Ecclesiastl.8fe Regulatory News (ELLA)

Ecclesiastical Insurance Office plc

("Ecclesiastical" or "the Company")

10 December 2010

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR A PROSPECTUS EQUIVALENT DOCUMENT. COPIES OF THE PROSPECTUS TO BE ISSUED IN CONNECTION WITH THE PLACING WILL BE AVAILABLE ON PUBLICATION FROM THE COMPANY'S REGISTERED OFFICE AND AT THE OFFICES OF SPEECHLY BIRCHAM LLP, 6 NEW STREET SQUARE, LONDON EC4A 3LX, DURING NORMAL BUSINESS HOURS FROM MONDAY TO FRIDAY INCLUSIVE (PUBLIC HOLIDAYS EXCEPTED) FOR A PERIOD OF 14 DAYS FROM THE DATE OF PUBLICATION. THE PROSPECTUS WILL ALSO BE AVAILABLE ON PUBLICATION ON THE COMPANY'S WEBSITE (WWW.ECCLESIASTICAL.COM) AND WILL BE SUBMITTED TO THE NATIONAL STORAGE MECHANISM, AND WILL BE AVAILABLE FOR INSPECTION AT: WWW.HEMSCOTT.COM/NSM.DO

PROPOSED PLACING OF UP TO 40 MILLION ADDITIONAL 8.625 PER CENT. NON-CUMULATIVE IRREDEEMABLE PREFERENCE SHARES

Introduction

Further to the Company's announcement of 18 November 2010 regarding a potential further issue of 8.625 per cent. non-cumulative irredeemable preference shares ("NCIP Shares"), the Company today announces that it is seeking to raise proceeds of approximately £40.8 million (before expenses) by way of the Placing of up to 40 million Additional NCIP Shares, which will rank pari passu with the existing NCIP Shares at a placing price per share of 102p.

Details of the Placing are contained in this announcement and in the Prospectus which the Company expects to publish later today.

Appendix I sets out the full terms and conditions of the Placing. Appendix II sets out the definition of terms used in this announcement.

Placing statistics

\* The Additional NCIP Shares will be issued after the record date for the 31 December 2010 payment. The first payment date relevant to the Additional NCIP Shares is 30 June 2011

Details of the Placing Agreement and the Additional NCIP Shares

The Company is seeking to raise gross proceeds of up to £40.8 million through a placing of up to 40 million Additional NCIP Shares with institutional and other investors.

The Company has entered into a placing agreement with Collins Stewart, under which Collins Stewart has, subject to the terms set out therein, agreed to use reasonable endeavours, as agents of the Company, to procure Placees for the Additional NCIP Shares. The Placing is conditional, inter alia, on Admission taking place no later than 8.00 a.m. on 31 December 2010. It is expected that Admission will occur and dealings in the Additional NCIP Shares will commence on 16 December 2010.

The Additional NCIP Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing NCIP Shares. The Additional NCIP Shares will be issued free of any encumbrance, lien or other security interest.

Collins Stewart is acting as Joint Financial Adviser, Bookrunner and Broker. Rothschild is acting as Joint Financial Adviser.

Expected timetable of principal events

Commenting on the Placing, Michael Tripp, Group Chief Executive Officer, said:

"The Board believes that the Placing will provide the Company with the ability to pursue attractive future growth opportunities and will also enhance the Company's regulatory capital position ahead of anticipated regulatory changes. The Board is delighted with the support provided for the Placing by existing and new preference shareholders."

Enquiries:

Disclaimer

This announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any non-cumulative irredeemable preference shares ("NCIP Shares") must be made only on the basis of the information contained in and incorporated by reference into the Prospectus.

The distribution of this announcement and the NCIP Shares in certain jurisdictions may be restricted by law and such distribution or participation could result in a violation of the laws of such jurisdictions. In particular, there are restrictions on the distribution of this announcement and participation in the NCIP share issue in the United States, Australia, Canada, Japan and South Africa. Persons into whose possession this announcement comes are required to inform themselves about, and to observe, any restrictions and legal requirements in relation to the distribution of this announcement and their participation in the proposals described in this announcement.

The NCIP Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or under the applicable securities laws of any State of the United States or under the securities laws of Australia, Canada, Japan, South Africa or any State, province or territory thereof or any other jurisdiction outside the United Kingdom. Accordingly, the NCIP Shares may not be taken up, offered, sold, resold, delivered or distributed, directly or indirectly, within, into or from the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any State or other jurisdiction of the United States. None of the NCIP Shares may be taken up, offered, sold, resold, delivered or distributed, directly or indirectly, within, into or from Australia, Canada, Japan or South Africa or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen, of such jurisdictions except pursuant to an applicable exemption.

This announcement is directed only at (i) persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) ("Qualified Investors"); and (ii) in the United Kingdom, Qualified Investors: (a) who have professional experience in matters relating to investments falling within Article 19(5) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); (b) who are high net worth persons or entities falling within Article 49(2)(a) to (d) of the Order or (c) to persons to whom it may otherwise lawfully be distributed (all such persons together being referred to as "relevant persons") and persons who receive this announcement who are not relevant persons should not rely on or act upon this announcement. Any investment activity to which this announcement relates will only be available to relevant persons and will only be engaged in with relevant persons.

This announcement may include certain "forward-looking statements" including, without limitation, statements containing the words "believes", "estimates", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or similar expressions. Such forward-looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the Group, or industry results, to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, potential investors are cautioned not to place any undue reliance on such forward-looking statements. These forward looking statements apply only as at the date of this announcement. Subject to its legal and regulatory obligations, the Company expressly disclaims any obligation to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based unless required to do so by any appropriate regulatory authority or by law.

All investments are subject to risk. Past performance is no guarantee of future returns. The value of investments may fluctuate. This announcement is not intended to constitute legal, tax or accounting advice or investment recommendation. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Statements contained in this announcement that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of the Company. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon.

Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as joint financial adviser, bookrunner and broker to Ecclesiastical Insurance Office plc and is acting for no-one else in connection with the contents of this announcement, and will not be responsible to anyone other than Ecclesiastical Insurance Office plc for providing the protections afforded to clients of Collins Stewart Europe Limited nor for providing advice in connection with the contents of this announcement or any other matter referred to herein. Collins Stewart Europe Limited is not responsible for the contents of this announcement. This does not exclude or limit the responsibilities, if any, which Collins Stewart Europe Limited may have under the Financial Services and Markets Act 2000 or the regulatory regime established thereunder.

Rothschild, which is authorised and regulated in the United Kingdom by the FSA, is advising Ecclesiastical Insurance Office plc and no one else in relation to this announcement and will not be responsible to anyone other than Ecclesiastical Insurance Office plc for providing the protections afforded to customers of Rothschild nor for providing advice in connection with the contents of this announcement or any other matter referred to herein. This does not exclude or limit the responsibilities, if any, which Rothschild may have under the Financial Services and Markets Act 2000 or the regulatory regime established thereunder.

About Ecclesiastical Insurance Office

General

The Company was incorporated on 3 August 1887 in England and is a public limited company. Its principal activity is the transaction of general insurance in the UK and overseas. As at the date of the Company's latest published financial information, 30 June 2010, it had Group assets of over £1.5 billion and net assets of over £350 million. The Company is regularly reviewed by industry rating agencies A.M. Best and Standard & Poor's and currently has ratings of A (stable) and A- (stable) respectively. Standard & Poor's has affirmed the Company's rating as at 20 October 2010. EIG is a public limited company and intermediate holding company and is the Company's immediate parent company. EIG is, in turn, a wholly owned subsidiary of ATL which is the ultimate parent company of the Group. ATL is a company incorporated in England with liability limited by guarantee and is a registered charity. Since 1972, the Group has provided both charitable grants and dividends to ATL out of its available profits. In 2009 this donation was £8.5 million, which put the Company in the top ten UK corporate donors. The support of the Group since ATL's establishment in 1972 has enabled ATL to make more than £80 million of charitable donations.

Financial Highlights

Over the five years to 2009, cumulative profits before tax of £270 million have been generated, despite the impact of the 2008 stock market crash. Over the same period the general insurance business has generated profits of £35 million and a combined operating ratio of 97 per cent. and shareholders' funds have increased by 88 per cent. The Company also has a track record of robust cash flow generation, prudent reserving and capital strength, holding over 3.9 times the FSA regulatory capital resource requirement, as reported on in the Company's 31 December 2009 FSA return.

Reasons for the Placing and Use of Proceeds

To date, the Company's ability to meet its regulatory capital requirements has been primarily supported by utilising retained profits generated by its insurance and investment activities. The Board seeks to maintain a strong capital position over and above minimum regulatory capital requirements in order to provide the Company with flexibility in its operations, protection for its customers and also to support the Company's credit ratings of A (stable) and A- (stable) from A.M. Best and Standard & Poor's respectively.

The Board believes that under the current regulatory regime the Company would be able to sustain good growth in its existing business areas based on its current capital position and through internal capital generation. However, the financial services regulatory environment continues to evolve and following the implementation of Solvency II, it is likely that minimum capital adequacy levels will increase. Although the final framework of Solvency II is still uncertain and the new regime is currently not due to come into place until 2013, the Board believes that it is prudent to increase the Company's regulatory capital in advance of the anticipated changes and that the Placing will provide a significant degree of additional comfort in this regard.

The Board also believes that the Company is well placed to take advantage of future growth opportunities in its core insurance markets. The Placing is intended to strengthen further the Company's capital position (which will be increased by the level of the proceeds from the issue of up to 40 million Additional NCIP Shares) and ensure a continuing prudent buffer against any increase in minimum regulatory capital requirements once Solvency II is implemented. This is likely to enable Ecclesiastical to sustain good growth as it would provide increased resources and flexibility, allowing the Company to take advantage of any improvement in insurance market conditions.

In recent years the Company has acquired a number of insurance brokers in order to diversify its earnings stream and to obtain the benefit of economic exposure to different parts of the insurance value chain. The Company acquired 100 per cent. of South Essex Insurance Brokers Limited on 31 March 2008.

The proceeds of the Placing will more effectively allow the Company to look for additional opportunities in order for the Company to further diversify its earnings.

The purpose of this Placing is, therefore, to enable the Group to continue to take advantage of growth opportunities available to it in its core markets, whilst also preparing the Company for potentially increased future regulatory capital requirements.

Current Trading and Outlook

For the half year ended 30 June 2010, the Group reported that its general insurance results had been adversely impacted by an increase in liability claim frequency and in particular in relation to a number of catastrophic events, including the earthquake in Chile on 27 February 2010, which impacted the Group's London Market business.

Although additional claims experience has remained at a higher level than in 2009, the impact of one-off events has lessened in recent months. Combined with an improvement in investment market conditions since the half year, this has resulted in a more positive outlook for the full year, although the Group is still operating under challenging market conditions.

In line with Group strategy to reduce non-core operations, the Group's London Market business ceased underwriting on 30 September 2010 and will run off over the next few years. As announced on 1 December 2010, Ecclesiastical Life Limited has disposed of a majority part of its life business to a third party, as life business is an insurance sector which carries more specific risk and is more heavily regulated than general insurance.

The Group's strategy is to focus on further penetration of its target markets from a stronger and more diversified position, and to take advantage of market opportunities as and when insurance premium rates increase.

The Board's strategy is to run the Company conservatively and retain its reputation and high standards of integrity. The Group expects to continue producing charitable grants for the Church and not-for-profit sector. The Group will continue to focus on profitability and growth without compromise to its existing strong capital position. The Board believes that there is potential to expand the Group's market share in the Charity, Heritage, Education and Care markets by utilising the Group's core property insurance competencies in these markets. At the same time the Group will continue to work to protect and further expand its market share in the Faith sector.

Issued Share Capital

Following Admission, the total number of NCIP Shares in issue will be 106,450,000. The Company also has 140,271,190 Ordinary Shares of 10p each in issue.

NCIP Shares

The Company currently has 66,450,000 NCIP Shares in issue which are traded and listed on the Official List of the London Stock Exchange with a Standard Listing. The NCIP Shares are entitled to a 8.625 per cent. dividend each year out of the distributable profits of the Company, unless the Board considers the Company's profits to be insufficient. The NCIP Shares do not carry voting rights in ordinary circumstances and the non-cumulative dividend payments are made bi-annually. The Company has always made the bi-annual dividend payments on the NCIP Shares.

Application will be made for the Additional NCIP Shares to be admitted to listing on the Official List pursuant to Chapter 14 of the Listing Rules, which sets out the requirements for Standard Listings. The Company intends to comply with the Listing Principles set out in Chapter 7 of the Listing Rules, notwithstanding that they only apply to companies which obtain a Primary Listing on the Official List. The Company is not, however, formally subject to such Listing Principles.

Dividend

The dividend entitlement of holders of existing NCIP Shares will not be affected by the issue of the Additional NCIP Shares.

Dividend cover

Immediately following the Placing, excluding the effect of the Placing on future profits before dividend payments, there will be a reduction in the NCIP dividend cover from available Group profits, as the total annual NCIP dividend will increase from approximately £5.7 million to £9.2 million. Based on 2009 Group profit after tax, this would equate to a reduction in dividend cover from 9.8 times to 6.1 times. In addition cumulative retained profits of the Group as at 31 December 2009 provide approximately 29 times cover for the increased annual level of NCIP dividend following the Placing.

Regulatory capital

The capital of the Group which is available to meet its current and future regulatory capital requirements will increase as a result of the Placing.

Gearing

Based on the Group shareholders' funds at 31 December 2009, the NCIP Share capital as a proportion of overall shareholders' funds will increase by approximately 7.7 percentage points immediately following the Placing. This will reduce the debt to shareholders' funds ratio of the Group.

Voting dilution

As the NCIP Shares carry no voting rights under ordinary circumstances, the Placing will not be dilutive to existing NCIP Shareholders.

APPENDIX I: TERMS AND CONDITIONS OF THE PLACING

Ecclesiastical Insurance Office plc

("the Company")

Proposed Placing of up to 40 million 8.625 per cent.

Non-Cumulative Irredeemable Preference Shares of £1 each

Terms and Conditions of the Placing

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN AND THE INFORMATION CONTAINED HEREIN, IS NOT FOR PUBLICATION OR FOR RELEASE, OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT AND REFERRED TO HEREIN ARE DIRECTED ONLY AT PERSONS SELECTED BY COLLINS STEWART EUROPE LIMITED ("COLLINS STEWART" AND THE "PLACING AGENT") WHO ARE "INVESTMENT PROFESSIONALS" FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "FPO") OR "HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC" FALLING WITHIN ARTICLE 49(2) OF THE FPO OR TO PERSONS TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO.

THE 8.625 PER CENT. NON-CUMULATIVE IRREDEEMABLE PREFERENCE SHARES OF £1 EACH THAT ARE THE SUBJECT OF THE PLACING (THE "ADDITIONAL NCIP SHARES") ARE NOT BEING OFFERED OR SOLD TO ANY PERSON IN THE EUROPEAN UNION, OTHER THAN TO "QUALIFIED INVESTORS" AS DEFINED IN ARTICLE 2.1(E) OF DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE"), WHICH INCLUDES LEGAL ENTITIES WHICH ARE REGULATED BY THE FINANCIAL SERVICES AUTHORITY (THE "FSA") OR ENTITIES WHICH ARE NOT SO REGULATED WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES, OR TO DIRECTORS AND EMPLOYEES OF THE COMPANY IN COMPLIANCE WITH THE EXEMPTION CONTAINED IN RULE 1.2.2(5) OF THE PROSPECTUS RULES MADE BY THE UK LISTING AUTHORITY (THE "PROSPECTUS RULES") PURSUANT TO AN EMPLOYEE OFFERING (THE "EMPLOYEE OFFERING").

The Additional NCIP Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the Additional NCIP Shares is being made in the United States. The Placing (as defined below) is being made outside the United States in offshore transactions (as defined in Regulation S under the Securities Act ("Regulation S")) meeting the requirements of Regulation S under the Securities Act. Persons receiving this Announcement (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing.

This Announcement does not constitute an offer to sell or issue or a solicitation of an offer to buy or subscribe for Additional NCIP Shares in any jurisdiction including, without limitation, the United States, Canada, Australia, Japan or any other jurisdiction in which such offer or solicitation is or may be unlawful (a "Prohibited Jurisdiction"). This Announcement and the information contained herein are not for publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

Any indication in this Announcement of the price at which the 8.625 per cent. non-cumulative irredeemable preference shares ("NCIP Shares") have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that priority dividends paid on each NCIP Share for the current or future financial years would necessarily match the historical published priority dividends paid on each NCIP Share in respect of any dividend payment period.

The distribution of this Announcement, the Placing and/or issue of the Additional NCIP Shares in certain jurisdictions may be restricted by law and/or regulation. No action has been taken by the Company, Collins Stewart or any of their respective Affiliates (as defined below) that would permit an offer of the Additional NCIP Shares or possession or distribution of this Announcement or any other publicity material relating to such Additional NCIP Shares in any jurisdiction where action for that purpose is required. Persons receiving this Announcement are required to inform themselves about and to observe any such restrictions.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

Collins Stewart Europe Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Ecclesiastical Insurance Office plc and for no one else in connection with the Placing and will not be responsible to anyone other than Ecclesiastical Insurance Office plc for providing the protections afforded to clients of Collins Stewart Europe Limited or for affording advice in relation to the Placing, or any other matters referred to herein.

By participating in the Placing, each person who is invited to and who chooses to participate in the Placing (a "Placee") by making an oral offer to take up Additional NCIP Shares is deemed to have read and understood this Announcement in its entirety, to be making an offer and acquiring Additional NCIP Shares on the terms and conditions herein, and to be providing the representations, warranties, undertakings, agreements and acknowledgements contained herein.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF A PURCHASE OF ADDITIONAL NCIP SHARES.

Details of the Placing Agreement and the Additional NCIP Shares

The Company has entered into a placing agreement (the "Placing Agreement") with Collins Stewart, under which Collins Stewart has, subject to the terms set out therein, agreed to use reasonable endeavours, as agents of the Company, to procure Placees for the Additional NCIP Shares (the "Placing").

The Additional NCIP Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with each other.

The Additional NCIP Shares will be issued free of any encumbrance, lien or other security interest.

Application for listing and admission to trading

Application will be made to the FSA (as the competent authority for listing) for admission of the Additional NCIP Shares to the standard segment of the Official List maintained by the FSA in accordance with section 74(1) of the Financial Services and Markets Act 2000 ("FSMA") for the purposes of part VI of FSMA and to the London Stock Exchange plc (the "London Stock Exchange") for admission to trading of the Additional NCIP Shares on the London Stock Exchange's market for listed securities ("Admission"). It is expected that Admission will become effective and that dealings will commence on 16 December 2010, and in any event no later than 31 December 2010.

Participation in, and principal terms of, the Placing

Each of Collins Stewart and its respective Affiliates (as defined below) is entitled to participate as a Placee.

A single price (the "Placing Price") will be payable to Collins Stewart by all Placees.

Prospective Placees will be identified and contacted by Collins Stewart.

The Placing is expected to close at 16.30 on 10 December 2010. However, the Company may, with the prior approval of Collins Stewart, bring forward or postpone this date. In the event such date is changed, the Company will notify investors who have applied for Additional NCIP Shares either by post, by electronic mail or by the publication of a notice through a regulatory information service provider to the London Stock Exchange.

Collins Stewart will re-contact and confirm orally to Placees the size of their respective allocations and a trade confirmation will be dispatched as soon as possible thereafter. Collins Stewart's oral confirmation of the size of allocations and each Placee's oral commitments to accept the same will constitute a legally binding agreement pursuant to which each such Placee will be required to accept the number of Additional NCIP Shares allocated to the Placee at the Placing Price and otherwise on the terms and subject to the conditions set out herein and in the Prospectus.

Collins Stewart reserves the right to scale back the number of Additional NCIP Shares to be subscribed by any Placee. The Placing Agent also reserves the right not to accept offers to subscribe for Additional NCIP Shares or to accept such offers in part rather than in whole. Collins Stewart shall be entitled to effect the Placing by such method as it shall in its sole discretion determine. To the fullest extent permissible by law, neither Collins Stewart or any holding company thereof, nor any subsidiary, branch or affiliate of Collins Stewart (each an "Affiliate") nor any person acting on behalf of any of the foregoing shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither of Collins Stewart nor any Affiliate thereof nor any person acting on its behalf shall have any liability to Placees in respect of its conduct of the Placing. No commissions will be paid to Placees or directly by Placees in respect of any Additional NCIP Shares.

Each Placee's obligations will be owed to the Company and to Collins Stewart. Following the oral confirmation referred to above, each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Collins Stewart, to pay to Collins Stewart (or as Collins Stewart may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Additional NCIP Shares such Placee has agreed to acquire. The Company shall allot such Additional NCIP Shares to each Placee following each Placee's payment to Collins Stewart of such amount.

All obligations of Collins Stewart under the Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing".

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms.

The obligations of Collins Stewart under the Placing Agreement are conditional, inter alia, on:

1. Admission occurring by no later than 8.00 a.m. on 31 December 2010;

2. the Company delivering, by no later than 5.00 p.m. on the day prior to Admission, to Collins Stewart a certificate confirming, inter alia, that none of the representations and warranties given by the Company in the Placing Agreement was untrue, inaccurate or misleading when made or has at any time since that date become untrue, inaccurate or misleading in any material respect by reference to the facts and circumstances existing since that date and confirming that there has been no significant change affecting any matter in the Prospectus and no new significant matter has occurred which would require the publication of a supplementary prospectus;

3. the Company having complied with all its obligations under the Placing Agreement which fall to be performed or satisfied on or prior to Admission; and

4. the Company allotting the Additional NCIP Shares, prior to and conditionally only on Admission.

If (a) the conditions are not fulfilled (or to the extent permitted under the Placing Agreement waived by Collins Stewart), or (b) the Placing Agreement is terminated including in the circumstances specified below, the Placing will lapse and each Placee's rights and obligations hereunder shall cease and determine at such time and no claim may be made by a Placee in respect thereof. Collins Stewart shall not have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision it may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition in the Placing Agreement or in respect of the Placing generally.

By participating in the Placing, each Placee agrees that its rights and obligations hereunder terminate only in the circumstances described above and if the Placing Agreement is terminated including in the circumstances described in "Right to terminate under the Placing Agreement" below, and will not be capable of rescission or termination by the Placee.

Right to terminate under the Placing Agreement

Collins Stewart may, in its absolute discretion, terminate the Placing Agreement by giving notice to the Company at any time prior to Admission if, inter alia:

a) any of the warranties or any statement made in any of the marketing documents (which includes the Prospectus) is untrue, inaccurate or misleading in any material respect when made or becomes untrue, inaccurate or misleading in any material respect by reference to the facts and circumstances existing from time to time or any matter arises which might reasonably be expected to give rise to a claim under the indemnity in the Placing Agreement;

b) there is a material breach by the Company of any of its obligations under the Placing Agreement (to the extent such obligations fall to be performed prior to Admission); or

c) in the good faith opinion of Collins Stewart, there has been a material adverse change (or any development involving a material adverse change) in the financial position or prospects of the Company including any adverse change in the credit rating of the Company or indication that such a change is reasonably likely; or

d) in the good faith opinion of Collins Stewart, there has been: a change in national or international financial, political, economic or market conditions; an incident of terrorism, outbreak or escalation of hostilities, or declaration by the UK or the US of a national emergency or war or any other analogous calamity or crisis; a suspension or limitation in trading of securities generally on the London or New York stock exchanges; the declaration of a banking moratorium in London or by the US federal or New York State authorities or any material disruption to commercial banking or securities settlement or clearance services in the US or the UK, in each case being likely to have an adverse effect on the financial or trading position or the business or prospects of the Group which is material in the context of Group as a whole or which renders the Placing impracticable or inadvisable; or

e) there is a significant change affecting any matter contained in the Prospectus or a significant new matter arising requiring a Supplementary Prospectus to be published.

By participating in the Placing, each Placee agrees with Collins Stewart that the exercise by Collins Stewart of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Collins Stewart and that Collins Stewart need not make any reference to the Placee in this regard and that, to the fullest extent permitted by law, Collins Stewart shall not have any liability whatsoever to the Placee in connection with any such exercise.

Prospectus

The Prospectus has been published in connection with the Placing and Admission. The Prospectus has been approved by the UK Listing Authority. A Placee may only rely on the information contained in the Prospectus in deciding whether or not to participate in the Placing.

Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix) and the Prospectus. Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement (including this Appendix) is exclusively the responsibility of the Company and that the Prospectus is exclusively the responsibility of the Company and the persons stated therein as accepting responsibility for the Prospectus and confirms to Collins Stewart and the Company that it has neither received nor relied on any information, representation, warranty or statement made by or on behalf of Collins Stewart (other than the amount of the relevant Placing participation in the oral confirmation given to Placees and the trade confirmation referred to below), any of its Affiliates, any persons acting on its behalf or the Company other than the Prospectus and neither Collins Stewart nor any of its Affiliates, nor any persons acting on its behalf, nor the Company will be liable for the decision of any Placee to participate in the Placing based on any other information, representation, warranty or statement which the Placee may have obtained or received (regardless of whether or not such information, representation, warranty or statement was given or made by or on behalf of any such persons) other than the Prospectus. By participating in the Placing, each Placee acknowledges to and agrees with Collins Stewart for itself and as agent for the Company that, except in relation to the information contained in this Announcement and the Prospectus, it has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Additional NCIP Shares (ISIN GB0003035382) following Admission will take place within the CREST system, using the DVP mechanism, subject to certain exceptions. Collins Stewart reserves the right to require settlement for and delivery of the Additional NCIP Shares to Placees by such other means that it deems necessary, if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement or in the Prospectus or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee allocated Additional NCIP Shares in the Placing will be sent a trade confirmation stating the number of Additional NCIP Shares allocated to it, the Placing Price, the aggregate amount owed by such Placee to Collins Stewart and settlement instructions. Placees should settle against CREST ID: 288. It is expected that such trade confirmation will be despatched on 10 December 2010 and the trade date will be 13 December. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which it has in place with Collins Stewart.

It is expected that settlement will be on 16 December 2010 on a T+3 basis in accordance with the instructions set out in the trade confirmation unless otherwise notified by Collins Stewart.

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of 2 percentage points above the base rate of Barclays Bank Plc.

Each Placee is deemed to agree that if it does not comply with these obligations, Collins Stewart may sell any or all of the Additional NCIP Shares allocated to the Placee on such Placee's behalf and retain from the proceeds, for its own account and profit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The Placee will, however, remain liable for any shortfall below the aggregate amount owed by such Placee and it may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Additional NCIP Shares on such Placee's behalf.

If Additional NCIP Shares are to be delivered to a custodian or settlement agent, the Placee should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation.

Insofar as Additional NCIP Shares are registered in the Placee's name or that of its nominee or in the name of any person for whom the Placee is contracting as agent or that of a nominee for such person, such Additional NCIP Shares will, subject as provided below, be so registered free from any liability to PTM levy, stamp duty or stamp duty reserve tax. If there are any circumstances in which any other stamp duty or stamp duty reserve tax is payable in respect of the issue or transfer of the Additional NCIP Shares, neither Collins Stewart nor the Company shall be responsible for the payment thereof. Placees will not be entitled to receive any fee or commission in connection with the Placing.

Representations and Warranties

By participating in the Placing, each Placee (and any person acting on such Placee's behalf):

1. represents and warrants that it has read and understood this Announcement (including this Appendix) and the Prospectus in its entirety and that its purchase of the Additional NCIP Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained herein;

2. agrees to indemnify on an after-tax basis and hold harmless each of the Company, Collins Stewart, their respective Affiliates and any person acting on its behalf from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

3. acknowledges that the NCIP Shares of the Company in issue at the date of this Announcement are listed on the standard segment of the Official List of the UK Listing Authority, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the FSA (collectively, the "Exchange Information") and that the Placee is able to obtain or access the Exchange Information without undue difficulty. Each Placee further acknowledges that as the NCIP Shares are listed on the standard segment of the Official List of the UK Listing Authority, the Company is under no obligation to adhere to those provisions of the Listing Rules which apply only to companies with shares listed on the premium segment;

4. acknowledges that neither Collins Stewart, nor any of its Affiliates nor any person acting on their behalf has provided, and will not provide it with any material or information regarding the Additional NCIP Shares or the Company other than in this Announcement; nor has it requested Collins Stewart, any of its Affiliates or any person acting on their behalf to provide it with any such material or information;

5. acknowledges that the content of this Announcement and the Prospectus is exclusively the responsibility of the Company and the persons stated therein as accepting responsibility for the Prospectus and that neither Collins Stewart, nor any of its Affiliates nor any person acting on their behalf will be responsible for or shall have any liability for any information, representation or statement relating to the Company contained in this Announcement (including this Appendix) or the Prospectus or any information previously published by or on behalf of the Company and neither Collins Stewart, nor any of its Affiliates nor any person acting on their behalf will be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement, the Prospectus or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing to subscribe for or acquire the Additional NCIP Shares is contained in this Appendix and the Prospectus, such information being all that it deems necessary to make an investment decision in respect of the Additional NCIP Shares, and that it has relied on its own investigation with respect to the Additional NCIP Shares and the Company in connection with its decision to subscribe for or acquire the Additional NCIP Shares and acknowledges that it is not relying on any investigation that Collins Stewart, any of its Affiliates or any person acting on their behalf may have conducted with respect to the Additional NCIP Shares or the Company and none of such persons has made any representations to it, express or implied, with respect thereto;

6. acknowledges that it has not relied on any information relating to the Company contained in any research reports prepared by Collins Stewart, its Affiliates or any person acting on its or any of its Affiliates' behalf and understands that (i) none of Collins Stewart, any of its Affiliates nor any person acting on their behalf has or shall have any liability for public information or any representation; (ii) none of Collins Stewart, any of its Affiliates nor any person acting on their behalf has or shall have any liability for any additional information that has otherwise been made available to such Placee, whether at the date of publication, the date of this Appendix or otherwise; and that (iii) none of Collins Stewart, any of its Affiliates nor any person acting on their behalf makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such information, whether at the date of publication, the date of this Announcement or otherwise;

7. represents and warrants that (i) it (or the beneficial owner, as applicable) is entitled to acquire the Additional NCIP Shares under the laws and regulations of all relevant jurisdictions which apply to it (or the beneficial owner, as applicable); (ii) it (or the beneficial owner, as applicable) has fully observed such laws and regulations and obtained all such governmental and other guarantees and other consents and authorities which may be required thereunder and complied with all necessary formalities; (iii) it (or the beneficial owner, as applicable) has all necessary capacity to commit to participation in the Placing and to perform its (or the beneficial owners, as applicable) obligations in relation thereto and will honour such obligations; (iv) it (or the beneficial owner, as applicable) has paid any issue, transfer or other taxes due in connection with its (or the beneficial owners, as applicable) participation in any territory and (v) it (or the beneficial owner, as applicable) has not taken any action which will or may result in the Company, Collins Stewart, any of their Affiliates or any person acting on their behalf being in breach of the legal and/or regulatory requirements of any territory in connection with the Placing;

8. represents and warrants that the allocation, allotment, issue or transfer and delivery to the Placee, or the person specified by the Placee for registration as holder, of Additional NCIP Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Additional NCIP Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Additional NCIP Shares into a clearance system;

9. represents and warrants that it understands that the Additional NCIP Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States (as defined below) and that the Company has not been registered as an "investment company" under the United States Investment Company Act of 1940, as amended;

10. represents and warrants that it has not offered or sold and will not offer or sell any Additional NCIP Shares to persons in the United Kingdom prior to Admission except to persons falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive, or to directors and employees of the Company in compliance with the exemption contained in Rule 1.2.2(5) of the Prospectus Rules;

11. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Additional NCIP Shares in circumstances in which it is permitted to do so pursuant to section 21 of FSMA;

12. represents and warrants that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Additional NCIP Shares in, from or otherwise involving the United Kingdom;

13. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Anti-terrorism Crime and Security Act 2001 and the Money Laundering Regulations (2007) (the "Regulations") and, if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

14. represents and warrants that it is (a) a person falling within Article 19(5) of the FPO or (b) a person falling within Article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Additional NCIP Shares that are allocated to it for the purposes of its business;

15. represents and warrants that it is a qualified investor as defined in section 86(7) of FSMA, being a person falling within Article 2.1(e)(i), (ii) or (iii) of the Prospectus Directive;

16. undertakes that it (and any person acting on its behalf) will pay for the Additional NCIP Shares acquired by it in accordance with this Announcement on the due time and date set out herein against delivery of such Additional NCIP Shares against it, failing which the relevant Additional NCIP Shares may be placed with other Placees or sold as Collins Stewart may, in its absolute discretion, determine and it will remain liable for any shortfall below the net proceeds of such sale and the placing proceeds of such Additional NCIP Shares and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties due pursuant to the terms set out or referred to in this Appendix) which may arise upon the sale of such Placee's Additional NCIP Shares on its behalf;

17. acknowledges that none of Collins Stewart, any of its Affiliates nor any person acting on their behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Placing, and acknowledges that neither Collins Stewart, any of its Affiliates nor any person acting on their behalf has any duties or responsibilities to it for providing advice in relation to the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the exercise or performance of any of Collins Stewart's rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;

18. undertakes that (i) the person whom it specifies for registration as holder of the Additional NCIP Shares will be (a) the Placee or (b) the Placee's nominee or (c) an employee or director of the Company or any of its subsidiaries participating in the Placing pursuant to the Employee Offering, as the case may be, (ii) neither Collins Stewart nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement and (iii) the Placee and any person acting on its behalf agrees to subscribe for or acquire the Additional NCIP Shares on the basis that the Additional NCIP Shares will be allotted to the CREST stock account of Collins Stewart which will hold them as settlement agent as nominee for the Placees until settlement in accordance with its standing settlement instructions with payment for the Additional NCIP Shares being made simultaneously upon receipt of the Additional NCIP Shares in the Placee's stock account on a delivery versus payment basis;

19. acknowledges that any agreements entered into by it pursuant to these terms and conditions (and any non-contractual obligations connected with such agreements) shall be governed by and construed in accordance with the laws of England and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract;

20. acknowledges that it irrevocably appoints any director of Collins Stewart as its agent for the purposes of executing and delivering to the Company and/or its registrars any documents on its behalf necessary to enable it to be registered as the holder of any of the Additional NCIP Shares agreed to be taken up by it under the Placing;

21. represents and warrants that it is not a resident of any Prohibited Jurisdiction and acknowledges that the Additional NCIP Shares have not been and will not be registered nor will a prospectus be cleared in respect of the Additional NCIP Shares under the securities legislation of any Prohibited Jurisdictions and, subject to certain exceptions, may not be offered, sold, taken up, renounced, delivered or transferred, directly or indirectly, within any Prohibited Jurisdiction;

22. represents and warrants that any person who confirms to Collins Stewart on behalf of a Placee an agreement to subscribe for or acquire Additional NCIP Shares and/or who authorises Collins Stewart to notify the Placee's name to the Company's registrar, has authority to do so on behalf of the Placee;

23. acknowledges that the agreement to settle each Placee's acquisition of Additional NCIP Shares (and/or the acquisition of a person for whom it is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to an acquisition by it and/or such person direct from the Company of the Additional NCIP Shares in question. Such agreement assumes that the Additional NCIP Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer the Additional NCIP Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in the Additional NCIP Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Collins Stewart will be responsible. If this is the case, the Placee should take its own advice and notify Collins Stewart accordingly;

24. acknowledges that the Additional NCIP Shares will be issued and/or transferred subject to the terms and conditions set out in this Appendix and otherwise as stated in the Prospectus;

25. acknowledges that when a Placee or any person acting on behalf of the Placee is dealing with Collins Stewart any money held in an account with Collins Stewart on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the relevant rules and regulations of the FSA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Collins Stewart money in accordance with the client money rules and will be used by Collins Stewart in the course of its business; and the Placee will rank only as a general creditor of Collins Stewart (as the case may be);

26. acknowledges and understands that the Company, Collins Stewart, and others will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, undertakings and acknowledgements;

27. acknowledges that until 40 days after the later of the commencement of the Placing and the closing date, an offer or sale of Additional NCIP Shares within the United States by any dealer (whether or not participating in the Placing) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the Securities Act or pursuant to another exemption from registration under the Securities Act to a person that is a "qualified purchaser" (as defined in Section 2(a)(51) of the United States Investment Company Act of 1940, as amended); and

28. acknowledges that the basis of allocation will be determined by Collins Stewart at its absolute discretion. The right is reserved to reject in whole or in part and/or scale back any participation in the Placing.

The acknowledgements, agreements, undertakings, representations and warranties referred to above are given to each of the Company and Collins Stewart (for its own benefit and, where relevant, the benefit of its Affiliates and any person acting on its behalf) and are irrevocable.

No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Additional NCIP Shares are issued or transferred (as the case may be) into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee.

Any arrangements to issue or transfer the Additional NCIP Shares into a depositary receipts system or a clearance service or to hold the Additional NCIP Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Additional NCIP Shares in a clearance service, or any arrangements subsequently to transfer the Additional NCIP Shares, may give rise to UK stamp duty and/or stamp duty reserve tax, for which neither the Company nor Collins Stewart will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Additional NCIP Shares has given rise to such stamp duty or stamp duty reserve tax undertakes to pay such stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Collins Stewart in the event that any of the Company and/or Collins Stewart has incurred any such liability to stamp duty or stamp duty reserve tax.

In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Additional NCIP Shares or the agreement by them to subscribe for or acquire any Additional NCIP Shares.

All times and dates in this Appendix may be subject to amendment. Collins Stewart shall notify the Placees and any person acting on behalf of the Placees of any such changes.

This Announcement has been issued by the Company and is the sole responsibility of the Company.

The rights and remedies of Collins Stewart and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise or partial exercise of one will not prevent the exercise of others.

Each Placee may be asked to disclose in writing or orally to Collins Stewart:

(a) if he is an individual, his nationality; or

(b) if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.

Appendix II: Definitions