Issue of Equity

Issue of Equity

Centrica plc

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

5 May 2016

CENTRICA ANNOUNCES A PROPOSED EQUITY PLACING

Centrica plc (the “Company” or “Centrica” and, together with its subsidiaries, the “Group”) announces today its intention to raise funds equivalent to c.7% of Centrica’s current issued share capital (approximately 350 million shares), by way of a placing to institutional investors (the “Placing”).

Highlights

• Implementation of Centrica’s strategy is on track.
• Organic sources and uses of cash flow remain more than balanced in the current low commodity price environment.
• The Group maintains its strong focus on capital and cash flow discipline, balance sheet strength and cost efficiency.
• The Placing allows:
  • acceleration of the Group’s customer-facing strategy through two prioritised and attractive acquisitions, with combined consideration of around £350m; and
  • continued lowering of net debt, reducing pressure on the Group’s targeted strong investment grade credit ratings in a continuing uncertain environment.
• The Group continues to target delivery of long-term shareholder value through returns and growth, including a progressive dividend policy from the current level linked to its confidence in sustainable adjusted operating cash flow growth.

Centrica strategy

Centrica is an energy and services company with a purpose to provide energy and services to satisfy the changing needs of its customers. The Company’s focus areas for long-term growth are energy supply, services, connected home, distributed energy & power and energy marketing & trading. To deliver its customer-facing strategy, the Group expects to reallocate £1.5bn of total capital and operating resources from E&P to these focus areas for growth by 2020.

Through execution of its strategy, the Group expects to deliver sustainable adjusted operating cash flow growth of 3-5% per annum over the period from 2015 to 2020. This growth will be delivered through investing in its customer-facing strategy and in part through a £750m per annum cost efficiency programme, which is expected to be fully delivered by 2020. The Group expects to deliver a progressive dividend, linked to its confidence in sustainable adjusted operating cash flow growth.

The Group will also maintain a strong focus on capital discipline, with capital investment, including small acquisitions of less than £100m, limited to £1bn per annum in 2016 and 2017. In addition, the Group continues to target its current strong investment grade credit ratings of Baa1 with Moody’s and BBB+ with Standard & Poor’s.

Strategy implementation on track

As set out in the Company’s Trading Update announcement on 18 April 2016, Centrica is on track to achieve the targets set out in its Preliminary Results announcement on 18 February 2016. The Company remains on track to cut E&P capital expenditure to £500m in 2016, as part of its £1bn capital investment limit, and remains on track to achieve £200m of cost efficiencies and reduce direct headcount by 3,000 in 2016.

In addition, organic sources and uses of cash flow in 2016 are forecast to remain more than balanced in the current low commodity price environment, with adjusted operating cash flow expected to be in excess of £2 billion in the year.

However the Group faces low commodity prices and a challenging external environment, and its credit metrics and targeted strong investment grade credit ratings remain under pressure. Although the Company could operate effectively with lower credit ratings, it continues to believe that the targeted strong investment grade credit ratings are most efficient for Centrica's business model, given the scale of its energy procurement activities and the resultant need for access to cost-effective short-term sources of liquidity to manage collateral requirements. In addition, while the Group continues to explore all options for repositioning its E&P business, the external environment means this is not straightforward, and reallocation of resources towards its customer-facing businesses is currently running below targeted levels.

Rationale for the Placing and use of proceeds

The Group has the opportunity to accelerate its customer-facing strategy through the acquisition of key capabilities and market positions. Two highly attractive acquisition opportunities have been identified, both of which deliver leading capabilities and double-digit percentage EBITDA growth potential, and will immediately contribute to earnings and cash flow once the transactions have closed.

Centrica announced the acquisition of Neas Energy A/S (“Neas”), a leading provider of energy management and revenue optimisation services, on 21 April 2016 for £170m plus working capital, estimated at around £30m. In 2015, Neas reported EBITDA of £21m. This acquisition complements the Company’s Energy Marketing & Trading growth strategy. The transaction is subject to customary European Union regulatory approvals and is expected to close around the middle of 2016. A further customer-facing acquisition is also nearing completion, with consideration expected to be around £150m. The Company believes these two acquisitions are among the most attractive in their respective sectors.

The Company would expect sources and uses of cash to remain balanced in 2016 even after these two acquisitions. However, the credit metrics required for the current strong investment grade credit ratings are under pressure. A 7% placing therefore allows c.£350m for acceleration of Centrica’s customer-facing strategy through acquisitions and c.£400m for lowering of net debt, reducing pressure on credit metrics and the Group’s targeted strong investment grade credit ratings, in what remains an uncertain environment.

Summary

Centrica’s strategy implementation remains on track, as it targets long-term shareholder value through expected returns and growth. It expects to deliver at least 3-5% sustainable adjusted operating cash flow growth per annum on average until 2020 and a targeted 10-12% return on average capital employed (ROACE) each year. In addition, the Group remains committed to delivering a progressive dividend from the current 12.0 pence per share baseline, linked to confidence in sustainable growth in adjusted operating cash flow. The Group will maintain its focus on cash flow, capital discipline and cost reduction.

It is expected that the placing will facilitate the Group both to:

• secure two prioritised and attractive acquisitions to accelerate growth and develop capabilities in its customer-facing activities; and
• reduce pressure on its credit metrics and its current strong investment grade credit ratings.

Details of the Placing

Goldman Sachs International (“Goldman Sachs”) and UBS Limited (“UBS”) are acting as Joint Bookrunners and Corporate Brokers in connection with the Placing.

The Placing is subject to the terms and conditions set out in the Appendix (which forms part of this announcement, such announcement and the Appendix together being the “Announcement”). The Bookrunners will today commence a bookbuilding process in respect of the Placing (the “Bookbuilding Process”). The price per ordinary share at which the Placing Shares are to be placed (the “Placing Price”) will be decided at the close of the Bookbuilding Process. The book will open with immediate effect following this Announcement. The timing of the closing of the book, pricing and allocations are at the discretion of the Bookrunners and the Company. Details of the Placing Price and the number of Placing Shares will be announced as soon as practicable after the close of the Bookbuilding Process.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing ordinary shares of the Company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue. If all the Placing Shares are placed, it would represent an increase of approximately 7% of the current issued ordinary share capital of the Company (approximately 350 million shares).

Application will be made for the Placing Shares to be admitted to the premium listing segment of the Official List (the “Official List”) of the Financial Conduct Authority (the “FCA”) and to be admitted to trading on the main market for listed securities of the London Stock Exchange plc (the “London Stock Exchange”) (together, “Admission”). Settlement for the Placing Shares and Admission is expected to take place on or before 8.00 a.m. on 9 May 2016. The Placing is conditional, among other things, upon Admission becoming effective and the placing agreement between the Company and the Bookrunners (the “Placing Agreement”) not being terminated in accordance with its terms. The Appendix sets out further information relating to the Bookbuilding Process and the terms and conditions of the Placing.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the “Important notices” section of this Announcement.

For further information on the announcement, please contact:

Centrica	Â
Martyn Espley (Investor Relations)		[phone]
Sophie Fitton (Media Relations)		[phone]
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Goldman Sachs Joint Bookrunner and Joint Corporate Broker		[phone]
Phil Raper Brian O’Keeffe Laura Klaassen
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UBS Joint Bookrunner and Joint Corporate Broker		[phone]
David James Christopher Smith Thomas Raynsford

Notes to Editors

About the Company

Centrica plc is an international energy and services company. Everything we do is focused on satisfying the changing needs of our customers. Our focus areas for long-term growth are energy supply, services, connected home, distributed energy & power and energy marketing & trading.

We supply energy and energy-related services to around 28 million customer accounts in the UK, Ireland and North America, through strong brands such as British Gas, Direct Energy and Bord Gáis Energy, supported by around 12,000 engineers and technicians.

We are developing new and innovative products and services for customers globally. Our Connected Home business has developed products such as the Hive smart thermostat and Boiler IQ.

Through our Distributed Energy & Power business we are developing integrated energy solutions for commercial and industrial customers, including flexible generation, energy management systems, and battery storage.

Our Energy Marketing & Trading business operates in LNG trading, optimisation and route to market and risk-management services for customers.

We also own Exploration & Production assets and in 2015 produced 79mmboe of gas and oil in the UK, Netherlands, Norway, Canada and Trinidad & Tobago. We are targeting a reduction in this level of production to within a 40-50mmboe range, focused on the North Sea and East Irish Sea. We also own around 3GW of gas-fired power generation capacity in the UK, have a 20% interest in the UK nuclear fleet, with our share of capacity equating to 1.8GW, and own a 50% interest in a 270MW offshore wind farm, Lincs, which we have announced we intend to dispose of. In addition, we own the UK’s largest gas storage facility, Rough, located in the southern North Sea.

Disclaimer

This Announcement (including the Appendix) is for information only and, save as expressly set out herein, does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction, including without limitation, the United Kingdom, the United States, Australia, Canada or Japan. In particular the Company has not registered, and does not intend to register, any Securities under the United States Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States. Securities cannot be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with all applicable securities laws of any state or other jurisdiction of the United States. There will be no public offering of any Securities in the United States. These materials do not constitute or form part of any offer to sell or otherwise dispose of, or a solicitation of any offer to purchase or subscribe for, any Securities in the United States or in any jurisdiction where such offer or solicitation would be unlawful or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which the Company regards as unduly onerous.

Persons needing advice should consult an independent financial adviser.

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Bookrunners or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

Each of Goldman Sachs International and UBS Limited, which are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting for the Company in connection with the Placing and no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice in relation to the Placing or any other matter referred to in this Announcement.

The distribution of this Announcement and the placing of the Placing Shares as set out in this Announcement in certain jurisdictions may be restricted by law. No action has been taken by the Company or the Bookrunners that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Bookrunners to inform themselves about, and to observe, such restrictions.

In connection with any offering of the Placing Shares, each of the Bookrunners and any of their respective affiliates may take up a portion of the securities in the offering as a principal position and in that capacity may retain, purchase or sell for their own account such securities. In addition each of the Bookrunners or their respective affiliates may enter into financing arrangements and swaps with investors in connection with which each of the Bookrunners (or their respective affiliates) may from time to time acquire, hold or dispose of shares. The Bookrunners do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

This announcement contains “forward-looking statements” with respect to certain of the Company’s plans and its current goals or expectations relating to its future financial condition and performance. Forward looking statements typically use forward looking terminology such as 'aims', 'believes', 'expects', 'may', 'will', 'could', 'should', 'intends', 'estimates', 'plans', 'assumes' or 'anticipates' or the negative thereof or other words of similar meaning. These statements are subject to a number of risks and uncertainties and actual results, and events could differ materially from those currently being anticipated as reflected in such forward-looking statements. Factors which may cause future outcomes to differ from those foreseen in forward-looking statements include, but are not limited to: general economic and business conditions; demand for the Company’s products and services; competitive factors in the industries in which the Company operates; exchange rate fluctuations; legislative, fiscal and regulatory developments; political risks; terrorism, acts of war and pandemics; changes in law and legal interpretations affecting the Company’s intellectual property rights and internet communications; and the impact of technological change. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and neither the Company nor the Bookrunners assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

Any indication in this Announcement of the price at which ordinary shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

Copies of the contents of this announcement are not being, and must not be, directly or indirectly, released, mailed, transmitted or otherwise forwarded, distributed or sent, in whole or in part, in or into a jurisdiction in which to do the same would be unlawful, and persons receiving such documents (including, without limitation, custodians, nominees and trustees) should observe these restrictions and must not, directly or indirectly, mail, transmit or otherwise forward, distribute or send any such documents in, into or from any such jurisdiction. The Company and its advisers do not assume any responsibility for any violation by any person of any of these restrictions.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

APPENDIX: TERMS AND CONDITIONS OF THE PLACING

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE RESTRICTED AND ARE NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE “PROSPECTUS DIRECTIVE”) (“QUALIFIED INVESTORS”); (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE “ORDER”), OR (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (“HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC”) OF THE ORDER; OR (C) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION OF THE UNITED STATES. ANY OFFERING OF THE PLACING SHARES IN THE UNITED STATES WILL BE MADE TO A LIMITED NUMBER OF QUALIFIED INSTITUTIONAL BUYERS (EACH A "QIB") AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT, PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IN A TRANSACTION NOT INVOLVING ANY PUBLIC OFFERING. THE PLACING SHARES ARE BEING OFFERED AND SOLD OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES.

Persons who are invited to and who choose to participate in the Placing, by making an oral or written offer to acquire Placing Shares, including any individuals, funds or others on whose behalf a commitment to acquire Placing Shares is given (the “Placees”), will be deemed to have read and understood this Announcement in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements and undertakings, contained in this Appendix. In particular each such Placee represents, warrants and acknowledges that:

(a) it is a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

(b) it is acquiring the Placing Shares for its own account or for an account with respect to which it exercises sole investment discretion, and that it (and any such account) is outside the United States and is acquiring the Placing Shares in an “offshore transaction” in accordance with Regulation S under the Securities Act (as defined above) and has not entered into any arrangement for transfer of the Placing Shares or any economic interest therein to any person in the United States; and

(c) if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, that any Placing Shares acquired by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA which has implemented the Prospectus Directive to Qualified Investors, or in circumstances in which the prior consent of the Bookrunners has been given to each such proposed offer or resale.

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any State securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is unlawful.

The Placing Shares are being offered and sold outside the United States in accordance with Regulation S under the Securities Act. Any offering to be made in the United States will be made to a limited number of QIBs (as defined in Rule 144A under the Securities Act) pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering.

The relevant clearances have not been, and nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada or Japan. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, Canada, Japan or any other jurisdiction outside the United Kingdom.

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

Details of the Placing Agreement and the Placing Shares

UBS and Goldman Sachs (together, the “Bookrunners”) have entered into a placing agreement (the “Placing Agreement”) with the Company under which they have agreed as agents for the Company to use their respective reasonable endeavours to procure Placees to take up the Placing Shares, on the terms and subject to the conditions set out therein. Subject to the execution of a terms of subscription setting out, among other things, the final number of Placing Shares and the final Placing Price (as defined below) following completion of the Bookbuild (as defined below) (the “Terms of Subscription”), if any such Placee defaults in paying the Placing Price in respect of any Placing Shares allotted to it, the Bookrunners have severally (and not jointly or jointly and severally) agreed to subscribe for such shares, and the Company has agreed to allot or issue, as applicable, such shares to the Bookrunners at the Placing Price, on and subject to the terms set out in the Placing Agreement.

The new ordinary shares in the Company to be issued in the Placing (“Placing Shares”) will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued ordinary shares of 6 14/81 pence per share in the capital of the Company (the “Ordinary Shares”), including the right to receive all dividends and other distributions declared, made or paid on or in respect of the Ordinary Shares after the date of issue of the Placing Shares, and will on issue be free of all claims, liens, charges, encumbrances and equities.

Application for listing and admission to trading

Application will be made to the Financial Conduct Authority (the “FCA”) for admission of the Placing Shares to the Official List of the UK Listing Authority and to London Stock Exchange plc for admission to trading of the Placing Shares on its main market for listed securities (“Admission”).

It is expected that Admission of the Placing Shares will become effective at or around 8.00a.m. on 9 May 2016 and that dealings in the Placing Shares will commence at that time.

Bookbuild

The Bookrunners will today commence the bookbuilding process in respect of the Placing (the “Bookbuild”) to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

The Bookrunners and the Company shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their sole discretion, determine.

Participation in, and principal terms of, the Placing

1. The Bookrunners are arranging the Placing severally and not jointly or jointly and severally as Bookrunners and agents of the Company. Participation will only be available to persons who may lawfully be, and are, invited to participate by any of the Bookrunners. Each of the Bookrunners and their respective affiliates are entitled to enter bids as principal in the Bookbuild.

2. The Bookbuild, if successful, will establish a single price payable in respect of the Placing Shares (the “Placing Price”) to the Bookrunners by all Placees whose bids are successful. The Placing Price and the aggregate proceeds to be raised through the Placing will be agreed between the Bookrunners and the Company following completion of the Bookbuild and any discount to the market price of the Ordinary Shares will be determined in accordance with the listing rules of the UK Listing Authority. The Placing Price and the number of Placing Shares to be issued will be announced on a Regulatory Information Service following the completion of the Bookbuild.

3. To bid in the Bookbuild, prospective Placees should communicate their bid by telephone to their usual sales contact at one of the Bookrunners. Each bid should state the number of Placing Shares which the prospective Placee wishes to acquire at the Placing Price ultimately established by the Company and the Bookrunners or at prices up to a price limit specified in its bid. Bids may be scaled down by the Bookrunners on the basis referred to in paragraph 7 below.

4. The Bookbuild is expected to close no later than 4:30 p.m. (London time) on 5 May 2016 but may be closed earlier or later at the discretion of the Bookrunners. The Bookrunners may, in agreement with the Company, accept bids that are received after the Bookbuild has closed.

5. Each Placee’s allocation will be confirmed to Placees orally by the relevant Bookrunner following the close of the Bookbuild, and a trade confirmation will be dispatched as soon as possible thereafter. The relevant Bookrunner’s oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of such Bookrunner and the Company, under which such Placee agrees to acquire the number of Placing Shares allocated to it and to pay the relevant Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company’s corporate documents.

6. The Company will make a further announcement following the close of the Bookbuild detailing the number of Placing Shares to be issued and the price at which the Placing Shares have been placed.

7. Subject to paragraphs 3 and 4 above, the Bookrunners will, in effecting the Placing, agree with the Company the identity of the Placees and the basis of allocation of the Placing Shares.

8. A bid in the Bookbuild will be made on the terms and subject to the conditions in this Appendix and will be legally binding on the Placee on behalf of which it is made and except with the relevant Bookrunner’s consent will not be capable of variation or revocation after the time at which it is submitted. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the relevant Bookrunner, to pay it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares that such Placee has agreed to acquire. Each Placee’s obligations will be owed to the relevant Bookrunner.

9. Except as required by law or regulation, no press release or other announcement will be made by the Bookrunners or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee’s prior written consent.

10. Irrespective of the time at which a Placee’s allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under “Registration and Settlement”.

11. All obligations under the Bookbuild and Placing will be subject to fulfilment or (where applicable) waiver of the conditions referred to below under “Conditions of the Placing” and to the Placing not being terminated on the basis referred to below under “Right to terminate under the Placing Agreement”.

12. By participating in the Bookbuild, each Placee agrees that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee after confirmation (oral or otherwise) by a Bookrunner.

13. To the fullest extent permissible by law, neither the Bookrunners, the Company nor any of their respective directors, officers, employees, agents or affiliates shall have any responsibility or liability (whether in contract, tort or otherwise) to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither the Bookrunners, the Company nor any of their respective directors, officers, employees, agents or affiliates shall have any responsibility or liability (whether in contract, tort or otherwise and including to the extent permissible by law or any fiduciary duties) in respect of the Bookrunners’ conduct of the Bookbuild or of such alternative method of effecting the Placing as the Bookrunners, their respective affiliates and the Company may agree.

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 Bookrunners’ obligations under the Placing Agreement are conditional on customary terms and conditions, including among others:

(a) none of the representations, warranties and undertakings of the Company contained in the Placing Agreement being untrue, inaccurate or misleading on and as of the date of the Placing Agreement and the Closing Date;

(b) Admission occurring not later than 8:00 a.m. London time on 9 May 2016 (or such other time or date as the Company and the Bookrunners may agree) (the “Closing Date”);

(c) the execution and delivery of the Terms of Subscription;

(d) the publication of the results of the Placing on a Regulatory Information Service as soon as reasonably practicable after the execution of the Terms of Subscription and in any event by 7.00 a.m. on the Business Day following the date of the Placing Agreement (or such later time or date as the Company and the Bookrunners may agree); and

(e) the Company allotting, subject only to Admission, the relevant Placing Shares in accordance with the Placing Agreement.

If (i) any of the conditions contained in the Placing Agreement, including those described above, are not fulfilled or (where applicable) waived by the Bookrunners by the respective time or date where specified (or such later time or date as the Company and the Bookrunners may agree) or (ii) the Placing Agreement is terminated in the circumstances specified below under “Right to terminate under the Placing Agreement”, the Placing will lapse and the Placees’ rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by it in respect thereof.

The Bookrunners may, at their discretion and upon such terms as they think fit, waive compliance by the Company with the whole or any part of any of the Company’s obligations in relation to the conditions contained in the Placing Agreement save that the above conditions relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees’ commitments as set out in this Announcement.

None of the Bookrunners, nor any of their respective directors, officers, employees, agents or affiliates shall have any liability (whether in contract, tort or otherwise) 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 to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Bookrunners.

Right to terminate under the Placing Agreement

The Bookrunners are entitled, at any time before Admission, to terminate the Placing Agreement in accordance with the terms of the Placing Agreement in certain circumstances, including a breach of the representation, warranties and undertakings of the Company contained in the Placing Agreement which the Bookrunners (acting jointly) consider to be material in the context of the Placing and/or Admission, upon the occurrence of certain material adverse changes in the financial condition or prospects of the Group or in the relevant financial markets or in the event of a force majeure event.

Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions.

By participating in the Placing, Placees agree that the exercise by any Bookrunner of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of such Bookrunner and that it need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise and neither the Company nor the Bookrunners nor any of their respective directors, officers, employees, agents or affiliates shall have any liability to Placees whatsoever in connection with any such exercise or failure to exercise.

Lock-up

The Company has undertaken to the Bookrunners that, between the date of the Placing Agreement and the date which is 90 calendar days after the Closing Date, it will not, without the prior written consent of the Bookrunners (such consent not to be unreasonably withheld or delayed), directly or indirectly: (i) issue, offer, lend, mortgage, assign, charge, pledge, sell, contract to sell or issue, sell any option or contract to purchase, purchase any option or contract to sell or issue, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Ordinary Shares or any interest in Ordinary Shares or any securities convertible into or exercisable or exchangeable for, or substantially similar to, Ordinary Shares or any interest in Ordinary Shares or file any registration statement under the Securities Act or file or publish any prospectus with respect to any of the foregoing; or (ii) enter into any swap or other agreement or transaction that transfers, in whole or in part, any of the economic consequences of ownership of the Ordinary Shares, whether any such swap or transaction described in (i) or (ii) above is to be settled by delivery of the Ordinary Shares or such other securities, in cash or otherwise, provided that the foregoing shall not prevent or restrict, amongst other things, the issue and offer by or on behalf of the Company of the Placing Shares, the issue of Ordinary Shares pursuant to any existing convertible instruments or options in the Company, any existing employee share schemes of the Company or the issue of shares pursuant to the Company’s existing scrip dividend programme.

No Prospectus

No offering document or prospectus has been or will be submitted to be approved by the UKLA in relation to the Placing.

Placees’ commitments will be made solely on the basis of the information contained in this Announcement. Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement and all other publicly available information previously or simultaneously published by the Company by notification to a Regulatory Information Service or otherwise filed by the Company is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or the Bookrunners or any other person and none of the Bookrunners or the Company nor any other person will be liable for any Placee’s decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation 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 Placing Shares (ISIN: GB00B033F229) following Admission will take place within the CREST system. Subject to certain exceptions, the Bookrunners and the Company reserve the right to require settlement for and delivery of the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not practicable within the CREST system within the timetable set out in this Announcement or would not be consistent with the regulatory requirements in the Placee’s jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation in accordance with the standing arrangements in place with the relevant Bookrunner stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to the Bookrunner and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions in respect of the Placing Shares that it has in place with the relevant Bookrunner.

It is expected that settlement will be on 9 May 2016 in accordance with the instructions set out in the trade confirmation.

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 two percentage points above LIBOR as determined by the Bookrunners.

Each Placee is deemed to agree that, if it does not comply with these obligations, the Bookrunners may sell any or all of the Placing Shares allocated to that Placee on such Placee’s behalf and retain from the proceeds, for the Bookrunners’ account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) or other similar taxes imposed in any jurisdiction which may arise upon the sale of such Placing Shares on such Placee’s behalf.

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

Insofar as Placing Shares are registered in a Placee’s name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax.

Representations, Warranties and Further Terms

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 the Appendix, in its entirety;

2 acknowledges that no offering document or prospectus has been prepared in connection with the placing of the Placing Shares and represents and warrants that it has not received a prospectus or other offering document in connection therewith;

3 acknowledges that none of the Bookrunners, the Company, any of their respective affiliates or any person acting on behalf of any of them has provided, nor will provide it, with any material regarding the Placing Shares or the Company other than this Announcement; nor has it requested any of the Bookrunners, the Company, any of their affiliates or any person acting on behalf of any of them to provide it with any such information;

4 acknowledges that the content of this Announcement is exclusively the responsibility of the Company and that none of the Bookrunners, their respective affiliates or any person acting on behalf of any of them has or shall have any liability for any information, representation or statement contained in this Announcement or any information previously published by or on behalf of the Company and will not be liable for any Placee’s decision to participate in the Placing based on any information, representation or statement contained in this Announcement 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 itself to acquire Placing Shares is contained in this Announcement and any information previously published by the Company by notification to a Regulatory Information Service, such information being all that such Placee deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Bookrunners or the Company nor any of their respective affiliates and none of the Bookrunners or the Company will be liable for any Placee’s decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company and the Group in deciding to participate in the Placing;

5 acknowledges that it may not rely, and has not relied, on any investigation that the Bookrunners, any of their affiliates or any person acting on their behalf, may have conducted with respect to the Placing Shares or the Company, and none of such persons has made any representation, express or implied, with respect to the Company, the Placing Shares or the accuracy, completeness or adequacy of the Exchange Information or any other information;

6 acknowledges that none of the Bookrunners, their respective affiliates or any person acting on behalf of any of them has or shall have any liability for any publicly available or filed information or any information, representation, warranty or statement relating to the Company or the Group contained therein or otherwise, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

7 represents and warrants that it is not, and at the time the Placing Shares are acquired will not be, located in the United States or a resident of Australia, Canada or Japan, and each of it and the beneficial owner of the Placing Shares is not a resident of the United States, Australia, Canada or Japan and, at the time the Placing Shares are acquired, (i) will be acquiring the Placing Shares in an “offshore transaction” in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act; or (ii) will be a QIB, which is acquiring the Placing Shares for its own account or for the account of one or more QIBs, each of which is acquiring beneficial interests in the Placing Shares for its own account; if acquiring the Placing Shares for the account of one or more other persons, it has full power and authority to make the representations, warranties, agreements and acknowledgements herein on behalf of each such account, (iii) has such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the Placing Shares, (iv) will not look to the Bookrunners for all or part of any such loss it may suffer, (v) is able to bear the economic risk of an investment in the Placing Shares, (vi) is able to sustain a complete loss of an investment in the Placing Shares and (vii) has no need for liquidity with respect to its investment in the Placing Shares;

8 acknowledges that the Placing Shares have not been and will not be registered nor will a prospectus be cleared in respect of any of the Placing Shares under the securities laws or legislation of the United States, Australia, Canada or Japan and, subject to certain exceptions, may not be offered, sold, or delivered or transferred, directly or indirectly, within those jurisdictions;

9 unless otherwise specifically agreed with the Bookrunners, represents and warrants that it is, or at the time the Placing Shares are acquired that it will be, the beneficial owner of such Placing Shares, or that the beneficial owner of such Placing Shares is not a resident of Australia, Canada or Japan;

10 represents and warrants that the issue to it, or the person specified by it for registration as holder, of Placing 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 Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to issue or transfer Placing Shares into a clearance service;

11 represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the “Regulations”) and, if 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;

12 if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of the Bookrunners has been given to the offer or resale;

13 represents and warrants that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of the Financial Services and Markets Act 2000 as amended (“FSMA”);

14 represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive;

15 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 the FSMA) relating to the Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person;

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

17 represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to this participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix) and will honour such obligations;

18 undertakes that it (and any person acting on its behalf) will make payment in respect of the Placing Shares allocated to it in accordance with this Appendix on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other acquirers or sold as the Bookrunners may in their sole discretion determine and without liability to such Placee, who will remain liable for any amount by which the net proceeds of such sale falls short of the product of the relevant Placing Price and the number of Placing Shares allocated to it and may be required to bear any stamp duty, stamp duty reserve tax or other similar taxes (together with any interest or penalties) which may arise upon the sale of such Placee’s Placing Shares;

19 acknowledges that none of the Bookrunners, nor any of their respective affiliates, nor any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of any Bookrunner and that the Bookrunners have no duties or responsibilities to it for providing the protections afforded to their respective clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of their respective rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

20 undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. None of the Bookrunners or the Company will be responsible for any liability to stamp duty or stamp duty reserve tax or other similar taxes resulting from a failure to observe this requirement (“Indemnified Taxes”). Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company and the Bookrunners on an after-tax basis in respect of any Indemnified Taxes;

21 acknowledges that any agreements entered into by it pursuant to these terms and conditions, and all non-contractual or other obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of England and Wales 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 (including any dispute regarding the existence, validity or termination of such contract or relating to any non contractual or other obligation arising out of or in connection with such contract), except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by either the Company or the Bookrunners in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

22 agrees that the Company, the Bookrunners and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Bookrunners on their own behalf and on behalf of the Company and are irrevocable;

23 agrees to indemnify on an after tax basis and hold the Company, the Bookrunners and their respective directors, officers, employees, agents and affiliates harmless 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;

24 represents and warrants that it has neither received nor relied on any inside information concerning the Company in accepting this invitation to participate in the Placing; and

25 if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with applicable laws and regulations.

The agreement to settle a Placee’s acquisition of Placing Shares (and/or the acquisition by a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement also assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to issue or transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax or other similar taxes may be payable, for which neither the Company nor the Bookrunners will be responsible and the Placees shall indemnify the Company and the Bookrunners on an after-tax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings. If this is the case, each Placee should seek its own advice and notify the Bookrunners accordingly.

In addition, Placees should note that they will be liable for any 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 Placing Shares or the agreement by them to acquire any Placing Shares.

Each Placee, and any person acting on behalf of the Placee, acknowledges that the Bookrunners do not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.

Each Placee and any person acting on behalf of the Placee acknowledges and agrees that any Bookrunner or any of its affiliates may, at its absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

When a Placee or person acting on behalf of the Placee is dealing with a Bookrunner, any money held in an account with such Bookrunner 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 rules and regulations of the FCA made under the FSMA. 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 such Bookrunner’s money in accordance with the client money rules and will be used by such Bookrunner in the course of its own business and the Placee will rank only as a general creditor of such Bookrunner.

All times and dates in this Announcement may be subject to amendment. The Bookrunners shall notify the Placees and any person acting on behalf of the Placees of any changes.

The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America (including its territories and possessions, any State of the United States and the District of Columbia). These materials do not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The securities referred to herein have not been and will not be registered under the Securities Act, and may not be offered or sold in the United States absent registration under the Securities Act or an available exemption from, or transaction not subject to, the registration requirements of the Securities Act.

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