Return of capital

The following sets out some frequently asked questions and provides brief answers about the Return of Capital. It is aimed particularly at the Company’s individual Shareholders. Shareholders should read and rely on the whole of this Circular and not just this Part 4.

If Shareholders have any further questions, they may call the Shareholder helpline on 0871 664 0321 from within the UK or +44 20 8639 3399 if calling from outside the UK. Lines are open between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday. Calls to the 0871 664 0321 number cost 10 pence per minute (including VAT) plus your service provider’s network extras. Calls to the helpline from outside the UK will be charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Share Alternatives nor give any financial, legal or tax advice. For financial advice, including taxation advice, you should consult your own financial and/or taxation adviser.

You should be aware that the Return of Capital is conditional upon approval by Shareholders of Resolution 1 to be proposed at the Extraordinary General Meeting and upon Admission. The obligation of UBS to make the Purchase Offer is conditional upon the satisfaction or waiver by UBS (in its sole discretion) of a number of conditions including those as set out in paragraph 13 of Part 6 of this Circular.

1. What is being proposed?

We intend to distribute to Shareholders 45 pence by way of a special distribution and 15 pence instead of the payment of a final dividend for the financial year ended 31 December 2014, for each Existing Ordinary Share (other than in respect of treasury shares) that they hold at the Record Time. This Return of Capital will comprise a bonus issue of E Shares and F Shares. The E Shares will pay a dividend of 60 pence and it is intended that UBS, acting as principal (and not as agent, nominee or trustee), will purchase the F Shares from Shareholders for 60 pence per F Share under the Purchase Offer. In the event that UBS does not purchase any F Shares on or before 2 April 2015, for example because any of the conditions to the Purchase Offer set out in paragraph 13 of Part 6 of this Circular are not satisfied, the Default Dividend will be paid. We also intend to subdivide and consolidate all of the Existing Ordinary Shares of the Company (including any treasury shares and each unissued Ordinary Share in the capital of the Company). This means that, in addition to any E Shares and/or F Shares received, for every 100 Existing Ordinary Shares that you own at the Record Time, you will receive in place of your Existing Ordinary Shares, 88 New Ordinary Shares and 88 Deferred Shares. Existing Ordinary Shares will be replaced with effect from 26 March 2015.

 

2. Why are you doing it in this way?

The structure is similar in many respects to that used by other listed companies to return capital to shareholders and is the same as the structure used by the Company in the previous return of capital in 2014. We have chosen this structure as it allows Shareholders (save for Restricted Shareholders) to be treated equally on a pro-rata basis and gives each Shareholder the choice to receive their share of the Return of Capital as income or capital or a combination of both. This structure has been chosen to effect the Return of Capital because:

• it treats all Shareholders equally relative to the size of their existing shareholdings in the Company;
• it gives all Shareholders (with the exception of Restricted Shareholders) a choice as to how they receive their cash, which is intended to afford UK tax-resident Shareholders flexibility in the tax treatment of their proceeds; and
• it enhances the Company’s ability to maintain a progressive dividend policy.

 

3. What happens to the final dividend?

As announced in the Group’s preliminary statement of the full year results for the year ended 31 December 2014 a sum equal to 15 pence per Existing Ordinary Share will be payable to Shareholders as part of the Return of Capital in place of a final dividend. Such amount, together with the interim dividend of 7.5 pence per share paid in September 2014, is equivalent to a total dividend for 2014 of 22.5 pence per share, an increase of 7.1 per cent over the 2013 dividend, in line with our policy of progressive dividend growth. Shareholders (other than Restricted Shareholders) may elect for the Capital Alternative in respect of some or all of the amount comprising the final dividend equivalent included within the Return of Capital. It should be noted that a scrip dividend alternative will not be available in respect of any element of the Return of Capital.

 

4. What happens to my Existing Ordinary Shares?

The Return of Capital involves the Share Capital Consolidation where the Existing Ordinary Shares will be subdivided and consolidated, reducing the number of ordinary shares that all Shareholders will hold. As a result of the Share Capital Consolidation, for every 100 Existing Ordinary Shares (including in respect of treasury shares) held at the Record Time, you will receive 88 New Ordinary Shares and 88 Deferred Shares.

If the Share Capital Consolidation is not effected as part of the Return of Capital, the Company’s ordinary share price would fall. The intention of the Share Capital Consolidation is that, subject to market movements, the NTA value per New Ordinary Share after the Share Capital Consolidation will be approximately equal to the NTA value per Existing Ordinary Share beforehand, disregarding any effect that the amount comprising the equivalent of the final dividend per ordinary share within the amount of the Return of Capital may have on the NTA value of the Company. The NTA value per ordinary share as at 31 December 2014 was 428.81 pence per ordinary share.

While you will be holding fewer in number of Ordinary Shares as a result of the Share Capital Consolidation (i.e. 88 New Ordinary Shares for every 100 Existing Ordinary Shares held), you will however receive one E Share or one F Share for each Existing Ordinary Share that you hold at the Record Time without the need to sell any shares or incur dealing charges or commissions. In addition, you will continue to own the same proportion of the Company (subject to fractional entitlements) as you did before.

 

5. What happens to fractions of the New Ordinary Shares?

Any fractional entitlements arising pursuant to the Share Capital Consolidation will not be allotted to Shareholders and will, as far as is practicable, be aggregated with the fractions of a New Ordinary Share (if any) to which other Shareholders would be similarly entitled and sold in the market. The net proceeds of such sale will be distributed among those Shareholders (except that any proceeds in respect of a holding of less than £5 will be retained for the benefit of the Company).

 

6. What does this mean for me and am I being forced to sell my Existing Ordinary Shares?

Nobody is being forced to sell his or her Existing Ordinary Shares. Although you will hold fewer ordinary shares in the Company after the Share Capital Consolidation than you did before, you will continue to own the same percentage holding in the Company (subject to fractional entitlements to New Ordinary Shares). The New Ordinary Shares will be equivalent in all material respects to the Existing Ordinary Shares except that their par value will be different, including as to their dividend, voting and other rights.

The intention is that the NTA value per New Ordinary Share after the Share Capital Consolidation is approximately equal to the NTA value per Existing Ordinary Share beforehand by reference to the last published NTA value, disregarding any effect that the amount comprising the equivalent of the final dividend per ordinary share within the amount of the Return of Capital may have on the NTA value of the Company. The NTA value per ordinary share as at 31 December 2014 was 428.81 pence per ordinary share.

Holders of Existing Ordinary Shares can elect to receive: (i) one E Share for every Existing Ordinary Share held at the Record Time and will receive a dividend (income) on the E Share Dividend Date; or (ii) one F Share for every Existing Ordinary Share held at the Record Time and elect to have their F Share purchased (capital) on the F Share Purchase Date; or (iii) a combination of the two. In reaching your decision you should consider your personal tax position.

Restricted Shareholders will be deemed to have elected to receive the E Share Dividend and will automatically receive E Shares.

 

7. What are the conditions of the Return of Capital?

The Return of Capital is conditional upon the approval by Shareholders of Resolution 1 to be proposed at the Extraordinary General Meeting and on Admission. If these conditions are not satisfied by 8.00 a.m. on 26 March 2015, or such later date as the Directors may decide, no New Ordinary Shares, Deferred Shares, E Shares or F Shares will be issued and the Return of Capital will not take effect. The obligation of UBS to make the Purchase Offer is conditional upon the satisfaction, or waiver by UBS (in its sole discretion) of a number of conditions inclosing those set out in paragraph 13 of Part 6 of this Circular.

 

8. Do I need to vote at the Extraordinary General Meeting?

Before it can be implemented, the Return of Capital requires the approval by Shareholders of Resolution 1 at the Extraordinary General Meeting. The Directors recommend that you vote in favour of this Resolution. The notice of the Extraordinary General Meeting, which includes the Resolutions to be voted on at the Extraordinary General Meeting, is set out in Part 14 of this Circular.

Whether or not you intend to attend the Extraordinary General Meeting, you are requested to complete the Form of Proxy and return it to Capita Asset Services as soon as possible but in any event so as to be received by no later than 1.00 p.m. on 23 March 2015.

Any Depositary Interest Holder wishing to instruct Capita IRG Trustees Limited to vote in respect of the holder’s interest should use the enclosed Form of Direction. Whether or not Depositary Interest Holders intend to be present at the Extraordinary General Meeting, they are requested to complete and sign the accompanying Form of Direction and return it to Capita Asset Services as soon as possible and, in any event, by no later than 1.00 p.m. on 20 March 2015. Depositary Interest Holders also have the option of transmitting a CREST Proxy Instruction by the same time and date.

When completing and returning the Form of Proxy or Form of Direction you will need to take into account the postal time necessary for your form to reach the Registrar. If you do not vote at the Extraordinary General Meeting you should still make an election for the Share Alternatives except where you wish to receive (or are deemed to have elected to receive) the E Share Dividend in respect of all of your Share Entitlement.

 

9. How do I decide which Share Alternative to elect for?

You can split your entitlement between the Share Alternatives. The most appropriate Share Alternative(s) for you, depends on your own individual tax and other circumstances. If you are in any doubt as to what action to take, such as which Share Alternative(s) to elect for, you should seek your own independent professional advice without delay.

 

10. What if I do not make my election in time or do nothing?

Shareholders who do not validly complete and return their Election Form, or in the case of Depositary Interest Holders who hold interests in respect of Existing Ordinary Shares in CREST, do not send a valid TTE Instruction, to be received by 1.00 p.m. on 25 March 2015, will be deemed to have elected to receive the E Share Dividend in respect of all of their Share Entitlement.

Restricted Shareholders who will automatically receive E Shares and the E Share Dividend will not be sent an Election Form.

 

11. When do I get my New Ordinary Share certificate? When will my CREST account be credited with New Ordinary Shares?

It is expected that share certificates representing the New Ordinary Shares will be sent to Shareholders by 2 April 2015. Share certificates are sent to Shareholders at their own risk. Shareholders will be able to trade their New Ordinary Shares in the normal manner prior to receipt by them of their new share certificates.

It is expected that the CREST accounts of Depositary Interest Holders who hold their interests in respect of Existing Ordinary Shares in CREST will be credited in respect of interests in New Ordinary Shares as soon as practicable after 8.00 a.m. on 26 March 2015 under the new ISIN BMG4593F1389.

Share certificates will not be issued for the Deferred Shares, and CREST accounts will not be credited in respect of the Deferred Shares.

 

12. Will I get a certificate for my E Shares, F Shares or E Deferred Shares and can I sell them in the market?

No, share certificates will not be issued, and CREST accounts will not be credited, in respect of the E Shares, F Shares or E Deferred Shares. Whilst the E Shares, F Shares and E Deferred Shares are transferable, they will not be listed or admitted to trading on the Official List or to trading on the London Stock Exchange’s main market for listed securities or any other investment exchange or trading platform and it is highly unlikely that an active market for them will develop or, if developed, be sustained.

The E Deferred Shares will have extremely limited economic rights, carry no voting rights and have no value. Following the E Share Dividend Date, the E Shares will automatically be converted into E Deferred Shares. It is intended that the Company will acquire all of the E Deferred Shares from Shareholders, for an aggregate price not exceeding one pence following which they will be cancelled.

The F Shares will be cancelled following any purchase of them by the Company from UBS pursuant to the Option Agreement.

 

13. Why are you issuing Deferred Shares? What will happen to the Deferred Shares?

Pursuant to the Share Capital Consolidation, for every 100 Existing Ordinary Shares you hold, you will receive 88 New Ordinary Shares and 88 Deferred Shares. The Deferred Shares are being issued to enable the par value of the New Ordinary Shares to be 6.5 pence.

The Deferred Shares issued pursuant to the Share Capital Consolidation will have extremely limited economic rights, carry no voting rights and have no value. It is intended that the Company will acquire all of the Deferred Shares from all of the Shareholders, for an aggregate price not exceeding one penny following which they will be cancelled.

No share certificates will be issued in respect of the Deferred Shares, and CREST accounts will not be credited in respect of them. The Deferred Shares will not be listed or admitted to trading on the Official List or to trading on the London Stock Exchange’s main market for listed securities or any other investment exchange or trading platform and it is highly unlikely that an active market for them will develop or, if developed, be sustained.

 

14. What shall I do if I need a replacement Election Form?

If you need a replacement Election Form, you should call the Shareholder helpline on 0871 664 0321 from within the UK or +44 20 8639 3399 if calling from outside the UK. Lines are open between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday. Calls to the 0871 664 0321 number cost 10 pence per minute (including VAT) plus your service provider’s network extras. Calls to the helpline from outside the UK will be charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Share Alternatives nor give any financial, legal or tax advice. You will need to take into account the postal time necessary for a replacement Election Form to reach Capita Asset Services by 1.00 p.m. on 25 March 2015.

Restricted Shareholders who will automatically receive E Shares and the E Share Dividend, will not be sent an Election Form.

 

15. What if I hold my Ordinary Shares in a PEP or an ISA?

The E Shares and F Shares cannot be retained in a PEP or an ISA as they will be unlisted and so will not constitute qualifying investments. If you elect for the Capital Alternative and the F Shares issued are added to a PEP or ISA, under current HMRC practice, your plan manager must, within 30 days of the issue of the F Shares, sell the F Shares or transfer them to you to be held outside the PEP or ISA. Cash proceeds from a sale of such F Shares may, however be retained in the PEP or ISA. If you hold your Existing Ordinary Shares in a PEP or ISA, you should contact your plan manager who will be able to advise you of their procedure for voting on the Resolutions to be proposed at the Extraordinary General Meeting.