ARL.L Regulatory News (ARL)

18 Dec 2007 11:07

SMC Group Plc18 December 2007 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR INPART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THEREPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTIONWHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCHJURISDICTION. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULDNOT SUBSCRIBE FOR OR PURCHASE ANY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPTON THE BASIS OF INFORMATION IN THE PROSPECTUS EXPECTED TO BY PUBLISHED BY SMCGROUP PLC TODAY IN CONNECTION WITH THE PROPOSED OPEN OFFER. 18 December 2007 For Immediate Release SMC Group Plc ("SMC" or "the Company" or "the Group") Open Offer of up to 188,377,187 New Ordinary Shares at 8.0 pence per New Ordinary Share Approval of Rule 9 Waiver by the Takeover Panel and Notice of General Meeting SMC, the architects and design business, today announces that it proposes toraise approximately £15.1 million, before expenses, by way of a fullyunderwritten Open Offer of up to 188,377,187 New Ordinary Shares at 8.0 penceper share on the basis of 19 New Ordinary Shares for every 5 Existing OrdinaryShares. Highlights •Open Offer to raise approximately £15.1 million before expenses (approximately £13.3 million net of expenses) •The Open Offer is to be made by way of a Prospectus to be sent to Qualifying Shareholders who will be given the opportunity to subscribe for New Ordinary Shares pro rata to their existing shareholdings at a price of 8.0 pence per New Ordinary Share on the following basis: 19 New Ordinary Shares for every 5 Existing Ordinary Shares •Other than in relation to the New Ordinary Shares to be irrevocably subscribed for by the Directors, the Open Offer is to be fully underwritten by the Ironshield Fund, under the advice of its investment manager, Ironshield, a UK-based investment management firm •Net proceeds to be utilised to finance the deferred consideration payments due to certain vendors of acquired businesses, to repay part of the Group's term loan and working capital facilities and to be used for general corporate purposes •Irrevocable undertakings to vote in favour of the Resolutions have been received from the Directors and certain Shareholders, representing 17.1 per cent. of the Existing Ordinary Shares in issue •The Open Offer will be subject to the passing of certain of the Resolutions to be considered at a General Meeting expected to be held on 14 January 2008 •Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. Dealings are expected to commence in the New Ordinary Shares on 18 January 2008 •The Prospectus setting out details of the Open Offer, the Resolutions and a notice of the General Meeting, accompanied by the Form of Proxy and the Application Form, is expected to be posted to Shareholders today Sir Rodney Walker, Executive Chairman of SMC, said: "Following the disappointing performance of the Group in the first half of 2007, the Board believes that the net proceeds of the Open Offer together with its available facilities will be sufficient for the Company to meet its financial obligations as they fall due in the near to mid-term. Having fully implemented the recommendations of the internal business review the latest management information indicates that since July 2007 the Group has performed in line with management's expectations. With the benefit of the proceeds from the Open Offer, the Board expects steady progress from its new base." For further information: SMC Group Plc Tel: +44 (0)20 7495 5335Rob Boardman Numis Securities Limited Tel: +44 (0)20 7776 1500Stuart Skinner/Brent Nabbs/JamesSerjeant Bell Pottinger Corporate & Financial Tel: +44 (0)20 7861 3232David Rydell/Chris Hamilton This summary should be read in conjunction with the detailed announcement whichfollows. Paragraph 17 of the full announcement contains the definitions of certain termsused in this summary and the full announcement. This announcement does notconstitute, or form part of, an offer to sell, or the solicitation of an offerto subscribe for or buy, any of the New Ordinary Shares to be issued inconnection with the Open Offer. The Directors of SMC have taken all reasonable care to ensure that theinformation contained in this announcement is, to the best of their knowledge,in accordance with the facts and contains no omission likely to affect theimport of such information. Numis, which is authorised and regulated in the UK by the Financial ServicesAuthority, is acting as Nominated Adviser exclusively to the Company and no oneelse in connection with the Open Offer and the admission of the New OrdinaryShares to trading on AIM and will not be responsible to anyone other than theCompany for providing the protection afforded to clients of Numis or forproviding advice in relation to the Open Offer, the proposed admission totrading on AIM, or any other matters referred to in this announcement. The release, publication or distribution of this announcement into certainjurisdictions other than the UK may be restricted by law and therefore personsin such jurisdictions into which this announcement is released, published ordistributed should inform themselves about and observe any such restrictions.Any failure to comply with any such restrictions may constitute a violation ofthe securities laws or regulation of such jurisdictions. A combined circular to shareholders containing both the notice of the GeneralMeeting and the prospectus relating to the Open Offer (the "Prospectus") isexpected to be despatched today. The Prospectus gives further details of theOpen Offer and contains a notice of a General Meeting to approve certainresolutions necessary to implement the Open Offer, expected to be held at 10.00a.m. on 14 January 2008 at the Barry Room, Royal Institute of BritishArchitects, 66 Portland Place, London W1B 1AD. The Prospectus gives furtherdetails of the Open Offer, the New Ordinary Shares to be offered pursuant to theOpen Offer, the Rule 9 Waiver and the Company's business. This announcement is not for release, publication or distribution, directly orindirectly, in whole or in part, in or into the United States, Australia,Canada, Japan, New Zealand, the Republic of Ireland or the Republic of SouthAfrica and does not constitute, or form part of, an offer or the solicitation ofan offer, or inducement, or invitation to subscribe for, buy, underwrite orotherwise acquire, any rights, shares or other securities, nor the solicitationof any vote or approval in any jurisdiction, nor shall there be any sale, issueor transfer of shares in the Company in any jurisdiction in contravention ofapplicable law. Any offer, invitation or inducement to acquire shares in theCompany will be made solely by means of the Prospectus, as updated by anysupplementary prospectuses, and the Application Form and any decision to keep,buy or sell shares in the Company should be made solely on the basis of theinformation contained in such document(s). The New Ordinary Shares have not been approved or disapproved by the USSecurities and Exchange Commission, any State securities commission in theUnited States or any other US regulatory authority, nor have any of theforegoing authorities passed upon or endorsed the merits of the offering of theNew Ordinary Shares or the accuracy or adequacy of this announcement or theProspectus. The securities referred to herein have not been and will not beregistered under the US Securities Act and may not be sold or offered in theUnited States unless registered under the US Securities Act or any applicableexemption from such registration. No public offering of New Ordinary Shares willbe made in the United States, Australia, Canada, Japan, New Zealand, theRepublic of Ireland or the Republic of South Africa. This announcement includes statements that are, or may be, "forward-lookingstatements". These forward-looking statements can be identified by the use offorward-looking terminology, including the terms "believes", "estimates","plans", "anticipates", "targets", "aims", "continues", "expects", "intends","may", "will", "would" or "should" or, in each case, their negative or othervariations or comparable terminology. These forward-looking statements includeall matters that are not historical facts. They appear in a number of placesthroughout this announcement and include statements regarding the Group'sintentions, beliefs or current expectations concerning, among other things, theGroup's results of operations, financial condition, liquidity, prospects, growthstrategies and the markets in which the Group operates. By their nature,forward-looking statements involve risk and uncertainty because they relate tofuture events and circumstances. A number of factors could cause actual resultsand developments to differ materially from those expressed or implied by theforward-looking statements, including, without limitation: market position ofthe Group, earnings, financial position, cash flows, return on capital,anticipated investments and capital expenditures, changing business or othermarket conditions and general economic conditions. These and other factors couldadversely affect the outcome and financial effects of the events describedherein and the Group. Forward-looking statements contained in this announcementbased on these trends or activities should not be taken as a representation thatsuch trends or activities will continue in the future. THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR INPART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THEREPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTIONWHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCHJURISDICTION. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULDNOT SUBSCRIBE FOR OR PURCHASE ANY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPTON THE BASIS OF INFORMATION IN THE PROSPECTUS EXPECTED TO BY PUBLISHED BY SMCGROUP PLC TODAY IN CONNECTION WITH THE PROPOSED OPEN OFFER. 18 December 2007 For Immediate Release SMC Group Plc ("SMC" or "the Company" or "the Group") Open Offer of up to 188,377,187 New Ordinary Shares at 8.0 pence per New Ordinary Share Approval of Rule 9 Waiver by the Takeover Panel and Notice of General Meeting 1. Introduction The Company proposes to raise approximately £15.1 million, before expenses, byway of an Open Offer of up to 188,377,187 New Ordinary Shares at 8.0 pence pershare on the basis of: 19 New Ordinary Shares for every 5 Existing Ordinary Shares The Open Offer is to be made by way of a Prospectus to be sent to QualifyingShareholders holding Ordinary Shares at the close of business on the RecordDate. 2. Background to and reasons for the Open Offer Background to the Open Offer SMC has grown rapidly since its Ordinary Shares were admitted to AIM in June2005 through the acquisition of 12 architectural businesses (including the twobusinesses acquired by the Company at the time of its admission to AIM). Theacquisition structure typically employed by SMC for each of the acquisitionsinvolved an initial payout to the vendors of the acquired business, usuallyconsisting of a mixture of cash and shares in the Company, followed by adeferred consideration component determined on the basis of future earnings ofthe acquired business and paid at pre-determined times. The deferredconsideration component was generally payable partly in cash and partly inshares although, at the discretion of the Company, the share component wascapable of being satisfied in cash. Since its admission to AIM, the Company has gone through two rounds of equityfinancing, in February 2006, when it raised £1.72 million (before expenses) andin October 2006, when it raised an additional £6.08 million (before expenses),both by way of institutional placings. The proceeds of the February 2006 placingwere utilised to increase the Group's working capital and the proceeds of theOctober 2006 placing were utilised to replace elements of debt finance drawndown for the purposes of the acquisitions made by the Group in September 2006. On 25 January 2007, SMC announced that the Group's profits for 2006 would fallshort of market expectations largely as a result of inconsistent work inprogress treatments across the subsidiaries of the Group. The Board alsoannounced that it had commissioned an independent report from a 'big four'accountancy firm to look at various aspects of the Group's strategy and businessmodel. On 12 February 2007, SMC announced that the Non-Executive Chairman, Sir RodneyWalker, would become Executive Chairman with immediate effect, taking onday-to-day control of the business supported by other members of the Board. Itis intended that as soon as a new chief executive officer is appointed to theBoard, Sir Rodney Walker will revert to being Non-Executive Chairman. On 29 March 2007, the Group announced that investigations into work in progresswere continuing and that the Group had undertaken a further contract-by-contractreview in conjunction with its advisers, which was likely to lead to a furthersignificant reduction in the profits of the Group for 2006. On 25 May 2007, SMC announced that the initial findings from a review into therecent financial underperformance of the Group carried out by Ernst & Young atthe request of Executive Chairman, Sir Rodney Walker, together with the resultsof trading for the financial year to date, may lead to a further significantlyreduced profit expectation for the Group for the six months to June 2007. On 31 May 2007, SMC confirmed the findings of the internal business review andthe preliminary view of the Board as announced to the market on 25 May 2007. TheBoard implemented the recommendations of the review to improve the profitabilityof the Group, including the way the Group approaches the winning and executionof projects, the management structure, resourcing and the cost base of somebusiness units. It was also announced that following the Board meeting StewartMcColl had resigned as Executive Deputy Chairman and had left the Group withimmediate effect. On 12 June 2007, the Board announced that it believed it was prudent to withdrawthe resolution regarding the proposed final dividend for the year ended 31December 2006 of 0.65 pence per Ordinary Share and that the resolution to theannual general meeting of the Company should not be proposed, believing that todeclare a dividend at that time would not have been in the long term interestsof the Company. In the Group's 'Pre-Close Trading Update' announced on 30 July 2007, it wasreported that the Board had fully implemented the recommendations of the reviewcommittee. As a direct result of this action, it was reported that the Group'scost base had been significantly reduced, with all seriously underperformingareas of the business either integrated into other parts of the Group or havingclosed, resulting in 32 people leaving the Group, including 11 senior staff anddirectors. In the Group's 'Interim Results for Six Months ended 30 June 2007' announced on27 September 2007, it was reported that the restructuring initiativesimplemented by the Board following the strategic review had led to a reductionin headcount from 650 to 600 employees as at 27 September 2007, net work inprogress had reduced by £3.0 million to £7.1 million in the period, debtor andWIP provisions of £2.9 million had been made in the six month period ending 30June 2007 and overhead reductions in excess of £2 million annualised togetherwith other efficiencies had been implemented. On 13 December 2007, the Board announced that as a result of furtherinvestigations into the Group's work in progress and debtor positions by thirdparty accountants, the Board believed that it was likely that the Company wouldincur further exceptional charges in addition to those highlighted in theGroup's interim financial statements announced on 27 September 2007, primarilyas a result of potential historic WIP and debtor provisions of up toapproximately £800,000, in aggregate. Merger Discussions On 8 August 2007, SMC announced that it had entered into non binding heads ofagreement with Aukett Fitzroy Robinson Group Plc, the only other UK listedarchitecture business, relating to a potential merger to form the largestarchitecture group in Europe. On 12 October 2007, SMC announced that it had beenunable to agree satisfactory terms with AFR for a merger and that thediscussions with AFR had ceased. However, in the same announcement, the Boardconfirmed that discussions were ongoing with a private equity backed third partyfor a potential offer for the Group. On 18 October 2007, the Group announcedthat all offer discussions had ceased. Group indebtedness The Group ended the financial year to 31 December 2006 with net debt ofapproximately £14.9 million, comprising, inter alia, of term loan facilities ofapproximately £7.9 million and a working capital facility of £7.5 million withthe Bank of Scotland of which approximately £2.3 million was undrawn. On 22February 2007, the Bank of Scotland provided a further £3.0 million of term loanfacilities repayable between March 2007 and March 2010 on a straight line basis.This additional term loan facility was to provide the Group with additionalworking capital. A further refinancing of the Group's debt facilities with theBank of Scotland was completed on 10 August 2007. As a result, the Group's termloan facilities were increased from approximately £10.1 million to £15.0 millionand the Group's working capital facilities were reduced from £7.5 million to£5.0 million, an overall increase in the Group's term loan facilities ofapproximately £2.4 million. The revised facilities were used primarily toprovide the Group with additional working capital and to finance theimplementation of the restructuring initiatives following the internal businessreview. As at 30 September 2007, the Company had headroom of approximately £1.1million under these banking facilities. The Group's revised term loan facilitiesare repayable by 31 December 2012, with no repayments due until 31 March 2008. In addition to its banking facilities with the Bank of Scotland, the Group has aloan of £1.35 million from Kaupthing Singer & Friedlander Limited in relation toa freehold property acquired by the Company. Going concern statement In the Group's 'Interim Results for Six Months ended 30 June 2007' announced on27 September 2007, the Company's auditors, Ernst & Young LLP, reported that theability of the Group to meet its liabilities as they fall due, and the validityof the going concern basis, depended on the ability of the Directors toeliminate a potential funding shortfall in the Company by measures that includedrenegotiating the Group's deferred consideration obligations, seeking additionaldebt facilities and improving cash flow from working capital. Arrangements with vendors regarding deferred consideration payments Based on the acquisition agreements entered into with vendors and the Directors'view of the likely deferred consideration components payable on the earnings ofthe acquired businesses, the Directors believe that total deferred considerationliabilities are likely to amount to, in aggregate, approximately £11.6 million,of which £7.5 million is to be satisfied in cash and/or loan notes with thebalance satisfied in Ordinary Shares although, at the Company's discretion, someor all of the share component could be satisfied in cash. The timings of thesedeferred consideration payments are as follows: • approximately £1.25 million due in January 2008, which is to be satisfied in cash; and • approximately £10.4 million due in July 2008, of which £6.25 million is to be satisfied in cash and/or loan notes with the balance satisfied in Ordinary Shares although, at the Company's discretion, some or all of the share component could be satisfied in cash. Due to the potential funding shortfall for the payment of the deferredconsideration obligations in 2008, and as part of the basis for undertaking theOpen Offer, SMC entered into discussions with those vendors to whom deferredconsideration payments are due in order to seek the renegotiation of the termsand timings of these payments. As a consequence of these renegotiations, theCompany has entered into variation agreements with all but one group of therespective vendors, which are contingent upon the Company successfully raising£10 million (net of expenses) of debt or equity funding by 31 January 2008, inwhich all but one group of the vendors have agreed to fix the amounts of thedeferred consideration obligations due to them and to reschedule the timings ofthese payments. As a consequence of these variation agreements, the Company'stotal deferred consideration obligations now amount, in aggregate, to no morethan £9.1 million, payable in cash. The proposed timings of the deferredconsideration payments under the variation agreements are as follows: • approximately £6.2 million due in January 2008; and • up to approximately £2.9 million due in January 2010. The Company has not entered into a variation agreement with the vendors ofCorstophine & Wright Kenzie Lovell Limited as the Company and those vendors havenot agreed the amount of the deferred consideration due. The Board believes that a substantial increase in the equity base of the Groupis in the best long-term interests of the Group and its Shareholders, with thenet proceeds from the Open Offer being applied to reducing Group debt, therebystrengthening the Group's balance sheet, and enabling the Company to meet itsdeferred consideration obligations. 3. Directors' and other undertakings in respect of the Open Offer The Directors, who hold, in aggregate, 6,627,877 Existing Ordinary Shares,representing approximately 13.4 per cent. of the Existing Ordinary Shares inissue, have given irrevocable undertakings to vote in favour of the Resolutions.The Directors, or their nominees, are entitled, in aggregate, to subscribe for25,185,906 New Ordinary Shares pursuant to the Open Offer and they havecommitted, in aggregate, to subscribe for, or procure that their nomineessubscribe for up to 7,576,503 New Ordinary Shares under the Open Offer,representing approximately 4.0 per cent. of the New Ordinary Shares to be issuedby the Company under the Open Offer. Certain of the Directors have alsoundertaken to subscribe for up to an additional 937,500 New Ordinary Shares inthe event that Qualifying Shareholders do not validly take up their entitlementsunder the Open Offer in full. The Company has secured irrevocable undertakings from certain of the Company'sshareholders to vote in favour of the Resolutions. In aggregate, theseShareholders hold approximately 3.7 per cent. of the Existing Ordinary Shares inissue. Consequently, the Company has secured irrevocable undertakings from Directorsand certain Shareholders holding, in aggregate, 8,454,303 Existing OrdinaryShares, representing approximately 17.1 per cent. of the Existing OrdinaryShares in issue to vote in favour of the Resolutions. Further details of the irrevocable undertakings from the Directors and certainShareholders in relation to the Open Offer and the Resolutions will be set outin the Prospectus. 4. Underwriting agreement Other than in relation to those New Ordinary Shares which the Directors haveagreed to subscribe for or procure that their nominees subscribe for, in orderto provide certainty as to the amount of capital to be raised, the Company hasarranged for the Open Offer to be fully underwritten by the Ironshield Fund,upon the advice of its investment manager, Ironshield. The Ironshield Fund (taken together with those persons with whom the IronshieldFund is acting in concert for the purposes of Rule 9 of the City Code, if any)currently has no direct beneficial interest in the share capital of the Company.On completion of the Open Offer, the Ironshield Fund (taken together with thosepersons with whom the Ironshield Fund is acting in concert for the purposes ofRule 9 of the City Code, if any) will potentially be interested in a maximum of179,863,184 New Ordinary Shares, representing a maximum of approximately 75.6per cent. of the Company's enlarged issued voting share capital. Rule 9 of the City Code provides that the Ironshield Fund would normally beobliged under the City Code to make a general offer to all Shareholders toacquire their shares if its interest (taken together with those persons withwhom the Ironshield Fund is acting in concert for the purposes of Rule 9 of theCity Code, if any) were to become 30 per cent. or more of the voting rights ofthe Company. However in this instance the Takeover Panel has agreed to waivethis obligation subject to the approval of Shareholders on a poll. In consideration for the Ironshield Fund, upon the advice of its investmentmanager, Ironshield, agreeing to subscribe at the Open Offer Price for any NewOrdinary Shares (other than for those New Ordinary Shares which the Directorshave agreed to subscribe for or procure that their nominees subscribe for by wayof irrevocable undertaking or otherwise) which are not taken up under the OpenOffer, the Company has agreed to pay Ironshield: (i) in the event that the Open Offer is completed and Admissionoccurs on or before 31 January 2008, an underwriting commission of 3 per cent.of the aggregate value at the Open Offer Price of the New Ordinary Shares issuedby the Company under the Open Offer less the aggregate value, at the Open OfferPrice, of certain New Ordinary Shares issued by the Company under the Open Offerwhich the Directors have agreed to subscribe for or procure that their nomineessubscribe for by way of irrevocable undertaking or otherwise (the "UnderwritingFee"); (ii) in the event that the Open Offer is terminated pursuant tothe terms of the Underwriting Agreement or is otherwise not completed andAdmission does not occur on or before 31 January 2008, the Company has agreed topay Ironshield £450,000 forthwith (the "Termination Fee"); or (iii)in the event that the Open Offer is not completed andAdmission does not occur on or before 31 January 2008 but a further offering ofthe Company's shares or other securities of the Company (including securitieswhich may be convertible into Ordinary Shares) (including by way of an openoffer) is completed at a subsequent date with the Ironshield Fund acting asunderwriter: (a) where the Underwriting Fee in relation to such further offeringwould have been in excess of the Termination Fee, the Company shall pay toIronshield, upon completion of such further offering, an amount in cash equal tothe difference between the Underwriting Fee and £450,000; and (b) where theUnderwriting Fee in relation to such further offering is less than theTermination Fee, Ironshield shall pay to the Company, upon completion of suchfurther offering, an amount in cash equal to the difference between the £450,000and the Underwriting Fee. The Company has also agreed to pay the fees and expenses reasonably and properlyincurred by Ironshield in connection with the Open Offer, including Ironshield'saccountant's fees, legal fees and expenses ("Ironshield's Expenses"). In theevent that the Open Offer is terminated pursuant to the terms of theUnderwriting Agreement or is otherwise not completed and Admission does notoccur on or before 31 January 2008, Ironshield's Expenses are subject to a capof £100,000 plus VAT. Nothing in the Underwriting Agreement obliges SMC to pay the Termination Fee toIronshield if the Takeover Panel determines that it would not be permitted byRule 21.2 of the City Code. 5. Use of proceeds The Directors propose to apply the estimated proceeds of the Open Offer ofapproximately £13.3 million (net of expenses) to finance the deferredconsideration payment of, in aggregate, approximately £6.2 million due tocertain vendors of acquired businesses in January 2008, repay approximately £3.0million of the Group's term loan facilities and repay approximately £3.0 millionof the Group's working capital facility. The balance of the net proceeds ofapproximately £1.1 million will be used for general corporate purposes. 6. Summary of the principal terms of the Open Offer The Open Offer is to be made to Qualifying Shareholders, upon and subject to theterms and conditions to be set out in the Prospectus and the Application Form tobe sent to Qualifying Shareholders, who will be given the opportunity tosubscribe for New Ordinary Shares pro rata to their existing shareholdings at aprice of 8.0 pence per New Ordinary Share on the following basis: 19 New Ordinary Shares for every 5 Existing Ordinary Shares held and registered in their name at the close of business on the Record Date.The Open Offer will not be made in any jurisdictions other than the UK by way ofthe Prospectus but will be made to Qualifying Shareholders with registeredaddresses outside of the UK as detailed in paragraph 12 of this announcemententitled "Overseas Shareholders". Fractional entitlements shall be rounded down.The New Ordinary Shares will rank in full for all dividends declared after theRecord Date and otherwise pari passu with the Existing Ordinary Shares in allrespects. Qualifying Shareholders will receive an Application Form (and a Form of Proxy)with the Prospectus which sets out their maximum entitlement to New OrdinaryShares. Qualifying Shareholders may apply for any number of New Ordinary Sharesup to their maximum entitlement as shown on their Application Form. Certain ofthe Directors have undertaken to subscribe for up to an additional 937,500 NewOrdinary Shares not validly taken up by Qualifying Shareholders pursuant to theOpen Offer. Subject to the foregoing, no application in excess of a QualifyingShareholder's maximum entitlement will be met, and any Qualifying Shareholder soapplying will be deemed to have applied for his maximum entitlement only. Shareholders should note that the Open Offer is not a rights issue. QualifyingShareholders should note that the Application Form will not be a negotiabledocument and cannot be traded. Qualifying Shareholders should be aware that inthe Open Offer, unlike in a rights issue, any New Ordinary Shares not appliedfor will not be sold in the market or placed for the benefit of QualifyingShareholders who do not apply under the Open Offer, but will be subscribed forand allocated to the Ironshield Fund under the terms of the UnderwritingAgreement. The Open Offer Price of 8.0 pence per New Ordinary Share represents a 3.0 percent. discount to the Closing Price of an Existing Ordinary Share of 8.25 penceon 17 December 2007 (being the latest practicable date prior to thisannouncement). If a Qualifying Shareholder does not take up the offer of NewOrdinary Shares in full, his/her proportionate shareholding will be diluted byup to 79.2 per cent. Other than in relation to those New Ordinary Shares which the Directors haveirrevocably agreed to subscribe for or procure that their nominees subscribe foreither under the Open Offer or as described above, in order to provide certaintyas to the amount of capital to be raised, the Company has arranged for the OpenOffer to be fully underwritten by the Ironshield Fund, upon the advice of itsinvestment manager, Ironshield, pursuant to the terms of the UnderwritingAgreement. The Open Offer will be conditional, inter alia, upon: (a)the passing of resolutions 1 to 3 to be proposed at the General Meeting; (b)Admission becoming effective by not later than 5.00 p.m. on 31 January2008; and (c)the Underwriting Agreement otherwise becoming unconditional in allrespects and not having been terminated in accordance with its terms prior toAdmission. Accordingly, if any of such conditions are not satisfied, or, if applicable,waived, the Open Offer will not proceed. Prior to Admission, Numis and/orIronshield may terminate the Underwriting Agreement in certain circumstances. Application will be made to the London Stock Exchange for the New OrdinaryShares to be admitted to trading on AIM. It is expected that Admission willbecome effective and that dealings in the New Ordinary Shares will commence onAIM at 8.00 a.m. on 18 January 2008. The Open Offer will result in the issue of up to 188,377,187 New Ordinary Shares(representing approximately 79.2 per cent. of the Enlarged Share Capital). TheNew Ordinary Shares will, when issued and fully paid, rank pari passu in allrespects with, and will carry the same voting and dividend rights in relation tothose dividends declared after the Record Date as, the Existing Ordinary Shares.The New Ordinary Shares are capable of being held in certificated anduncertificated form. For Qualifying Shareholders wishing to subscribe for New Ordinary Shares underthe Open Offer, completed Application Forms, accompanied by full payment, shouldbe returned by post or by hand (during normal business hours) to ShareRegistrars Limited at Craven House, West Street, Farnham, Surrey GU9 7EN, so asto arrive as soon as possible and in any event so as to be received no laterthan 11.00 a.m. on 14 January 2008. Applications once made will be irrevocable. 7. Alternative funding If the Resolutions to be proposed at the General Meeting are not passed by theShareholders and the Open Offer is not implemented, the Directors believe thatthe Group may not have sufficient funds to meet its liabilities as they fall duewithout obtaining alternative sources of debt or equity funding, which may notbe available at attractive terms, or at all. If the Open Offer does not take place or further debt or equity funding is notobtained, there is a significant risk that Group may not be able to meet itsdeferred consideration and other payment obligations as they fall due. 8. City Code Under Rule 9 of the City Code, any person who acquires an interest (as definedin the City Code) in shares which, taken together with shares in which he isalready interested and in which persons acting in concert with him areinterested, carry 30 per cent. or more of the voting rights of a company whichis subject to the City Code, is normally required to make a general offer to allthe remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, isinterested in shares which in the aggregate carry not less than 30 per cent. ofthe voting rights of such a company but does not hold shares carrying more than50 per cent. of such voting rights, a general offer will normally be required ifany further interest in shares is acquired by any such person. An offer under Rule 9 must be made in cash and at the highest price paid by theperson required to make the offer, or any person acting in concert with him, forany interest in shares of that company during the 12 months prior to theannouncement of the offer. The Ironshield Fund (taken together with those persons with whom the IronshieldFund is acting in concert for the purposes of Rule 9 of the City Code, if any)currently has no direct beneficial interest in the share capital of the Company. On completion of the Open Offer, the Ironshield Fund (taken together with thosepersons with whom the Ironshield Fund is acting in concert for the purposes ofRule 9 of the City Code, if any) will potentially be interested in a maximum of179,863,184 New Ordinary Shares, representing a maximum of approximately 75.6per cent. of the Company's enlarged issued voting share capital. Following completion of the Open Offer, the Ironshield Fund (taken together withthose persons with whom the Ironshield Fund is acting in concert for thepurposes of Rule 9 of the City Code, if any) will potentially be interested inshares carrying 30 per cent. or more of the Company's voting share capital butpossibly may not hold shares carrying more than 50 per cent. of such votingrights and, in such case, any further increase in that interest in shares willbe subject to the provisions of Rule 9 of the City Code. The Takeover Panel has agreed, however, to waive the obligation to make ageneral offer that would otherwise arise as a result of the Ironshield Fundsubscribing for New Ordinary Shares pursuant to the Underwriting Agreement,subject to the approval of independent Shareholders on a poll. Accordingly,resolution 3 is being proposed at the General Meeting, and will be taken on apoll. Following completion of the Open Offer, the Ironshield Fund (taken together withthose persons with whom the Ironshield Fund is acting in concert for thepurposes of Rule 9 of the City Code, if any) will potentially hold more than 50per cent. of the Company's voting share capital and may accordingly increase itsinterests in shares without incurring any obligation under Rule 9 of the CityCode to make a general offer. Ironshield's current intention regarding the future business of the Company isto continue to support the current management's plan and not to seek any changeto the general nature of the Company's business. However, the Ironshield Fundmay, as a prudent investor, seek to safeguard its investment in the Company wereit to become a substantial shareholder in the Company as a result of itsunderwriting commitment in the Open Offer, including, without limitation, byappointing a representative director to the Board of the Company. Ironshield hasno strategic plans for the Company and, therefore, there are no repercussions onemployment and the locations of the Company's places of business. Ironshield hasno plans to redeploy the Company's fixed assets. Ironshield's commercialjustification for underwriting the Open Offer is to receive a commission inrespect of such underwriting commitment, as set out in paragraph 4 of thisannouncement. Ironshield is not proposing any change to the general nature ofthe Company's business including in relation to the continued employment of theCompany's employees. 9. Information on Ironshield and the Ironshield Fund Ironshield Ironshield is a UK-based investment management firm authorised and regulated bythe FSA whose head office is 1 Royal Exchange Avenue, London EC3V 3LT.Ironshield is owned by the four Ironshield partners and a corporate partner,Ironshield Capital Management Limited. Ironshield has been appointed as the investment manager to the Ironshield Fund.Ironshield is primarily responsible for the investment and re-investment of theassets of the Ironshield Fund subject to the overall supervision, control andpolicies of the general partner of the Ironshield Fund. Further details on Ironshield and the partners of Ironshield will be set out inthe Prospectus. Ironshield Fund DescriptionIronshield Special Situations Master Fund LP is a Cayman Islands exemptedlimited partnership incorporated on 18 May 2007 with registered number OG-20113. Investment objectiveThe investment objective of the Ironshield Fund is to achieve high absolutereturns by investing in special situations primarily in Europe. The Ironshield Fund seeks to make opportune investments in the securities ofcompanies, including without limitation, those that may be undergoingrestructurings or other such corporate events. The Ironshield Fund currently maintains equity investments in a number ofcompanies, including, for example, an equity investment of approximately 11 percent. in Axeon Holdings plc, a semiconductor company which is listed on AIM andan equity investment of approximately 5 per cent. in MicroEmissive DisplaysGroup plc, a technology company which is also listed on AIM. SizeAs at 1 December 2007, the Ironshield Fund had assets under management(including cash resources available for investment) of approximately US$284million. Nature of investorsInvestment in the Ironshield Fund comes from a range of sophisticated investors,including hedge fund investors, pension funds, other institutional investors andhigh net worth individuals. 10. Current trading and prospects Latest management information indicates that since July 2007 the Group hasperformed in line with management's expectations. The Board has now fully implemented the recommendations of the internal businessreview which was instigated following the financial underperformance of theGroup in the first half of 2007. As a result, the Group's cost base has beensignificantly reduced. The Company has also renegotiated with all but one groupof the vendors of the acquired businesses the terms and timings of its deferredconsideration obligations due to them, contingent upon the Company successfullyraising £10 million (net of expenses) of debt or equity funding by 31 January2008. As a result of further investigations into the Group's work in progress anddebtor positions by third party accountants, the Board believes that it islikely that the Company will incur further exceptional charges in addition tothose highlighted in the Group's interim financial statements announced on 27September 2007, primarily as a result of potential historic WIP and debtorprovisions of up to approximately £800,000, in aggregate. With the benefit of the proceeds from the Open Offer, the Board expects steadyprogress from its new base, while acknowledging the uncertainty in theconstruction sector in the near to mid-term. 11. Dividend policy At the Company's Annual General Meeting held on 12 June 2007, the Board withdrewthe resolution regarding the payment of the proposed final dividend for thefinancial year ended 31 December 2006, believing that a dividend would not havebeen in the long term interests of the Company. While the Board believes it is inappropriate to attempt to predict the likelylevel or timescale for the declaration and payment of dividends by the Company,the Board has committed to returning to a progressive dividend policy as andwhen appropriate. The payment of future dividends by the Company and the amount thereof willdepend upon the Company's results from operations, financial condition, cashrequirements, future prospects, profits available for distribution and otherfactors considered relevant by the Board at the relevant time. 12. Overseas Shareholders The attention of Qualifying Shareholders who have registered addresses outsidethe United Kingdom, or who are citizens or residents of countries other than theUnited Kingdom, or who are holding Ordinary Shares for the benefit of suchpersons, (including, without limitation, custodians, nominees, trustees andagents) or who have a contractual or other legal obligation to forward theProspectus, the Application Form and the Form of Proxy to such persons, is drawnto the information which appears below. In particular, Qualifying Shareholders who have registered addresses in or whoare resident in, or who are citizens of, countries other than the UK (includingwithout limitation the United States) should consult their professional advisersas to whether they require any governmental or other consents or need to observeany other formalities to enable them to take up their entitlements to the OpenOffer. In accordance with section 90(5) of the 1985 Act, the Open Offer to QualifyingShareholders who have no registered address within the UK and who have not giventhe Company an address within the UK for the service of notices will (subject tothe conditions of the Open Offer) be made by the Company publishing a notice inthe London Gazette on the day following the date on which the Prospectus andApplication Forms are despatched, stating where copies of the Prospectus and theApplication Forms may be inspected, or, in certain circumstances, obtained onpersonal application, by or on behalf of such Qualifying Shareholders. SuchQualifying Shareholders may be able to participate in the Open Offer if theysatisfy themselves that, and in the case of those Qualifying Shareholders withregistered addresses in, or residents of, the United States, Australia, Canada,Japan, New Zealand, the Republic of Ireland or the Republic of South Africa,they are able to prove to the Company and Numis that, the receipt, oracceptance, of the Open Offer in such jurisdiction will not breach localsecurity laws. However, in order to facilitate acceptance of the Open Offer made to suchQualifying Shareholders by virtue of such publication, Application Forms will beposted to such Qualifying Shareholders (other than those Qualifying Shareholderswith registered addresses in, or residents of, the United States, Australia,Canada, Japan, New Zealand, the Republic of Ireland or the Republic of SouthAfrica). Accordingly, Qualifying Shareholders who have no registered address within theUK and who have not given the Company an address within the UK for service ofthe notices may accept the Open Offer either by returning the Application Formsposted to them in accordance with the instructions printed thereon or byobtaining copies thereof from Share Registrars Limited at Craven House, WestStreet, Farnham, Surrey, GU9 7EN. Qualifying Shareholders will not be entitled to participate in the Open Offerunless they meet the legal requirements needed 13. General Meeting A notice convening the General Meeting, expected to be held at 10.00 a.m. on 10January 2008 at the Barry Room, Royal Institute of British Architects, 66Portland Place, London W1B 1AD will be set out in the Prospectus to be sent toQualifying Shareholders. The General Meeting is to be convened for the purposeof considering and, if thought fit, passing the Resolutions. The Open Offer willnot proceed if resolutions 1 to 3 are not passed. The Open Offer is notconditional upon resolution 4 being passed by Shareholders. Resolution 4 isbeing proposed in order to give the Directors power to allot Ordinary Shares inconnection with a pre-emptive offering and, in addition, to allot OrdinaryShares up to a nominal value of £118,975.07 without the need to offer theseshares to existing Shareholders. At the General Meeting, Shareholders will be asked to consider and, if thoughtfit, to pass resolutions to the following effects: 1. to increase the authorised share capital of the Company from £375,000to £1,500,000 by the creation of 225,000,000 New Ordinary Shares; 2. subject to and conditional upon resolution 1 being passed, to authorisethe Directors, for the purposes of section 80(1) of the 1985 Act, to exerciseall of the powers of the Company to allot relevant securities for the purposesof the Open Offer and otherwise up to an aggregate nominal amount of£310,249.35; 3.to approve the Rule 9 Waiver of the Ironshield Fund's obligation tomake a general offer to Shareholders under Rule 9 of the City Code; and 4.subject to and conditional upon resolutions 1 and 2 being passed, toempower the Directors, pursuant to section 95 of the 1985 Act, to allot equitysecurities (as defined in section 94(2) of the 1985 Act) for cash in connectionwith any pre-emptive offering and for other purposes up to a maximum aggregatenominal amount up to £118,975.07. The resolutions described in sub-paragraphs 1 to 3 above will be proposed asordinary resolutions and the resolution described in sub-paragraph 4 above willbe proposed as a special resolution. In order to comply with the City Code,resolution 3 will be taken on a poll. 14. Recommendation The Board, which has been so advised by Numis, considers the Open Offer and theRule 9 Waiver to be in the best interests of the Company and its Shareholders asa whole. Accordingly, the Directors unanimously recommend that you vote infavour of the Resolutions to be proposed at the General Meeting as they intendto do, or procure, in respect of their own beneficial holdings, which amount, inaggregate, to 6,627,877 Ordinary Shares, representing approximately 13.4 percent. of the Existing Ordinary Shares in issue. In providing advice to theBoard, Numis has taken into account the commercial assessments of the Board. 15. Prospectus The Prospectus setting out details of the Open Offer, the Resolutions and anotice of the General Meeting, accompanied by the Form of Proxy and theApplication Form, is expected to be posted to Qualifying Shareholders today. Copies of the Prospectus will be available free of charge from the offices ofRosenblatt Solicitors at 9-13 St. Andrew Street, London EC4A 3AF during normaloffice hours on any weekday (Saturday and public holidays excepted) for a periodof not less than one month from the date of Admission. 16. Expected Timetable of Principal Events 2007Record Date for the Open Offer close of business 17 December onPosting of Prospectus, Application Forms 18 Decemberand Forms of Proxy Publication of Gazette Notice 19 December 2008Latest time and date for splitting 3.00 p.m. on 10 JanuaryApplication Forms (to satisfy bona fidemarket claims) Latest time and date for receipt of 10.00 a.m. on 10 JanuaryForms of Proxy Latest time and date for receipt of 11.00 a.m. on 14 Januarycompleted Application Forms and paymentin full under the Open Offer General Meeting 10.00 a.m. on 14 January Admission to AIM effective and dealings 8.00 a.m. on 18 Januaryin New Ordinary Shares commence Expected date for crediting of New 18 JanuaryOrdinary Shares to CREST stock accounts(uncertificated holders only) Expected date of despatch of definitive by 25 Januaryshare certificates for New OrdinaryShares in certificated form Notes: (i) Each of the times and dates set out in the above timetable and mentionedthroughout this announcement is subject to change by the Company, with theagreement of Numis and Ironshield, in which event details of the new times anddates will be notified to the London Stock Exchange and, where appropriate, toShareholders. (ii) References to times in this document are to London times. 17. Definitions "1985 Act" the Companies Act 1985, as amended; "Admission" admission of the New Ordinary Shares to trading on AIM, and such admission becoming effective in accordance with the AIM Rules; "AFR" Aukett Fitzroy Robinson Group Plc; "AIM" AIM, a market operated by the London Stock Exchange; "AIM Rules" the rules published by the London Stock Exchange from time to time governing admission to, and the operation of, AIM; "Application Form" the application form to accompany the Prospectus for Qualifying Shareholders for use in connection with the Open Offer; "Bank of Scotland" Bank of Scotland Plc; "Board" the board of directors of the Company from time to time; "Business Day" any day on which banks are generally open in the City of London for the transaction of business other than a Saturday or Sunday or public holiday; "certificated" or "in a share or other security which is not incertificated form" uncertificated form (that is, not in CREST); "City Code" the City Code on Takeovers and Mergers; "Closing Price" the closing, middle market quotation of an Existing Ordinary Share, as published in the AIM Appendix to the Daily Official List; "CREST" the relevant system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the Regulations operated by Euroclear UK & Ireland Limited; "Daily Official List" the daily official list of the London Stock Exchange; "Director" a director of the Company; "Enlarged Share Capital" the issued ordinary share capital of the Company following the issue of the New Ordinary Shares pursuant to the Open Offer; "Existing Ordinary the ordinary shares of one half pence each in theShares" capital of the Company in issue; "Form of Proxy" the form of proxy for use at the General Meeting to accompany the Prospectus; "FSA" the Financial Services Authority of the United Kingdom; "General Meeting" the general meeting of the Company to be convened pursuant to the notice set out at the end of the Prospectus (including any adjournment thereof); "Group" or the "SMC the Company together with its subsidiaries andGroup" subsidiary undertakings and "Group Company" means any one of them; "Ironshield" Ironshield Capital Management LLP; "Ironshield Fund" "the Ironshield Special Situations Master Fund LP; "London Stock Exchange" London Stock Exchange plc or its successor(s); "New Ordinary Shares" the up to 188,377,187 Ordinary Shares to be issued by the Company pursuant to the Open Offer; "Numis" Numis Securities Limited; "Open Offer" the invitation to Qualifying Shareholders to subscribe for New Ordinary Shares at the Open Offer Price on the terms and subject to the conditions to be set out or referred to in the Prospectus and, where relevant, in the Application Form; "Open Offer Price" 8.0 pence per New Ordinary Share; "Ordinary Shares" ordinary shares of one half pence each in the capital of the Company; "Overseas Shareholder" Shareholders with registered addresses in, or who are citizens, residents or nationals of, jurisdictions outside the United Kingdom and including all US Shareholders; "Prospectus" the document to be dated on or about 18 December 2007, comprising a prospectus relating to the Company for the purpose of the Open Offer and the admission to trading of the New Ordinary Shares on AIM (together with any supplements or amendments thereto) and a notice of the General Meeting; "Qualifying holders of Ordinary Shares on the Company'sShareholders" register of members at the Record Date; "Record Date" the close of business in London on 17 December 2007; "Registrar" or Share Registrars Limited;"Receiving Agent""Regulatory Information one of the regulatory information servicesService" authorised by the UK Listing Authority to receive, process and disseminate regulatory information from listed companies and other entities; "Resolutions" the resolutions to be proposed at the General Meeting; "Rule 9 Waiver" the waiver, referred to in paragraph 8 of this announcement, of Rule 9 of the City Code by the Takeover Panel in relation to its potential application to the Ironshield Fund in the context of the Open Offer; "Shareholder(s)" holder(s) of Ordinary Shares; "SMC" or the "Company" SMC Group Plc, registered in England and Wales with registered number 03283014, whose registered office is at 33 Davies Street, Mayfair, London W1K 4LR; "subsidiary" a subsidiary as that term is defined in section 736 of the 1985 Act; "subsidiary undertaking" a subsidiary undertaking as that term is defined in section 258 of the 1985 Act; "Takeover Panel" the Panel on Takeovers and Mergers; "UK Listing Authority" the Financial Services Authority acting in its capacity as the competent authority for the purposes of FSMA; "uncertificated" or "in a share or other security recorded on the relevantuncertificated form" register of the share or security concerned as being held in uncertificated form in CREST and title to which by virtue of the Regulations, may be transferred by means of CREST; and "Underwriting Agreement" the conditional underwriting agreement entered into on 18 December 2007 among the Company, Numis and the Ironshield Fund (acting upon the advice of Ironshield). This announcement does not constitute, or form part of, an offer to sell, or thesolicitation of an offer to subscribe for or buy, any of the New Ordinary Sharesto be issued in connection with the Open Offer. The Directors of SMC have taken all reasonable care to ensure that theinformation contained in this announcement is, to the best of their knowledge,in accordance with the facts and contains no omission likely to affect theimport of such information. Numis, which is authorised and regulated in the UK by the Financial ServicesAuthority, is acting as Nominated Adviser exclusively to the Company and no oneelse in connection with the Open Offer and the admission of the New OrdinaryShares to trading on AIM and will not be responsible to anyone other than theCompany for providing the protection afforded to clients of Numis or forproviding advice in relation to the Open Offer, the proposed admission totrading on AIM, or any other matters referred to in this announcement. The release, publication or distribution of this announcement into certainjurisdictions other than the UK may be restricted by law and therefore personsin such jurisdictions into which this announcement is released, published ordistributed should inform themselves about and observe any such restrictions.Any failure to comply with any such restrictions may constitute a violation ofthe securities laws or regulation of such jurisdictions. A combined circular to shareholders containing both the notice of the GeneralMeeting and the prospectus relating to the Open Offer (the "Prospectus") isexpected to be despatched today. The Prospectus gives further details of theOpen Offer and contains a notice of a General Meeting to approve certainresolutions necessary to implement the Open Offer, expected to be held at 10.00a.m. on 14 January 2008 at the Barry Room, Royal Institute of BritishArchitects, 66 Portland Place, London W1B 1AD. The Prospectus gives furtherdetails of the Open Offer, the New Ordinary Shares to be offered pursuant to theOpen Offer, the Rule 9 Waiver and the Company's business. This announcement is not for release, publication or distribution, directly orindirectly, in whole or in part, in or into the United States, Australia,Canada, Japan, New Zealand, the Republic of Ireland or the Republic of SouthAfrica and does not constitute, or form part of, an offer or the solicitation ofan offer, or inducement, or invitation to subscribe for, buy, underwrite orotherwise acquire, any rights, shares or other securities, nor the solicitationof any vote or approval in any jurisdiction, nor shall there be any sale, issueor transfer of shares in the Company in any jurisdiction in contravention ofapplicable law. Any offer, invitation or inducement to acquire shares in theCompany will be made solely by means of the Prospectus, as updated by anysupplementary prospectuses, and the Application Form and any decision to keep,buy or sell shares in the Company should be made solely on the basis of theinformation contained in such document(s). The New Ordinary Shares have not been approved or disapproved by the USSecurities and Exchange Commission, any State securities commission in theUnited States or any other US regulatory authority, nor have any of theforegoing authorities passed upon or endorsed the merits of the offering of theNew Ordinary Shares or the accuracy or adequacy of this announcement or theProspectus. The securities referred to herein have not been and will not beregistered under the US Securities Act and may not be sold or offered in theUnited States unless registered under the US Securities Act or any applicableexemption from such registration. No public offering of New Ordinary Shares willbe made in the United States, Australia, Canada, Japan, New Zealand, theRepublic of Ireland or the Republic of South Africa. This announcement includes statements that are, or may be, "forward-lookingstatements". These forward-looking statements can be identified by the use offorward-looking terminology, including the terms "believes", "estimates","plans", "anticipates", "targets", "aims", "continues", "expects", "intends","may", "will", "would" or "should" or, in each case, their negative or othervariations or comparable terminology. These forward-looking statements includeall matters that are not historical facts. They appear in a number of placesthroughout this announcement and include statements regarding the Group'sintentions, beliefs or current expectations concerning, among other things, theGroup's results of operations, financial condition, liquidity, prospects, growthstrategies and the markets in which the Group operates. By their nature,forward-looking statements involve risk and uncertainty because they relate tofuture events and circumstances. A number of factors could cause actual resultsand developments to differ materially from those expressed or implied by theforward-looking statements, including, without limitation: market position ofthe Group, earnings, financial position, cash flows, return on capital,anticipated investments and capital expenditures, changing business or othermarket conditions and general economic conditions. These and other factors couldadversely affect the outcome and financial effects of the events describedherein and the Group. Forward-looking statements contained in this announcementbased on these trends or activities should not be taken as a representation thatsuch trends or activities will continue in the future. -ends- This information is provided by RNS The company news service from the London Stock Exchange