Takeover, Placing&Appointment

Asfare Group plc 06 March 2007 For Immediate Release 6 March 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR THEIR RESPECTIVE TERRITORIES AND POSSESSIONS ASFARE GROUP PLC PROPOSED Â£80.2 MILLION REVERSE TAKEOVER OF ASSETCO GROUP LIMITED PROPOSED PLACING OF NEW ORDINARY SHARES TO RAISE Â£20.0 MILLION AND APPOINTMENT OF HOARE GOVETT AS NOMAD Asfare Group plc ('Asfare' or the 'Company'), a leading supplier of products and services to the emergency and homeland security markets in the UK, announces that it has entered into a conditional agreement to acquire the entire issued share capital of AssetCo Group Limited ('AssetCo'), a leading provider of total managed services to UK fire and rescue authorities, for a consideration of approximately Â£80.2 million (the 'Acquisition'). Of this amount, Â£70.2 million will be satisfied by the issue of new shares at 145 pence per share to AssetCo's ordinary shareholders and convertible preference shareholders and the remaining Â£10.0 million will be paid in cash in respect of the AssetCo preference shares. Furthermore, the Company has today conditionally placed 13,793,104 new shares at 145 pence each with institutional investors to raise approximately Â£20.0 million before expenses. By reason of the size of AssetCo relative to Asfare and the fundamental change in Asfare's business, board and voting control, the Acquisition will be classified as a reverse takeover under the AIM Rules. The Acquisition and the Placing are conditional, inter alia, on shareholder approval. Key points: Information on AssetCo â€¢AssetCo is a leading provider of total managed services to UK fire and rescue authorities. â€¢In 2001, AssetCo won the largest outsourced emergency services contract worldwide, the 20-year contract for London Fire Brigade with current estimated contract revenues of Â£400 million over the life of the contract. â€¢In 2006, AssetCo won a Â£60 million 20-year total managed services contract with Lincoln Fire and Rescue. The transaction â€¢Â£80.2 million consideration for AssetCo of which Â£70.2 million will be satisfied by issue of new shares at 145 pence to AssetCo's ordinary shareholders and convertible preference shareholders and the remaining Â£10.0 million will be paid in cash in respect of the AssetCo preference shares. â€¢Conditional placing of new shares in Asfare to raise approximately Â£20.0 million before expenses. â€¢The net proceeds of the placing will be used to satisfy the consideration for the AssetCo preference shares, refinance existing debt obligations and for working capital purposes. â€¢The market capitalisation of the Company at the placing price is Â£97.4 million. â€¢Upon Admission, Asfare will change its name to AssetCo plc. Profit forecast and forecast net debt â€¢The Ongoing Directors estimate that the pro-forma forecast turnover, EBITDA and profit before taxation and amortisation for the year ending 31 March 2007 for the enlarged group will be approximately Â£103.2 million, Â£17.9 million* and Â£6.2 million* respectively. â€¢At 31 March 2007, the Ongoing Directors estimate that the Enlarged Group will have net debt of approximately Â£52.7 million. * Before transaction costs and the cost of share based payments. Enlarged Group strategy â€¢Capitalise on AssetCo's first mover advantage in total managed services for the fire and rescue service. â€¢Build on long term contracted client relationships and engage at strategic planning level. â€¢Leverage off Asfare's and FSE's existing relationships to further organic growth. â€¢Horizontally integrate into the supply chain through selective acquisitions and strategic partnerships. â€¢Pull-through additional value added services into the existing client base. â€¢Replicate total managed services model across other emergency services agencies. Proposed board It is proposed that, on Admission, John Shannon, the Chief Executive Officer of AssetCo, and Frank Flynn, the Chief Finance Officer of AssetCo, will join the board of Asfare as Chief Executive Officer and Chief Finance Officer respectively. It is also proposed that, following their management of Asfare through a period of organic and acquisitive growth, Tony O'Neill and Tim O'Connor will stand down from the board of Asfare following Admission. Appointment of NOMAD The board of Asfare is pleased to announce the appointment of Hoare Govett as nominated adviser with immediate effect. Tim Wightman, Chairman of Asfare, said: 'This transaction brings together two experienced and specialist UK fire services companies and management teams. The fire market is moving towards outsourced solutions where significant growth opportunities for the enlarged group exist. AssetCo already has, through its contracts with the London and Lincoln fire authorities, a highly successful and proven total managed services solution.' John Shannon, Chief Executive Officer of AssetCo, said: 'The market for outsourcing is growing rapidly driven by the demands placed on modern fire and rescue services. AssetCo has first mover advantage within the fire and rescue market. We have proven success with London Fire Brigade, the largest urban fire authority, and Lincoln Fire and Rescue, one of the largest rural fire authorities. This transaction will enable us to use the combined strengths of both AssetCo and Asfare to continue to build upon the leadership position we have developed.' For more information please contact: Asfare Group plc Tim Wightman Tel: +44 (0)1789 262 664 AssetCo Group Limited Tel: +44 (0) 20 8515 3999 John Shannon Frank Flynn Hoare Govett Limited Tel: +44 (0) 20 7678 8000 John MacGowan Sean Wegerhoff Bertie Whitehead Buchanan Communications Tel: +44 (0) 207466 5000 Tim Anderson Isabel Podda High resolution images are available for the media to view and download free of charge from www.vismedia.co.uk. Hoare Govett, which is regulated by the FSA, is acting as nominated adviser, financial adviser and corporate broker exclusively for Asfare and no-one else in connection with the matters set out in this announcement, the Admission Document or any other document published in connection with the matters set out herein. Its responsibilities as Asfare's nominated adviser under the AIM Rules for Nominated Advisers will be owed solely to London Stock Exchange plc and are not and will not be owed to Asfare or to any director or proposed director of Asfare or to any other person. No representation or warranty, express or implied, is made by Hoare Govett as to any of the contents of this announcement. Hoare Govett is and will be acting for Asfare and no one else and will not be responsible to anyone other than Asfare for providing advice in relation to the Acquisition, the Placing or Admission or otherwise. Hoare Govett will not be offering advice and will not be responsible for providing the protections afforded to customers of Hoare Govett in relation to the matters described in this announcement or in respect of the Acquisition, the Placing or any acquisition of shares or securities in Asfare or otherwise. The Placing is only made in the United Kingdom. This announcement does not constitute an offer to sell or the solicitation of an offer to buy shares in any jurisdiction in which such offer or solicitation is unlawful and in particular is not an offer of securities for sale in the United States and the Ordinary Shares have not been and will not be registered under the United States Securities Act of 1933 or under the laws of any state, district or other jurisdiction of the US or of Australia, Canada, Japan or the Republic of South Africa or any of their respective territories and possessions and no regulatory clearances in respect of the Ordinary Shares have been or will be applied for in any such jurisdiction. This summary should be read in conjunction with the full text of this announcement. Appendix I sets out the timetable of principal events and placing statistics. Appendix II sets out the terms and conditions of the Placing. Appendix III sets out the definitions used in this announcement. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR THEIR RESPECTIVE TERRITORIES AND POSSESSIONS ASFARE GROUP PLC PROPOSED Â£80.2 MILLION REVERSE TAKEOVER OF ASSETCO GROUP LIMITED PROPOSED PLACING OF NEW ORDINARY SHARES TO RAISE Â£20.0 MILLION AND APPOINTMENT OF HOARE GOVETT AS NOMAD INTRODUCTION The Company announces that it has entered into a conditional agreement to acquire the entire issued share capital of AssetCo, a leading provider of total managed services to the UK fire and rescue authorities, for a consideration of approximately Â£80.2 million. Of this amount, Â£70.2 million will be satisfied by the issue of the Consideration Shares at 145 pence per share to AssetCo's ordinary shareholders and convertible preference shareholders and the remaining Â£10.0 million will be paid in cash to Brook Henderson in respect of its holding of AssetCo preference shares. Furthermore, the Company has today conditionally placed 13,793,104 new shares (the 'Placing Shares'), at 145 pence each with institutional investors, raising approximately Â£20.0 million before expenses. The Placing Shares are being issued on a non-pre-emptive basis. By reason of the size of AssetCo relative to Asfare and the fundamental change in Asfare's business, board and voting control, the Acquisition is classified as a reverse takeover under the AIM Rules. The AIM Rules require that completion of the Acquisition is subject to the prior approval of Shareholders, which will be sought at the EGM, and the publication of an AIM Admission document which is being posted to Shareholders today. Furthermore, the Placing is conditional, inter alia, on shareholder approval. In conjunction with the Acquisition, Asfare proposes to change its name to AssetCo plc and make certain changes to its capital. In addition, because the Concert Party will, as a result of the Acquisition, receive Ordinary Shares representing more than 30 per cent. of the Enlarged Share Capital, the Company is seeking a waiver of Rule 9 of the Takeover Code, which would otherwise require the Concert Party to offer to acquire those Ordinary Shares that they do not own. The Acquisition and the Placing are conditional, inter alia, upon the passing of the Resolutions by Shareholders at the EGM. Subject to the passing of the necessary resolutions at the EGM, trading in the Existing Ordinary Shares will be cancelled and it is expected that the Enlarged Share Capital will be admitted to trading on AIM on 30 March 2007. INFORMATION ON ASSETCO Introduction The origins of the AssetCo business date back to 1995 when British Gas created a subsidiary, The Leasing Group plc ('TLG'), to manage independently the fleet and fleet-related equipment of British Gas (now National Grid). In February 2001, TLG commenced a 20-year PFI contract for LFB (London Fire Brigade) issued by LFEPA (London Fire and Emergency Planning Authority). This was the largest outsourced emergency services equipment contract worldwide and the first FRA total managed services contract in the UK to be outsourced. The contract includes the procurement, supply, maintenance and lifecycle replacement of LFB's fire appliances, specialist fire and rescue vehicles and operational equipment. The contract also included a transfer of ownership of all vehicles and 20,000 items of equipment, workshop staff (under TUPE), management of existing workshops and all risk associated with operational processes and front line vehicle and equipment availability from LFB to TLG. TLG was acquired by a privately owned leasing company, Brook Henderson in October 2002. Brook Henderson subsequently rebranded itself as AssetCo and disposed of certain non-core assets, retaining other business interests and client contracts including the contract with LFEPA. Whilst under Brook Henderson's ownership, AssetCo completed the following acquisitions: Date of Company Cost Activity acquisition name September SVO Â£5.1m Conversion of standard vehicles to meet the 2003 enhanced vehicle specification requirements for police authorities. October Papworth Â£2.4m Design and build of vehicles for all emergency 2003 services agencies, including FRAs, police authorities and ambulance services trusts. October FMI Â£1.3m Fleet management services. 2003 November Fleet Â£11.0m Fleet managed services and contract hire. 2003 Solutions Limited On 5 October 2005, John Shannon led the management buy-in/buy-out ('BIMBO'), backed by HBOS plc, of AssetCo's emergency and fleet-related business, including Papworth, SVO and the Ireland fleet management operations, for a consideration of Â£45 million. The strategic rationale for the BIMBO was that FRAs, both locally and nationally, were embarking upon a period of major change which presented a significant opportunity for AssetCo. Additional statutory responsibilities had been placed upon them through government legislation with emphasis on the need for FRAs to adapt and change established practices and thinking. One of the main elements of the modernisation agenda is that all FRAs in England and Wales are now required to produce an annual action plan supporting incremental change in delivery of services and usage of resources in order to meet the expectations of central government as outlined in the National Framework Document. In April 2006, AssetCo commenced a 20-year PPP contract for the Lincolnshire Fire and Rescue Service ('LFR'). This was the second fully managed service contract issued on behalf of an FRA and was for the procurement, supply, maintenance and lifecycle replacement of LFR's fleet, fire and rescue vehicles and operational equipment. Since the BIMBO, AssetCo has entered into the following acquisitions: Date of Company Cost Activity acquisition name December 2006 FSE Â£1.4m Distributor of hydraulic rescue equipment Acquisition agreed 23 November 2006 (completion expected on the day of Admission) Simentra Â£0.5m Homeland security and civil contingency planning Since the BIMBO, the directors of AssetCo: â€¢have positioned AssetCo to capitalise on its first mover advantage in the fire market through equipping the company with the capability and competencies to win future total managed services contracts; â€¢have reduced the high fixed cost base to a more variable cost base, thereby allowing increased flexibility to align AssetCo's cost base with its operations; â€¢exited, or are in the process of exiting, from pre-BIMBO fleet management contracts which had low margin returns; â€¢have relocated the main headquarters from an administrative centre in Reading to an existing under-utilised operational facility in London, thereby delivering significant operational and financial benefits; and â€¢have relocated the back office functions to Ireland to manage group business support and deliver a lower cost base. In December 2006, AssetCo secured Â£5.0 million of funding from J O Hambro which enabled AssetCo, inter alia, to complete the acquisition of FSE. The Ongoing Directors believe that the LFB and LFR contracts endorse AssetCo's total managed services model and provide a template upon which FRAs and other emergency services can base their service delivery. With first mover advantage in the delivery of total managed services to the fire market, the Ongoing Directors believe that AssetCo is well positioned to build a significant and leading position in the provision of total managed services for vehicles and equipment, equipment supply and specialist vehicle design and build to the FRAs and other emergency services. The Ongoing Directors also believe that with change and modernisation high on the agenda for all emergency services, AssetCo is well placed to meet the needs for similar outsourced requirements within ambulance service trusts and police authorities. Accordingly, AssetCo's focus and capability is now predominantly geared towards the fire market. AssetCo has approximately 380 employees across five primary locations. AssetCo's business AssetCo is a leading provider of total managed services to UK fire and rescue authorities. AssetCo also designs, builds and converts specialist vehicles and equipment for emergency and mission critical service clients. The breadth of AssetCo's capabilities allows it to provide clients with a service covering all of their vehicle and operation equipment needs. The directors of AssetCo believe that the company's success in the fire market is not only attributable to the value and service it brings, but also in its adoption of a partnering approach to operational solution design, an approach compatible with the partnering philosophy advocated by the FRAs. In addition, following the transfer of staff from LFB and LFR, AssetCo has direct knowledge, skills and experience in running mission critical operational infrastructures, which the directors of AssetCo believe is a key cultural and operational differentiator to its competitors. A substantial number of AssetCo employees have previously been employed in the fire service. AssetCo Total Managed Services AssetCo's total managed services model is built on long-term contracted relationships and brings together the capabilities of AssetCo in order to provide for its clients' vehicle and equipment needs. AssetCo creates an interdependent partnering approach with its clients where both parties share knowledge and work collaboratively to deliver improved availability for vehicles and operational equipment, which the directors of AssetCo believe is essential if the long term capability and expectations of the FRAs in meeting their immediate and future Integrated Risk Management Plans ('IRMPs') are to be realised. AssetCo's total managed services model is designed to deliver value for money solutions and be affordable (within budget) in the provision, supply, maintenance and lifecycle management of all vehicles and operational equipment. Transferring the ownership, risk and management of vehicles and equipment from the FRAs to AssetCo enables the FRAs to concentrate on their core activities. Risk transfer to AssetCo takes place under a contractual arrangement whereby AssetCo provides guaranteed levels of vehicle and equipment availability across defined territories, at defined locations. Through this risk transfer and contractual arrangement, FRAs are able to equip themselves with a mechanism that delivers their vehicle and equipment requirements and enables change to vehicle and equipment inventories over the total contracted period thereby assisting FRAs in fulfilling their future IRMP requirements. Vehicles and equipment are designed to meet client performance and diversity specification requirements and are regularly refreshed to incorporate new technologies. AssetCo provides familiarisation training on new equipment supporting the FRAs' statutory duty under the Fire and Rescue Services Act 2004 to maintain competency of their personnel. The Ongoing Directors believe that AssetCo's total managed services model provides clients with the following benefits: â€¢guaranteed levels of vehicle and equipment availability at the point of need; â€¢early life replacements and refreshed technologies that enable faster access to technologically advanced vehicles and equipment which assists clients in meeting their statutory obligations under the Civil Contingency Act 2004 and the Fire and Rescue Services Act 2004; â€¢flexible solutions, designed in partnership with FRAs to meet local needs; â€¢release of front line staff from non-core activities thereby enabling clients to meet the increased demand in delivering community safety initiatives brought about by the modernisation agenda; and â€¢budgetary stability, assisting in eliminating the uncertainty of future payments brought about by public sector planning cycles. AssetCo's largest contract is the 20-year PFI contract with LFEPA for total managed services of LFB vehicles and equipment. This was the first FRA total managed services contract in the UK to be outsourced. The original stated contract value was Â£292 million. The Proposed Directors estimate that the current contract value is Â£400 million based on additional equipment added through the PFI contract change procedure. The existing contract includes the procurement, supply, maintenance and lifecycle replacement of LFB fire appliances, specialist fire and rescue vehicles and operational equipment. Following Admission, Asfare will be substituted as the guarantor, in place of AssetCo, under the LFB contract. Under the terms of the LFEPA contract, AssetCo is required to repair or replace any critical vehicle or equipment item with a defect that renders it unavailable to LFB within up to two hours of the defect being reported. Revenue abatements are applied in the event of failure to meet this performance target. Over the last five years, the level of revenue abatement applied by LFB has been less than one per cent. of contract revenues. Further controls have been introduced since the BIMBO to service delivery management, which the directors of AssetCo expect to reduce revenue abatement costs further. In April 2006, AssetCo commenced a 20-year PPP contract with LFR. This is a Â£60 million total managed services contract for the procurement, supply, maintenance and lifecycle replacement of LFR's fleet, fire and rescue vehicles and operational equipment. Services provided to LFR include managed services for hoses and supply of general consumables, a new service which expands AssetCo's offering over that which is provided as part of the PFI contract with LFEPA. LFR's vehicles and equipment are currently on contract hire from a third party supplier. As these vehicles and equipment reach contract end date, they will be replaced with vehicles and equipment owned by AssetCo. This replacement programme is due to commence in June 2007. Under the terms of the LFR contract, AssetCo is required to repair or replace any critical vehicle or item of equipment with a defect that renders it unavailable within up to four hours of the defect being reported, with revenue abatements being applicable in the event of failure. Since the start of the LFR contract, there have been no revenue abatements. During the six months ended 30 September 2006, total managed services revenue (including the LFEPA and LFR contracts) was Â£9.1 million and gross margins were 33.1 per cent. (source: audited non-statutory financial statements). The contracts secured by AssetCo represent the total managed services contract for the largest urban fire brigade in Europe (LFB) and the largest total managed services contract with a rural fire brigade in England (LFR). AssetCo now owns and manages approximately 650 fire and rescue vehicles and appliances, approximately 50,000 items of operational equipment and approximately eleven per cent. of all of England's frontline and reserve pumping appliances. AssetCo has the scalability, design, capability and the range of services required to meet the needs of county, metropolitan and combined FRAs. The Proposed Directors estimate that the replacement cost for all vehicles and equipment provided as part of the total managed services to LFB and LFR is approximately Â£73 million. AssetCo Engineering AssetCo Engineering manages eight specialist vehicle and equipment workshops servicing existing clients, including a dedicated emergency workshop covering approximately seven acres in London. AssetCo Engineering's workshops are an integral component in delivering the vehicle and equipment availability service levels set out in the individual client contracts. Engineers are emergency trained and have the specialist knowledge and skills required to maintain vehicles and equipment unique to the fire market. AssetCo Engineering has also established a network of mobile technicians who deliver fast and effective roadside repair to vehicles and equipment, and provide engineering support to clients that operate in remote locations. AssetCo Engineering's clients include AssetCo Total Managed Services, the UK Ministry of Defence, HM Prison Service and various local authorities and health authorities. Services provided by AssetCo Engineering include: â€¢emergency workshop and equipment engineering services; â€¢collection and delivery of vehicles and equipment; â€¢testing and inspection of vehicles and equipment; and â€¢technical maintenance scheduling. During the six months ended 30 September 2006, AssetCo Engineering's revenue was Â£1.2 million and gross margins were 18.5 per cent. (source: audited non-statutory financial statements). AssetCo Specialist Vehicle Design and Build Re-focused since the BIMBO, and with a strong heritage based on the Papworth and SVO operations, AssetCo's specialist vehicle design, build and conversion operation, located in Papworth, Cambridgeshire is one of the UK's leading suppliers of emergency services vehicles. AssetCo is an approved supplier of fire-pumping appliances to the fire market. During 2007, AssetCo intends to build 130 fire-pumping appliances representing over 55 per cent. of the UK's estimated new fire-pumping appliances expected to be produced for 2007. AssetCo currently provides a range of fire rescue units and operational service vehicles to LFB and LFR. AssetCo is an NHS PASA (purchasing and supply agreement) framework approved supplier for fast response (accident and emergency) vehicles and built over 100 ambulances in 2006. AssetCo designs and provides a specialist build service for police vehicles. In 2006, over 2,000 vehicles were supplied by AssetCo to police authorities in the UK. AssetCo has recently been awarded a national framework agreement for the supply of fire-pumping appliances to the fire and rescue service. The Ongoing Directors intend to leverage off this agreement and increase further AssetCo's focus on promoting capability in specialist design and build in the fire and rescue market. AssetCo Specialist Vehicle Design and Build provides clients with the following benefits: â€¢turnkey vehicle design, development and manufacturing services; â€¢coordination of all supply chain and build activities, through to commissioning and handover; â€¢modifications to vehicle body or standard features tailored to meet specific needs; and â€¢installation of data and communication systems. During the six months ended 30 September 2006, AssetCo Specialist Vehicle Design and Build revenue was Â£6.4 million and gross margins were 10.6 per cent. (source: audited non-statutory financial statements). AssetCo Operational Equipment Services Established since the BIMBO, AssetCo Operational Equipment Services currently supplies operational equipment to over 70 per cent. of all UK FRAs. The Enlarged Group will be the largest purchaser of fire appliances and fire equipment within the UK and Republic of Ireland, supplying operational equipment products to all FRAs in the UK. The Ongoing Directors intend to develop further the Enlarged Group's operational equipment capability to enhance the range of total managed services currently provided through the selective acquisition of UK-based complementary businesses and strategic partnerships. AssetCo's Operational Equipment Services business provides clients with the following benefits: â€¢reduced cost through the buying power of AssetCo; â€¢specialist procurement services that ensure only fire market compliant products are supplied; â€¢increased equipment compatibility through integrating design technologies; and â€¢use of 'green' product technologies that assist in reducing the impact on the environment. AssetCo Business Support Services Established since the BIMBO, AssetCo Business Support Services provides back office support to emergency and other existing service critical clients. The Ongoing Directors intend to market these services further as a standalone business service support offering. AssetCo provides a 24 x 7 x 365 call and client services centre for accident management, vehicle and equipment hire and other service/user related queries. Client services include: â€¢operational control and call centre management; â€¢vehicle and plant hire; â€¢vehicle and equipment breakdown and after sales management service; and â€¢finance and administration support services. During the six months ended 30 September 2006, AssetCo Business Support Services revenue was Â£1.9 million (source: audited non-statutory financial statements). AssetCo Consulting Established since the BIMBO, the Ongoing Directors intend that AssetCo Consulting will provide independent advice on 'best practice and best value' in civil contingency planning. AssetCo has agreed, conditional upon Admission, to acquire Simentra, a specialist Northern Ireland based consultancy boutique, with a well established brand in homeland security and civil contingency planning, for Â£0.45 million in cash. Simentra's diverse team of experienced front line/first responders, who have experience at all levels of emergency services operations, have spoken at international conferences in this evolving and critical aspect of integrated risk management. Other operations AssetCo provides a number of other services through operations acquired as part of the BIMBO that are outside of the fire and rescue services sector. These include the provision of vehicle contract hire services for Northern Ireland Electricity, fleet management services for Scottish Water and spot hire operations in the UK. AssetCo has exited the majority of its fleet management contracts. Accordingly, the Ongoing Directors expect revenue from fleet management to reduce substantially. The Ongoing Directors intend to review these operations and consider the timing of any future exit from non-fire and rescue service related contracts. During the six months ended 30 September 2006, revenue from other operations was Â£34.3 million and gross margins were 6.1 per cent. (source: audited non-statutory financial statements). AssetCo's markets There are 59 FRAs in the UK, comprising of 47 in England, three in Wales, eight in Scotland and one in Northern Ireland. Collectively, these FRA's total estimated annual expenditure is Â£2.6 billion of public money in 2006/7 (source: PKF). The Proposed Directors estimate that AssetCo's share of LFB's budgeted expenditure for 2006/7 of Â£407 million will be approximately five per cent. All FRAs are responsible for tending fires, delivering community fire safety and responding to road traffic accidents, flooding and major emergencies. Day-to-day management of the FRA is undertaken by the Chief Fire Officer who is responsible to the community through a local authority member or members appointed to the FRA. There is significant variation in the scale of, and local circumstances facing, FRAs. Some are predominantly rural authorities with relatively small populations and others are mainly urban with large populations. Numbers of FRA staff range from 25 in the Isle of Wight to nearly 7,000 in London. Whilst other organisations have the depth of resource to continue to target this market, the Ongoing Directors believe that AssetCo retains a significant advantage by having won the first two outsourced fire contracts, demonstrated capability in delivering tailored solutions to meet local FRA needs and established a level of trust and confidence that is essential to the mission critical service market. Fire and rescue market drivers The Fire and Rescue Services Act 2004 requires FRAs to develop and deliver the strategic objectives of the National Framework Document. FRAs are also under pressure to deliver savings under the Gershon Efficiency Review as well as to undertake improvement planning and manage performance against service objectives under the statutory basis of best value. Faced with uncertain levels of government funding, and the recognition that the reform agenda and associated agreement on pay and terms and conditions, has and will have significant financial ramifications, AssetCo provides the capability and capacity to support FRAs in seeking out alternative methods of supporting 'front end' service delivery. Following the 11 September 2001 attacks on the World Trade Center and accelerated by the attacks of 7 July 2005 in London, the UK Government established the CCCP. The aim of the CCCP is to enhance the country's preparedness and resilience by improving the capability of the FRAs and other organisations to respond to major and catastrophic incidents. As of July 2006, the UK Government has invested approximately Â£200 million in vehicles and equipment in support of this programme. The UK Government has also committed to spend up to Â£16 million per annum to help meet the costs of crewing these new vehicles and is working with the Chief Fire Officers association and the local government association on the allocation of these funds. The Ongoing Directors expect a requirement to be placed on the FRAs to perform duties that go beyond their current statutory obligations to respond to fires, special services and major incidents. In addition, FRAs will be required to plan and prepare for catastrophic incidents identified by the CCCP in areas such as: â€¢chemical, biological, radiological and nuclear incidents; â€¢industrial and domestic accidents; â€¢chemical spills and collapsed buildings; â€¢natural disasters; and â€¢floods and earthquakes. By order of the Secretary of State for Communities and Local Government, responsibility for maintaining the CCCP vehicles and equipment will transfer from the CLG to FRAs in Spring 2007. As an interim measure, the CLG has elected to invite tenders for a one year contract for the maintenance only of CCCP vehicles. This contract is targeted by the CLG to commence in Spring 2007. The Ongoing Directors believe that a comprehensive managed service tender will be issued to the private sector in March 2007. This will be for the provision of support for FRAs in ensuring national capability is maintained through long term capability management of CCCP vehicles and equipment. The Ongoing Directors believe that, with its successful track record in winning vehicle and equipment managed service contracts in the fire market, its networked national infrastructure with the required skills and knowledge to provide an interim solution, and with its established track record of delivering mission critical operational infrastructures and long term capability management across the UK, AssetCo is well positioned to secure both the interim and longer term CCCP contracts described above. Fire and rescue market size Based on current prices, PKF estimates that the potential market size for UK fire and rescue fleet services is approximately Â£172 million per annum. In addition, the Ongoing Directors estimate that the potential market size relating to the CCCP is approximately Â£10 million per annum. Therefore, the Ongoing Directors believe that this implies a total addressable UK vehicle total managed services market of Â£3.6 billion, including a market relating to the CCCP in England of Â£200 million, based on typical 20-year contract agreements. AssetCo currently holds both of the current total vehicle and equipment managed service fire contracts, with an initial aggregate contract value of Â£17 million per annum. Market and new product development AssetCo intends to expand its total managed services offering, particularly in the areas of equipment managed service support. The Ongoing Directors intend to utilise their experience in delivering improvements and efficiencies in the provision and support of specialist equipment to the fire services market to other emergency services agencies and organisations in the UK such as the UK Ministry of Defence. In addition, as a result of discussions with manufacturers and distributors of specialist equipment, the Ongoing Directors believe that there is a significant opportunity for specialist equipment 'after care' service and support. The Ongoing Directors believe that the development of an expanded and national equipment managed service, with endorsement from specialist manufacturers and distributors, could provide increased entry points into new clients and enables further expansion into AssetCo's addressable market. New markets In addition to the FRAs, AssetCo already provides services and products into both the UK police and ambulance sectors. The UK police market consists of 43 police authorities which, as a result of the Gershon Efficiency Review, are under pressure to deliver savings as well as to undertake reviews of how to deliver efficiencies at a local level and deliver improved community safety. On 1 July 2006, the existing 29 UK ambulance trusts were merged to create 12 UK regional ambulance trusts, with the objective of reducing bureaucracy and committing more money to invest in front line vehicles and equipment. UK ambulance trusts are being encouraged to adapt, change and seek alternative means of improving services and reducing costs through partnerships with the private sector. The Ongoing Directors believe that, with increased cost pressure in each of the emergency services and an increasing need to standardise products and leverage existing infrastructure, opportunities exist to generate synergies and improve services across the emergency services through adoption of the AssetCo total managed services business model. Financial information on AssetCo Prior to the BIMBO, the AssetCo Group did not exist in its current form but was part of a larger group. The BIMBO brought together a number of subsidiaries and contracts. In addition, AssetCo has withdrawn from all except one of the fleet management contracts acquired as part of the BIMBO. The selected consolidated financial information on the AssetCo Group (post-BIMBO) set out below, as at and for the six months ended 31 March 2006 and 30 September 2006 respectively, is presented in accordance with UK GAAP. Six months Six months ended ended 30 31 March September 2006 2006 Â£'000 Â£'000 Revenue 62,119 52,941 ========== ========== EBITDA(1) 7,780 8,147 ========== ========== Operating profit 1,584 2,522 Interest (1,699) (1,292) ---------- ---------- (Loss)/profit before taxation (115) 1,230 Taxation 302 113 ---------- ---------- Profit after taxation 187 1,343 ========== ========== Net assets 3,258 4,601 ========== ========== Net debt(2) 68,645 52,786 ========== ========== (1) Earnings before interest, taxation, depreciation and amortisation. (2) Net debt excludes the AssetCo preference shares of Â£10 million. Turnover decreased in the six months to 30 September 2006 as build consultancy for the UK utility contracts was reduced and AssetCo exited the majority of its fleet management contracts during this period. As both of these activities were high volume but low margin, the effect of exiting these businesses improved margins. In addition, since the BIMBO, there has been an ongoing review of all costs in AssetCo which resulted in further improved margins. A continuous improvement programme has been put in place to review all aspects of the AssetCo Group with the aim of achieving further margin improvement. Profit before tax improved from a loss of Â£115,000 in the six months ended 31 March 2006 to a profit of Â£1,230,000 in the six months ended 30 September 2006 after charging Â£1 million for goodwill amortisation in each period. Net debt has decreased from Â£68.6 million to Â£52.8 million due to exiting the majority of the fleet management contracts, which reduced debt by Â£14.3 million and the net repayment of Â£1.5 million of other loans. INFORMATION ON ASFARE Asfare, a leading supplier of products and services to the emergency and homeland security markets in the UK, was incorporated in July 2003 and was admitted to trading on AIM in December 2003. Asfare supplies operational equipment products and services to more than 90 per cent. of the UK FRAs. Asfare comprises two divisions: â€¢the search and rescue division; and â€¢the protection and detection division. The search and rescue division comprises AS Fire and Rescue and Collins Youldon. AS Fire and Rescue is an established manufacturer of an extensive range of ladders, gantries and ancillary equipment sold under several brand names to emergency and rescue services in the UK and internationally. AS Fire and Rescue's principal customers are FRAs, airports, police forces and AssetCo with exports comprising approximately 15 per cent. of turnover. AS Fire and Rescue has successfully launched a new lightweight roller shutter which is proving attractive to the European markets. De-mount systems and beam gantries are also being developed, particularly focused on the utility and European markets. The Directors believe that the establishment of AS Security Equipment BV in February 2006 will be a catalyst for sales into European markets with significant growth expectations in the next two years. Within AS Fire and Rescue, the Directors are exploring opportunities in the Malaysian and Australasian markets and expect there to be significant opportunities in these regions in 2007 and 2008. Collins Youldon, acquired by Asfare in June 2006, manufactures hose reels, cable drums and a range of related products for both the fire-fighting and the oil tanker industries. Collins Youldon is the largest supplier of vehicle mounted hose reels in the UK, with exports comprising approximately 37 per cent. of turnover. Collins Youldon recently recruited a new managing director, who is undertaking a review of potential new areas of product development. The sole trading entity in the protection and detection division is Todd Research, acquired by Asfare in November 2005, which manufactures advanced package screening units. In 2005, Todd Research launched a full upgrade to its premium product range including colour X-ray image and powder detection capability. Further developments in 2006 included a remote access and network functionality for the premium range and a 'Basix' range targeting SMEs for entry level scanning. Todd Research has increased its direct sales approach through the recruitment of a focused salesman to develop the existing customer base to include more facilities management companies and to look beyond the traditional blue chip companies and government agencies, targeting high profile retail outlets, hotels and schools. Financial information on Asfare The selected financial information set out below, as at and for the three years ended 31 March 2006, is presented in accordance with UK GAAP. Pro forma (unaudited) Year ended Year ended Year ended 31 March 31 March 31 March 2004 2005 2006 Â£000 Â£000 Â£000 Revenue 4,389 3,925 4,905 ========== ========== ========== EBITDA(1) 837 387 646 ========== ========== ========== Operating (loss)/profit (360) 190 456 Interest (41) (81) (98) ---------- ---------- ---------- (Loss)/profit before taxation (401) 109 358 Taxation (165) 10 (45) ---------- ---------- ---------- (Loss)/profit after taxation (566) 119 313 ========== ========== ========== Net assets 2,885 2,962 3,966 ========== ========== ========== Net debt 1,033 693 1,329 ========== ========== ========== (1) Earnings before interest, taxation, depreciation, amortisation and exceptional items. In order to enable useful comparison of the Group's performance pro forma information has been set out for the year ended 31 March 2004. The pro forma results for the year ended 31 March 2004 represent the actual consolidated results of Asfare from the date of incorporation together with the results of Speed 5019 Limited and its subsidiaries from 1 April 2003 until its acquisition by the Company on 12 December 2003. The financial information set out above includes the trading results for AS Fire and Rescue and Todd Research since the date it was acquired on 11 November 2005. Turnover for the year ended 31 March 2006 amounted to Â£4,905,000, a growth of 25 per cent. above turnover of Â£3,925,000 in the previous year (pro-forma 2004: Â£4,389,000). AS Fire and Rescue's turnover increased in the year to 31 March 2006 by 4 per cent. to Â£4,092,000 over the prior year and Todd Research recorded Â£813,000 in sales. Gross margins in the year ended 31 March 2006 were 57.8 per cent. (2005: 52.9 per cent., 2004: 54.2 per cent.). The AS Fire and Rescue gross margin was improved by the mix of sales and higher margin products, particularly in the second half of the year. Todd Research's gross margin was improved as more of the new product range was sold. BACKGROUND TO AND REASONS FOR THE ACQUISITION AND THE PLACING The Ongoing Directors intend to increase the Enlarged Group's share of existing client expenditure by providing an enlarged service offering and by cross-selling into the existing client bases of Asfare and AssetCo. Organic growth is planned through the sale of additional products and enhanced services, including total managed services and consultancy. The Enlarged Group will have all the FRAs as clients. The Directors and the Proposed Directors believe that the Acquisition brings together two experienced and specialist UK fire services companies and management teams and will: â€¢demonstrate the Enlarged Group's commitment to the UK fire market; â€¢establish the attractiveness of the Enlarged Group as a strategic partner for other key fire market suppliers; â€¢provide the Enlarged Group with increased purchasing power within the total fire product supply market in the UK; and â€¢reduce operating costs through integrated Enlarged Group support services functions. In addition, the Ongoing Directors believe that the Acquisition will provide clients of the Enlarged Group with the following benefits: â€¢a service-led solution based on value, not cost; â€¢increased client choice and flexibility through an expanded range of products and total managed services; â€¢integrated supply chain management, able to deliver products and total managed services from a single source supplier; and â€¢integrated technologies that are able to deliver technically advanced vehicles and operational equipment. As a larger listed company with a balance sheet strengthened by the net proceeds from the Placing the Directors and the Proposed Directors believe the Enlarged Group will gain an enhanced profile within its chosen markets which will assist it in winning new contracts in the future, particularly in the fire services market. The recruitment, retention and reward of employees is a critical factor in the future success of the Enlarged Group. The Directors and the Proposed Directors believe that the Acquisition and the Placing will help the Enlarged Group to continue to recruit and retain skilled staff and thereby continue to grow. STRATEGY OF THE ENLARGED GROUP The Ongoing Directors' objectives are to: â€¢capitalise on AssetCo's first mover advantage in total managed services for the fire and rescue service; â€¢build on long term contracted client relationships and engage at strategic planning level; â€¢leverage off Asfare's and FSE's existing relationships to further organic growth; â€¢horizontally integrate into the supply chain through selective acquisitions and strategic partnerships; â€¢pull-through additional value added services into the existing client base; and â€¢replicate the total managed services model across other emergency services agencies. PROFIT FORECAST FOR THE YEAR ENDING 31 MARCH 2007 AND FORECAST NET DEBT AT 31 MARCH 2007 The Ongoing Directors estimate that pro-forma turnover, EBITDA before transaction costs and the cost of share based payments and profit before taxation, amortisation, transaction costs and the cost of share based payments for the Enlarged Group for the year ending 31 March 2007 will be approximately Â£103.2 million, Â£17.9 million and Â£6.2 million respectively. This is based on the aggregate of the forecast turnover (after the elimination of pro-forma intercompany sales of Â£1.1 million), EBITDA before transaction costs and the cost of share based payments and profit before taxation, amortisation, transaction costs and the cost of share based payments for the year ending 31 March 2007 for each of Asfare and AssetCo. The Ongoing Directors estimate that the Enlarged Group will have net debt of approximately Â£52.7 million at 31 March 2007, comprising acquisition debt of Â£21.3 million, asset finance (emergency) of Â£25.7 million, asset finance (non-emergency) of Â£11.0 million and working capital of Â£1.0 million, less cash balances of Â£6.3 million. Net debt excludes the AssetCo preference shares of Â£10 million. CURRENT TRADING AND PROSPECTS The Ongoing Directors believe that the UK fire market is relatively underdeveloped and offers significant growth potential for total managed services. AssetCo AssetCo has won both of the fully outsourced fire vehicle and equipment managed services contracts (each being for 20 years) that the UK fire services have awarded to date. The UK fire services sector is increasingly moving towards outsourcing and the Ongoing Directors are confident that the Enlarged Group is well positioned to win additional fire service contracts. AssetCo is currently working on proposals in relation to total managed services provision for ten FRAs, expected by the Ongoing Directors to be awarded over the next three years, with potential contract values, in aggregate, of approximately Â£24 million per annum (Â£480 million over a 20-year contracted period). In conjunction with the CCCP, the Ongoing Directors believe that contract awards with a value of approximately Â£34 million per annum could be made between 2007 and 2009. Asfare In the six months ended 30 September 2006, Asfare's turnover doubled to Â£3.6 million from the same period in the prior year, growing both organically and through acquisition. The Directors believe that the strength of Asfare's order book and the continuing improvement in its markets provide a sound platform for continued growth. The Directors believe the prospects beyond the current financial year are strong as Collins Youldon and Todd Research begin to benefit from the market opportunities and synergies of being part of the existing Asfare Group. The Enlarged Group The Ongoing Directors are confident in the underlying financial and trading prospects of the Enlarged Group for the current financial year and the financial year ending 31 March 2008. USE OF PROCEEDS OF THE PLACING The Ongoing Directors intend to use the net proceeds of the Placing as follows: â€¢Â£10.0 million to provide the Company with funds to satisfy the cash consideration due to Brook Henderson under the terms of the Acquisition Agreements; â€¢Â£3.5 million to refinance existing debt obligations; and â€¢Â£3.5 million for working capital purposes. DIVIDEND POLICY The Ongoing Directors intend to adopt a progressive dividend policy taking into account the earnings potential of the Enlarged Group and the growth and development opportunities available to it, while maintaining appropriate levels of dividend cover. The Board will continue to review the appropriateness of its dividend policy as the Enlarged Group develops. SHARE OPTION PLANS The Company operates the Share Option Plans to incentivise directors and employees of the Enlarged Group. The Ongoing Directors intend to grant options under the Share Option Plans over Ordinary Shares following Completion of the Acquisition. These options will have an option exercise price equal to the Placing Price. Immediately following Admission, the Company intends to grant options over an aggregate of 1,381,205 Ordinary Shares to certain employees of the AssetCo Group. DIRECTORS AND PROPOSED DIRECTORS It is proposed that, on Admission, John Shannon will join the Board as Chief Executive Officer and Frank Flynn will join the Board as Chief Financial Officer. It is also proposed that, following their management of Asfare through a period of organic and acquisitive growth, Tony O'Neill and Tim O'Connor will stand down from the Board following Admission and Tim O'Connor will step down as Company Secretary. In addition, David Chisnall will step down as Deputy Chairman but will remain on the Board as a non-executive director. In addition, the Ongoing Directors intend to appoint a further non-executive director with significant fire industry experience during 2007. Further details of the Proposed Directors are set out below: Marcus John Shannon, proposed Chief Executive Officer John Shannon (aged 41) led the BIMBO of the AssetCo Group in October 2005. He acquired Star Rentals Limited in 1997 and by January 2000, following the acquisition of the Lex Transfleet subsidiary in Northern Ireland, Chart Hire Services Limited, had formed Northern Ireland's largest independent commercial vehicle hire company, FMI. Upon selling FMI to AssetCo he became a board member of AssetCo and managing director of AssetCo (Ireland) Limited, AssetCo Emergency Limited and AssetCo Vehicles Limited. Until 1996, he worked in Bank of Ireland's Corporate and International Banking division, prior to which he worked at KPMG. He holds a BSc (Hons) in Marine Biology, is a fellow of the Institute of Chartered Accountants in Ireland, a fellow of the Institute of Logistics and Transport, a member of the Institute of Bankers and holds an MBA. Raymond Francis Flynn, proposed Chief Financial Officer Frank Flynn (aged 43) is currently Finance Director of the AssetCo Group and was part of the BIMBO team that acquired the AssetCo Group in October 2005. In the four years leading up to the BIMBO, he was an associate partner at PricewaterhouseCoopers ('PwC') with specific focus on realising shareholder value. He was responsible for activities in PwC's Omagh and Derry offices and managed human resources for Northern Ireland Assurance, a division of PwC employing over 300 people. He also managed a portfolio of audit clients. Prior to this, he worked for three years within the corporate finance division of the Industrial Development Board for Northern Ireland. He also spent six years with Crescent Capital / Hambro Northern Ireland Venture Capital Fund as an investment manager and was a non-executive director of UP Holdings Limited and Toughglass Limited. He holds a BSc (Hons) in Business and Accountancy, is a fellow of the Institute of Chartered Accountants in Ireland and was a licensed Insolvency Practitioner. THE TAKEOVER CODE The terms of the Acquisition give rise to certain considerations under the Takeover Code. The Takeover Code is issued and administered by the Panel. The Company is subject to the Takeover Code and therefore its shareholders are entitled to the protections afforded by the Takeover Code. Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which he is already interested and in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer in cash to all other shareholders of that company to acquire the balance of the shares not held by such a person (or group of persons acting in concert). Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry 30 per cent. or more of the voting rights of such a company but not more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person. An offer under Rule 9 must be in cash and at the highest price paid during the twelve months prior to the announcement of the offer for any interests in shares in the company acquired by any person required to make the offer or any person acting in concert with them. The parties shown in the table below are deemed to be acting in concert for the purposes of the Takeover Code (the 'Concert Party') as a result of their positions as directors of AssetCo and their collective participation in the BIMBO. Consideration Percentage holding Shares of Enlarged Share Capital John Shannon 26,963,327 40.1 Frank Flynn 7,137,351 10.6 Denis Mellon 2,775,637 4.2 David Smith 2,775,637 4.2 Pelham Olive 2,428,682 3.6 Peter Lewin 346,955 0.5 ---------- --------- 42,427,589 63.2 ========== ========= The table above shows the interest of the Concert Party assuming that the Acquisition and the Placing is completed and assuming that all the Placing Shares are issued, that no further Ordinary Shares are issued by the Company prior to the issue of the Ordinary Shares. After completion of the Acquisition and the Placing, the Concert Party's interest in shares carrying voting rights in the Company will represent, in aggregate, 63.2 per cent. of the voting rights attaching to the Enlarged Share Capital. The Panel has agreed however to waive the obligation to make a general offer that would otherwise arise on the members of the Concert Party as a result of the Acquisition, subject to approval of the Shareholders. PLACING AGREEMENT The Company is proposing to raise in aggregate approximately Â£20.0 million (before expenses) through a conditional placing of 13,793,104 Placing Shares at the Placing Price with institutional investors pursuant to the Placing Agreement. The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with Existing Ordinary Shares and will, once allotted, rank in full for all dividends and other distributions declared, made or paid on the share capital of the Company in respect of the period after such allotment. It is expected that dealings in the Existing Ordinary Shares and the New Ordinary Shares will commence on AIM on 30 March 2007 (or such later date as shall be determined by Hoare Govett and the Company, being not later than 13 April 2007). Completion of the Placing will be subject to satisfaction of conditions contained in the Placing Agreement including Admission occurring and becoming effective by 8.00 a.m. on 30 March 2007 or such later time and/or date as may be determined in accordance with the Placing Agreement (not being later than 3.00 p.m. on 13 April 2007) and to the Placing Agreement not having been terminated. LOCK-IN AND ORDERLY MARKETING ARRANGEMENTS The Proposed Directors and the AssetCo Senior Managers have undertaken to the Company and Hoare Govett (subject to certain limited exceptions, including disposals by way of acceptance of a takeover offer or the granting of an irrevocable commitment to accept a takeover offer for the entire issued share capital of the Company) not to dispose of any of their Ordinary Shares (and to procure that no persons connected with them dispose of any Ordinary Shares) during the period from Admission up to publication of the Company's annual report and accounts for the year ending 31 March 2008. The Ongoing Directors and the AssetCo Senior Managers have also agreed with the Company and Hoare Govett that, for as long as Hoare Govett is the Company's nominated adviser (subject to certain conditions), they shall effect, insofar as they are able, any disposal of such shares through Hoare Govett. EXTRAORDINARY GENERAL MEETING A notice convening the EGM to be held at 11.00 a.m. on Thursday 29 March 2007 at the offices of Nabarro, Lacon House, 84 Theobald's Road, London, WC1X 8RW, will be despatched to Shareholders today. The Company has received irrevocable undertakings which amount to an aggregate of 1,705,555 Ordinary Shares representing 34.3 per cent. of the issued share capital of the Company to vote in favour of the Resolutions. Appendix I Timetable of principal events and placing statistics Timetable of principal events Latest time and date for receipt of forms of proxy in 11.00 a.m. on respect of the EGM 27 March 2007 Extraordinary General Meeting 11.00 a.m. on 29 March 2007 Completion of the Acquisition and Placing 30 March 2007 Admission effective and dealings in the New Ordinary 30 March 2007 Shares to commence on AIM and new name effective CREST stock accounts credited in respect of New Ordinary 30 March 2007 Shares Despatch of definitive share certificates Shares to be by 13 April 2007 held in certificated form Placing statistics Placing Price 145 pence Number of Existing Ordinary Shares 4,971,112 Number of Placing Shares 13,793,104 Number of Consideration Shares 48,434,483 Enlarged Share Capital 67,198,699 Market capitalisation of the Company at the Placing Price(1) Â£97.4 million Placing Shares as a percentage of the Enlarged Share Capital 20.5 per cent. Consideration Shares as a percentage of the Enlarged Share 72.1 per cent. Capital Estimated net proceeds of the Placing receivable by the Company Â£17.0 million (2) Notes: 1. Market capitalisation has been calculated based on the number of Ordinary Shares in issue immediately following Admission multiplied by the Placing Price. 2. Net proceeds are stated after the deduction of estimated total expenses of approximately Â£3.0 million. Appendix II Terms and conditions of the Placing THIS ANNOUNCEMENT, INCLUDING THE APPENDIX IS NOT FOR RELEASE, OR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR THEIR RESPECTIVE TERRITORIES AND POSSESSIONS IMPORTANT INFORMATION FOR PLACEES ONLY Eligible participants in the Placing MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE DIRECTED ONLY AT PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE 'ORDER') OR ARE PERSONS FALLING WITHIN ARTICLE 49(2) ('HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC') OF THE ORDER OR TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED AND ARE PERSONS WHO FALL WITHIN PARAGRAPH (7) OF SECTION 86 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS 'RELEVANT PERSONS'). THIS ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN AND ITS CONTENTS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT AND THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT AND THIS APPENDIX MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. THIS ANNOUNCEMENT AND THIS APPENDIX DO NOT CONSTITUTE AN OFFER, OR FORM PART OF, ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES IN ASFARE GROUP PLC (THE 'COMPANY'). THE NEW ORDINARY SHARES TO BE ISSUED BY THE COMPANY THAT ARE THE SUBJECT OF THE PLACING REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED, (THE 'SECURITIES ACT') OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND ABSENT REGISTRATION MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM, OR AS A PART OF A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. Persons who are invited to and who choose to participate in the Placing ('Placees') by making an oral offer to subscribe for Placing Shares, will be deemed to have read and understood this Announcement (including this Appendix) in its entirety and to be making such offer on the terms and conditions contained in this Appendix, and to be providing the representations, warranties, agreements, acknowledgements and undertakings, in each case as contained in this Appendix. In particular, each Placee represents, warrants and acknowledges that it: 1. is a Relevant Person; and 2. is outside the United States and is acquiring the Placing Shares in an 'offshore transaction' (within the meaning of Regulation S under the Securities Act). This Announcement (including this Appendix) does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any Placing Shares in the United States, Australia, Canada, Japan or the Republic of South Africa and their respective territories and possessions or in any other jurisdiction in which such offer or solicitation is or may be unlawful and the information contained herein is not for publication or distribution to persons in the United States, Australia, Canada, Japan or the Republic of South Africa and their respective territories and possessions or any jurisdiction in which such publication or distribution is unlawful. Any failure to comply with these restrictions may constitute a violation of US, Australian, Canadian, Japanese or South African securities laws. Persons receiving this Announcement (including, without limitation, custodians, nominees and trustees) must not distribute, mail or send it in, into or from the United States, or use the United States mails, directly or indirectly, in connection with the Placing, and by so doing may invalidate any related purported application for Placing Shares. The Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any state or other jurisdiction of the United States, and, subject to certain exceptions from the appropriate requirements of such jurisdiction, may not be offered or sold, resold or delivered, directly or indirectly in or into the United States. No public offering of the Placing Shares is being made in the United States. The Placing Shares are being offered and sold outside the United States in reliance on Regulation S. Until the expiration of 40 days after the closing of the Placing, an offer or sale of the Placing Shares within the United States by a dealer whether or not participating in the Placing may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A of the Securities Act. The distribution of this Announcement (including this Appendix) and the Placing and/or issue of Ordinary Shares (as defined below) in certain other jurisdictions may be restricted by law. No action has been taken by the Company or Hoare Govett that would permit an offer of Ordinary Shares or possession or distribution of this Announcement (including this Appendix) or any other offering or publicity material relating to such Ordinary Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement (including this Appendix) comes are required by the Company and Hoare Govett to inform themselves about and to observe any such restrictions. Details of the Placing Agreement and the Placing Shares Hoare Govett has entered into a conditional Placing Agreement with the Company and others whereby Hoare Govett has, on the terms and subject to the conditions set out therein, agreed to use its reasonable endeavours as agent for and on behalf of the Company to procure Placees for the Placing Shares at 145 pence per share and, failing which, to subscribe itself for the Placing Shares at the Placing Price. The Placing Shares will when issued be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares of 25 pence each of the Company, including the right to receive all dividends and other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue of the Placing Shares. Application for admission to trading Application will be made to the London Stock Exchange for Admission of the Enlarged Share Capital on AIM. It is expected that Admission will take place and dealings in the Enlarged Share Capital will commence on 30 March 2007. Bookbuilding process Hoare Govett has conducted a bookbuilding process (the 'Bookbuilding Process') to determine demand for participation in the Placing. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of their agreement to subscribe for any Placing Shares. To the fullest extent permissible by law, neither Hoare Govett nor any holding company thereof, nor any subsidiary, branch or affiliate of Hoare Govett or any such holding company (each an 'Affiliate') shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise) in connection with the Placing or the Bookbuilding Process. In particular, neither Hoare Govett nor any Affiliate thereof shall have any liability in respect of its conduct of the Bookbuilding Process. Participation in, and principal terms of, the Bookbuilding Process By having participated in the Bookbuilding Process and the Placing, Placees will be deemed to have read and understood this Announcement (including this Appendix) in its entirety and to be participating and making an offer for Placing Shares at the Placing Price on the terms and conditions, and to be providing the representations, warranties, acknowledgements and undertakings, contained in this Appendix. Hoare Govett (whether through itself or its Affiliates) is arranging the Placing as an agent of the Company. A bid in the Bookbuilding Process will be made on the terms and conditions in this Appendix and will not be capable of variation or revocation after the close of the Bookbuilding Process. Any allocation will be confirmed orally to persons who have participated in the Bookbuilding Process and a contract note setting out settlement instructions will be dispatched as soon as possible thereafter. Hoare Govett's oral confirmation will constitute a legally binding commitment upon such person (who will at that point become a Placee) to subscribe for the number of Placing Shares allocated to that Placee at the Placing Price set out in this Announcement and otherwise on the terms and conditions set out in this Appendix and in accordance with the Company's memorandum and articles of association. Each Placee's obligations will be owed to the Company and to Hoare Govett through whom such Placee submitted its offer. Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to Hoare Govett, to pay to it (or as it may direct) in cleared funds an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe for. All obligations under the Placing will be subject to fulfilment of the conditions referred to below under 'Conditions of the Placing'. Conditions of the Placing The Placing is conditional on the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms. The obligations of Hoare Govett under the Placing Agreement are conditional, inter alia, upon: (a) the Resolutions to be proposed at the Extraordinary General Meeting of the Company to be convened for this purpose on 29 March 2007 having been passed thereat without any amendment; and (b) Admission taking place by no later than by 8.00 a.m. on 30 March 2007. If (a) any of the conditions contained in the Placing Agreement are not fulfilled or waived by Hoare Govett by the respective time or date where specified (or such later time or date as Hoare Govett and the Company may agree but not later than 3.00 p.m. on 13 April 2007) or (b) the Placing Agreement is terminated in the circumstances specified below, the Placing will lapse and the Placees' rights and obligations hereunder shall cease and terminate at such time and each Placee agrees that no claim can be made by or on behalf of the Placee (or any person on whose behalf the Placee is acting) in respect thereof. By participating in the Bookbuilding Process and/or the Placing, each Placee agrees that its rights and obligations cease and terminate only in the circumstances described above and will not be capable of rescission or termination by it. Hoare Govett may, at its discretion and upon such terms as it thinks fit, waive compliance by the Company with, or extend the time and/or date for fulfilment by the Company of, the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement. Hoare Govett and the Company shall have no liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision Hoare Govett may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision it may make as to the satisfaction of any condition or in respect of the Placing generally. Right to terminate under the Placing Agreement Hoare Govett may, at any time before Admission, terminate the Placing Agreement in accordance with the terms of the Placing Agreement by giving notice to the Company in certain circumstances, including the occurrence of a force majeure event or a material adverse change in the financial or trading condition of the Enlarged Group. If the obligations of Hoare Govett under the Placing Agreement are terminated in accordance with its terms, the rights and obligations of each Placee in respect of the Placing as described in this Announcement (including this Appendix) shall cease and terminate at such time and no claim can be made by any Placee in respect thereof. By participating in the Placing, each Placee agrees with Hoare Govett that the exercise by Hoare Govett of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Hoare Govett and that Hoare Govett need not make any reference to any such Placee and that Hoare Govett shall have no liability whatsoever to any such Placee (or to any other person whether acting on behalf of a Placee or otherwise) in connection with the exercise of such rights. No prospectus No prospectus, admission document or other offering document has been or will be submitted to be approved by the FSA in relation to the Placing and the Placees' commitments will be made solely on the basis of the information contained in this Announcement (including this Appendix), any information published by or on behalf of the Company in accordance with the AIM Rules, the annual report and accounts and interim financial statements of the Company which can be found in the 'Financial' section in the Company's website http://www.asfare.com (the 'Website Information') and the Admission Document. Each Placee, by accepting a participation in the Placing, agrees and confirms that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of Hoare Govett or the Company and neither the Company nor Hoare Govett will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial and trading position of the Enlarged Group in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation. Registration and settlement Settlement of transactions in the Placing Shares (ISIN: GB0033997387) following Admission will take place within the CREST system, subject to certain exceptions. Hoare Govett reserves the right to require settlement for and delivery of the Placing Shares to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within the CREST system within the timetable set out in this Announcement (including this Appendix) or would not be consistent with the regulatory requirements in any Placee's jurisdiction. Each Placee allocated Placing Shares in the Placing will be sent a contract note (the 'Contract Note') stating the number of Placing Shares allocated to it, the Placing Price, the aggregate amount owed by such Placee to Hoare Govett and settlement instructions. ABN AMRO Bank N.V. (London Branch) is acting as Hoare Govett's settlement agent and Placees should settle against CREST ID: 521, account designation 'AGENT'. It is expected that such Contract Notes will be despatched today, 6 March 2007 and that the trade date will be 6 March 2007. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the settlement instructions set out in the Contract Note. It is expected that settlement will be on 30 March 2007 in accordance with the instructions set out in the Contract Note. Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above and in the Contract Note at the rate of 2 percentage points above the base rate of Barclays Bank Plc. Each Placee is deemed to agree that if it does not comply with these obligations, Hoare Govett may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Hoare Govett's account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the Contract Note is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below (and in particular subject to paragraph 14 below), be so registered free from any liability to UK stamp duty or stamp duty reserve tax. No Placee (or any nominee or other agent acting on behalf of a Placee) will be entitled to receive any fee or commission in connection with the Placing. Representations and warranties By participating in the Bookbuilding Process and/or the Placing, each Placee (and any person acting on such Placee's behalf): 1. represents and warrants that it has read this Announcement (including this Appendix) in its entirety and acknowledges that its participation in the Placing will be governed by the terms of this Appendix; 2. represents and warrants that it has received this Announcement (including this Appendix) solely for its use and has not redistributed or duplicated it; 3. represents and warrants that it has not received a prospectus, admission document or other offering document in connection with the Placing other than the Admission Document and acknowledges that no prospectus, admission document or other offering document has been prepared in connection with the Placing other than the Admission Document; 4. acknowledges that neither of Hoare Govett nor any of its Affiliates nor any person acting on behalf of Hoare Govett or its Affiliates nor the Company and its affiliates has provided, and will not provide it with any material regarding the Placing Shares or the Enlarged Group other than this Announcement (including this Appendix); nor has it requested Hoare Govett, any of its Affiliates or any person acting on behalf of Hoare Govett or any of its Affiliates to provide it with any such information; 5. acknowledges that the content of this Announcement (including this Appendix) is exclusively the responsibility of the Company and that neither Hoare Govett, nor any of its Affiliates nor any person acting on behalf of Hoare Govett or its Affiliates has or shall have any liability for any information, representation or statement contained in this Announcement (including this Appendix) or any information previously published by or on behalf of the Company and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement (including this Appendix) or otherwise. Each Placee represents, warrants and agrees that when making its investment decision to purchase the Placing Shares it has relied only on information contained in this Announcement (including this Appendix), any information published by or on behalf of the Company in accordance with the AIM Rules, the Website Information and the Admission Document, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has relied on its own investigation with respect to the Placing Shares and the Enlarged Group in connection with its decision to subscribe for the Placing Shares and acknowledges that it is not relying on any investigation that Hoare Govett, any of its Affiliates or any person acting on behalf of Hoare Govett or its Affiliates may have conducted with respect to the Placing Shares or the Enlarged Group and none of such persons has made any representations to it, express or implied, with respect thereto; 6. acknowledges that it has not relied on any information relating to the Enlarged Group contained in any research reports prepared by Hoare Govett, any of its Affiliates or any person acting on behalf of Hoare Govett or its Affiliates and understands that neither Hoare Govett, nor any of its Affiliates nor any person acting on behalf of Hoare Govett or its Affiliates: (i) has or shall have any liability for public information or any representation; (ii) has or shall have any liability for any additional information that has otherwise been made available to such Placee, whether at the date of publication, the date of the announcement or otherwise; and (iii) makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such information, whether at the date of publication, the date of the announcement or otherwise; 7. represents and warrants that it, or the beneficial owner, as applicable, is entitled to subscribe for and/or purchase Placing Shares under the laws of all relevant jurisdictions which apply to it, or the beneficial owner, as applicable, and that it has fully observed such laws and obtained all such governmental and other guarantees and other consents in either case which may be required thereunder and complied with all necessary formalities (including any applicable foreign exchange rules); 8. represents and warrants that it has the power and authority to carry on the activities in which it is engaged, to subscribe for the Placing Shares and to execute and deliver all documents necessary for such subscription; 9. represents and warrants that it (or if acquiring the Placing Shares as fiduciary or agent for any investor account, such investor) will be the beneficial owner of such Placing Shares and that the beneficial owner of such Placing Shares will not at the time the Placing Shares are acquired be a resident of Australia, Canada, Japan or the Republic of South Africa or their respective territories or possessions; 10. acknowledges that the Placing Shares have not been and will not be registered under the Securities Act or under the securities laws of any of the States of the United States, or under the securities legislation of Australia, Canada, Japan or the Republic of South Africa and their respective territories and possessions and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within those jurisdictions; 11. represents and warrants that it is not a resident of or located in the United States or acting in a non-discretionary basis for a person in the United States and is purchasing the Placing Shares in an 'offshore transaction' in accordance with Regulation S under the Securities Act; 12. acknowledges (and confirms that each beneficial owner of the Placing Shares has been advised) that the Placing Shares have not been and will not be registered under the Securities Act or under any applicable state securities laws, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority; 13. represents and warrants that if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with applicable laws and regulations; 14. represents and warrants that the allocation, allotment, issue and delivery to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being subscribed for by it in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system; 15. represents and warrants that it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money Laundering Regulations 2003 (the 'Regulations') and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations; 16. represents and warrants that it and any person acting on its behalf is a person falling within Article 19(2) and/or 49(2) of the Order and is a person who falls within paragraph (7) of section 86 of the FSMA; 17. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the United Kingdom prior to Admission except in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of the Prospectus Rules made by the FSA pursuant to Part VI of the FSMA; 18. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to the Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person; 19. represents and warrants that it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom; 20. represents and warrants that it and any person acting on its behalf is entitled to subscribe for the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to participating in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Announcement (including this Appendix) and to make the foregoing representations, acknowledgments, warranties and agreements) and will honour such obligations; 21. undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement (including this Appendix) and the Contract Note on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Hoare Govett may in its sole discretion determine and without liability to such Placee; 22. acknowledges that neither Hoare Govett, nor any of its Affiliates nor any person acting on behalf of Hoare Govett or its Affiliates is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing nor providing advice in relation to the Placing nor the exercise or performance of any of Hoare Govett's rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right; 23. undertakes that the person who it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither Hoare Govett nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Placees acknowledge that the Placing Shares will be credited to the CREST stock account of ABN AMRO Bank N.V. (London branch) (CREST ID: 521, account designation 'AGENT') who will hold them as nominee for the subscribers of such shares until settlement in accordance with its standing settlement instructions; 24. acknowledges that the Placing is conditional, inter alia, upon approval by the Company's shareholders of the Resolutions set out in the notice convening an Extraordinary General Meeting of the Company to be held on 29 March 2007; 25. acknowledges that any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in all respects in accordance with English law and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the courts of England as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Hoare Govett in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange; 26. acknowledges that Hoare Govett may (at its absolute discretion) satisfy its obligations to procure Placees by itself agreeing to become a Placee in respect of some or all of the Placing Shares or by nominating any connected or associated person to do so; 27. agrees that the Company, Hoare Govett and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to Hoare Govett on its own behalf and on behalf of the Company and are irrevocable; and 28. agrees to indemnify and hold the Company and Hoare Govett harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach by it (or any person on whose behalf it is acting) of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing. No UK stamp duty or stamp duty reserve tax should be payable to the extent that the Placing Shares are issued into CREST to, or to the nominee of, a Placee who holds those shares beneficially (and not as agent or nominee for any other person) within the CREST system and registered in the name of such Placee or such Placee's nominee provided that the Placing Shares are not issued to a person whose business is or includes issuing depositary receipts or the provision of clearance services or to an agent or nominee for any such person. Any arrangements to issue or transfer the Placing Shares into a depositary receipts system or a clearance service or to hold the Placing Shares as agent or nominee of a person to whom a depositary receipt may be issued or who will hold the Placing Shares in a clearance service, or any arrangements subsequently to transfer the Placing Shares, may give rise to UK stamp duty and/or stamp duty reserve tax, for which neither the Company nor Hoare Govett will be responsible and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Hoare Govett in the event that any of the Company and/ or Hoare Govett has incurred any such liability to UK stamp duty or stamp duty reserve tax. In addition, Placees should note that they will be liable to pay any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the subscription by them for any Placing Shares or the agreement by them to subscribe for any Placing Shares. All times and dates in this Announcement (including this Appendix) may be subject to amendment. Hoare Govett shall notify the Placees and any person acting on behalf of the Placees of any changes. This Announcement (including this Appendix) has been issued by the Company and is the sole responsibility of the Company. Hoare Govett, which is authorised and regulated by the FSA, is acting exclusively for the Company and for no one else solely in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to the customers of Hoare Govett or for providing advice in relation to the Placing. When a Placee or person acting on behalf of the Placee is dealing with Hoare Govett, any money held in an account with Hoare Govett on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FSA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Hoare Govett's money in accordance with the client money rules and will be used by Hoare Govett in the course of its own business; and the Placee will rank only as a general creditor of Hoare Govett. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. Appendix III Definitions The following definitions apply throughout this announcement, unless the context requires otherwise: 'Acquisition' the proposed acquisition of the entire issued share capital of AssetCo pursuant to the Acquisition Agreements; 'Acquisition the conditional agreements dated 5 March 2007 between the Agreements' Vendors and the Company; 'Admission' admission of the Enlarged Share Capital to trading on AIM and such admission becoming effective in accordance with Rule 6 of the AIM Rules; 'AIM' the AIM market of the London Stock Exchange; 'AIM Rules' the AIM Rules for Companies published by the London Stock Exchange and those other rules of the London Stock Exchange which govern the admission of securities to trading on, and the regulation of, AIM; 'ambulance a National Health Service trust providing ambulance services services trust' for a specified region; 'Asfare' or the Asfare Group plc, a company registered in England and Wales 'Company' with registration number 4966347, whose registered office is at Commercial Road, Totton, Southampton SO40 3AE; 'Asfare Group' the Company and its existing subsidiary undertakings; or the 'Group' 'AS Fire and AS Fire and Rescue Equipment Limited; Rescue' 'AssetCo' AssetCo Group Limited, a company registered in Northern Ireland with registration number NI053848, whose registered office is at 34 Roughfort Road, Mallusk, Newtownabbey, BT36 4RE; 'AssetCo Group' AssetCo and its existing subsidiary undertakings; 'AssetCo Senior Denis Mellon and David Smith; Managers' 'Board' the board of directors of the Company; 'Brook Brook Henderson Group Limited, a company registered in England Henderson' and Wales with registration number 4450947 and whose registered office is at Brook Henderson House, 173 to 175 Friar Street, Reading, RG1 1HE; 'CCCP' Civil Contingency Capability Programme; 'certificated' a share which is not in uncertificated form (that is, a share or 'in not held in CREST); certificated form' 'Chief Fire individual responsible for the day-to-day operational command Officer' of an FRA; 'Civil an Act of Parliament, which received Royal Assent in November Contingencies 2004, intended to deliver a single framework for civil Act 2004' protection in the United Kingdom; 'CLG' the Communities and Local Government, a department of the UK Government; 'Collins Collins Youldon, a division of AS Fire and Rescue Limited; Youldon' 'Completion' completion of the Acquisition Agreements, which is expected to occur on the day of Admission; 'Concert Party' John Shannon, Frank Flynn, Denis Mellon and David Smith, each of 34 Roughfort Road, Mallusk, Newtownabbey, BT36 4RE and Pelham Olive and Peter Lewin, both of Brook Henderson House, 173 to 175 Friar Street, Reading, RG1 1HE; 'Consideration the 48,434,483 Ordinary Shares to be issued pursuant to the Shares' Acquisition Agreements; 'CREST' the electronic settlement system operated by CRESTCo, which facilitates the transfer of title to securities in uncertificated form; 'CRESTCo' CRESTCo Limited, a company incorporated under the laws of England and Wales and the operator of CREST; 'CREST the Uncertificated Securities Regulations 2001 (SI 2001 No. Regulations' 3755) as amended from time to time and such other regulations as are applicable to CRESTCo; 'Directors' Tim Wightman, David Chisnall, Tony O'Neill, Tim O'Connor and Adrian Bradshaw; 'EBITDA' earnings before interest, taxation, depreciation and amortisation; 'Enlarged Group' the Company together with its subsidiaries and subsidiary undertakings, as enlarged by the Acquisition; 'Enlarged Share the number of ordinary shares in the capital of the Company in Capital' issue immediately following Admission, consisting of the Existing Ordinary Shares and the New Ordinary Shares; 'Existing the Ordinary Shares in issue at the date of this announcement; Ordinary Shares' 'Extraordinary the extraordinary general meeting of the Company, convened for General Meeting' 11.00 a.m. on 29 March 2007; or 'EGM' 'FMI' Fleet Management Ireland Limited; 'FRA' Fire and Rescue Authority; 'FRS' Fire and Rescue Service; 'FSA' the Financial Services Authority; 'FSE' Fire Safety Equipment Limited; 'FSMA' the Financial Services and Markets Act 2000, as amended; 'Gershon the HM Treasury report entitled 'Releasing Resources to the Efficiency Front Line - Independent Review of Public Sector Efficiency' Review' published on 14 July 2004; 'HBOS' HBOS plc and any member of the HBOS Group; 'Hoare Govett' Hoare Govett Limited; 'IRMP' Integrated Risk Management Plan: a risk managed assessment of local response to incidents prepared by each FRA; ''J O Hambro'' funds managed or advised by North Atlantic Value LLP, part of the J O Hambro Capital Management Group, being North Atlantic Smaller Companies Investment Trust plc, discretionary investment management clients of North Atlantic Value LLP, Oryx International Growth Fund Limited and Oryx International Growth Fund Limited - C Shares; 'LFB' the London Fire Brigade; 'LFR' the Lincolnshire Fire and Rescue Service; 'LFEPA' the London Fire and Emergency Planning Authority; 'London Stock London Stock Exchange plc or its successor; Exchange' 'National The Fire and Rescue National Framework 2006-08, published by Framework the Office of the Deputy Prime Minister on 6 April 2006; Document' 'New Ordinary the Placing Shares and the Consideration Shares; Shares' 'NHS PASA' the National Health Service Purchasing and Supply Agency, an executive agency of the Department of Health, established on 1 April 2000, to act as a strategic advisor to the National Health Service on procurement issues; 'Ongoing Messrs. Wightman, Chisnall, Bradshaw and the Proposed Directors' Directors; 'Ordinary ordinary shares of 25 pence each in the capital of the Company; Shares' 'Panel' the UK Panel on Takeovers and Mergers; 'Papworth' AssetCo Papworth Limited, a company registered in England and Wales with registered number 3048528 and whose registered office is at 800 Field End Road, South Ruislip, Middlesex, HA4 0QH; 'PFI' Private Finance Initiative; 'PKF' PKF (UK) LLP; 'Placing' the conditional placing of 13,793,104 Placing Shares pursuant to the Placing Agreement; 'Placing the agreement dated 6 March 2007 between the Company, Hoare Agreement' Govett, the Directors, the Proposed Directors and the AssetCo Senior Managers; 'Placing Price' 145 pence per Ordinary Share; 'Placing Shares' the 13,793,104 new Ordinary Shares to be issued by the Company for cash at the Placing Price pursuant to the Placing; 'Proposed John Shannon and Frank Flynn; Directors' 'PPP' Public Private Partnership; 'Resolutions' the resolutions to be proposed at the EGM; 'Securities Act' the United States Securities Act of 1933, as amended; 'Shareholders' holders of Ordinary Shares; 'Share Option the Unapproved Share Option Plan and the Enterprise Management Plans' Incentive Share Option Plan; 'Simentra' Simentra Limited; 'Speed 5019 a subsidiary of AS Fire and Rescue and holding company of Limited' Asfare No.1 Limited, Fire Guns Limited and Sacol Group 1990 Limited, acquired by the Asfare Group plc in December 2003; 'SVO' Special Vehicle Operations Limited (now AssetCo SVO Limited); 'Takeover Code' the City Code on Takeovers and Mergers issued from time to time by or on behalf of the Panel; 'Todd Research' Todd Research Limited; 'uncertificated' a share or shares recorded on the register of members as being or 'in held in uncertificated form in CREST, entitlement to which by uncertificated virtue of the CREST Regulations, may be transferred by means of form' CREST; 'United Kingdom' the United Kingdom of Great Britain and Northern Ireland; or 'UK' 'United States' the United States of America, its territories and possessions, or 'US' any state of the United States of America and the District of Columbia; and 'Vendors' Denis Mellon, Peter Lewin, Pelham Olive, David Smith, John Shannon, Frank Flynn, J O Hambro, Brook Henderson, Gerald Andrews, Damian Murphy, Lou Gill, Stephen Bristow, Dermot McDermott, Mark Clisset, Tom Joyce, Gareth White, Michael Lavender, Jeffrey Stone, Lyndon Plant, Jonathan Reid and William Campbell Walters. This information is provided by RNS The company news service from the London Stock Exchange

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Tuesday, 14th May 2024

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