Announcement re: Rights Issue

RNS Number : 2054N

British Land Co PLC

12 February 2009

 



Embargoed until 7.00 a.m. - Thursday, 12 February 2009

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, CHINA, JAPAN, SWITZERLAND OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

12 February 2009

THE BRITISH LAND COMPANY PLC

PROPOSED 2 FOR 3 RIGHTS ISSUE AT £2.25 PER NEW SHARE TO RAISE NET PROCEEDS OF £740 MILLION

The Board of Directors of The British Land Company PLC (the "Company") today announces a rights issue to raise approximately £740 million net of expenses by the issue of up to 340,873,589 New Shares (representing approximately 67 per cent. of the existing issued share capital and 40 per cent. of the enlarged issued share capital immediately following completion of the Rights Issue) through a 2 for 3 Rights Issue at 225 pence per New Share.

The Rights Issue will:

• Underpin the Company's balance sheet at a time of unprecedented market dislocation;

• Position British Land to be able to exploit future real estate buying opportunities. 

The Board believes that the current dislocation in asset pricing and likelihood of distressed sales will generate opportunities to acquire quality assets at yields that would be accretive to earnings, offering the further potential for strong asset value growth as the market recovers. By undertaking a pre-emptive equity issue today, the Company is able to maximise its competitive position and provide the opportunity for existing Shareholders to participate in the capital raising.

The final quarterly dividend payable in respect of the year to 31 March 2009 will be declared at the time of preliminary announcement of results for the year to 31 March 2009. The amount of the dividend is expected to be set by reference to the third quarter dividend of 9.375 pence per share, adjusted to take account of the effects of the Rights Issue and to maintain the same level of annualised pro forma dividend cover as before the Rights Issue.  

Key highlights of the Rights Issue:

• Net proceeds of £740 million raised through an issue of up to 340,873,589 New Shares at 225 pence per New Share, a 53 per cent. discount to the closing middle-market share price on 11 February 2009, a 49 per cent. discount to the closing middle-market share price on 6 February 2009 (being the last trading day before the announcement of the transfer of the Meadowhall Shopping Centre to a newly formed joint venture) and a 40 per cent. discount to the theoretical ex-rights price based on the closing middle-market share price on 11 February 2009.  Both closing middle-market share prices are adjusted for the dividend of 9.375 pence for the three months ended 31 December 2008, as declared today, which will not be paid on the New Shares.

• Government of Singapore Investment Corporation Pte Ltd shall take up its rights as a Company shareholder to the extent that those rights relate to shares held in connection with the operations of GIC Real Estate Pte Ltd and companies managed by it.

• The Rights Issue is subject to approval by shareholders at a General Meeting to be held on 3 March 2009.

The Rights Issue is fully underwritten by Morgan Stanley Securities Limited, UBS Limited and Euro Lights Private Ltd, an affiliate of GIC Real Estate Pte Ltd. 

Chris Grigg, Chief Executive of the Company, said:

"Today's rights issue further strengthens British Land's balance sheet during a period of market dislocation. Additionally we have enhanced our ability to exploit commercial real estate buying opportunities as they emerge." 

British Land has today also released its results for the third quarter to 31 December 2008.

A circular concerning the Rights Issue is being sent to shareholders today. Further details of the Rights Issue are set out in the prospectus, which will be made available, on the Company's website www.britishland.com.

The Rights Issue is conditional upon, amongst other things, approval of the Resolutions by Shareholders at the General Meeting expected to be held on 3 March 2009, certain conditions in the Underwriting Agreement being fulfilled before Admission and the Underwriting Agreement not being terminated in accordance with  its terms prior to Admission.

Application has been made to the UKLA for the New Shares (nil paid and fully paid) to be admitted to the Official List and to the London Stock Exchange for the New Shares (nil paid and fully paid) to be admitted to trading on its main market for listed securities. It is expected that Admission will become effective on 4 March 2009 and that dealings in the New Shares, nil paid, will commence on the London Stock Exchange at 8.00 a.m. on that date.  The expected latest time and date for acceptance and payment in full under the Rights Issue will be 11.00 a.m. on 18 March 2009.

Capitalised terms used in this announcement have the meanings given in the Appendix.

A conference call for analysts and institutional investors will be hosted by Chris Grigg, the Company's Group Chief Executive today at 09.30 a.m.  The details of the conference call are as follows:

Time:                      09.30 a.m.

Live Number:        [phone]      

Passcode:              4937155#

Replay Number:    [phone]

Passcode:              4937155#

Enquiries:

The British Land Company PLC Laura de Vere - Media Amanda Jones - Investors	Tel: [phone] Tel: [phone]
Morgan Stanley Jonathan Lane Paul Baker Henrik Gobel	Tel: [phone]
UBS Investment Bank Simon Warshaw Tim Waddell Chris Smith	Tel: [phone]
Finsbury Ed Simpkins Gordon Simpson	Tel: [phone]

 1)  Introduction 

The Board of Directors of The British Land Company PLC (the "Company") today announces a fully underwritten Rights Issue to raise approximately £740 million net of expenses (the "Rights Issue") by the issue of up to 340,873,589 New Shares (representing approximately 67 per cent. of the existing issued share capital and 40 per cent. of the enlarged issued share capital immediately following completion of the Rights Issue) through a 2 for 3 Rights Issue at 225 pence per New Share (the "Rights Issue Price").

The Issue Price of 225 pence per New Share represents a 53 per cent. discount to the closing middle-market share price on 11 February 2009, a 49 per cent. discount to the closing middle-market share price on 6 February 2009 (being the last trading day before the announcement of the transfer of the Meadowhall Shopping Centre to a newly formed joined venture) and a 40 per cent. discount to the theoretical ex-rights price based on the closing middle-market share price on 11 February 2009. Both closing middle-market share prices are adjusted for the dividend of 9.375 pence for the three months ended 31 December 2008, as declared today, which will not be paid on the New Shares.

2)  Background To And Reasons For The Rights Issue

Market background

The extreme turmoil that continues to affect global capital markets has had a significant impact on the pricing and liquidity of all asset classes. The real estate sector, with its large dependency on credit, is being particularly hard hit, with transaction volumes across all asset classes markedly lower and asset values declining as the availability of debt has reduced. 

Although initially starting as a banking issue, the negative consequences of the credit crunch for the broader economy have become increasingly clear over the last few months, as the impact of credit scarcity and adjustments to consumer and corporate budgets is felt. The UK gross domestic product contracted by 1.5 per cent. in the fourth quarter of 2008, the second consecutive quarter of negative growth, confirming that the UK economy is now in recession. The Board believes that an economic recession in the United Kingdom will put downward pressure on rents, occupancy levels and property values. As the global financial system continues to deleverage, with access to debt increasingly restricted, this is likely to induce the prospect of extensive covenant breaches and refinancing difficulties across the real estate market. 

These market conditions inevitably carry substantial risks for real estate investors, with many landlords likely to face major financial stress. However, these factors are likely to produce opportunities for companies that are well capitalised and have access to debt to acquire real estate from distressed sellers at yields which the Board believes will be attractive relative to historical long-term fair values.  

The Company's competitive position

The Company is a market leader in UK real estate and the second largest property company quoted on the London Stock Exchange by market capitalisation. The Company has a long history of value creation for shareholders and is strongly positioned for today's challenging real estate environment. The high quality of the Company's portfolio, its strong cash flow and continuing demand for the Company's product from a broad range of tenants should help to mitigate the effects of current market conditions.  

The Company's prime property assets generate secure, long-term contracted rental income. The Company's cash flow security is unparalleled among its peers, with an occupancy level of 96 per cent., lease lengths averaging 13 years and a wide spread of market standard tenant covenants across a broad diversity of industries as at 31 December 2008 at which date no single tenant accounted for more than 7.25 per cent. of total rents. The top ten office tenants include major international banks, law firms and HM Government, accounting for 23.3 per cent. of the rent roll, and the top ten retail tenants include the largest food operators, department stores and fashion/homeware retailers, accounting for 26.4 per cent. of the rent roll, in each case as at 31 December 2008.

The security of the Company's income is matched by a debt structure with some of the lowest costs and longest maturities in the sector. The Company's borrowings are fixed at an average interest rate of 5.2 per cent. with a weighted average maturity of 12.2 years as at 31 December 2008. In addition, the Company has a further £2.4 billion of undrawn committed bank facilities, with no significant refinancing due in the next five years. As at 31 December 2008, the Company's loan to value ratio is 54 per cent., having absorbed a 32 per cent. fall in asset values since the market peak in 2007.

The Company is well placed to be a successful acquirer of real estate

The Board believes that there will be considerable opportunities for shareholder value creation emerging in an increasingly distressed UK real estate market. The Company is well placed to take advantage of these opportunities, given the combination of its experienced and creative management team, balance sheet strength and significant debt capacity.

Strong and proven management team

The Company's core expertise is in real estate investment and asset management. The Company's management team has demonstrated its ability to act in advance of market cycles in both property and finance, reinforcing the firm foundations and operating characteristics on which the Company's business has been built. Over the three years to 31 December 2008, the Company has sold a total £5.7 billion of assets and reduced net debt by £1.3 billion. Initially the sales were aimed at capturing the extraordinary value implied by yields available in the market. From September 2007, the sales were also targeted at reducing leverage in anticipation of weakness in yields caused by credit rationing and later the threat and reality of recession.

During the three years to 31 December 2008, the Company's debt was refinanced and £5.1 billion of new debt facilities were secured in order to take advantage of attractive investment opportunities.

The Company's experienced and well-resourced management team has a strong track record of sourcing deals and value creation across all major asset classes, based on a highly disciplined investment approach. The Company has considerable expertise in acquiring and developing real estate, both directly and through investment funds and joint ventures, and it has an innovative approach to financial structuring and investment. The combination of these factors, together with a proven ability to evaluate and think laterally, are a source of competitive advantage in accessing the best deal flow and maximising the opportunities that current markets present.

Balance sheet strength and debt capacity

The Company's balance sheet is underpinned by long term cashflow from tenants with an average unexpired term of 13 years and providing an interest cover of approximately two times.

Competition for distressed real estate acquisitions is limited at present due to a lack of debt finance available to many of the Company's competitors, which the Company believes may be unable to access new credit on commercially reasonable terms. Accordingly, the size and terms of the Company's committed bank facilities represents a significant opportunity to enable the Company to take advantage of market conditions. Current bank facilities amount to approximately £3.1 billion, with an average margin of 0.48 per cent. over LIBOR, including undrawn lines of approximately £2.4 billion as at 31 December 2008. Of these £3.1 billion facilities, only £300 million expire in the next two years and £1.0 billion are for a term of more than five years.

3)  Recent Developments

The Company has taken a number of steps to maintain its leverage ratios despite falling property values. These include the sales referred to earlier, as well as the establishment of a joint venture with Sainsbury's announced in March 2008, which has allowed the Company to move certain debt off its balance sheet.  Further, on 11 February 2009, the Company continued this course of action by entering into a 50:50 joint venture shareholders' agreement with LSPG Trust No.1 ("LSPG"), itself a joint venture between London & Stamford Limited and its joint venture partner, which establishes MSC Property Intermediate Holdings Limited ("MSC") as a joint venture company.

Under the transaction LSPG acquired a 50 per cent. stake in MSC for £587.7 million, at a net initial yield of 6.75 per cent., consisting of £170 million in cash with MSC continuing to benefit from the existing third party debt issued by the Meadowhall securitisation. The transaction valued Meadowhall at £1.175 billion.

The Company continues to consider other steps available to maximise its financial flexibility including further sales of assets to, or joint venture arrangements with, third party investors.

4)  Rationale for the Rights Issue

The net proceeds of the Rights Issue will support the Company's balance sheet leverage ratios and avoid placing undue risk on covenants, thereby facilitating access to the Company's significant debt facilities. This should ensure the Company is able to maximise its competitive position.

The Board's objective in making any real estate acquisitions would be to increase the Company's earnings and, ultimately, net asset value per share through a combination of active asset management and re-pricing of assets acquired at a significant discount to long-term fair value. The Board believes that the current dislocation in asset pricing and likelihood of distressed sales will generate opportunities to acquire quality assets at yields that would be accretive to earnings, offering the further potential for strong asset value growth as the market recovers.  

The Company has a strong track record of expertise in UK commercial property across multiple sectors as well as European out-of-town retail. As such, the specific criteria for potential acquisitions are likely to remain flexible as to asset type, location and profile. However, management will maintain a disciplined approach to assessing risk-adjusted return projections, taking account of pricing income, customer and vacancy risks, likely pricing development and repositioning opportunities.

The Company's preference will continue to be for higher quality income producing assets in more liquid subsectors, with upside potential from active management and typical lot sizes of at least £50 million. In line with the Company's track record of innovative, sophisticated transaction structuring, the Company would also be open to accessing opportunities via debt investment or other corporate structures.

Although the Board remains very mindful of the significant risks inherent in current markets, the Board is confident in the Company's prospects, the strength of its underlying cash flows and its ability, through prudent and disciplined investment, to generate significant additional shareholder value.

5)  Principal Terms of the Rights Issue

Pursuant to the Rights Issue the Company is proposing to offer up to 340,873,589 New Shares by way of a rights issue to Qualifying Shareholders other than to Shareholders with a registered address, or resident in, the Excluded Territory or, subject to certain exceptions, the United States or one of the other Restricted Territories at 225 pence per New Share, payable in full on acceptance by no later than 11.00 a.m. on 18 March 2009. The Rights Issue is expected to raise approximately £740 million, net of expenses. The Issue Price represents a 40 per cent. discount to the theoretical ex-rights price based on the closing middle-market share price on 11 February 2009 (being the last business day before the announcement of the terms of the Rights Issue), adjusted for the dividend of 9.375 pence for the three months to 31 December 2008, as declared today, which will not be paid on the New Shares.

The Rights Issue will be made on the basis of: 

2 New Shares at 225 pence per New Share for every 3 Existing Shares

held by Qualifying Shareholders at the close of business on the Record Date. 

Entitlements to New Shares will be rounded down to the nearest whole number and fractional entitlements will not be allotted to Shareholders but will be aggregated and issued into the market with the net proceeds ultimately accruing for the benefit of the Company. Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.

The Rights Issue is fully underwritten by the Underwriters pursuant to the Underwriting Agreement. 

The Rights Issue will result in up to 340,873,589 New Shares being issued (representing approximately 67 per cent. of the existing issued share capital and 40 per cent. of the enlarged issued share capital immediately following completion of the Rights Issue).

The Rights Issue is conditional, inter alia, upon: 

the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms;

Admission (nil paid) occurring by no later than 8.00 a.m. on 4 March 2009 (or such later time and/or date as the Joint Sponsors and Euro Lights (acting by majority in number) and the Company may agree); and

the passing, without amendment (or with such amendments as the Joint Sponsors and Euro Lights  (acting by majority in number) and the Company may agree), of the Resolutions.

The New Shares, when issued and fully paid, will rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive dividends or distributions made, paid or declared after the date of this document save in respect of the third quarter dividend of 9.375 pence per share for the financial year ending 31 March 2009 which will only be payable to Shareholders of Ordinary Shares, excluding the New Shares, on the register at the close of business on 27 February 2009.

Application will be made to the Financial Services Authority and to the London Stock Exchange for the New Shares to be admitted to the Official List and to trading on the London Stock Exchange. It is expected that Admission will occur and that dealings in the New Shares (nil paid) on the London Stock Exchange will commence at 8.00 a.m. on 4 March 2009.

Dividends and Dividend Policy

The Directors intend to maintain a dividend policy which meets the REIT status requirement that the Company distributes a minimum of 90 per cent. of its tax-exempt income profits from its property rental business, and which also takes into account the profitability of the business, underlying growth in earnings of the Company, its capital requirements and cash flows.

In November 2006, the Company announced a move to a quarterly dividend cycle, which mirrors the Company's rental cash inflows. Dividends are paid in the form of either a property income distribution pursuant to applicable REIT requirements and/or a non-PID element.

The final quarterly dividend payable in respect of the year to 31 March 2009 will be declared at the time of preliminary announcement of results for the year to 31 March 2009. The amount of the dividend is expected to be set by reference to the third quarter dividend of 9.375 pence per share, adjusted to take account of the effects of the Rights Issue and to maintain the same level of annualised pro forma dividend cover as before the Rights Issue.  

Current Trading and Prospects

The Company's unaudited key performance indicators for the three months ended 31 December 2008 and its latest property valuation as at 31 December 2008 are as follows:

• Financial indicators

• The Company property valuation as at 31 December 2008 was £10.2 billion, 13.3 per cent. lower than at 30 September 2008 and 21.7 per cent. lower than at 31 March 2008:

  • The outward equivalent yield shift in The Company's portfolio was 85bps for the three months ended 31 December 2008, reflecting a shift of 75bps for the offices sector and 87bps for the retail sector.

  • The portfolio gross top-up initial yield (excluding purchaser's cost) was 7.0 per cent. at 31 December 2008 and the net equivalent yield was 6.9 per cent. at 31 December 2008, 142bps higher since 31 March 2008.

• The Company's EPRA NAV per share was 718 pence, down 31 per cent. as at 31 December 2008:

• • EPRA NNNAV per share was 861 pence at 31 December 2008, reflecting The Company's valuable debt structure.

  • IFRS net assets were £3.4 billion as at 31 December 2008.

  • Properties owned or managed by The Company were £13.7 billion as at 31 December 2008.

• The Company's underlying profit on ordinary activities before taxation was £63 million for the three months ended 31 December 2008, or 13 per cent. lower than for the three months ended 31 December 2007, mainly due to the accounting treatment of reducing interest capitalised on developments.

• The Company's loss on ordinary activities before taxation was £1,614 million for the three months ended 31 December 2008.

• The Company's underlying earnings per share were 12 pence for the three months ended 31 December 2008, 14 per cent. lower than for the three months ended 31 December 2007.

• The dividend per share for the three months ended 31 December 2008 (and payable on 15 May 2009) is up 7 per cent. from 8.75 pence to 9.375 pence, in addition to dividends of 18.75 pence per share paid in the first half of the financial year.

• Business indicators

• The Company achieved £169 million and £890 million of gross property sales during the three months and nine months, respectively, ended 31 December 2008.

• The Company contracted for £4.5 million per year of additional rent (as reflected in The Company's share of increases in headline rents (before any tenant incentives))  from 660,000 sq ft of new lettings and renewals and settled 50 rent reviews during three months ended 31 December 2008, overall ahead of ERV.

• The Company's like-for-like rental income growth was 3.8 per cent. for the nine months ended 31 December 2008 compared to 31 December 2007, ahead of the IPD benchmark.

• Balance sheet and cash flow indicators

• The Company's property portfolio (including accommodation subject to asset management incentives and under offer) as at 31 December 2008 was 96 per cent. let with an average lease length of 13 years and only 4 per cent. of total rents are up for renewal before 30 March 2011.

• The Company's debt (including share of funds and joint ventures) was 100 per cent. fixed at 5.2 per cent. with 12 years average maturity as at 31 December 2008.

• The Company had £2.4 billion undrawn committed credit facilities as at 31 December 2008.

Financial turmoil and market stress continues to adversely affect the property market, resulting in challenging conditions with few transactions. The IPD benchmark net equivalent yield is currently 8.2 per cent., some 450 bps over the 10-year gilt. While there are initial signs of renewed investor interest in property at current pricing levels particularly for prime properties, the lack of credit availability continues to inhibit activity. Against this background, British Land expects that property values in the UK will decline further until the market stabilises with prime properties stabilising first and the gap between primary and secondary property yields will widen.

Expected Timetable Of Principal Rights Issue Events

The expected timetable of the principal Rights Issue events is set out below:

Record Date for entitlement under the Rights Issue for Qualifying CREST Shareholders and Qualifying Non-CREST Shareholders	close of business on 27 February 2009
Latest time and date for receipt of General Meeting forms of proxy	10.00 a.m. on 1 March 2009
General Meeting	10.00 a.m. on 3 March 2009
Latest time and date for acceptance, payment in full and registration of  renunciation of Provisional Allotment Letters	11.00 a.m. on 18 March 2009
Dealings in New Shares, fully paid,  commence on the London Stock  Exchange	8.00 a.m. on 19 March 2009

Documentation

The Rights Issue will be on the terms and subject to the conditions set out in the prospectus, which is expected to be published today. The prospectus will be available, free of charge, at British Land's registered office and on its website www.britishland.com.

General Meeting

The General Meeting will be held on 3 March 2009 at York House, 45 Seymour Street, London, W1H 7LX at 10.00 a.m.  The General Meeting is being held for the purpose of considering and, if thought fit, passing four resolutions. The first two resolutions are to increase the Company's authorised ordinary share capital and to grant Directors authority to allot Ordinary Shares in connection with the Rights Issue and in respect of the enlarged share capital of the Company following the issue of New Shares.  The third resolution empowers the Directors to allot the Ordinary Shares otherwise than in accordance with section 89 of the Companies Act for the purposes of the authority conferred under the first two resolutions. The fourth resolution enables the Company to offer Shareholders a scrip dividend alternative.

Directors' Intentions

Each of the Directors intends to take up in full his or her rights to acquire New Shares under the Rights Issue in respect of his or her direct registered holdings and in respect of his or her Shares held in schemes which permit Directors to acquire the associated rights.

Chris Grigg, who took up his appointment as the Company's new Chief Executive on 12 January 2009, intends to purchase Shares with a value equal to £800,000 in the market. These Shares will be purchased ex-rights. Alternatively, Mr. Grigg may acquire rights in the market, and take up those rights to fulfil the £800,000 investment commitment. The Company will recommend that the Trustee make a conditional award to Chris Grigg under the CIP over an equivalent number of Shares, as calculated under the rules of the CIP.

  APPENDIX

In this document the following expressions have the following meaning unless the context otherwise requires:

Admission	the admission of the New Shares (nil paid or fully paid, as the case may require) to the Official List becoming effective in accordance with the Listing Rules and the admission of such shares (nil paid or fully paid, as the case may require) to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards
CIP	the Co-Investment Plan operated by the Company
EPRA	the European Public Real Estate Association
EPRA NAV per share	the EPRA NAV divided by the diluted number of shares at the period end
EPRA NNNAV per share	the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include deferred taxation on revaluations
ERV	estimated rental value which is the Company's external valuers' opinion as to the open market rent that, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property
Euro Lights	Euro Lights Pte Ltd., a company incorporated under the laws of Singapore and a member of GICRE
General Meeting	the general meeting of British Land to be held at York House, 45 Seymour Street, London W1H 7LX on 3 March 2009, notice of which is set out in the Circular
GICRE	The group of companies managed by GIC Real Estate Pte Ltd
IPD	Investment Property Databank
New Shares	the up to 340,873,589 Ordinary Shares to be allotted and issued pursuant to the Rights Issue
Ordinary Shares or Shares	the ordinary shares of 25 pence each in the share capital of the Company (including, if the context requires, the New Shares)
Qualifying CREST Shareholders	Qualifying Shareholders holding Ordinary Shares in uncertificated form in CREST
Qualifying Non-CREST Shareholders	Qualifying Shareholders holding Ordinary Shares in certificated form
Resolutions	the resolutions to be proposed at the General Meeting in connection with the Rights Issue
Rights Issue	the proposed issue by way of rights of New Shares to Qualifying Shareholders on the basis described in this document and, in the case of Qualifying Non-CREST Shareholders, in the Provisional Allotment Letter
Trustee	the trustee of the British Land Share Ownership Plan from time to time
Underwriting Agreement	the underwriting agreement entered into by the Company, Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited, UBS Limited and Euro Lights
Underwriters	Morgan Stanley Securities Limited, UBS Limited and Euro Lights

  This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security.

This announcement is an advertisement and does not constitute a prospectus. Nothing in this announcement should be interpreted as a term or condition of the Rights Issue. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any Nil Paid Rights, Fully Paid Rights and/or New Shares must be made only on the basis of the information contained in and incorporated by reference into the Prospectus. Copies of the Prospectus will be available on publication from the Company's registered office.

Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited and UBS Investment Bank are acting for the Company and no one else in connection with the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue and/or any other matter referred to in this announcement.

Each of Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited and UBS Investment Bank accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Nil Paid Rights, the Fully Paid Rights, the New Shares, or the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited and UBS Investment Bank accordingly disclaim to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or any such statement.

Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited and UBS Investment Bank may, in accordance with applicable legal and regulatory provisions and subject to the Underwriting Agreement, engage in transactions in relation to the Nil Paid Rights, the Fully Paid Rights, the Ordinary Shares and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise. Except as required by applicable law or regulation, Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited and UBS Investment Bank do not propose to make any public disclosure in relation to such transactions.

No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company, Morgan Stanley & Co. International plc, Morgan Stanley Securities Limited or UBS Investment Bank. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company and its subsidiaries (the Group) since the date of this announcement or that the information in it is correct as at any subsequent date.

The information contained herein is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part in, into or from the United States, Australia, Canada, Japan, Switzerland or South Africa or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The Nil Paid Rights, the Fully Paid Rights and the New Shares have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an exemption from and in compliance with any applicable securities laws. 

The distribution of this announcement, the Circular, the Prospectus and/or the Provisional Allotment Letters and/or the transfer or offering of Nil Paid Rights, Fully Paid Rights or New Shares into jurisdictions other than the United Kingdom is or may be restricted by law. Persons into whose possession this announcement or any such document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement and the information contained herein do not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The Nil Paid Rights, the Fully Paid Rights and the New Shares referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (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 in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of the Nil Paid Rights, the Fully Paid Rights or the New Shares in the United States. 

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. 

Prices and values of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. 

The address of Morgan Stanley & Co. International plc is 25 Cabot Square, Canary Wharf, London E14 4QA, United Kingdom. The address of Morgan Stanley Securities Limited is 25 Cabot Square, Canary Wharf, London E14 4QA, United Kingdom. The address of UBS Investment Bank is 1 Finsbury Avenue, London EC2M 2PP, United Kingdom.

Cautionary note regarding forward-looking statements

This announcement contains forward-looking statements regarding the belief or current expectations of the Company, the Company's directors and other members of its senior management about the Company's businesses and the transactions described in this announcement, including statements relating to possible future write-downs or movements in property prices and the Company's capital and financial planning projections. Generally, words such as "may", "could", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or similar expressions identify forward-looking statements.

These forward-looking statements are not guarantees of future performance. Rather they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements.

You are advised to read this announcement and, once available the Circular, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Group's future performance and the industries in which it operates. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

These forward-looking statements speak only as at the date of this documents. Except as required by the FSA, the London Stock Exchange, the Part VI Rules or applicable law, the Company does not have any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, further events or otherwise. 

 

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