INC.L Regulatory News (INC)

13 Dec 2006 07:02

Avanti Screenmedia Group PLC13 December 2006 FOR RELEASE 7.00 a.m. 13th December 2006 Avanti Screenmedia Group plc ("Screenmedia") Intention to demerge Satellite Networks businessProposed placing of Ordinary shares and Notice of Extraordinary General Meeting Avanti Screenmedia Group plc (AIM: ASG.L), the UK satellite media and telecommunications business, today announces its intention to demerge its Satellite Networks business by way of a dividend in specie. The proposed demerger is expected to result in the admission to AIM of a new holding company of Avanti's Satellite Networks business, to be called Avanti Communications Group plc ("Communications"). The Board has recognised that the Screenmedia and Communications businesses are very different in terms of their activities, cash flow profiles and scale. In order to deliver the maximum potential from the two businesses, each needs strong, focused and specialised management. The demerger proposals will be subject, inter alia, to the approval of Avanti shareholders, tax clearances and to the admission to AIM of Avanti Communications Group plc. A further announcement relating to the demerger and the convening of an Extraordinary General Meeting to approve the demerger proposals will be made in due course. The demerger is expected to be completed in the first quarter of 2007. In order to provide both Screenmedia and Communications with additional working capital following the demerger, the Board intends to carry out a proposed placing of new ordinary shares prior to the demerger becoming effective. The Company has convened an Extraordinary General Meeting to be held on 8th January 2007 to propose the special resolution which would enable such a placing to be carried out. The proposed placing comprises 1,587,301 new ordinary shares of one pence each(the "Placing Shares"), (the "Placing") at 315 pence per Placing Share (the"Placing Price"). The Placing will raise approximately £5m before expenses andit is the current intention that the proceeds provide approximately £3.5 millionof working capital for Screenmedia with the remainder being made available toCommunications. Conditionally upon the passing of the special resolution,Caledonia Investments plc has committed to subscribe for up to the maximumnumber of shares in the Placing, being 1,587,301 new shares at a price of 315pence per share. The Placing will be conducted by Hoare Govett Limited ("Hoare Govett") inaccordance with the terms and conditions set out in the Appendix to thisannouncement. The Placing is also conditional upon, inter alia, the admission of the PlacingShares to trading on the Alternative Investment Market of the London StockExchange ("AIM") ("Admission") becoming effective by 8.00am on 9th January 2007(or by such later time and date as Hoare Govett and the Company may agree, butnot later than 8.00 am on 31st January 2007). The Placing is also conditional onthe placing agreement made between the Company and Hoare Govett not beingterminated prior to such date. The Placing Shares will be issued credited as fully paid and will rank paripassu in all respects with Avanti's existing ordinary shares, including theright to receive all dividends and other distributions declared, made or paid(if any) after the allotment of the Placing Shares. Application will be made tothe London Stock Exchange for the admission of the Placing Shares to trading onAIM. It is expected that settlement will occur, and dealings in the Placing willcommence, on 9th January 2007. The commitment in relation to the proposed placing by Caledonia Investments plcconstitutes a related party transaction under the AIM Rules. The directors ofthe Company (other than William Wyatt who is a related party by virtue of hisconnection with Caledonia Investments plc) consider, having consulted with theCompany's nominated adviser, that the terms of the transaction with CaledoniaInvestments plc are fair and reasonable insofar as the Company's shareholdersare concerned. Boards and Management On demerger, it is intended that Mick Desmond will become Non-Executive Chairman of Avanti Screenmedia Group plc and Simon Rees will join its board as a Non-Executive Director. Mick Desmond has been a Non-Executive Director since November 2005 and, as former Chief Executive of ITV Broadcasting, is well placed to lead the board. Over the past three years Simon Rees has been an entrepreneur in the media industry prior to which he was Chief Executive of Mindshare UK, the Media Planning Agency owned by WPP. He brings with him a wealth of experience in the retail media sector. It is proposed that Stuart Chambers, currently Managing Director of Avanti'sMedia business, will join the board as Chief Executive of Avanti ScreenmediaGroup plc. Stuart's experience in this emerging medium is impressive havingworked with blue chip retailers and brand owners who have recognized thein-store communication value of this medium for the last 6 years. Avanti Screenmedia Group plc expects to appoint at least one further independent non-executive director to its board. Gary Truman will remain temporarily on the board of Avanti Screenmedia Group plc as Finance Director to ensure a smooth transition period with his replacement. David Williams and David Bestwick will leave the group to take up their posts at the demerged Avanti Communications Group plc upon completion. Upon the demerger, it is intended the boards of the two companies will comprise: Avanti Screenmedia Group plc Avanti Communications Group plcChairman Mick Desmond John BrackenburyChief Executive Stuart Chambers David WilliamsFinance Director Gary Truman, (interim pending his Gary Truman replacement)Executive - David BestwickDirectorNon-Executive John Brackenbury Mick DesmondDirectorNon-Executive Richard Vos Richard VosDirectorNon-Executive Simon Rees Alan FosterDirectorNon-Executive Roland Fisher William WyattDirector Background on the two businesses The historical divisional split of revenues and gross profits are set out below: 2005 (£) 2006 (£)TurnoverMedia 4,768,611 3,131,770Networks 3,671,831 9,719,927 Gross profitMedia 2,917,478 875,557Networks 2,245,920 8,595,749 Screenmedia Avanti's media business operates in a new and growing market niche, providing point of sale advertising and promotions on digital screens. The key goal of that business has always been to persuade retail operators that screenmedia is a powerful way to promote products and justifies their investment in it. Market acceptance to date has been slower than expected. However in the current financial year, Avanti was awarded a pivotal contract with SPAR, and is in the late stages of a pilot project with Woolworths, which is currently exceeding expectations. Thus the group has achieved its aim of proving its case to retailers who are now buying. As announced previously, success in winning the rights to sell Premiership football advertising on the Setanta Sports pub channels is also expected to drive revenues strongly over the next three years. The Screenmedia business now needs to focus strongly on increasing profitable sales in the retail sector, selling its services to retailers on the basis of the ability to generate an increase in their like for like sales. Communications The Networks business currently provides technical consulting in satellite communications and is deploying advanced satellite broadband services through a network of resellers around Europe and will grow this business prior to the launch of its satellite, called HYLAS in December 2008. Moving from a service provider to a satellite operator changes the business dramatically. The satellite operator business has very high barriers to entry, few competitors, high utilisation rates and high pricing and gross margins. The Communications business model is to sell wholesale bandwidth to telecoms and television service operators, a market in which Avanti expects an excess of demand over supply. In FY 2006 Avanti sold some satellite capacity and associated design services, representing 7.5% of its total satellite capacity, for £25m thereby demonstrating the revenue potential of its satellite (costing £75m). Avanti is now building its sales infrastructure but also has opportunities to seize upon its advantages to generate further satellite projects. Commenting on the demerger, David Williams, Chief Executive said: "This is avery positive step marking the progress towards maturity for both businesses.Within Screenmedia, we have created a market leading business capable of scale,however its growing position in the media landscape means that it needs morefocussed management led by media experts. In this context the leadership of MickDesmond is very welcome and the business has developed well under StuartChambers who has overseen its transition from a niche advertising contractor toa provider of high value services to retailers such as SPAR and Woolworths. Asthe new Chief Executive, Stuart will focus on expanding our penetration of theUK retail market with services which activate purchases at the point of sale. Ihave every confidence that our investment will be looked after very well.With regard to Communications, David Bestwick and I are satellite experts and assuch we are best focussed on growing and expanding our activities in that area.We have a very clear vision of the scale that it can achieve: we think we cangrow Avanti Communications Group plc into a top five global satellite operator." Enquiries: Avanti Screenmedia Group plc 020 7749 1600David Williams, Chief Executive Hoare Govett 020 7678 8000Lee Morton Smithfield 020 7903 0676Sara MusgraveTania Wild THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, IS NOT FOR RELEASE, OR PUBLICATION ORDISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES,CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR AUSTRALIA Hoare Govett, which is authorised and regulated by the Financial ServicesAuthority, is acting exclusively for the Company and for no one else solely inconnection with the Placing and will not be responsible to anyone other than theCompany for providing the protections afforded to the customers of Hoare Govettor for providing advice in relation to the Placing. Past performance is no guide to future performance and persons needing adviceshould consult an independent financial adviser. This Announcement (including the Appendix) does not constitute an offer to sellor issue or the solicitation of an offer to buy or subscribe for ordinary sharesof 1 pence each in the capital of the Company (the "Ordinary Shares") in theUnited States, Canada, the Republic of South Africa, Japan or Australia or inany other jurisdiction in which such offer or solicitation is or may be unlawfuland the information contained herein is not for release, publication ordistribution to persons in the United States, Canada, the Republic of SouthAfrica, Japan or Australia or any jurisdiction in which such publication ordistribution is unlawful. Persons receiving this Announcement (including,without limitation, custodians, nominees and trustees) must not distribute, mailor send it in, into or from the United States, or use the United States mails,directly or indirectly, in connection with the Placing, and by so doing mayinvalidate any related purported application for Placing Shares. The PlacingShares have not been and will not be registered under the Securities Act orunder the securities laws of any state or other jurisdiction of the UnitedStates, and, subject to certain exceptions from the appropriate requirements ofsuch jurisdiction, may not be offered or sold, resold or delivered, directly orindirectly in or into the United States, or to, or for the account or benefitof, US persons (as defined in Regulation S within the meaning of the SecuritiesAct). No public offering of the Placing Shares is being made in the UnitedStates. The Placing Shares are being offered and sold outside the United Statesin reliance on Regulation S. Until the expiration of 40 days after the closingof the Placing, an offer or sale of the Placing Shares sold in reliance uponRegulation S within the United States or to, or for the account or benefit of,US persons may violate the registration requirements of the Securities Act. The contents of this announcement are not to be construed as legal, financial ortax advice. If necessary, each recipient of this announcement should consulthis, her or its own legal adviser, financial adviser or tax adviser for legal,financial or tax advice. No representation or warranty, express or implied, is made by Hoare GovettLimited as to any of the contents of this Announcement for which the directorsof the Company are solely responsible. This Announcement contains certainstatements that are or may be forward-looking. These statements typicallycontain words such as ''intends'', ''expects'', ''anticipates'', ''estimates''and words of similar import. By their nature, forward-looking statements involverisk and uncertainty because they relate to events and depend on circumstancesthat will occur in the future and therefore undue reliance should not be placedon such forward-looking statements. Forward-looking statements speak only as ofthe date they are made and the Company undertakes no obligation to updatepublicly any of them in light of new information or future events except asrequired by the AIM Rules. There are a number of factors that could cause actualresults and developments to differ materially from those expressed or implied bysuch forward-looking statements. APPENDIX: IMPORTANT INFORMATION ON THE PLACING FOR PLACEES ONLY Eligible Participants in the Bookbuilding Process MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THISANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN AREDIRECTED ONLY TO PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TOINVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETSACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER") OR ARE PERSONS FALLINGWITHIN ARTICLE 49(1) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC") OF THE ORDER OR TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED AND AREPERSONS WHO FALL WITHIN PARAGRAPH (7) OF SECTION 86 OF THE FINANCIAL SERVICESAND MARKETS ACT 2000 (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANTPERSONS"). THIS ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SETOUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANTPERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THETERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANTPERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS DISTRIBUTINGTHIS ANNOUNCEMENT AND THIS APPENDIX MUST SATISFY THEMSELVES THAT IT IS LAWFUL TODO SO. THIS ANNOUNCEMENT AND THIS APPENDIX DOES NOT CONSTITUTE AN OFFER FOR SALE ORSUBSCRIPTION OF ANY SECURITIES IN AVANTI SCREENMEDIA GROUP PLC (THE "COMPANY"). THE NEW ORDINARY SHARES THAT ARE THE SUBJECT OF THE PLACING (THE "PLACINGSHARES") ARE NOT BEING OFFERED OR SOLD TO ANY PERSON IN THE EUROPEAN UNION,OTHER THAN TO QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIALSERVICES AND MARKETS ACT 2000 ("FSMA"), BEING PERSONS FALLING WITHIN ARTICLE 2.1(E)(I), (II) OR (III) OF DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE"),WHICH INCLUDES LEGAL ENTITIES WHICH ARE REGULATED BY THE FINANCIAL SERVICESAUTHORITY (THE "FSA") OR ENTITIES WHICH ARE NOT SO REGULATED WHOSE CORPORATEPURPOSE IS SOLELY TO INVEST IN SECURITIES. THE PLACING SHARES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTEREDUNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDERANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THEUNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR AS A PART OF ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACTAND THE SECURITIES LAWS OF ANY APPLICABLE STATE ABSENT REGISTRATION. Persons who are invited to and who choose to participate in the Placing("Placees") by making an oral offer to subscribe for Placing Shares, will bedeemed to have read and understood this Announcement (including this Appendix)in its entirety and to be making such offer on the terms and conditionscontained in this Appendix, and to be providing the representations, warranties,agreements, acknowledgements and undertakings, in each case as contained in thisAppendix. In particular, each Placee represents, warrants and acknowledges that it: is a Relevant Person; and is outside the United States and is acquiring the Placing Shares in an "offshoretransaction" (within the meaning of Regulation S under the Securities Act). This Announcement (including this Appendix) does not constitute an offer to sellor issue or the solicitation of an offer to buy or subscribe for ordinary sharesof 1 pence each in the capital of the Company (the "Ordinary Shares") in theUnited States, Canada, the Republic of South Africa, Japan or Australia or inany other jurisdiction in which such offer or solicitation is or may be unlawfuland the information contained herein is not for release, publication ordistribution to persons in the United States, Canada, the Republic of SouthAfrica, Japan or Australia or any jurisdiction in which such publication ordistribution is unlawful. Persons receiving this Announcement (including,without limitation, custodians, nominees and trustees) must not distribute, mailor send it in, into or from the United States, or use the United States mails,directly or indirectly, in connection with the Placing, and by so doing mayinvalidate any related purported application for Placing Shares. The PlacingShares have not been and will not be registered under the Securities Act orunder the securities laws of any state or other jurisdiction of the UnitedStates, and, subject to certain exceptions from the appropriate requirements ofsuch jurisdiction, may not be offered or sold, resold or delivered, directly orindirectly in or into the United States, or to, or for the account or benefitof, US persons (as defined in Regulation S within the meaning of the SecuritiesAct). No public offering of the Placing Shares is being made in the UnitedStates. The Placing Shares are being offered and sold outside the United Statesin reliance on Regulation S. Until the expiration of 40 days after the closingof the Placing, an offer or sale of the Placing Shares sold in reliance uponRegulation S within the United States or to, or for the account or benefit of,US persons may violate the registration requirements of the Securities Act. The distribution of this Announcement (including this Appendix) and the Placingand/or issue of Ordinary Shares in certain jurisdictions may be restricted bylaw. No action has been taken by the Company or Hoare Govett that would permitan offer of Ordinary Shares or possession or distribution of this Announcement(including this Appendix) or any other offering or publicity material relatingto such Ordinary Shares in any jurisdiction where action for that purpose isrequired. Persons into whose possession this Announcement (including thisAppendix) comes are required by the Company and Hoare Govett to informthemselves about and to observe any such restrictions. Details of the Placing Agreement and the Placing Shares Hoare Govett has today entered into a placing agreement (the "PlacingAgreement") with the Company whereby Hoare Govett has, on the terms and subjectto the conditions set out therein, agreed to use its reasonable endeavours asagent for and on behalf of the Company to procure Placees for the Placing Shares(the "Placing"). The Placing Shares will when issued be credited as fully paid and will rank paripassu in all respects with the existing issued Ordinary Shares, including theright to receive all dividends and other distributions declared, made or paid inrespect of such Ordinary Shares after the date of issue of the Placing Shares. Application for admission to trading Application will be made to the London Stock Exchange plc (the "London StockExchange") for admission to trading of the Placing Shares on AIM, a market ofthe London Stock Exchange ("Admission"). It is expected that Admission will takeplace and dealings in the Placing Shares will commence on 9 January 2007. Bookbuilding process Commencing today, Hoare Govett is conducting an accelerated bookbuilding process(the "Bookbuilding Process") to determine demand for participation in thePlacing. This Appendix gives details of the terms and conditions of, and themechanics of participation in, the Placing. No commissions will be paid toPlacees or by Placees in respect of their agreement to subscribe for any PlacingShares. Hoare Govett reserves the right to scale back the number of Placing Shares to besubscribed by any Placee in the event of an oversubscription under the Placing.Hoare Govett also reserves the right not to accept offers to subscribe PlacingShares or to accept such offers in part rather than in whole. The acceptance ofoffers shall be at the absolute discretion of Hoare Govett. Hoare Govett will beentitled to effect the Placing by such alternative method to the BookbuildingProcess as it may, in its sole discretion, determine. To the fullest extentpermissible by law, neither Hoare Govett nor any holding company thereof, norany subsidiary, branch or affiliate of Hoare Govett or any such holding company(each an "Affiliate") shall have any liability to Placees (or to any otherperson whether acting on behalf of a Placee or otherwise) in connection with thePlacing or the Bookbuilding Process or such alternative method of effecting thePlacing. In particular, neither Hoare Govett nor any Affiliate thereof shallhave any liability in respect of its conduct of the Bookbuilding Process or ofsuch alternative method of effecting the Placing as Hoare Govett may determine. Participation in, and principal terms of, the Bookbuilding Process By participating in the Bookbuilding Process and the Placing, Placees will bedeemed to have read and understood this Announcement (including this Appendix)in its entirety and to be participating and making an offer for Placing Sharesat the Placing Price and on the terms and conditions, and to be providing therepresentations, warranties, acknowledgements and undertakings, contained inthis Appendix. A further announcement will be made following the close of theBookbuilding Process detailing the number of Placing Shares to be issuedpursuant to the Placing (as defined below) (the "Final Announcement"). Hoare Govett (whether through itself or its Affiliates) is arranging the Placingas an agent of the Company. Hoare Govett and its Affiliates are entitled to participate as principal in theBookbuilding Process. The Bookbuilding Process is expected to close no later than 6.00 p.m. Londontime today, 13 December 2006, but may be closed earlier at the sole discretionof Hoare Govett. Hoare Govett may, at its sole discretion, accept bids that arereceived after the Bookbuilding Process has closed. A bid in the Bookbuilding Process will be made on the terms and conditions inthis Appendix and will not be capable of variation or revocation after the closeof the Bookbuilding Process. A person who wishes to participate in the Bookbuilding Process shouldcommunicate its bid by telephone to its usual sales contact at ABN AMRO BankN.V. (London branch) or Lee Morton at Hoare Govett on +44 (0)20 7678 1139. Ifsuccessful, an allocation will be confirmed orally to such person following theclose of the Bookbuilding Process, and a conditional contract note (enclosing aform of confirmation and registration schedule) setting out settlementinstructions will be dispatched as soon as possible thereafter. Hoare Govett'soral confirmation will constitute a legally binding commitment upon such person(who will at that point become a Placee) to subscribe for the number of PlacingShares allocated to that Placee at the Placing Price set out in thisAnnouncement and otherwise on the terms and conditions set out in this Appendixand in accordance with the Company's memorandum and articles of association. Each Placee's obligations will be owed to the Company and to Hoare Govettthrough whom such Placee submitted its bid. Each Placee will also have animmediate, separate, irrevocable and binding obligation, owed to Hoare Govett,to pay to it (or as it may direct) in cleared funds an amount equal to theproduct of the Placing Price and the number of Placing Shares such Placee hasagreed to subscribe for. All obligations under the Placing will be subject to fulfilment of theconditions referred to below under 'Conditions of the Placing'. Conditions of the Placing The Placing is conditional on the Placing Agreement becoming unconditional inall respects and not having been terminated in accordance with its terms. Theobligations of Hoare Govett under the Placing Agreement are conditional, interalia, upon: (a) the passing, without material amendment, of the resolution tobe proposed at the extraordinary general meeting of the Company to be convenedfor 8 January 2007; (b) the Company not having breached in any respect any of itsobligations under the Placing Agreement (to the extent that such obligationsfall to be performed prior to Admission); (c) each of the representations and warranties given by theCompany under the Placing Agreement (the "Warranties") and any statement made inthe Circular, this Announcement or the contract note (together the "PlacingDocuments") not being untrue, inaccurate or misleading in any respect when made,or becoming untrue, inaccurate or misleading in any respect by reference to thefacts and circumstances existing from time to time and no matter arising whichmight, in the opinion of Hoare Govett, be expected to give rise to a claim underthe indemnity set out in the Placing Agreement; (d) the delivery by the Company to Hoare Govett, immediatelyprior to Admission, of a certificate signed by a duly authorised officer of theCompany confirming, inter alia, that none of the Warranties was untrue orinaccurate or misleading in any respect at the date of the Placing Agreement orhas at any time since that date become untrue or inaccurate or misleading in anyrespect;(e) in the opinion of Hoare Govett there not having occurred amaterial adverse change (whether or not foreseeable at the date of the PlacingAgreement) in, or any development reasonably likely to involve a prospectivematerial adverse change in or affecting, the condition (financial, operational,legal or otherwise) or the earnings or business affairs or business prospects ofthe Group, whether or not arising in the ordinary course of business; (f) the Company allotting the Placing Shares, prior to andconditional only on Admission, in accordance with the terms of the PlacingAgreement; and (g) Admission taking place by not later than 8.00 a.m. on 9January 2007. If (a) any of the conditions contained in the Placing Agreement are notfulfilled or waived by Hoare Govett by the respective time or date wherespecified (or such later time or date as Hoare Govett and the Company may agreebut not later than 8.00 a.m. on 31 January 2007) or (b) the Placing Agreement isterminated in the circumstances specified below, the Placing will lapse and thePlacees' rights and obligations hereunder shall cease and terminate at such timeand each Placee agrees that no claim can be made by or on behalf of the Placee(or any person on whose behalf the Placee is acting) in respect thereof. By participating in the Bookbuilding Process, each Placee agrees that its rightsand obligations cease and terminate only in the circumstances described above orunder 'Right to terminate the Placing Agreement' below and will not be capableof rescission or termination by it. Hoare Govett may, at its discretion and upon such terms as it thinks fit, waivecompliance by the Company with, or extend the time and/or date for fulfilment bythe Company of, the whole or any part of any of the Company's obligations inrelation to the conditions in the Placing Agreement. Any such extension orwaiver will not affect Placees' commitments as set out in this Announcement. Hoare Govett and the Company shall have no liability to any Placee (or to anyother person whether acting on behalf of a Placee or otherwise) in respect ofany decision Hoare Govett may make as to whether or not to waive or to extendthe time and/or date for the satisfaction of any condition to the Placing norfor any decision it may make as to the satisfaction of any condition or inrespect of the Placing generally. Right to terminate under the Placing Agreement Hoare Govett may, at any time before Admission, terminate the Placing Agreementin accordance with the terms of the Placing Agreement by giving notice to theCompany in certain circumstances, including (inter alia): (a) any of the Warranties or any statement made in the PlacingDocuments being untrue, inaccurate or misleading in any respect when made orbecoming untrue, inaccurate or misleading in any respect by reference to thefacts and circumstances existing from time to time and any matter arising whichmight, in the opinion of Hoare Govett, be expected to give rise to a claim underthe indemnity set out in the Placing Agreement; or (b) in the event of a breach by the Company of any of itsobligations under the Placing Agreement (to the extent such obligations fall tobe performed prior to Admission); or (c) if, in the opinion of Hoare Govett, there is any materialadverse change, whether or not foreseeable at the date of the Placing Agreement,in, or any development involving a prospective material adverse change in oraffecting, the condition, financial or otherwise, or the earnings or businessaffairs or business prospects of the Group, whether or not arising in theordinary course of business; or there: (i) is any material adverse change in the financial markets in the UnitedStates, the United Kingdom, any member of the European Union or theinternational financial markets, any outbreak of hostilities or escalation ofhostilities or other calamity or crisis, any change or development involving aprospective change in national or international political, financial or economicconditions, or currency exchange rates, in each case the effect of which is suchas to make it, in the judgment of Hoare Govett, impracticable or inadvisable tomarket the New Ordinary Shares and to proceed with the Placing in the mannercontemplated in the Placing Documents or to enforce contracts for the sale ofthe New Ordinary Shares or which may materially and adversely affect the successof the Placing or dealings in the New Ordinary Shares following Admission; or(ii) is any cancellation, suspension or limitation in the trading in anysecurities of the Company imposed by the London Stock Exchange on any exchangeor over-the-counter market, or if trading generally on the New York StockExchange, the NASDAQ National Market or the London Stock Exchange has beensuspended or limited, or minimum or maximum prices for trading have been fixed,or maximum ranges for prices have been required, by any of such exchanges or bysuch system or by order of any governmental authority, or a material disruptionhas occurred in commercial banking or securities settlement or clearanceservices in the United States or in Europe; or (iii) is a declaration of abanking moratorium by US or UK authorities; or (iv) has occurred an adversechange or a prospective adverse change since the date of the Placing Agreementin UK taxation affecting the New Ordinary Shares or the transfer of the NewOrdinary Shares (otherwise than set forth in the Placing Documents) or theimposition of exchange controls by the United States or the United Kingdom. If the obligations of Hoare Govett under the Placing Agreement are terminated inaccordance with its terms, the rights and obligations of each Placee in respectof the Placing as described in this Announcement (including this Appendix) shallcease and terminate at such time and no claim can be made by any Placee inrespect thereof. By participating in the Placing each Placee agrees with Hoare Govett that theexercise by Hoare Govett of any right of termination or other discretion underthe Placing Agreement shall be within the absolute discretion of Hoare Govettand that Hoare Govett need not make any reference to any such Placee and thatHoare Govett shall have no liability whatsoever to any such Placee (or to anyother person whether acting on behalf of a Placee or otherwise) in connectionwith the exercise of such rights. No Prospectus No offering document, prospectus or admission document has been or will besubmitted to be approved by the FSA in relation to the Placing and the Placees'commitments will be made solely on the basis of the information contained inthis Announcement (including this Appendix) and any Exchange Information (asreferred to below under 'Representations and Warranties'). Each Placee, byaccepting a participation in the Placing, agrees and confirms that it hasneither received nor relied on any other information, representation, warrantyor statement made by or on behalf of Hoare Govett or its Affiliates or theCompany and neither the Company nor Hoare Govett (or its Affiliates) will beliable for any Placee's decision to participate in the Placing based on anyother information, representation, warranty or statement. Each Placeeacknowledges and agrees that it has relied on its own investigation of thebusiness, financial and trading position of the Company in accepting aparticipation in the Placing. Nothing in this paragraph shall exclude theliability of any person for fraudulent misrepresentation. Registration and settlement Settlement of transactions in the Placing Shares (ISIN: GB00B01JDG27) followingAdmission will take place within the CREST system, subject to certainexceptions. Hoare Govett reserves the right to require settlement for anddelivery of the Placing Shares to Placees by such other means that it deemsnecessary if delivery or settlement is not possible or practicable within theCREST system within the timetable set out in this Announcement (including thisAppendix) or would not be consistent with the regulatory requirements in anyPlacee's jurisdiction. Each Placee allocated Placing Shares in the Placing will be sent a conditionalcontract note (enclosing a form of confirmation and registration schedule)stating the number of Placing Shares allocated to it, the Placing Price, theaggregate amount owed by such Placee to Hoare Govett and settlementinstructions. ABN AMRO Bank N.V. (London Branch) is acting as Hoare Govett'ssettlement agent and Placees should settle against CREST ID: 521, accountdesignation "AGENT". It is expected that such conditional contract notes will bedespatched today, 13 December 2006 and that the trade date will be 13 December2007. Each Placee agrees that it will do all things necessary to ensure thatdelivery and payment is completed in accordance with the settlement instructionsset out in the conditional contract notes. It is expected that settlement will be on 9 January 2007 in accordance with theinstructions set out in the conditional contract note. Interest is chargeable daily on payments not received from Placees on the duedate in accordance with the arrangements set out above and in the conditionalcontract note at the rate of 2 percentage points above the base rate of BarclaysBank Plc. Each Placee is deemed to agree that if it does not comply with theseobligations, Hoare Govett may sell any or all of the Placing Shares allocated tothat Placee on such Placee's behalf and retain from the proceeds, for Hoare Govett's account and benefit, an amount equal to the aggregate amount owed by thePlacee plus any interest due. The relevant Placee will, however, remain liablefor any shortfall below the aggregate amount owed by it and may be required tobear any stamp duty or stamp duty reserve tax (together with any interest orpenalties) which may arise upon the sale of such Placing Shares on such Placee'sbehalf. If Placing Shares are to be delivered to a custodian or settlement agent,Placees should ensure that the conditional contract note is copied and deliveredimmediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of itsnominee or in the name of any person for whom a Placee is contracting as agentor that of a nominee for such person, such Placing Shares should, subject asprovided below, be so registered free from any liability to UK stamp duty orstamp duty reserve tax. No Placee (or any nominee or other agent acting onbehalf of a Placee) will be entitled to receive any fee or commission inconnection with the Placing. Representations and warranties By participating in the Bookbuilding Process each Placee (and any person actingon such Placee's behalf): represents and warrants that it has read this Announcement (including thisAppendix) in its entirety and acknowledges that its participation in the Placingwill be governed by the terms of this Appendix; represents and warrants that it has received this Announcement (including thisAppendix) solely for its use and has not redistributed or duplicated it; represents and warrants that it has not received a prospectus, admissiondocument or other offering document in connection with the Placing andacknowledges that no prospectus, admission document or other offering documenthas been prepared in connection with the Placing; acknowledges that the Ordinary Shares are admitted to trading on AIM, and theCompany is therefore required to publish certain business and financialinformation in accordance with the rules and practices of AIM (collectively, the"Exchange Information"), which includes a description of the nature of theCompany's business and the Company's most recent balance sheet and profit andloss account, and similar statements for preceding financial years, and that thePlacee is able to obtain or access the Exchange Information without unduedifficulty; acknowledges that neither of Hoare Govett nor any of its Affiliates nor anyperson acting on behalf of Hoare Govett or its Affiliates nor the Company andits affiliates has provided, and will not provide it with any material regardingthe Placing Shares or the Company other than this Announcement (including thisAppendix); nor has it requested Hoare Govett, any of its Affiliates or anyperson acting on behalf of Hoare Govett or any of its Affiliates to provide itwith any such information; acknowledges that the content of this Announcement (including this Appendix) isexclusively the responsibility of the Company and that neither Hoare Govett, norany of its Affiliates nor any person acting on behalf of Hoare Govett or itsAffiliates has or shall have any liability or responsibility for anyinformation, representation or statement contained in this Announcement(including this Appendix) or any information previously published by or onbehalf of the Company and will not be liable for any Placee's decision toparticipate in the Placing based on any information, representation or statementcontained in this Announcement (including this Appendix) or otherwise. EachPlacee represents, warrants and agrees that the only information on which it isentitled to rely and on which such Placee has relied in committing to subscribefor the Placing Shares is contained in this Announcement (including thisAppendix) and any Exchange Information (other than to the extent information hasbeen subsequently superseded by other information published through a RegulatoryInformation Service), such information being all that it deems necessary to makean investment decision in respect of the Placing Shares and that it has reliedon its own investigation with respect to the Placing Shares and the Company inconnection with its decision to subscribe for the Placing Shares andacknowledges that it is not relying on any investigation that Hoare Govett, anyof its Affiliates or any person acting on behalf of Hoare Govett or itsAffiliates may have conducted with respect to the Placing Shares or the Companyand none of such persons has made any representations to it, express or implied,with respect thereto; acknowledges that it has not relied on any information relating to the Companycontained in any research reports prepared by Hoare Govett, any of itsAffiliates or any person acting on behalf of Hoare Govett or its Affiliates andunderstands that neither Hoare Govett, nor any of its Affiliates nor any personacting on behalf of Hoare Govett or its Affiliates: (i) has or shall have anyliability for public information or any representation; (ii) has or shall haveany liability for any additional information that has otherwise been madeavailable to such Placee, whether at the date of publication, the date of theannouncement or otherwise; and (iii) makes any representation or warranty,express or implied, as to the truth, accuracy or completeness of suchinformation, whether at the date of publication, the date of the announcement orotherwise; represents and warrants that it, or the beneficial owner, as applicable, isentitled to subscribe for and/or purchase Placing Shares under the laws of allrelevant jurisdictions which apply to it, or the beneficial owner, asapplicable, and that it has fully observed such laws and obtained all suchgovernmental and other guarantees and other consents in either case which may berequired thereunder and complied with all necessary formalities and has nottaken any action which will or may result in Hoare Govett or the Company beingin breach of the legal and/or regulatory requirements of any territory inconnection with the Placing; represents and warrants that it has the power and authority to carry on theactivities in which it is engaged, to subscribe for the Placing Shares and toexecute and deliver all documents necessary for such subscription; represents and warrants that it will be the beneficial owner of such PlacingShares and that the beneficial owner of such Placing Shares will not at the timethe Placing Shares are acquired be a resident of Australia, Canada, the Republicof South Africa or Japan; acknowledges that the Placing Shares have not been and will not be registeredunder the Securities Act or under the securities laws of any of the States ofthe United States, or under the securities legislation of Australia, Canada, theRepublic of South Africa or Japan and, subject to certain exceptions, may not beoffered, sold, taken up, renounced or delivered or transferred, directly orindirectly, within those jurisdictions; represents and warrants that it is not a resident of or located in the UnitedStates or acting on a non-discretionary basis for a person in the United Statesand is purchasing the Placing Shares in an "offshore transaction" in accordancewith Regulation S under the Securities Act and that it will not offer or sell,directly or indirectly, any of the Placing Shares in the United States except inaccordance with Regulation S or pursuant to an exemption from, or in atransaction not subject to, the registration requirements of the Securities Act; acknowledges (and confirms that each beneficial owner of the Placing Shares hasbeen advised) that the Placing Shares have not been and will not be registeredunder the Securities Act or under any applicable state securities laws, norapproved or disapproved by the US Securities and Exchange Commission, any statesecurities commission in the United States or any other United States regulatoryauthority; represents and warrants that if it is a pension fund or investment company, itspurchase of Placing Shares is in full compliance with applicable laws andregulations; represents and warrants that the allocation, allotment, issue and delivery toit, or the person specified by it for registration as holder, of Placing Shareswill not give rise to a liability under any of sections 67, 70, 93 or 96 of theFinance Act 1986 (depositary receipts and clearance services) and that thePlacing Shares are not being subscribed for by it in connection witharrangements to issue depositary receipts or to transfer Placing Shares into aclearance system; represents and warrants that it has complied with its obligations in connectionwith money laundering and terrorist financing under the Proceeds of Crime Act2002, the Terrorism Act 2003 and the Money Laundering Regulations 2003 (the"Regulations") and, if making payment on behalf of a third party, thatsatisfactory evidence has been obtained and recorded by it to verify theidentity of the third party as required by the Regulations; represents and warrants that it and any person acting on its behalf is a personfalling within Article 19(1) and/or 49(1) of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2005, and is a person who falls withinParagraph (7) of Section 86 of the Financial Services and Markets Act 2000; represents and warrants that it has not offered or sold and will not offer orsell any Placing Shares to persons in the United Kingdom prior to Admissionexcept in circumstances which have not resulted and which will not result in anoffer to the public in the United Kingdom within the meaning of the ProspectusRules made by the FSA pursuant to Part IV of the FSMA; represents and warrants that it has only communicated or caused to becommunicated and will only communicate or cause to be communicated anyinvitation or inducement to engage in investment activity (within the meaning ofsection 21 of the FSMA) relating to the Placing Shares in circumstances in whichsection 21(1) of the FSMA does not require approval of the communication by anauthorised person; represents and warrants that it has complied and will comply with all applicableprovisions of the FSMA with respect to anything done by it in relation to thePlacing Shares in, from or otherwise involving the United Kingdom; represents and warrants that it and any person acting on its behalf is entitledto subscribe for the Placing Shares under the laws of all relevant jurisdictionsand that it has all necessary capacity and has obtained all necessary consentsand authorities to enable it to commit to participating in the Placing and toperform its obligations in relation thereto (including, without limitation, inthe case of any person on whose behalf it is acting, all necessary consents andauthorities to agree to the terms set out or referred to in this Announcement(including this Appendix)) and will honour such obligations; undertakes that it (and any person acting on its behalf) will make payment forthe Placing Shares allocated to it in accordance with this Announcement(including this Appendix) and the conditional contract note on the due time anddate set out herein, failing which the relevant Placing Shares may be placedwith other subscribers or sold as Hoare Govett may in its sole discretiondetermine and without liability to such Placee; acknowledges that neither Hoare Govett, nor any of its Affiliates nor any personacting on behalf of Hoare Govett or its Affiliates is making any recommendationsto it, advising it regarding the suitability of any transactions it may enterinto in connection with the Placing, and acknowledges that participation in thePlacing is on the basis that it is not and will not be a client or customer ofHoare Govett or any of its Affiliates and that Hoare Govett has no duties orresponsibilities to it for providing the protections afforded to its clients andthat neither Hoare Govett nor any of its Affiliates is providing advice inrelation to the Placing nor in respect of any representations, warranties,undertakings or indemnities contained in the Placing Agreement nor the exerciseor performance of any of Hoare Govett's rights and obligations thereunderincluding any rights to waive or vary any conditions or exercise any terminationright; undertakes that the person who it specifies for registration as holder of thePlacing Shares will be (i) itself or (ii) its nominee, as the case may be.Neither Hoare Govett nor the Company will be responsible for any liability tostamp duty or stamp duty reserve tax resulting from a failure to observe thisrequirement. Placees acknowledge that the Placing Shares will be credited to theCREST stock account of ABN AMRO Bank N.V. (London branch) (CREST ID: 521,account designation "AGENT") who will hold them as nominee for the subscribersof such shares until settlement in accordance with its standing settlementinstructions; acknowledges that the Placing is conditional, inter alia, upon approval by theCompany's shareholders of the issue and allotment of the Placing Shares at anExtraordinary General Meeting of the Company to be held on 8 January 2007; acknowledges that any agreements entered into by it pursuant to these terms andconditions shall be governed by and construed in all respects in accordance withEnglish law and it submits (on behalf of itself and on behalf of any person onwhose behalf it is acting) to the exclusive jurisdiction of the courts ofEngland as regards any claim, dispute or matter arising out of any suchcontract, except that enforcement proceedings in respect of the obligation tomake payment for the Placing Shares (together with any interest chargeablethereon) may be taken by the Company or Hoare Govett in any jurisdiction inwhich the relevant Placee is incorporated or in which any of its securities havea quotation on a recognised stock exchange; acknowledges that Hoare Govett may (at its absolute discretion) satisfy itsobligations to procure Placees by itself agreeing to become a Placee in respectof some or all of the Placing Shares or by nominating any connected orassociated person to do so; acknowledges that it irrevocably appoints any director of Hoare Govett as itsagent for the purposes of executing and delivering to the Company and/or itsregistrars any documents on its behalf necessary to enable it to be registeredas the holder of any of the Placing Shares agreed to be taken up by it under thePlacing; agrees that the Company, Hoare Govett and others will rely upon the truth andaccuracy of the foregoing representations, warranties, acknowledgements andundertakings which are given to Hoare Govett on its own behalf and on behalf ofthe Company and are irrevocable; and agrees to indemnify and hold the Company and Hoare Govett harmless from any andall costs, claims, liabilities and expenses (including legal fees and expenses)arising out of or in connection with any breach by it (or any person on whosebehalf it is acting) of the representations, warranties, acknowledgements,agreements and undertakings in this Appendix and further agrees that theprovisions of this Appendix shall survive after completion of the Placing. The acknowledgements, undertakings, representations and warranties referred toabove are given to each of the Company and Hoare Govett (for their own benefitand, where relevant, the benefit of their respective Affiliates) and areirrevocable. No UK stamp duty or stamp duty reserve tax should be payable to the extent thatthe Placing Shares are issued into CREST to, or to the nominee of, a Placee whoholds those shares beneficially (and not as agent or nominee for any otherperson) within the CREST system and registered in the name of such Placee orsuch Placee's nominee provided that the Placing Shares are not issued to aperson whose business is or includes issuing depositary receipts or theprovision of clearance services or to an agent or nominee for any such person. Any arrangements to issue or transfer the Placing Shares into a depositaryreceipts system or a clearance service or to hold the Placing Shares as agent ornominee of a person to whom a depositary receipt may be issued or who will holdthe Placing Shares in a clearance service, or any arrangements subsequently totransfer the Placing Shares, may give rise to UK stamp duty and/or stamp dutyreserve tax, for which neither the Company nor Hoare Govett will be responsibleand the Placee to whom (or on behalf of whom, or in respect of the person forwhom it is participating in the Placing as an agent or nominee) the allocation,allotment, issue or delivery of Placing Shares has given rise to such UK stampduty or stamp duty reserve tax undertakes to pay such UK stamp duty or stampduty reserve tax forthwith and to indemnify on an after-tax basis and to holdharmless the Company and Hoare Govett in the event that any of the Company and/or Hoare Govett has incurred any such liability to UK stamp duty or stamp dutyreserve tax. In addition, Placees should note that they will be liable to pay any capitalduty, stamp duty and all other stamp, issue, securities, transfer, registration,documentary or other duties or taxes (including any interest, fines or penaltiesrelating thereto) payable outside the UK by them or any other person on thesubscription by them for any Placing Shares or the agreement by them tosubscribe for any Placing Shares. All times and dates in this Announcement (including this Appendix) may besubject to amendment. Hoare Govett shall notify the Placees and any personacting on behalf of the Placees of any changes.This Announcement (including this Appendix) has been issued by the Company andis the sole responsibility of the Company. Hoare Govett, which is authorised and regulated by the Financial ServicesAuthority, is acting exclusively for the Company and for no one else solely inconnection with the Placing and will not be responsible to anyone other than theCompany for providing the protections afforded to the customers of Hoare Govettor for providing advice in relation to the Placing or any other matter referredto herein. When a Placee or person acting on behalf of the Placee is dealing with Hoare Govett, any money held in an account with Hoare Govett on behalf of the Placeeand/or any person acting on behalf of the Placee will not be treated as clientmoney within the meaning of the rules and regulations of the Financial ServicesAuthority made under the FSMA. The Placee acknowledges that the money will notbe subject to the protections conferred by the client money rules; as aconsequence, this money will not be segregated from Hoare Govett's money inaccordance with the client money rules and will be used by Hoare Govett in thecourse of its own business; and the Placee will rank only as a general creditorof Hoare Govett. Past performance is no guide to future performance and persons needing adviceshould consult an independent financial adviser. The information contained in this Announcement (including this Appendix) is notfor release, publication or distribution, directly or indirectly, to persons inthe United States. This Announcement (including this Appendix) is not an offerof securities for sale into the United States. The Placing Shares have not beenand will not be registered under the Securities Act and may not be offered orsold, directly or indirectly, in the United States absent registration or anexemption from registration. There will be no public offering of securities inthe United States. The Placing Shares have not been and will not be registeredwith any regulatory authority of any state within the United States. This information is provided by RNS The company news service from the London Stock Exchange