operator (as defined in
                                               said Regulations)
 "Dealing Disclosure"                          an announcement pursuant to Rule 8 of the Code containing details of dealings
                                               in interests in relevant securities of a party to an offer
 "Disclosed"                                   information which has been: (i) disclosed by or on behalf of McKay in the
                                               annual report and accounts of the McKay Group for the 12 month period to 31
                                               March 2021; (ii) disclosed by or on behalf of McKay in the half yearly results
                                               announcement of the McKay Group for the six month period to 30 September 2021;
                                               (iii) disclosed by or on behalf of McKay in this Announcement; (iv) disclosed
                                               by or on behalf of McKay in any other public announcement made by, or on
                                               behalf of, McKay in accordance with the Listing Rules, Disclosure Guidance and
                                               Transparency Rules and/or the Market Abuse Regulation (as applicable), or
                                               otherwise made via a Regulatory Information Service, in each case prior to the
                                               date of this Announcement; and/or (v) fairly disclosed prior to the date of
                                               this announcement by or on behalf of McKay to Workspace (or its respective
                                               officers, employees, agents or advisers in their capacity as such), including
                                               in the virtual data room operated by or on behalf of McKay in respect of the
                                               Acquisition
 "Disclosure Guidance and Transparency Rules"  the Disclosure Guidance and Transparency Rules made by the FCA and forming
                                               part of the FCA's handbook (as amended from time to time)
 "Effective"                                   in the context of the Acquisition:

                                               (i)         if the Acquisition is implemented by way of the Scheme,
                                               means the Scheme having become effective in accordance with its terms; or

                                               (ii)        if the Acquisition is implemented by way of a Takeover
                                               Offer, such offer having become or having been declared unconditional in all
                                               respects in accordance with the requirements of the Code
 "Effective Date"                              the date on which the Acquisition becomes Effective
 "Enlarged Group"                              the enlarged group following the Acquisition comprising the Workspace Group
                                               and the McKay Group
 "EPRA"                                        European Public Real Estate Association
 "FCA"                                         the Financial Conduct Authority of the United Kingdom, acting in its capacity
                                               as the competent authority for the purposes of FSMA
 "Facility Agreement"                          the £200,000,000 loan facility agreement between Workspace as borrower and
                                               Banco Santander S.A., London Branch, HSBC UK Bank plc and National Westminster
                                               Bank plc as original lenders and National Westminster Bank plc as agent dated
                                               2 March 2022
 "FSMA"                                        the Financial Services and Markets Act 2000, as amended from time to time
 "General Meeting"                             the general meeting of McKay Shareholders to be convened in connection with
                                               the Acquisition, notice of which will be set out in the Scheme Document, to
                                               consider and if thought fit approve the Resolutions, including any
                                               adjournment, postponement or reconvening thereof
 "J.P. Morgan Cazenove"                        J.P. Morgan Securities plc, which conducts its UK investment banking business
                                               as J.P. Morgan Cazenove
 "Knight Frank"                                Knight Frank LLP (a limited liability partnership incorporated in England and
                                               Wales with registered number OC 305934) whose registered office is at 55 Baker
                                               St, London W1U 8AN
 "Last Accounts Date"                          31 March 2021
 "London Stock Exchange"                       London Stock Exchange plc
 "Long Stop Date"                              2 October 2022 or such later date as may be agreed by McKay and Workspace in
                                               writing (with the Panel's consent and as the Court may approve (if such
                                               consent and/or approval is required))
 "Market Abuse Regulation"                     Regulation (EU) No.596/2014 of the European Parliament and of the Council of
                                               16 April 2014 on market abuse, as applicable in the UK by virtue of section 3
                                               of the European Union (Withdrawal) Act 2018, as amended from time to time
                                               (including by the Market Abuse (Amendment) (EU Exit) Regulations 2019 (SI
                                               2019/310))
 "McKay"                                       McKay Securities Plc of 20 Greyfriars Road, Reading, Berkshire, RG1 1NL
 "McKay Confidentiality Agreement"             the confidentiality agreement between Workspace and McKay dated 30 November
                                               2021
 "McKay Directors" or "McKay Board"            the board of directors of McKay from time to time and "McKay Director" means
                                               any of them
 "McKay Group"                                 McKay and its subsidiary undertakings
 "McKay Shareholders"                          registered holders of McKay Shares from time to time
 "McKay Share Plans"                           McKay Performance Share Plan 2017 and McKay Deferred Bonus Share Plan 2017, as
                                               amended from time to time
 "McKay Shares"                                ordinary shares of 20p each in the capital of McKay from time to time
 "Net Tangible Assets"                         the net tangible assets of the Workspace Group, McKay Group or the Enlarged
                                               Group, as applicable, from time to time or, as the context requires, the net
                                               tangible assets per ordinary share
 "New Workspace Shares"                        the new ordinary shares of £1 each in the share capital of Workspace, to be
                                               allotted and issued pursuant to the Scheme or the Acquisition (as the context
                                               requires)
 "Offer Document"                              if (subject to the consent of the Panel and the terms of the Co-operation
                                               Agreement), Workspace elects to effect the Acquisition by way of a Takeover
                                               Offer, the offer document published by or on behalf of Workspace in connection
                                               with any Takeover Offer, setting out, among other things, the full terms and
                                               conditions of the Acquisition, including any revised offer document
 "Official List"                               the official list maintained by the FCA pursuant to Part 6 of the FSMA
 "Opening Position Disclosure"                 an announcement pursuant to Rule 8 of the Code containing details of interests
                                               or short positions in, or rights to subscribe for, any relevant securities of
                                               a party to an offer
 "Panel" or "Takeover Panel"                   the Panel on Takeovers and Mergers
 "Pension Trustee Confidentiality Agreement"   the confidentiality agreement between Workspace and the Pension Trustees dated
                                               14 February 2022
 "Pension Trustee Letter"                      the agreement between Workspace, McKay and the Pension Trustees dated 25
                                               February 2022
 "Pension Trustees"                            Stratact Consulting Limited, Christopher James Spence, Simon Perkins and Giles
                                               Salmon
 "Registrar of Companies"                      the Registrar of Companies in England and Wales
 "Regulatory Information Service"              a primary information provider which has been approved by the FCA to
                                               disseminate regulated information
 "REIT"                                        Real Estate Investment Trust
 "Resolutions"                                 the resolution(s) to be proposed at the General Meeting necessary to
                                               facilitate the implementation of the Scheme, including, without limitation, a
                                               resolution to amend the articles of association of McKay by the adoption and
                                               inclusion of a new article under which any McKay Shares issued or transferred
                                               after the Scheme Record Time (other than to Workspace and/or its nominees)
                                               shall be automatically transferred to Workspace (or as it may direct) and,
                                               where applicable, for consideration to be paid to the transferee or to the
                                               original recipient of the McKay Shares so transferred or issued on the same
                                               terms as the Acquisition (other than terms as to timings and formalities)
 "Restricted Jurisdiction"                     any jurisdiction where local laws or regulations may result in a significant
                                               risk of civil, regulatory or criminal exposure if information concerning the
                                               Acquisition is sent or made available to McKay Shareholders in that
                                               jurisdiction
 "Rothschild & Co"                             N.M. Rothschild & Sons Limited
 "Scheme" or "Scheme of Arrangement"           the scheme of arrangement proposed to be made under Part 26 of the Companies
                                               Act between McKay and the Scheme Shareholders, the terms of which are to be
                                               set out in the Scheme Document, with or subject to any modification, addition
                                               or condition approved or imposed by the Court and agreed to by McKay and
                                               Workspace
 "Scheme Document"                             the document to be sent to (among others) McKay Shareholders setting out,
                                               amongst other things, the full terms and conditions of the Acquisition
                                               (including the Scheme) and notices convening the Court Meeting and the General
                                               Meeting
 "Scheme Record Time"                          the date and time specified in the Scheme Document as the Scheme Record Time,
                                               expected to be 6.00pm on the Business Day immediately preceding the Effective
                                               Date (or such other date and/or time as Workspace and McKay may agree)
 "Scheme Shareholders"                         registered holders of Scheme Shares and a "Scheme Shareholder" shall mean any
                                               one of those Scheme Shareholders
 "Scheme Shares"                               the McKay Shares which remain in issue at the Scheme Record Time and are:

                                               (i)         in issue at the date of the Scheme Document;

                                               (ii)         (if any) issued after the date of the Scheme Document but
                                               before the Voting Record Time; and

                                               (iii)        (if any) issued at or after the Voting Record Time but at
                                               or before the Scheme Record Time on terms that the holder thereof shall be
                                               bound by the Scheme or in respect of which the original or any subsequent
                                               holders thereof are, or have agreed in writing to be, bound by the Scheme,

                                               excluding, in any case, any McKay Shares registered in the name of or
                                               beneficially owned by Workspace or any other member of the Workspace Group or
                                               held in treasury, in each case at the Scheme Record Time
 "subsidiary" and "subsidiary undertaking"     have the meanings given to them in the Companies Act
 "Takeover Offer"                              if (subject to the consent of the Panel and the terms of the Co-operation
                                               Agreement), Workspace elects to effect the Acquisition by way of a takeover
                                               offer as defined in section 974 of the Companies Act, the offer to be made by
                                               or on behalf of Workspace to acquire the entire issued and to be issued
                                               ordinary share capital of Workspace on the terms and subject to the conditions
                                               to be set out in the related offer document
 "Treasury Shares"                             shares held as treasury shares as used in section 724(5) of the Companies Act
 "UK" or "United Kingdom"                      the United Kingdom of Great Britain and Northern Ireland
 "United States" or "US"                       the United States of America, its territories and possessions, any state of
                                               the United States of America, the District of Columbia, and all other areas
                                               subject to its jurisdiction
 "Voting Record Time"                          the time and date specified in the Scheme Document by reference to which
                                               entitlement to vote at the Court Meeting will be determined, which is expected
                                               to be 6.30 p.m. on the day which is two Business Days before the date of the
                                               Court Meeting or if the Court Meeting is adjourned, 6.30 p.m. on the day which
                                               is two Business Days before such adjourned meeting
 "VWAP"                                        Volume Weighted Average Price
 "Workspace"                                   Workspace Group Plc of Canterbury Court Kennington Park, 1-3 Brixton Road,
                                               London, England, SW9 6DE
 "Workspace Confidentiality Agreement"         the confidentiality agreement between Workspace and McKay dated 9 February
                                               2022
 "Workspace Directors" or "Workspace Board"    the board of directors of Workspace from time to time and "Workspace Director"
                                               means any of them
 "Workspace Group"                             Workspace and its subsidiary undertakings
 "Workspace Shareholders"                      holders of Workspace Shares from time to time
 "Workspace Shares"                            ordinary shares of £1 each in Workspace from time to time

All times referred to are London time unless otherwise stated.

All references to "GBP", "pence", "sterling" or "£" are to the lawful
currency of the United Kingdom.

All references to statutory provision or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and orders from time to time made
thereunder or deriving validity therefrom.

 

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