Offer for City North Group

Grainger Trust PLC
22 March 2005





  Not for release, distribution or publication in or into the United States of
                      America, Canada, Japan or Australia.





                                                                   22 March 2005

                               Grainger Trust plc



                Recommended cash offer for City North Group plc



•      The boards of Grainger and City North announce the terms of a recommended
cash offer, to be made by JPMorgan Cazenove on behalf of Grainger, for the
entire issued and to be issued share capital of City North.

•      The Offer has been unanimously recommended by the Board of City North.

•      The Offer is 270 pence in cash for each City North Share, valuing the
entire issued and to be issued ordinary share capital of City North at
approximately £58.5 million.

•      The Offer represents:

•      a premium of 6.5 per cent. to the closing middle market price of 253.5
pence per City North Share on 21 March 2005, being the last business day prior
to the announcement of the Offer;

•      a discount of 10.6 per cent. to the Net Asset Value per City North Share
of approximately 302 pence as at 31 December 2004; and

•      a premium of 2.3 per cent. to the Triple Net Asset Value per City North
Share of approximately 264 pence as at 31 December 2004.

•      City North Shareholders may elect for a Partial Share Alternative of 180
pence in cash and 0.2423 New Grainger Shares for each City North Share.  Based
on the closing mid-market Grainger share price of 392 pence on 21 March 2005,
being the latest practicable date prior to this announcement, the Partial Share
Alternative values each City North share at 275 pence.

•      Grainger's core business is in the tenanted residential market.  Grainger
regards the potential acquisition of City North as an important strategic
opportunity to strengthen its presence in the market rented sector and in
particular in the Central London residential market.

•      In total, Grainger has received confirmation of support for the Offer
from City North Shareholders in respect of their beneficial holdings amounting
in aggregate to 7,421,519 City North Shares, representing approximately 35.34
per cent. of City North's current issued share capital, comprising:

•      Certain directors of City North have irrevocably undertaken to accept the
Offer in respect of their beneficial holdings amounting in aggregate to
1,364,000 City North Shares, representing approximately 6.49 per cent. of City
North's current issued share capital.  Of this aggregate holding, Michael
Sherley-Dale, who holds 5.24 per cent., has stated his intention to elect to the
extent possible under the Mix and Match Facility to take New Grainger Shares as
consideration in respect of a minimum of 50 per cent. of his holding.

•      Certain other Shareholders have irrevocably undertaken to accept the
Offer in respect of their beneficial holdings amounting in aggregate to
4,226,432 City North Shares, representing approximately 20.12 per cent. of City
North's current issued share capital.  Of these, undertakings in respect of
2,125,432 City North Shares, representing approximately 10.12 per cent. of City
North's current issued share capital, cease to be binding in the event that a
third party announces a firm intention to make an offer for City North at a
higher price than that announced by Grainger, and undertakings in respect of
2,101,000 City North Shares, representing approximately 10.00 per cent. of City
North's current issued share capital, cease to be binding in the event that a
third party announces a firm intention to make an offer for City North at a
price which is 10 per cent. higher than that announced by Grainger.

•      Certain other Shareholders have confirmed in writing that it is their
intention to accept the Offer in respect of their beneficial holdings amounting
in aggregate to 1,831,087 City North Shares, representing approximately 8.72 per
cent. of City North's current issued share capital.

The above summary is to be read in conjunction with the full text of this
announcement.

Commenting on the Offer, Robert Dickinson, Chairman of Grainger, said:

'The acquisition of City North will increase our market rented residential
portfolio to approximately £225m.  This critical mass will enable us to take
advantage of both operational synergies and wider funding opportunities.  City
North's high quality portfolio, which includes approximately 350 units with an
average value of approximately £247,000, is well located and has been well
managed.  We believe the merging of our portfolios will be in the best interests
of both sets of shareholders.'

John Cobb, Chairman of City North, said:

'The offer represents an excellent opportunity for our shareholders to receive
fair value for their shares.  The Board of City North believes there are
significant advantages in City North becoming part of a larger entity in terms
of critical mass and economies of scale.'

Enquiries

Grainger
Rupert Dickinson                                                   020 7795 4700
Andrew Cunningham                                                  0191 261 1819

JPMorgan Cazenove                                                  020 7588 2828
Richard Cotton
Roger Clarke

Baron Phillips Associates                                          020 7920 3161
Baron Phillips

City North                                                         020 7932 0403
Michael Sherley-Dale

KPMG Corporate Finance                                             020 7311 1000
David Simpson
Richard Barlow
Richard Brown





JPMorgan Cazenove, which is regulated in the United Kingdom by the Financial
Services Authority, is acting for Grainger and for no one else in connection
with the Offer and will not be responsible to anyone other than Grainger for
providing the protections afforded to clients of JPMorgan Cazenove or for
providing advice in relation to the Offer or any matter referred to herein or in
the Offer Document.



KPMG Corporate Finance, a division of KPMG LLP which is authorised and regulated
by the Financial Services Authority, is acting for City North as financial
adviser in relation to the Offer and is not acting for any other person in
relation to such Offer.  KPMG Corporate Finance will not be responsible to
anyone other than City North for providing the protections afforded to its
clients or for providing advice in relation to the contents of this
announcement, or any matter referred to herein, or in the Offer Document.



This announcement does not constitute, or form part of, any offer for, or any
solicitation of any offer for, securities.  Any acceptance or other response to
the Offer should be made only on the basis of information referred to in the
Offer Document and the Form of Acceptance which Grainger intends to despatch
shortly to City North Shareholders and, for information only, to holders of
options under the City North Share Option Schemes.



The availability of the Offer to persons not resident in the United Kingdom may
be affected by the law of the relevant jurisdiction.  Such persons should inform
themselves about and observe any applicable requirements.



The Offer will not be made, directly or indirectly, in or into, or by use of the
mails, or by any means or instrumentality (including, but not limited to,
facsimile transmission or other electronic transmission, telex or telephone) of
interstate or foreign commerce, or any facilities of a national, state or other
securities exchange, of the United States, nor will it be made, directly or
indirectly, in or into Canada, Australia or Japan and will not be capable of
acceptance by any such use, means, instrumentality or facilities or from within
the United States, Canada, Australia or Japan.  Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed or
sent in or into or from, the United States, Canada, Australia or Japan.



This announcement is not an offer of securities for sale in the United States
and the New Grainger Shares have not been, and will not be, registered under the
United States Securities Act of 1933, as amended, or under the securities laws
of any jurisdiction of the United States; the relevant clearances have not been
obtained and will not be obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the New Grainger Shares has
been, or will be, lodged with or registered by the Australian Securities &
Investments Commission; nor have any steps been taken to enable the New Grainger
Shares to be offered in Japan in compliance with applicable securities laws of
Japan. Accordingly, the New Grainger Shares may not be offered, sold, resold or
delivered directly or indirectly in or into the United States, Canada, Australia
or Japan or any other country outside the UK where to do so would lead to a
breach of any legal or regulatory requirement.


This announcement contains a number of forward-looking statements relating to
Grainger, City North and the Enlarged Group with respect to, among others, the
following: financial condition; results of operations; the business of the
Enlarged Group; future benefits of the transaction; and management plans and
objectives. Grainger and City North consider any statements that are not
historical facts as 'forward-looking statements'. They involve a number of risks
and uncertainties that could cause actual results to differ materially from
those suggested by the forward-looking statements. Important factors that could
cause actual results to differ materially from estimates or forecasts contained
in the forward-looking statements include, among others, the following
possibilities: future revenues are lower than expected; costs or difficulties
relating to the integration of the businesses of Grainger and City North, or of
other future acquisitions, are greater than expected; expected cost savings from
the transaction or from other future acquisitions are not fully realised or
realised within the expected time frame; competitive pressures in the industry
increase; general economic conditions or conditions affecting the relevant
industries, whether internationally or in the places Grainger and City North do
business, are less favourable than expected, and/or conditions in the securities
market are less favourable than expected.



The directors of Grainger accept responsibility for the information contained in
this announcement other than information relating to City North and the
directors of City North, their immediate families, related trusts and persons
connected with them.  To the best of the knowledge and belief of the directors
of Grainger (who have taken all reasonable care to ensure that such is the
case), the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.



The directors of City North accept responsibility for the information contained
in this announcement relating to City North and the directors of City North,
their immediate families, related trusts and persons connected with them. To the
best of the knowledge and belief of the directors of City North (who have taken
all reasonable care to ensure that such is the case), the information contained
in this announcement for which they accept responsibility is in accordance with
the facts and does not omit anything likely to affect the import of such
information.










  Not for release, distribution or publication in or into the United States of
                      America, Canada, Japan or Australia.





                                                                   22 March 2005



                                  Grainger plc



                Recommended cash offer for City North Group Plc



1.  Introduction



The boards of Grainger and City North announce the terms of a recommended cash
offer, to be made by JPMorgan Cazenove on behalf of Grainger, for the entire
issued and to be issued share capital of City North.



2.  The Offer

The Offer is 270 pence in cash for each City North Share, valuing the entire
issued and to be issued ordinary share capital of City North at approximately
£58.5 million.

The Offer represents:

•          a premium of 6.5 per cent. to the closing middle market price of
253.5 pence per City North Share on 21 March 2005, being the last business day
prior to the announcement of the Offer;

•          a discount of 10.6 per cent. to the Net Asset Value per City North
Share of approximately 302 pence as at 31 December 2004; and

•          a premium of 2.3 per cent. to the Triple Net Asset Value per City
North Share of approximately 264 pence as at 31 December 2004.

The City North Shares will be acquired pursuant to the Offer fully paid and free
from all liens, charges, equitable interests, encumbrances and rights of
pre-emption and any other interests of any nature whatsoever and together with
all rights now or hereafter attaching thereto including voting rights and the
right to receive all dividends or other distributions declared, made or paid
after the date of the Offer, other than the City North second interim dividend
announced today and referred to below, which will be paid on 26 April 2005 to
City North Shareholders on the register on 1 April 2005.



The Offer will initially remain open for acceptance until 3.00 pm (London time)
on the date which is 21 days following the date on which the Offer Document is
posted, but may be extended in accordance with the Code.



The conditions to and certain further terms of the Offer are set out in Appendix
I to this Announcement. Further details of the terms of the Offer will be
contained in the Offer Document and the Form of Acceptance.



3.  Terms of the Partial Share Alternative



Each City North Shareholder (other than certain overseas shareholders) may elect
to receive New Grainger Shares in lieu of part of the cash consideration to
which he would otherwise be entitled under the Offer.



Under the Partial Share Alternative a City North Shareholder may elect to
receive 180 pence in cash plus 0.2423 New Grainger Shares for each City North
Share. The Partial Share Alternative will be available in respect of up to a
maximum of 5,088,583 New Grainger Shares.



Fractions of New Grainger Shares will not be allotted or issued to Accepting
City North Shareholders. Fractional entitlements to New Grainger Shares will be
rounded down and paid in cash.



The Partial Share Alternative is conditional upon the Offer becoming or being
declared unconditional in all respects.



Full acceptance of the Offer assuming the maximum take-up of the Partial Share
Alternative, and assuming exercise of all the options under the City North Share
Option Schemes where the exercise price is less than 270 pence, would result in
the issue of 5,088,583 New Grainger Shares (representing approximately 3.9 per
cent. of the enlarged issued share capital of Grainger).



4.  Terms of the Mix and Match Facility



City North Shareholders (other than certain overseas shareholders) who
participate in the Partial Share Alternative may elect under the terms of the
Mix and Match Facility to vary the proportion of New Grainger Shares they
receive in lieu of cash consideration above or below the New Grainger Shares
receivable under the Partial Share Alternative.



The total number of New Grainger Shares to be issued to City North Shareholders
pursuant to the Partial Share Alternative will not exceed 5,088,583.
Accordingly, satisfaction of elections made for additional New Grainger Shares
pursuant to the Mix and Match Facility will depend on the extent to which other
City North shareholders have elected to receive New Grainger Shares under either
the Partial Share Alternative or the Mix and Match Facility.



To the extent that elections to receive more than the New Grainger Shares
available under the Partial Share Alternative are received, any City North
Shareholders who elect for the Partial Share Alternative or fewer New Grainger
Shares than are receivable under the Partial Share Alternative will have their
elections satisfied in full, but City North Shareholders who elect for
additional New Grainger Shares will be scaled down pro rata.  Fractions of New
Grainger Shares will be rounded down and paid in cash.



As a result, City North Shareholders who make an election to receive more than
the New Grainger Shares available under the Partial Share Alternative will not
necessarily know the exact number of New Grainger Shares or the amount of cash
they will receive until settlement of the consideration under the Offer.



Elections under the Mix and Match Facility will not affect the entitlements of
those City North Shareholders who have elected for the Partial Share Alternative
but who have not made elections under the Mix and Match Facility.



The Mix and Match Facility will remain open until the first closing date of the
Offer.  If the Offer is not then unconditional as to acceptances, Grainger may
extend the Mix and Match Facility to a later date.  If the Mix and Match
Facility has been closed, Grainger reserves the right to reintroduce a mix and
match facility, subject to the rules of the Code.  The Mix and Match Facility is
conditional on the Offer becoming or being declared wholly unconditional.



Further details of the terms of the Mix and Match Facility will be contained in
the Offer Document and Form of Acceptance.



5.  Conclusion and Recommendation



Conclusion



The Board of City North, which has been so advised by KPMG Corporate Finance,
considers the terms of the Offer to be fair and reasonable so far as the City
North Shareholders are concerned.  In providing its advice, KPMG Corporate
Finance has taken into account the commercial assessments of the Board of City
North.



Recommendation



The directors of City North unanimously recommend City North Shareholders to
accept the Offer, as they will do in respect of their own respective beneficial
holdings comprising, in aggregate, 1,460,447 City North Shares, representing
approximately 6.95 per cent. of the current issued share capital of City North.



6.  Undertakings to accept the Offer



Certain directors of City North have entered into agreements with Grainger
pursuant to which they have irrevocably undertaken to accept the Offer in
respect of their own beneficial holdings amounting in aggregate to 1,364,000
City North Shares, representing approximately 6.49 per cent. of the current
issued share capital of City North.  The terms of these irrevocable undertakings
require acceptance of the Offer even in the event of a higher competing offer
being made for City North by a third party, unless the Offer is withdrawn or
lapses.  Of this aggregate holding, Michael Sherley-Dale, who holds 5.24 per
cent., has stated his intention to elect to the extent possible under the Mix
and Match Facility to take New Grainger Shares as consideration in respect of a
minimum of 50 per cent. of his holding.



Certain other Shareholders have irrevocably undertaken to accept the Offer in
respect of their beneficial holdings amounting in aggregate to 4,226,432 City
North Shares, representing approximately 20.12 per cent. of City North's current
issued share capital.  Of these, undertakings in respect of 2,125,432 City North
Shares, representing approximately 10.12 per cent. of City North's current
issued share capital, cease to be binding in the event that a third party
announces a firm intention to make an offer for City North at a higher price
than that announced by Grainger, and undertakings in respect of 2,101,000 City
North Shares, representing approximately 10.00 per cent. of City North's current
issued share capital, cease to be binding in the event that a third party
announces a firm intention to make an offer for City North at a price which is
10 per cent. higher than that announced by Grainger.

Certain other Shareholders have confirmed in writing that is their intention to
accept the Offer in respect of their beneficial holdings amounting in aggregate
to 1,831,087 City North Shares, representing approximately 8.72 per cent. of
City North's current issued share capital.



7.  Background to, reasons for and benefits of the Offer



The Directors of Grainger anticipate that the supply of regulated tenancies will
decline over forthcoming years.  Grainger is therefore expanding other areas of
its business to take advantage of the skills and understanding of the
residential marketplace within the organisation.



One of these areas is market rented tenancies.  Grainger intends to extend its
activities as a manager of and co-investor in property funds.  Its extensive
network of in-house managers, combined with external agents, carry out both the
day-to-day and asset management of the existing 12,000 unit residential
portfolio.



Grainger regards City North as a well run company with a proven track record in
buying and managing market rented residential property.  City North is a good
strategic fit with Grainger's existing £136m rented portfolio.  This is an
excellent opportunity to merge both the market rented portfolios of Grainger and
City North and also the property management operations of both groups.  Grainger
has recently moved its main South Eastern management office to Putney and its
Board believes that the inclusion of City North's Clerkenwell office in the
network will provide better geographical coverage for the approximately 4,000
properties managed in London and the South East.



City North's principal business is a residential market rented portfolio
together with a number of commercial investment and development properties.
Grainger is increasingly becoming involved in mixed use development and believes
that City North's management team will augment its existing capabilities in
mixed use development and management.



City North has existing plans for joint venture development or sale of its two
main development sites.  The greater scale of the Enlarged Group's operations
will enable a longer term view of these plans to be taken.



8.  Information relating to the Grainger Group



Grainger is the UK's largest quoted residential property investor owning over
12,000 units.  This core business is supplemented by the development and trading
division, which is active in the delivery of residential and mixed use
developments.  In addition to its traditional long-term businesses Grainger is
also expanding its portfolio of equity release products and exploring
opportunities in mainland Europe.



Grainger specialises in those areas of the tenanted residential market that
offer reversionary or development potential, regulated tenancies and home
reversions in particular.  It also has expertise in residential property and
asset management, including purchase, refurbishment and sale both for its own
portfolio and for other landlords, such as the Schroders ResPUT, in which
Grainger holds approximately 9.5 per cent. of the units.



Consequently Grainger's business generates income from two main sources: trading
profits from the sale of residential units and development assets and rental
income from its managed portfolio.  Grainger also receives property and asset
management fees from its work for other landlords.



In the year ended 30 September 2004, Grainger reported profit before tax and
exceptional items of £59.6 million and at that date had a property portfolio
with a market value of £1.4 billion.



9.  Information relating to City North



City North is primarily a residential property company, specialising in Central
London development and letting. The business originated from a combination of
private and Business Expansion Scheme investments, which grew significantly from
the late 1980s. The Group was floated on the London Stock Exchange in May 1998,
at which stage it raised approximately £11 million from institutional investors
and had around £36 million of shareholders' funds.



As at 31 December 2004, City North's net assets were approximately £65 million,
with gross assets of around £112 million.  The bulk of the assets are one, two
and three bedroom flats, which generate approximately 80 per cent. of current
income. The business remains a residential specialist with over 70 per cent. of
assets being Central London apartments within a four-mile radius of Oxford
Circus. There has been some diversification by the addition of a number of
commercial and office schemes, but these remain a secondary priority for City
North. Turnover for the year ended on 31 December 2004 was over £5.8 million,
which mostly derived from middle price range rentals, where many flats are
shared by single professional tenants.





City North released its preliminary results for the year ended 31 December 2004
today.  John Cobb, City North's Chairman, said the following:



'City North has completed its sixth full year since flotation, with its best
ever performance in margins and new highs in turnover and operating profits in
that period. Asset value per share has resumed an upward path and shareholders'
funds have increased by 10 per cent.'



10.  Financial effects of the acceptance of the Offer



Details of the financial effects of acceptance of the Offer are set out in
Appendix II of this announcement.



11.  City North Share Option Schemes



The Offer will extend to any City North Shares unconditionally issued or
allotted while the Offer remains open for acceptance (or by such earlier date as
Grainger may, subject to the Code or with the consent of the Panel, determine)
including any such shares allotted or issued pursuant to the exercise of City
North Options.  Grainger will make appropriate proposals to participants in the
City North Share Option Schemes in due course which would take effect after the
Offer has become or has been declared wholly unconditional, to the extent that
their options have not been exercised.



12.  Financing of the Offer



The Offer will be financed by existing facilities of Grainger. There are no
conditions required to be satisfied prior to the drawdown of these funds.



Pro forma net debt of the Enlarged Group on completion of the acquisition is
expected to be a maximum of approximately £805 million, assuming no take-up of
the Partial Share Alternative.



13.  Management and employees



The Board of Grainger has given assurances to the City North directors that,
following the Offer becoming or being declared unconditional in all respects,
the existing employment rights (including pension rights) of all employees of
City North will be safeguarded.



14.  Listing of New Grainger Shares



Application will be made to the UK Listing Authority for the New Grainger Shares
to be admitted to the Official List and to the London Stock Exchange for the New
Grainger Shares be admitted to trading on the London Stock Exchange's market for
listed securities. It is expected that admission of the New Grainger Shares to
the Official List will become effective, and that dealings for normal settlement
in the New Grainger Shares will commence on the London Stock Exchange, as soon
as reasonably practicable after the date on which the Offer becomes or is
declared unconditional in all respects (subject only to the condition relating
to admission contained in paragraph (b) of Part 1 of Appendix I to this
Announcement).



15.  Delisting and compulsory acquisition



If the Offer becomes or is declared unconditional in all respects, Grainger
intends to procure the making of an application by City North to delist the City
North Shares from the Official List and to cancel trading on the London Stock
Exchange's market for listed securities.  It is anticipated that cancellation of
listing and trading will take effect no earlier than 20 business days after the
Offer becomes or is declared unconditional in all respects.  Delisting would
significantly reduce the liquidity and marketability of any City North Shares
not assented to the Offer.



If Grainger receives acceptances under the Offer in respect of, and/or otherwise
acquires, 90 per cent. or more of the City North Shares to which the Offer
relates, Grainger intends to exercise its rights pursuant to the provisions of
sections 428 to 430F (inclusive) of the Companies Act 1985 (as amended) to
acquire compulsorily the remaining City North Shares.



16.  Inducement fee



It has been agreed between Grainger and City North that City North will pay
Grainger a fee of £585,000 (inclusive of VAT) if the board of City North
withdraws its recommendation of the Offer or if, prior to the withdrawal or
lapse of the Offer, a higher competing offer for City North is announced and
such offer subsequently becomes or is declared unconditional in all respects.



17.  Securities in issue



As at 7.00 a.m. on 22 March 2005 Grainger had 124,106,385 ordinary shares of 5p
in issue (ISIN number GB00B04V1276) and City North had 21,001,170 ordinary
shares of 50p in issue (ISIN number GB0002827672) and options outstanding over
660,670 City North Shares.



18.  General



Neither Grainger, nor any of its directors, nor, so far as Grainger is aware,
any person deemed to be acting in concert with it, owns or controls any City
North Shares or has any option to acquire any City North Shares, or has entered
into any derivative referenced to securities of City North which remains
outstanding.




The Offer will be on the terms and subject to the conditions set out herein and
in Appendix I and to be set out in the Offer Document and Form of Acceptance.
It is intended that the Offer Document (including a letter of recommendation
from the Chairman of City North) and Forms of Acceptance will be despatched
shortly to City North Shareholders.



Appendix III contains the sources and bases for certain information set out in
this announcement.



Appendix IV contains the definitions used in this announcement.



JPMorgan Cazenove, which is regulated in the United Kingdom by the Financial
Services Authority, is acting for Grainger and for no one else in connection
with the Offer and will not be responsible to anyone other than Grainger for
providing the protections afforded to clients of JPMorgan Cazenove or for
providing advice in relation to the Offer or any matter referred to herein or in
the Offer Document.



KPMG Corporate Finance, a division of KPMG LLP which is authorised and regulated
by the Financial Services Authority, is acting for City North as financial
adviser in relation to the Offer and is not acting for any other person in
relation to such Offer.  KPMG Corporate Finance will not be responsible to
anyone other than City North for providing the protections afforded to its
clients or for providing advice in relation to the contents of this
announcement, or any matter referred to herein, or in the Offer Document.



The availability of the Offer to persons not resident in the United Kingdom may
be affected by the laws of the relevant jurisdiction.  Such persons should
inform themselves about and observe any applicable requirements.



This announcement does not constitute, or form any part of, any offer for, or
solicitation of any offer for securities. Any acceptance or other response to
the Offer should be made only on the basis of the information contained in the
Offer Document and the Form of Acceptance.



The Offer will not be made, directly or indirectly, in or into, or by use of the
mails or any means of instrumentality (including without limitation facsimile
transmission, telex and telephone) of interstate or foreign commerce of, or any
facilities of a national securities exchange of the United States, nor will it
be made in or into Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed or
sent in or into or from the United States, Canada, Australia or Japan and
persons receiving this announcement (including custodians, nominees and
trustees) must not distribute or send it in, into or from the United States,
Canada, Australia or Japan.



The New Grainger Shares have not been, and will not be, registered under the
United States Securities Act of 1933, as amended, or under the securities laws
of any jurisdiction of the United States; the relevant clearances have not been
obtained and will not be obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the New Grainger Shares has
been, or will be, lodged with or registered by the Australian Securities &
Investments Commission; nor have any steps been taken to enable the New Grainger
Shares to be offered in Japan in compliance with applicable securities laws of
Japan. Accordingly, the New Grainger Shares may not be offered, sold, resold or
delivered directly or indirectly in or into the United States, Canada, Australia
or Japan or any other country outside the UK where to do so would lead to a
breach of any legal or regulatory requirement.



This announcement contains a number of forward-looking statements relating to
Grainger, City North and the Enlarged Group with respect to, among others, the
following: financial condition; results of operations; the business of the
Enlarged Group; future benefits of the acquisition; and management plans and
objectives. Grainger and City North consider any statements that are not
historical facts as 'forward-looking statements'. They involve a number of risks
and uncertainties that could cause actual results to differ materially from
those suggested by the forward-looking statements. Important factors that could
cause actual results to differ materially from estimates or forecasts contained
in the forward-looking statements include, among others, the following
possibilities: future revenues are lower than expected; costs or difficulties
relating to the integration of the businesses of Grainger and City North, or of
other future acquisitions, are greater than expected; expected cost savings from
the acquisition or from other future acquisitions are not fully realised or
realised within the expected time frame; competitive pressures in the industry
increase; general economic conditions or conditions affecting the relevant
industries, whether internationally or in the places Grainger and City North do
business, are less favourable than expected, and/or conditions in the securities
market are less favourable than expected.



The directors of Grainger accept responsibility for the information contained in
this announcement other than information relating to City North and the
directors of City North, their immediate families, related trusts and persons
connected with them.  To the best of the knowledge and belief of the directors
of Grainger (who have taken all reasonable care to ensure that such is the
case), the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.



The directors of City North accept responsibility for the information contained
in this announcement relating to City North and the directors of City North,
their immediate families, related trusts and persons connected with them. To the
best of the knowledge and belief of the directors of City North (who have taken
all reasonable care to ensure that such is the case), the information contained
in this announcement for which they accept responsibility is in accordance with
the facts and does not omit anything likely to affect the import of such
information.




                                   APPENDIX I

                CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER

                                     PART 1

                             CONDITIONS OF THE OFFER


The Offer will be subject to the following conditions:



(a)            valid acceptances being received (and not, where permitted,
withdrawn) by 3.00 p.m. (London time) on the first closing date of the Offer (or
such later time(s) and/or date(s) as Grainger may, subject to the rules of the
Code or with the consent of the Panel, decide) in respect of not less than 90
per cent. (or such lesser percentage as Grainger may decide) in nominal value of
the City North Shares to which the Offer relates, provided that this condition
will not be satisfied unless Grainger (together with its wholly owned
subsidiaries) shall have acquired or agreed to acquire (pursuant to the Offer or
otherwise) City North Shares carrying in aggregate more than 50 per cent. of the
voting rights then exercisable at a general meeting of City North (including for
this purpose, to the extent (if any) required by the Panel, any voting rights
attaching to any City North Shares that are unconditionally allotted or issued
before the Offer becomes or is declared unconditional as to acceptances whether
pursuant to the exercise of any outstanding subscription or conversion rights or
otherwise).



For the purposes of this condition:



(i)                   City North Shares which have been unconditionally allotted
shall be deemed to carry the voting rights they will carry upon issue; and



(ii)                 the expression 'City North Shares to which the Offer
relates' shall be construed in accordance with sections 428 to 430F of the
Companies Act 1985;



(b)            the UK Listing Authority agreeing to admit the New Grainger
Shares to the Official List and such admission becoming effective in accordance
with paragraph 7.1 of the Listing Rules and the London Stock Exchange agreeing
to admit the New Grainger Shares to trading and the admission becoming effective
in accordance with the Admission and Disclosure Standards of the London Stock
Exchange or (if Grainger so determines and subject to the consent of the Panel)
the UK Listing Authority and the London Stock Exchange agreeing to admit such
shares to listing and trading respectively;



(c)            it being established to the satisfaction of Grainger that:



(i)          neither the proposed acquisition of City North by any member of the
Wider Grainger Group nor any matters or arrangements arising therefrom or
related thereto will be referred to the Competition Commission in the United
Kingdom;

(ii)         it is not and will not be necessary, in order to avoid any such
reference to the Competition Commission, for any member of the Wider Grainger
Group or member of the Wider City North Group to give undertakings to the Office
of Fair Trading except where any such undertakings are on terms which Grainger
in its entire discretion considers satisfactory; and



(iii)               there has been no statement or intervention by the Office of
Fair Trading or the Secretary of State for Trade and Industry indicating that it
is necessary or desirable for any aspect of the proposed acquisition of City
North or any matters or arrangements arising therefrom or related thereto to be
altered, amended or modified except on terms which Grainger in its entire
discretion considers satisfactory.



(d)            no government or governmental, quasi-governmental, supranational,
statutory, regulatory or investigative body, trade agency, court, professional
association or any other body or person in any jurisdiction (each a 'Third
Party') having (prior to the date on which the Offer would otherwise become
unconditional) decided to take, institute or threaten any action, proceeding,
suit, investigation, enquiry or reference, or having required any action to be
taken or otherwise having done anything or having enacted, made or proposed any
statute, regulation, decision or order and there not continuing to be
outstanding any statute, regulation, decision or order which would or might:



(i)                   make the Offer, its implementation or the acquisition or
proposed acquisition of any City North Shares by any member of the Wider
Grainger Group void, unenforceable or illegal or restrict, prohibit, delay or
otherwise interfere with the implementation of, or impose additional materially
adverse conditions or obligations with respect to, or otherwise challenge or
require amendment, of the Offer or the acquisition of any City North Shares by
any member of the Wider Grainger Group;



(ii)                 require, prevent or delay the divestiture or alter the
terms envisaged for such divestiture by any member of the Wider Grainger Group
or by any member of the Wider City North Group of all or any part of their
respective businesses, assets or properties or impose any material limitation on
their ability to conduct their respective businesses or to own any of their
respective assets or properties; in any such case to an extent which is material
in the context of the City North Group taken as a whole or the Grainger Group
taken as a whole (as the case may be);



(iii)               impose any material limitation on, or result in a delay in,
the ability of any member of the Wider Grainger Group to acquire or hold or to
exercise effectively, directly or indirectly, all or any rights of ownership of
shares or other securities (or the equivalent) in City North or on the ability
of any member of the Wider City North Group or any member of the Wider Grainger
Group to hold or exercise effectively any rights of ownership of shares or other
securities in or to exercise management control over any member of the Wider
City North Group; in any such case to an extent which is material in the context
of the Wider City North Group or the Wider Grainger Group (as the case may be);



(iv)                require any member of the Wider Grainger Group or the Wider
City North Group to acquire or offer to acquire any shares or other securities
(or the equivalent) in any member of the Wider City North Group or any asset
owned by any third party (other than in the implementation of the Offer);



(v)                  require, prevent or delay a divestiture by any member of
the Wider Grainger Group of any shares or other securities (or the equivalent)
in City North; in any such case to an extent which is material in the context of
the Wider Grainger Group;



(vi)                result in any member of the Wider City North Group ceasing
to be able to carry on business under any name which it presently does so to an
extent which is material in the context of the Wider City North Group;



(vii)              impose any material limitation on the ability of any member
of the Wider Grainger Group or any member of the Wider City North Group to
integrate or co-ordinate all or any part of its business with all or any part of
the business of any other member of the Wider Grainger Group and/or the Wider
City North Group; or



(viii)            otherwise affect the business, assets, profits or prospects of
any member of the Wider Grainger Group or any member of the Wider City North
Group in a manner which is adverse to and material in the context of the Wider
Grainger Group or the Wider City North Group (as the case may be);



and all applicable waiting and other time periods during which any such Third
Party could decide to take, institute or threaten any such action, proceeding,
suit, investigation, enquiry or reference or otherwise intervene having expired,
lapsed or been terminated;



(e)            all necessary notifications and filings having been made in
connection with the Offer and all necessary waiting periods (including any
extensions thereof) under any applicable legislation or regulation of any
jurisdiction having expired, lapsed or been terminated (as appropriate) and all
statutory and regulatory obligations in any jurisdiction having been complied
with and all Authorisations which in the reasonable opinion of Grainger are
necessary or appropriate in any jurisdiction for or in respect of the Offer and
the acquisition or the proposed acquisition of any shares or other securities in
or control of City North by any member of the Wider Grainger Group having been
obtained in terms and in a form reasonably satisfactory to Grainger from all
appropriate Third Parties or (without prejudice to the generality of the
foregoing) from any person or bodies with whom any member of the Wider City
North Group or the Wider Grainger Group has entered into contractual
arrangements and all such Authorisations which in the reasonable opinion of
Grainger are necessary or appropriate to carry on the business of any member of
the Wider City North Group in any jurisdiction having been obtained and all such
Authorisations remaining in full force and effect at the time at which the Offer
becomes otherwise unconditional and there being no notice or intimation of an
intention to revoke, suspend, restrict, modify or not to renew such
Authorisations;



(f)              save as fairly disclosed to Grainger prior to 22 March 2005 or
as publicly announced to a Regulatory Information Service by or on behalf of
City North before 22 March 2005 there being no provision of any arrangement,
agreement, licence, permit, lease or other instrument to which any member of the
Wider City North Group is a party or by or to which any such member or any of
its assets is or may be bound or be subject or any event or circumstance which
would, as a consequence of the Offer or the acquisition or the proposed
acquisition by any member of the Wider Grainger Group of any shares or other
securities (or the equivalent) in City North or because of a change in the
control or management of any member of the Wider City North Group or otherwise,
would or might reasonably be expected to result in, to an extent which is
material in the context of the Wider City North Group:



(i)                   any monies borrowed by, or any other indebtedness, actual
or contingent, of any member of the Wider City North Group being or becoming
repayable, or capable of being declared repayable, immediately or prior to its
or their stated maturity, or the ability of any such member to borrow monies or
incur any indebtedness being withdrawn or inhibited;



(ii)                 the rights, liabilities, obligations, interests or business
of any member of the Wider City North Group under any such arrangement,
agreement, licence, permit, lease or instrument or the interests or business of
any member of the Wider City North Group in or with any other firm or company or
body or person (or any agreement or arrangements relating to any such business
or interests) being terminated or adversely modified or affected or any onerous
obligation or liability arising or any adverse action being taken thereunder;



(iii)               any member of the Wider City North Group ceasing to be able
to carry on business under any name under which it presently does so;



(iv)                any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider City North Group being or falling to be
disposed of or charged or any right arising under which any such asset or
interest could be required to be disposed of or charged or could cease to be
available to any member of the Wider City North Group otherwise than in the
ordinary course of business;



(v)                  the creation or enforcement of any mortgage, charge or
other security interest over the whole or any part of the business, property or
assets of any member of the Wider City North Group;



(vi)                the value of, or the financial or trading position or
prospects of, any member of the Wider City North Group being prejudiced or
adversely affected;



(vii)              the creation of any liability (actual or contingent) by any
member of the Wider City North Group; or



(viii)            any liability of any member of the Wider City North Group to
make any severance, termination, bonus or other payment to any director or other
officer of any company in the Wider City North Group;



(g)            except as disclosed in this announcement or in the preliminary
statement of audited results of City North for the year ended 31 December 2004
(the 'City North Preliminary Results') or as publicly announced to a Regulatory
Information Service by or on behalf of City North before 22 March 2005 or as
fairly disclosed to Grainger before 22 March 2005, no member of the Wider City
North Group having since 31 December 2004 :



(i)                   issued or agreed to issue or authorised or proposed the
issue of additional shares of any class, or securities or securities convertible
into, or exchangeable for, or rights, warrants or options to subscribe for or
acquire, any such shares or convertible securities (save as between City North
and wholly-owned subsidiaries of City North and save for the grant of any City
North options and/or the issue of City North Shares on the exercise of options
granted before the date of this announcement in the ordinary course);



(ii)                 recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus, dividend or other distribution;



(iii)               merged with or demerged or acquired any body corporate,
partnership or business or acquired or disposed of, or, other than in the
ordinary course of business, transferred, mortgaged or charged or created any
security interest over, any assets or any right, title or interest in any asset
(including shares and trade investments) or authorised, proposed or announced
any intention to do so to an extent which is material in the context of the
Wider City North Group;



(iv)                made, authorised, proposed or announced an intention to
propose any change in its loan capital;



(v)                  issued, authorised or proposed the issue of any debentures
or (other than in the ordinary course of business) incurred or increased any
indebtedness or contingent liability to an extent which is material in the
context of the Wider City North Group;



(vi)                entered into or varied or announced its intention to enter
into or vary any contract, transaction, arrangement or commitment (whether in
respect of capital expenditure or otherwise) which is of a long term, unusual or
onerous nature, or which involves or could involve an obligation of a nature or
magnitude which is, in any such case, material in the context of the City North
Group or which is or is likely to be restrictive on the business of any member
of the Wider City North Group or the Wider Grainger Group to an extent which is
material in the context of the Wider City North Group;



(vii)              entered into or varied the terms of any service agreement
with any director of the Wider City North Group;



(viii)            proposed, agreed to provide or modified the terms of any share
option scheme, incentive scheme, or other benefit relating to the employment or
termination of employment of any employee of the Wider City North Group in a
manner which is material in the context of the Wider City North Group;



(ix)                made or agreed or consented to any significant change to the
terms of the trust deeds constituting the pension schemes established for its
directors, employees or their dependants or the benefits which accrue, or to the
pensions which are payable, thereunder, or to the basis on which qualification
for, or accrual or entitlement to, such benefits or pensions is calculated or
determined or to the basis on which the liabilities (including pensions) of such
pension schemes are funded or made, or agreed or consented to any change to the
trustees, including the appointment of a trust corporation to an extent which is
material in the context of the Wider City North Group;



(x)                  implemented, effected or authorised, proposed or announced
its intention to implement, effect, authorise or propose any reconstruction,
amalgamation, commitment, scheme or other transaction or arrangement otherwise
than in the ordinary course of business to an extent which is material in the
context of the Wider City North Group;



(xi)                purchased, redeemed or repaid or proposed the purchase,
redemption or repayment of any of its own shares or other securities or reduced
or made any other change to any part of its share capital;



(xii)              waived or compromised any claim otherwise than in the
ordinary course of business which is material in the context of the Wider City
North Group;



(xiii)            made any alteration to its memorandum or articles of
association or other incorporation documents;



(xiv)            taken or proposed any corporate action or had any legal
proceedings instituted or threatened against it for its winding-up (voluntary or
otherwise), dissolution, reorganisation or for the appointment of any
administrator, administrative receiver, trustee or similar officer of all or any
of its assets or revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction;



(xv)              been unable, or admitted in writing that it is unable, to pay
its debts or having stopped or suspended (or threatened to stop or suspend)
payment of its debts generally or ceased or threatened to cease carrying on all
or a substantial part of its business; or



(xvi)            entered into any contract, commitment, agreement or arrangement
or passed any resolution with respect to or announced an intention to effect or
propose any of the transactions, matters or events referred to in this
paragraph;



(h)            except as disclosed in this announcement or in the City North
Preliminary Results or as publicly announced to a Regulatory Information Service
by or on behalf of City North before 22 March 2005 or as fairly disclosed to
Grainger before 22 March 2005, since 31 December 2004:



(i)                   there having been no adverse change in the business,
assets, financial or trading position or profits or prospects of any member of
the Wider City North Group to an extent which is material in the context of to
the Wider City North Group;



(ii)                 no litigation, arbitration proceedings, prosecution or
other legal proceedings having been threatened, announced or instituted by or
against or remaining outstanding against any member of the Wider City North
Group or to which any member of the Wider City North Group is or may become a
party (whether as plaintiff or defendant or otherwise) and no enquiry or
investigation by or complaint or reference to any Third Party against or in
respect of any member of the Wider City North Group having been threatened,
announced or instituted or remaining outstanding, against or in respect of any
member of the Wider City North Group which, in any such case, would reasonably
be expected materially and adversely to affect any member of the Wider City
North Group to an extent which is material in the context of the Wider City
North Group;



(iii)               no contingent or other liability having arisen or become
apparent to Grainger which would reasonably be expected materially and adversely
to affect the business, assets, financial or trading position or profits or
prospects of any member of the Wider City North Group to an extent which is
material in the context of the Wider City North Group; and



(iv)                no steps having been taken and no omissions having been made
which are likely to result in the withdrawal, cancellation, termination or
modification of any licence held by any member of the Wider City North Group,
which is necessary for the proper carrying on of its business to an extent which
is material in the context of the Wider City North Group;



(i)              except as fairly disclosed to Grainger prior to 22 March 2005
Grainger not having discovered (after the date of this announcement and prior to
the Offer becoming unconditional in all respects):



(i)                   that any financial, business or other information
concerning the Wider City North Group publicly disclosed or disclosed to any
member of the Wider Grainger Group at any time by or on behalf of any member of
the Wider City North Group which is material in the context of the acquisition
of City North by any member of Grainger Group is misleading, contains a
misrepresentation of fact or omits to state a fact necessary to make the
information contained therein not misleading and which was not, if material in
the context of the Wider City North Group, corrected by a subsequent
announcement to a Regulatory Information Service prior to 22 March 2005;



(ii)                 that any member of the Wider City North Group is subject to
any liability, contingent or otherwise, which is not disclosed in the City North
Annual Accounts, and which is material in the context of the Wider City North
Group; or



(iii)               any information which affects the import of any information
disclosed to Grainger at any time by or on behalf of any member of the Wider
City North Group and which would have a material adverse effect on the Wider
City North Group;



(j)               in relation to any release, emission, accumulation, discharge,
disposal or other fact or circumstance which has caused or might impair the
environment (including property) or harm human health, no past or present member
of the Wider City North Group, in a manner or to an extent which is material in
the context of the Offer, (i) having committed any violation of any laws,
statutes, regulations, notices or other requirements of any Third Party and/or
(ii) having incurred any liability (whether actual or contingent) to any Third
Party; and/or (iii) being likely to incur any liability (whether actual or
contingent), or be required, to make good, remediate, repair, re-instate or
clean up the environment (including any property) which would be material in the
context of the Wider City North Group.



Grainger reserves the right to waive in whole or in part all or any of
conditions (c) to (j) inclusive.  Conditions (b) to (j) inclusive must be
satisfied as at, or waived (where possible) on or before, the 21st day after the
later of the first closing date of the Offer and the date on which condition (a)
is fulfilled (or, in each case, such later date as the Panel may agree).
Grainger shall be under no obligation to waive, to determine to be or treat as
fulfilled, any of conditions (b) to (j) inclusive by a date earlier than the
date specified above for the fulfilment thereof notwithstanding that the other
conditions of the Offer may at such earlier date have been waived or fulfilled
and that there are at such earlier date no circumstances indicating that any of
such conditions may not be capable of fulfilment.



If Grainger is required by the Panel to make an offer for City North Shares
under the provisions of Rule 9 of the Code, Grainger may make such alterations
to the terms and conditions of the Offer as are necessary to comply with the
provisions of that Rule.



                                     PART 2

                        CERTAIN FURTHER TERMS OF THE OFFER

The City North Shares will be acquired by Grainger free from all liens,
equities, charges, encumbrances, rights of pre-emption and any other third party
rights or interests of any nature whatsoever and together with all rights
attaching thereto including the right to receive in full all dividends and other
distributions declared, paid or made after 22 March 2005 other than the City
North second interim dividend announced on 22 March 2005, which shall be paid on
26 April 2005 to City North shareholders on the register on 1 April 2005.

Fractions of New Grainger Shares will not be allotted or issued to persons who
elect to participate in the Partial Share Alternative or the Mix and Match
Facility. Entitlements to New Grainger Shares will be rounded down to the
nearest whole number with the fractional entitlement being settled in cash.

Any New Grainger Shares will be issued credited as fully paid and will rank pari
passu in all respects with existing Grainger Shares and will be entitled to all
dividends and other distributions declared, made or paid after the date of the
Offer.


The Offer will not be made, directly or indirectly, in or into, or by use of the
mails, or by any means or instrumentality (including, but not limited to,
facsimile transmission or other electronic transmission, telex or telephone) of
interstate or foreign commerce, or any facilities of a national, state or other
securities exchange, of the United States, nor will it be made, directly or
indirectly, in or into Canada, Australia or Japan and will not be capable of
acceptance by any such use, means, instrumentality or facilities or from within
the United States, Canada, Australia or Japan.  Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed or
sent in or into or from, the United States, Canada, Australia or Japan.



This announcement is not an offer of securities for sale in the United States
and the New Grainger Shares have not been, and will not be, registered under the
United States Securities Act of 1933, as amended, or under the securities laws
of any jurisdiction of the United States; the relevant clearances have not been
obtained and will not be obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the New Grainger Shares has
been, or will be, lodged with or registered by the Australian Securities &
Investments Commission; nor have any steps been taken to enable the New Grainger
Shares to be offered in Japan in compliance with applicable securities laws of
Japan. Accordingly, the New Grainger Shares may not be offered, sold, resold or
delivered directly or indirectly in or into the United States, Canada, Australia
or Japan or any other country outside the UK where to do so would lead to a
breach of any legal or regulatory requirement.

The provisions referred to in the previous two paragraphs may be waived or
varied by Grainger in its sole discretion as regards specific City North
Shareholders or generally.



                                  APPENDIX II

                  FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER


1.  FINANCIAL EFFECTS OF ACCEPTANCE OF THE FULL CASH OFFER

The following tables set out, for illustrative purposes only, and on the bases
and assumptions set out in the notes below, the financial effects of acceptance
of the full cash offer on capital value and gross income for an accepting holder
of 100 City North Shares if the Offer becomes or is declared unconditional in
all respects:

A.            Increase in Capital Value

                                                        Notes              £
Market value of 100 City North Shares                   (1)                253.5

Cash consideration for 100 City North Shares                               270.0

Increase in capital value                                                  16.5


This represents an increase of approximately 6.5 per cent.

B.            Increase in gross income under the terms of the Offer

                                                        Notes              £
Gross dividend income from 100 City North Shares        (2)                3.17
Gross income from re-investment of cash consideration   (3)                12.96

Increase in gross income                                (4)                9.79


This represents an increase of approximately 308.8 per cent.

Notes

1.         Based on the closing price of 253.5 pence per City North Share on 21
March 2005, being the last business day prior to this announcement.

2.         The gross dividend income on City North Shares is based on the
interim dividend for the half year to 30 June 2004 of 1.11 pence per City North
share and the proposed second interim dividend for the financial year ended 31
December 2004 of 2.06 pence per City North share.

3.         The gross income on the cash consideration has been calculated on the
assumption that the cash is re-invested for a period of 12 months to yield
approximately 4.80 per cent. per annum, being the yield for UK Gilts with a
maturity of up to five years as defined by the FTSE UK Gilts Index as published
by the Financial Times on 18 March 2005, the last practicable business day prior
to the publication of this announcement.

4.         No account has been taken of any potential liability for taxation.

2. FINANCIAL EFFECTS OF ACCEPTANCE OF THE PARTIAL SHARE ALTERNATIVE

The following tables set out, for illustrative purposes only, and on the bases
and assumptions set out in the notes below, the financial effects of acceptance
of the Partial Share Alternative on capital value and gross income for an
accepting holder of 100 City North Shares if the Offer becomes or is declared
unconditional in all respects:

A.            Increase in Capital Value

                                                       Notes              £
Market value of 100 City North Shares                  (5)                253.5

Market value of 24.23 Grainger Shares                  (6)                95.0
Cash consideration for 100 City North Shares                              180.0
Total value of consideration                                              275.0
Increase in capital value                                                 21.5


This represents an increase of approximately 8.5 per cent.

B.            Increase in gross income under the terms of the Offer

                                                        Notes             £
Gross dividend income from 100 City North Shares        (7)               3.17

Gross dividend income from 24.23 Grainger Shares        (8)               1.25
Gross income from re-investment of cash consideration   (9)               8.64
Total gross income from consideration                   (10)              9.89
Increase in gross income                                                  6.72


This represents an increase of approximately 212.0 per cent.

Notes

5.         Based on the closing price of 253.5 pence per City North Share on 21
March 2005, being the last business day prior to this announcement.

6.         Based on the closing price of 392 pence per Grainger Share on 21
March 2005, the last business day prior to this announcement.

7.        The gross dividend income on City North Shares is based on the interim
dividend for the half year to 30 June 2004 of 1.11 pence per City North share
and the proposed second interim dividend for the financial year ended 31
December 2004 of 2.06 pence per City North share.

8.        The gross dividend income on Grainger Shares is based on the interim
dividend for the half year to 31 March 2004 of 0.898 pence per Grainger share
(adjusted for the five for one share split effective from 25 February 2005) and
the final dividend for the financial year ended 30 September 2004 of 4.267 pence
per Grainger share (adjusted for the five for one share split effective from 25
February 2005).

9.         The gross income on the cash consideration has been calculated on the
assumption that the cash is re-invested for a period of 12 months to yield
approximately 4.80 per cent. per annum, being the yield for UK Gilts with a
maturity of up to five years as defined by the FTSE UK Gilts Index as published
by the Financial Times on 18 March 2005, the last practicable business day prior
to this announcement.

10.       No account has been taken of any potential liability for taxation.


                                  APPENDIX III

                                SOURCES AND BASES

In this announcement:

1.                  unless otherwise stated, financial information relating to
Grainger has been extracted from the audited financial statements of Grainger
for the relevant financial year or from Grainger's interim results;

2.                  unless otherwise stated, financial information relating to
City North has been extracted from the audited financial statements of City
North for the relevant financial year or from City North's interim or
preliminary results;

3.                  the value of the Offer is £58.5 million which is based on
21,661,840 million City North Shares in issue and to be issued on a fully
diluted basis as at 22 March 2005 and an offer price of 270 pence per City North
Share;

4.                  the number of New Grainger Shares to be issued pursuant to
the Offer, being up to 5,088,583 (assuming full take up of the Partial Share
Alternative), is based on 21,001,170 City North Shares in issue on 22 March
2005;

5.                  the pro forma net debt of approximately £805 million
assuming no take-up of the Partial Share Alternative has been based on Grainger
net debt of £703 million as of 30 September 2004 (reported on an audited basis),
City North net debt of £44.1 million as at 31 December 2004 (reported on an
audited basis) plus net debt arising from the transaction of £57.5 million (that
is consideration of £58.5 million less proceeds from the exercise of options of
£1.0 million);

6.                  all financial information relating to Grainger has been
quoted on the basis of current UK Generally Accepted Accounting Principles as at
the date of this announcement; and

7.                  the Triple Net Asset Value of City North as at 31 December
2004 is based upon the net asset value of £64,520,000 as at 31 December 2004,
adjusted for the contingent tax liability of £8,185,000 as at 31 December 2004,
the market value of long term debt and derivatives of nil as at 31 December
2004, and proceeds from the exercise of options of £957,972, divided by
21,661,840 shares in issue or to be issued as at 22 March 2005 on a fully
diluted basis.



                                   APPENDIX IV

                                   DEFINITIONS

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

'Accepting City North Shareholders'             the City North Shareholders who have accepted and who accept the Offer  
                                                and, in both cases, who have not withdrawn their acceptance of the      
                                                Offer, and also any City North Shareholder whose City North Shares are  
                                                compulsorily acquired pursuant to the regime in Part XIIIA of the       
                                                Companies Act 1985

'Authorisations'                                authorisations, orders, grants, recognitions, confirmations, consents,  
                                                licences, clearances, certificates, permissions or approvals

'Board' or 'Boards'                             the boards of Grainger and/or City North as the context requires

'JPMorgan Cazenove'                             JPMorgan Cazenove Limited

'City North'                                    City North Group plc

'City North Options'                            options granted under and exercisable under the terms of the City North 
                                                Share Option Schemes

'City North Shares'                             the ordinary shares of 50p each in the capital of City North which are  
                                                unconditionally allotted or issued or otherwise arise prior to the date 
                                                on which the Offer closes (or such earlier date, not being earlier than 
                                                the first closing date of the Offer as Grainger may, subject to the     
                                                provisions of the Code or with the consent of the Panel, decide) as a   
                                                result of exercise of the options under the City North Share Option     
                                                Schemes

'City North Share Option Schemes'               the existing share option schemes of City North, comprising the City    
                                                North plc Approved Share Option Scheme 1998 and the City North plc      
                                                Unapproved Share Option Scheme 1998

'City North Shareholder'                        a holder of City North Shares

'Code'                                          The City Code on Takeovers and Mergers

'Company' or 'Grainger'                         Grainger Trust plc

'Enlarged Group'                                the combined Grainger and City North groups

'Form of Acceptance'                            the form of acceptance and election relating to the Offer accompanying  
                                                the Offer Document

'KPMG Corporate Finance'                        KPMG Corporate Finance, a division of KPMG LLP

'Mix and Match Facility'                        the option for City North Shareholders (other than certain overseas     
                                                shareholders) to elect, subject to availability, to vary the proportions
                                                in which they receive New Grainger Shares and cash under the Partial    
                                                Share Alternative to the Offer

'New Grainger Shares'                           the new Grainger Shares of 5p each to be issued, credited as fully paid,
                                                pursuant to the Partial Share Alternative

'Offer'                                         the recommended cash offer to be made by Grainger to acquire all of the 
                                                issued and to be issued City North Shares as described in this          
                                                announcement, including, where the context so requires, any subsequent  
                                                revision, variation, extension or renewal of such offer, and subject to 
                                                the conditions set out or referred to herein

'Offer Document'                                the document to be dispatched to City North Shareholders containing the 
                                                full terms and conditions of the Offer

'Official List'                                 the Official List of the UK Listing Authority

'Panel'                                         The Panel on Takeovers and Mergers

'Partial Share Alternative'                     the partial share alternative under the Offer pursuant to which City    
                                                North Shareholders (other than certain overseas shareholders) may elect 
                                                to receive New Grainger Shares on the basis set out in this announcement
                                                in lieu of part of the cash consideration which they would otherwise    
                                                have received under the Offer

'Triple Net Asset Value' or 'NNNAV'             the net asset value of City North as at 31 December 2004 adjusted for   
                                                contingent tax liabilities which would accrue if assets were sold at    
                                                market value and for the market value of long term debt and derivatives

'UK Listing Authority'                          The Financial Services Authority in its capacity as competent authority 
                                                under Part VI of the Financial Services and Markets Act 2000

'Wider City North Group'                        City North and its subsidiary undertakings, associated undertakings and 
                                                any other undertakings in which City North and such undertakings        
                                                (aggregating their interests) have a substantial interest

'Wider Grainger Group'                          Grainger and its subsidiary undertakings, associated undertakings and   
                                                any other undertakings in which Grainger and such undertakings          
                                                (aggregating their interests) have a substantial interest




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