BRUNTWOOD INVESTMENTS PLC RETAIL BONDS

Transcription

1 Proof 2: PROSPECTUS DATED 2 JULY 2013 BRUNTWOOD INVESTMENTS PLC RETAIL BONDS Secured over a portfolio of real estate and other assets Fixed interest rate of 6.00 per cent. per annum Maturity date of 24 July 2020 Manager Investec AN INVESTMENT IN THE BONDS INVOLVES CERTAIN RISKS. YOU SHOULD HAVE REGARD TO THE FACTORS DESCRIBED IN SECTION 2 (RISK FACTORS) OF THIS PROSPECTUS. YOU SHOULD ALSO READ CAREFULLY SECTION 11 (IMPORTANT LEGAL INFORMATION).

2 c108615pu010 Proof 2: _15:16 B/L Revision: IMPORTANT NOTICES About this document This document (the Prospectus ) has been prepared in accordance with the Prospectus Rules of the United Kingdom Financial Conduct Authority (the FCA ) and relates to the offer by Bruntwood Investments plc (the Issuer ) of its Sterling denominated 6.00 per cent. secured bonds due 2020 (the Bonds ) at a price of 100 per cent. of their nominal amount. The Issuer s payment obligations under the Bonds are irrevocably and unconditionally guaranteed (the Guarantee ) by Bruntwood Limited. The Bonds will be secured over a portfolio of real estate held by Bruntwood RB Limited and other assets (the Security ). The Bonds are freely transferable debt instruments and are due to be issued by the Issuer on 24 July The nominal amount of each Bond (being the amount which is used to calculate payments made on each Bond) is 100. The maximum aggregate nominal amount of the Bonds to be issued will be 70,000,000 (i.e. 700,000 Bonds of 100 nominal amount each). The aggregate nominal amount of the Bonds to be issued will be specified in the Sizing Announcement published by the Issuer via the Regulatory News Service of the London Stock Exchange plc ( RNS ) at the end of the Offer Period. This Prospectus contains important information about the Issuer, the Group, the Bonds, the Security, the Guarantee and details of how to apply for the Bonds. This Prospectus also describes certain risks relevant to the Issuer, the Security, the Guarantor and the Group and their business and also risks relating to an investment in the Bonds generally. You should read and understand fully the contents of this Prospectus before making any investment decisions relating to the Bonds. Responsibility for the information contained in this Prospectus Each of the Issuer and the Guarantor accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of the Issuer and the Guarantor (each having taken all reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Where information has been sourced from a third party, this information has been accurately reproduced and that as far as each of the Issuer and the Guarantor is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used. Use of defined terms in this Prospectus Certain terms or phrases in this Prospectus are defined in double quotation marks and subsequent references to that term are designated with initial capital letters. In this Prospectus, references to the Issuer are to Bruntwood Investments plc, which is the issuer of the Bonds. References to the Guarantor are to Bruntwood Limited which is the Guarantor of the Bonds. References to the Charging Company are to Bruntwood RB Limited. The Charging Company is a direct wholly-owned subsidiary of the Guarantor. The Issuer and the Guarantor are both direct whollyowned subsidiaries of Bruntwood Group Limited, which is the ultimate holding company of the Group. All references to the Group are to Bruntwood Group Limited and its subsidiaries taken as a whole, and all references to the Guarantor Group are to the Guarantor and its subsidiaries taken as a whole. All references to the Group members or member of the Group are to Bruntwood Group Limited and/or any of its subsidiaries. See Section 6 (Description of the Bruntwood Group) for further details. The Bonds are not protected by the Financial Services Compensation Scheme The Bonds are not protected by the Financial Services Compensation Scheme (the FSCS ). As a result, neither the FSCS nor anyone else will pay compensation to you upon the failure of the Issuer, the Guarantor, the Charging Company or the Group as a whole. How to apply Applications to purchase Bonds cannot be made directly to the Issuer, the Guarantor or any other member of the Group. Bonds will be issued to you in accordance with the arrangements in place between you and your stockbroker or other financial intermediary, including as to application process, allocations, payment and delivery arrangements. You should approach your stockbroker or other financial intermediary to discuss any application arrangements that may be available to you. After the closing time and date of the Offer Period, which is expected to be noon (London time) on 17 July 2013 or such earlier time as may be communicated by the Issuer via a RNS announcement, no Bonds will be offered for sale by or on behalf of the Issuer or by or on behalf of any of the Authorised Offerors. See Section 4 (How to Apply for the Bonds) for more information. Questions relating to this Prospectus and the Bonds If you have any questions regarding the content of this Prospectus and/or the Bonds or the actions you should take, you should seek advice from your independent financial adviser or other professional adviser before making any investment decisions. 2

3 c108615pu010 Proof 2: _15:16 B/L Revision: TABLE OF CONTENTS Section Page 1 Summary Risk Factors Information about this document and the Bonds How to Apply for the Bonds Description of Issuer Description of the Bruntwood Group Selected Financial Information Subscription and Sale Taxation Additional Information Important Legal Information Appendix Page A Terms and Conditions of the Bonds B Summary of Provisions Relating to the Bonds while in Global Form in the Clearing Systems C Glossary of Defined Terms D Valuation Report E Financial Statements... F-1 3

4 c108615pu010 Proof 2: _15:16 B/L Revision: 1 SUMMARY The following is a summary of information relating to the Issuer, the Guarantor and the Bonds. 4

5 c108615pu010 Proof 2: _15:16 B/L Revision: SUMMARY Summaries are made up of disclosure requirements known as Elements. These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of Not applicable. Section A Introduction and warnings A.1 This summary must be read as an introduction to this Prospectus. Any decision to invest in the Bonds should be based on consideration of this Prospectus as a whole by the investor. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the EU Member States, have to bear the costs of translating this Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus or it does not provide, when read together with the other parts of this Prospectus, key information in order to aid investors when considering whether to invest in such Bonds. A.2 Each of the Issuer and the Guarantor consents to the use of this Prospectus in connection with any Public Offer of Bonds in the United Kingdom during the period commencing from, and including, 3 July 2013 until noon on 17 July 2013, or such earlier time and date as may be agreed between the Issuer, the Guarantor and Investec Bank plc (the Manager ), by the Manager or any other financial intermediary (any such intermediary, an Authorised Offeror ) which satisfies the Authorised Offer Terms and other conditions as set out below. The Authorised Offeror Terms, that the relevant financial intermediary represents and agrees to, are that it: (a) is authorised to make such offers under Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments ( MiFID ) (in which regard, you should consult the register of authorised entities maintained by the FCA at firms/systems-reporting/register). MiFID governs the organisation and conduct of the business of investment firms and the operation of regulated markets across the European Economic Area in order to seek to promote cross-border business, market transparency and the protection of investors; (b) acts in accordance with all applicable laws, rules, regulations and guidance of any applicable regulatory bodies (the Rules ), including the Rules published by the FCA (including its guidance for distributors in The Responsibilities of Providers and Distributors for the Fair Treatment of Customers ) from time to time including, without limitation and in each case, Rules relating to both the appropriateness or suitability of any investment in the Bonds by any person and disclosure to any potential investor; (c) complies with the restrictions set out under Subscription and Sale in this Prospectus which would apply as if it were the Manager; (d) ensures that any fee, commission, rebate or benefit of any kind received or paid by that financial intermediary in relation to the offer or sale of the Bonds does not violate the Rules and is fully and clearly disclosed to investors or potential investors; (e) holds all licences, consents, approvals and permissions required in connection with solicitation of interest in, or offers or sales of, the Bonds under the Rules, including authorisation under the Financial Services and Markets Act 2000 ( FSMA ) and/or the Financial Services Act 2012; (f) complies with and takes appropriate steps in relation to applicable anti-money laundering, anti-bribery, prevention of corruption and know your client Rules, and does not permit any application for Bonds in circumstances where the financial intermediary has any suspicions as to the source of the application monies; 5

6 c108615pu010 Proof 2: _15:16 B/L Revision: (g) retains investor identification records for at least the minimum period required under applicable Rules, and shall, if so requested and to the extent permitted by the Rules, make such records available to the Manager, the Issuer and the Guarantor or directly to the appropriate authorities with jurisdiction over the Issuer, the Guarantor and/or the Manager in order to enable the Issuer, the Guarantor and/or the Manager to comply with anti-money laundering, anti-bribery and know your client Rules applying to the Issuer, the Guarantor and/or the Manager; (h) does not, directly or indirectly, cause the Issuer, the Guarantor or the Manager to breach any Rule or subject the Issuer, the Guarantor or the Manager to any requirement to obtain or make any filing, authorisation or consent in any jurisdiction; (i) agrees and undertakes to indemnify each of the Issuer, the Guarantor and the Manager (in each case on behalf of such entity and its respective directors, officers, employees, agents, affiliates and controlling persons) against any losses, liabilities, costs, claims, charges, expenses, actions or demands (including reasonable costs of investigation and any defence raised thereto and counsel s fees and disbursements associated with any such investigation or defence) which any of them may incur or which may be made against any of them arising out of or in relation to, or in connection with, any breach of any of the foregoing agreements, representations or undertakings by such financial intermediary, including (without limitation) any unauthorised action by such financial intermediary or failure by such financial intermediary to observe any of the above restrictions or requirements or the making by such financial intermediary of any unauthorised representation or the giving or use by it of any information which has not been authorised for such purposes by the Issuer, the Guarantor or the Manager; (j) immediately gives notice to the Issuer, the Guarantor and the Manager if at any time such Authorised Offeror becomes aware or suspects that they are or may be in violation of any Rules or the terms of this paragraph, and takes all appropriate steps to remedy such violation and comply with such Rules and this paragraph in all respects; (k) does not give any information other than that contained in this document (as may be amended or supplemented by the Issuer from time to time) or make any representation in connection with the offering or sale of, or the solicitation of interest in, the Bonds; (l) agrees that any communication in which it attaches or otherwise includes any announcement published by the Issuer via a Regulatory Information Service at the end of the Offer Period will be consistent with the Prospectus, and (in any case) must be fair, clear and not misleading and in compliance with the Rules and must state that such Authorised Officer has provided it independently from the Issuer and the Guarantor and must expressly confirm that neither the Issuer nor the Guarantor accepts any responsibility for the content of any such communication; (m) does not use the legal or publicity names of the Manager, the Issuer, the Guarantor or any other name, brand or logo registered by any member of the Group or any material over which any member of the Group retains a proprietary interest or in any statements (oral or written), marketing material or documentation in relation to the Bonds; and (n) agrees and accepts that: (i) the contract between the Issuer, the Guarantor and the financial intermediary formed upon acceptance by the financial intermediary of the Issuer s offer to use the Prospectus with its consent in connection with the relevant Public Offer (the Authorised Offeror Contract ), and any non-contractual obligations arising out of or in connection with the Authorised Offeror Contract, shall be governed by, and construed in accordance with, English law; (ii) the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Authorised Offeror Contract (including a dispute relating to any non-contractual obligations arising out of or in connection with the Authorised Offeror Contract) and accordingly submits to the exclusive jurisdiction of the English courts; and (iii) the Manager will, pursuant to the Contracts (Rights of Third Parties) Act 1999, be entitled to enforce those provisions of the Authorised Offeror Contract which are, or are expressed to be, for its benefit, including the agreements, representations, 6

7 c108615pu010 Proof 2: _15:16 B/L Revision: undertakings and indemnity given by any financial intermediary pursuant to the Authorised Offeror Terms. Any financial intermediary who wishes to use this Prospectus in connection with a Public Offer as set out above is required, for the duration of the Offer Period, to publish on its website that it is using this Prospectus for such Public Offer in accordance with the consent of the Issuer and the conditions attached thereto in the following form (with the information in square brackets completed with the relevant information): We, [insert legal name of financial intermediary], refer to the 6.00 per cent. secured Bonds due 2020 of Bruntwood Investments plc. We hereby accept the offer by Bruntwood Investments plc and Bruntwood Limited of their consent to our use of the Prospectus dated 2 July 2013 relating to the Bonds in connection with the offer of the Bonds in the United Kingdom (the Public Offer ) in accordance with the Authorised Offeror Terms and subject to the conditions to such consent, each as specified in the Prospectus, and we are using the Prospectus in connection with the Public Offer accordingly. A Public Offer may only be made, subject to the conditions set out above, during the Offer Period by the Manager or the other Authorised Offerors. A Public Offer means any offer of Bonds that does not fall within an exemption from the requirement to publish a Prospectus under Article 5.4 of the Prospectus Directive. Other than as set out above, none of the Issuer, the Guarantor or the Manager has authorised the making of any Public Offer by any person in any circumstances and such person is not permitted to use this Prospectus in connection with any offer of Bonds. Any such offers are not made on behalf of the Issuer, the Guarantor or by the Manager or other Authorised Offerors and none of the Issuer, the Guarantor or the Manager or other Authorised Offerors has any responsibility or liability for the actions of any person making such offers. None of the Issuer, the Guarantor or the Manager has any responsibility for any of the actions of any other Authorised Offeror, including compliance by an Authorised Offeror with applicable conduct of business rules or other local regulatory requirements or other securities law requirements in relation to such offer. If you intend to acquire or do acquire any Bonds from an Authorised Offeror, you will do so, and offers and sales of the Bonds to you by such an Authorised Offeror will be made, in accordance with any terms and other arrangements in place between such Authorised Offeror and you including as to price, allocations and settlement arrangements. Neither the Issuer nor the Guarantor will be a party to any such arrangements with you in connection with the offer or sale of the Bonds and, accordingly, this Prospectus does not contain such information. The information relating to the procedure for making applications will be provided by the relevant Authorised Offeror to you at the relevant time. None of the Issuer, the Guarantor or the Manager or any other Authorised Offeror has any responsibility or liability for such information. Section B The Issuer and the Guarantor B.1 (B.19) Legal and commercial Name. The Issuer s legal and commercial name is Bruntwood Investments plc. The Guarantor s legal and commercial name is Bruntwood Limited. B.2 (B.19) The domicile and legal form of the Issuer and the Guarantor, the legislation under which they operate and their respective countries of incorporation. The Issuer is a public limited company incorporated and registered in England and Wales under the Companies Act on 16 May 2013 with registered number The Guarantor is a private limited company incorporated and registered in England and Wales under the Companies Act on 4 December 2006 with registered number B.4b (B.19) A description of any known trends affecting the Issuer and the Guarantor and the industry in which they operate. The United Kingdom commercial real estate market in which the Issuer, the Guarantor and the Group operates is experiencing a growing trend of positive investor sentiment. This trend has been supported by a number of factors such as (i) a slow and gradual return of confidence in the wider United Kingdom economy; (ii) a steadily increasing availability of bank debt financing to borrowers as a consequence of government initiatives and 7

8 c108615pu010 Proof 2: _15:16 B/L Revision: measures that the banks have taken to re-capitalise and re-finance themselves; and (iii) an attractive investment yield opportunity that the United Kingdom regional real estate market presently offers as an asset class to institutional investors as a consequence of its attractive purchase price (which reflects its suppressed valuation in recent years when compared to commercial property located within London) and the higher investment yields on offer to institutional investor s in order to enable them to service their on-going obligations. B.5 (B.19) B.9 (B.19) B.10 (B.19) If the Issuer or the Guarantor is part of a group, a description of the group and their position within the group. Where a profit forecast or estimate is made, state the figure. A description of the nature of any qualifications in the audit report on the historical financial information. The Group s main activity is the customer service led provision of conventional office space with ancillary retail premises, storage and car parking facilities to a range of customers including the public and private sectors. The Issuer is a special purpose company established to raise money for use by the Guarantor Group. The Issuer is a wholly owned subsidiary of Bruntwood Group Limited which is the ultimate holding company of the Group and which is in turn owned by the Oglesby family and family related trusts. The Guarantor is an intermediate holding company of a group of subsidiary companies. The Guarantor is a wholly owned subsidiary of Bruntwood Group Limited. Not applicable; neither the Issuer nor the Guarantor has made any public profit forecast or profit estimate. Not applicable; neither of the audit reports on the Guarantor s audited consolidated financial statements for the financial years ended 30 September 2011 and 2012 included any qualifications. 8

9 c108615pu010 Proof 2: _15:16 B/L Revision: B.12 (B.19) Selected historical key financial information regarding the Issuer and Guarantor, presented for each financial year of the period covered by the historical financial information, and any subsequent interim financial period accompanied by comparative data from the same period in the prior financial year except that the requirement for comparative balance sheet information is satisfied by presenting the year end balance sheet information. A statement that there has been no material adverse change in the prospects of the Issuer since the date of its last published audited financial statements or a description of any material adverse change. The following summary financial data as of, and for each of the financial years ended, 30 September 2011 and 2012 and as of, and for the six month period ended, 31 March 2013 has been extracted, without any material adjustment, from the Guarantor s consolidated financial statements in respect of those dates and/or relevant periods, as applicable. There has been no significant change in the financial or trading position of the Guarantor or the Guarantor Group since 31 March 2013 and there has been no material adverse change in the prospects of the Guarantor or the Guarantor Group since 30 September There has been no significant change in the financial or trading position of the Issuer, and there has been no material adverse change in the prospects of the Issuer, in either case since its incorporation. Profit and loss account Unaudited Six months ended 31 March 2013 Unaudited Six months ended 31 March 2012 Audited year ended 30 September 2012 Audited year ended 30 September Turnover... 50,624 48, ,630 99,049 Gross Profit... 28,270 27,209 56,340 56,352 Operating Profit... 21,073 20,831 42,078 41,690 Profit on ordinary activities before taxation... 1,293 5,878 12,351 11,204 Profit for the financial year after taxation ,315 10,971 10,070 Consolidated balance sheet Unaudited Six months ended 31 March 2013 Audited year ended 30 September 2012 Audited year ended 30 September Fixed Assets , , ,295 Current Assets... 47,818 55,082 42,916 Creditors: amounts falling due within one year... (233,156) (75,789) (65,475) Creditors: amounts falling due after more than one year... (451,644) (621,019) (604,766) Net Assets , , ,961 Total equity , , ,961 B.13 (B.19) A description of any recent events particular to the Issuer or the Guarantor which are to a material extent relevant to the evaluation of the issuer s and/or the guarantor s solvency. Consolidated cash flow statement Audited year ended 30 September 2012 Audited year ended 30 September Net cash inflow from operating activities... 43,319 35,859 Net cash inflow/(outflow) from capital expenditure and financial investment... 11,965 (19,355) Net cash inflow/(outflow) before financing... 19,535 (19,434) Net cash (outflow)/inflow from financing... (11,596) 8,657 Increase/(decrease) in cash in year... 7,939 (10,777) Not applicable; there have been no recent events particular to the Issuer or the Guarantor which are to a material extent relevant to the evaluation of either the Issuer s or the Guarantor s solvency. 9

10 c108615pu010 Proof 2: _15:16 B/L Revision: B.14 (B.19) B.15 (B.19) B.16 (B.19) B.17 (B.19) If the Issuer or the Guarantor is part of a group, a description of the group and the Issuer s and the Guarantor s position within the group. If the Issuer or the Guarantor is dependent upon other entities within the group, this must be clearly stated. A description of the Issuer s and the Guarantor s principal activities. To the extent known to the issuer and the guarantor, state whether the Issuer or the Guarantor is directly or indirectly owned or controlled and by whom and describe the nature of such control. Credit ratings assigned to either the Issuer or the Guarantor or its debt securities at the request or with the co-operation of the issuer in the rating. Please see Element B.5 above. The Issuer s only material assets will be the obligation of the various subsidiaries of the Guarantor to repay funds that it on-lends to them back to it. Therefore, the Issuer is dependent on those subsidiary companies to satisfy its obligations in full and on a timely basis. The Guarantor is an intermediate holding company of a group of subsidiary companies. (The Guarantor is a subsidiary of Bruntwood Group Limited, which is therefore the ultimate holding company of the Group and which is in turn owned by the Oglesby family and family related trusts. As with the Guarantor, the Issuer is also a subsidiary of Bruntwood Group Limited.) The Group is one of the United Kingdom s largest privately owned commercial property groups. The Group s main activity is the customer service led provision of conventional office space with ancillary retail premises, storage and car parking facilities to a range of customers including the public and private sectors located in Manchester, Greater Manchester, Liverpool, Leeds and Birmingham. The Group places a particular emphasis on the development of strong relationships with its customers and it lets and manages its floor space according to the needs of its customers. The Group aims to achieve this by offering office space to its customers in a flexible and progressive manner through conventional leases and short term serviced office licences. A primary aim of the Group is to provide office space in this manner for each stage of a customer s business development cycle. The Group owns approximately 6.2 million square feet of space within 110 properties which are utilised by approximately 2,114 business customers. As at 30 September 2012, the Group s total value of investment property and associated fixtures was million ( million as at 30 September 2011) which comprised freehold property with a net book value of million ( million as at 30 September 2011) and long leasehold property with a net book value of million ( million as at 30 September 2011). The Issuer is a special purpose company established to raise money for use by the Guarantor Group. The Issuer and the Guarantor are wholly owned subsidiaries of Bruntwood Group Limited which is the ultimate holding company of the Group. The ultimate controlling shareholder of the Group, via investment through Bruntwood Group Limited, is considered by the Group s Board of Directors to be Mr C G Oglesby, close members of his family and Oglesby family trusts. The Group adopts a family-owned and managed structure. Mr M J Oglesby is the chairman of the Group and his son, Mr C Oglesby, is the Chief Executive. Mr M J Oglesby s daughter, Mrs K Vokes (née Oglesby) is the Group s Marketing and Human Resources Director. Not applicable; neither the Issuer nor the Guarantor nor any of their debt securities has been assigned any credit ratings by a credit rating agency. 10

11 c108615pu010 Proof 2: _15:16 B/L Revision: B.18 Guarantee. Pursuant to the Trust Deed (the Trust Deed ) to be dated on or around 24 July 2013 (the Issue Date ) between the Issuer, the Guarantor, the Charging Company and U.S. Bank Trustees Limited (the Trustee ), the Guarantor will unconditionally and irrevocably, guarantee the due payment of all sums expressed to be payable by the Issuer under the Trust Deed and the Bonds. Section C Securities C.1 A description of the type and the class of the Bonds being offered and/or admitted to trading, including any security identification number. C.2 Currency of the Bonds issue. The 6.00 per cent. secured bonds due 2020 will be issued in bearer form. The nominal amount of each Bond (being the amount which is used to calculate payments made on each Bond) is 100. The International Securities Identification Number ( ISIN ) for the Bonds is XS and the Common Code is The currency of the Bonds will be pounds sterling. C.5 A description of any restrictions on the free transferability of the Bonds. Not applicable; there are no restrictions on the free transferability of the Bonds. C.8 A description of the rights attached to the Bonds including: * ranking * limitations to those rights Status of the Bonds and the Guarantee The Bonds constitute direct, secured and unconditional obligations of the Issuer. The Bonds will rank pari passu (i.e. equally in right of payment), without any preference between themselves. The Guarantee constitutes direct, secured and unconditional obligations of the Guarantor. The payment obligations of the Issuer under the Bonds and of the Guarantor under the Guarantee shall, save for such exceptions as may be provided by applicable legislation of mandatory application and subject to the security (see below), at all times rank at least equally with all their respective other present and future unsubordinated obligations. Security The Issuer, the Guarantor and the Charging Company will grant security for the Bonds on the Issue Date. The benefit of the security will be held on trust, by the Trustee, for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the holders of the coupons (the Couponholders ). The security comprises of: 11

12 c108615pu010 Proof 2: _15:16 B/L Revision: (a) a first legal mortgage (explained in more detail below) granted by the Charging Company over certain real estate properties located in England, including some or all of: Properties Alberton House, St Mary s Parsonage, Manchester, M3 2WJ ( Alberton House ) Exchange Court, 1 Dale Street, Liverpool, L2 2PP ( Exchange Court ) Lancastrian Office Centre, Talbot Road, Old Trafford, M32 0FP ( Lancastrian Office Centre ) West Gate, Grace Street, Leeds, LS1 2RP ( West Gate ) South Central, 11 Peter Street/Deansgate, Manchester, M2 5QR ( South Central ) Wilderspool Business Park, Greenalls Avenue, Warrington, Cheshire, WA4 6HL ( Wilderspool Business Park ) Landmark House, Station Road, Cheadle Hulme, Cheshire, SK8 7BS ( Landmark House ) Title Number MAN66873 MS90846 and MS90821 LA WYK GM CH GM (b) (c) (d) (e) (f) Alberton House, Exchange Court, Lancastrian Office Centre, West Gate and South Central shall each form part of the security package on the Issue Date. In addition, if the aggregate nominal amount of the Bonds issued on the Issue Date exceeds 50,000,000, the Issuer shall procure that Wilderspool Business Park and/or Landmark House shall also be included in the security package on the Issue Date. The specific properties that shall form part of the security package on the Issue Date will be announced by the Issuer, together with the Sizing Announcement, via Regulatory Information Service (expected to be the RNS) at the end of the Offer Period. In determining whether or not Wilderspool Business Park and/or Landmark House are also to be secured on the Issue Date, the Issuer has undertaken to ensure that the aggregate value of the charged properties will be at least equal to the aggregate nominal amount of the Bonds issued on the Issue Date. a first mortgage granted by the Guarantor over the Charging Company s share capital; a first fixed charge (explained in more detail below) granted by the Charging Company over the insurances relating to the charged properties; a first fixed charge granted by the Charging Company over any eligible investments (explained in more detail below) that it holds; a first fixed charge granted by the Charging Company over any cash held in its designated bank account; and a first floating charge (explained in more detail below) over all of the undertaking and assets, both present and future, of the Issuer and the Charging Company. 12

13 c108615pu010 Proof 2: _15:16 B/L Revision: Summary of certain legal terminology: A mortgage provides security over the specified assets of the person giving the security by transferring ownership of those assets from the mortgagor (i.e. the Charging Company) to the mortgagee (i.e. the Trustee on behalf of the Bondholders), along with the right to sell those assets if there is a default in obligations due under the Bonds. The first mortgage simultaneously imposes an obligation on the Trustee to re-transfer the title of the mortgaged assets back to the mortgagor after the discharge of the secured liabilities (i.e. once all the Bonds have been redeemed). A fixed charge unlike a legal mortgage, does not transfer title, ownership or possession of the charged assets to the Trustee (or to anyone else). Instead it allows the person giving the security to continue to own the charged assets during the period in which the Bonds are outstanding. However, such usage is subject to certain conditions designed to maintain the value of the charged assets and prevent the disposal of these assets without the consent of the mortgagee (i.e. the Trustee). The Charging Company, for instance, can continue to use the charged assets (subject to certain conditions) unless and until certain enforcement events (notably including any default in the Issuer s payment obligations under the Bonds, as set out in the Conditions of the Bonds) occur. On the occurrence of any enforcement event, the Trustee may either require the Charging Company to sell the charged assets or it may take possession of the charged assets and either sell the assets on its own or appoint a receiver to sell the charged assets (as per the provisions of the Security Deed). Pursuant to the fixed charge, the Trustee would have a claim over the proceeds of the sale of such charged assets in priority to any other creditors of the Charging Company. The Trustee would, in such an event, hold all proceeds of the charged assets on trust for itself and the Bondholders. A floating charge enables a chargee (i.e. the Trustee) to take security over assets whilst at the same time enabling the chargor (i.e. the Charging Company and the Issuer) to continue to operate its business without the restrictions that would follow from granting fixed charges over those assets. The assets subject to a floating charge can generally be dealt with by the Charging Company and the Issuer in the ordinary course of their respective businesses (including sale of such assets from time to time). A floating charge hovers over a shifting pool of assets. However, on the occurrence of certain events (notably if a receiver or an administrator is appointed, or if there is a default in the Issuer s obligations under the Bonds) the floating charge crystallises and will effectively be converted into a fixed charge with respect to the assets which are at that point of time owned by the chargor, and prohibit them from disposing of any assets going forwards without the Trustee s consent. General covenants So long as any Bonds remain outstanding, other than the security granted to the Trustee for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders, neither the Issuer nor the Charging Company may create any security interest or any other interest with an effect similar to any security upon the whole or any part of its present or future undertaking, assets or revenues (including but not limited to the charged properties) and (ii) the Issuer will not, without the prior written consent of the Trustee, engage in any activity or do any thing other than carrying out the business of a company which has as its purpose raising finance and on-lending such finance for the benefit of the Guarantor Group or other activities incidental or necessary to that. Negative Pledge of the Guarantor The Bonds contain a negative pledge provision with respect to the Guarantor. In general terms, a negative pledge provision prohibits the 13

14 c108615pu010 Proof 2: _15:16 B/L Revision: entity from granting security over certain of its indebtedness which diminishes the priority of Bondholder s claims against any of the entity s other assets. Therefore, under the negative pledge provision set out in the Terms and Conditions of the Bonds (the Conditions ), the Guarantor may not create or at any time have outstanding any security interest over any of its present or future undertakings, assets or revenues to secure any guarantee or indemnity in respect of any bond type debt without securing the Bonds equally, subject to certain exceptions. Security covenant For the life of the Bonds, the Issuer, the Guarantor and the Charging Company have agreed to ensure that the value (as is to be tested at least annually by independent appraisers) of the security is at least equal to the aggregate nominal amount of the Bonds for the time being outstanding. Financial covenants The Guarantor has provided covenants which require it to maintain certain financial ratios. Under these covenants, so long as any Bond remains outstanding, the Guarantor has agreed to ensure that: (a) the Guarantor Group s net debt does not exceed 75 per cent. of its tangible fixed assets; and (b) the ratio of the Guarantor Group s gross profit to net financing costs will be at least 1.5 : 1.0, in each case tested semi-annually. Periodic Valuation of the charged properties The Charging Company will arrange for an independent valuation of all charged properties (i) at least once annually; (ii) prior to any further issuance and/or substitution of properties (as described below); and (iii) if the value of any one or more charged properties at any time is shown to be reduced by 20 per cent. or more from the previously ascribed value of such asset. Furthermore, the Trustee will have the right but not the obligation to require valuations in certain circumstances, including if the Issuer ever defaults in any of its obligations under the Bonds. Withdrawal of charged assets The Trustee may, following the Charging Company s request, allow the release of charged properties or assets from the security package provided that the remaining charged properties or assets shall have a value of not less than 1.10 times the aggregate nominal amount of the Bonds then outstanding. Substitution of charged assets The Trustee may also, following the Charging Company s request, allow the withdrawal of any charged asset from the security package and replace it with another charged asset provided that the value of the substituted charged asset is at least equal to the value of the charged asset withdrawn. Events of default An event of default is a breach by the Issuer, the Guarantor or the Charging Company of certain provisions in the Conditions. Events of default under the Bonds include non-payment of interest for 14 days, breach of other obligations under the Bonds or the Trust Deed (which breach is not remedied within 30 days), defaults under other debt agreements for borrowed money of the Issuer, the Guarantor, the Charging Company or any of their respective subsidiaries subject to an aggregate threshold of 10,000,000, certain events related to insolvency or winding up of the Issuer, the Guarantor, the Charging Company or any of their respective subsidiaries, or a change in ownership of the Issuer and/or the Charging Company, non-performance of certain conditions essential for the valid execution of the transaction documents and any events under foreign laws that have a similar effect to any of the events described above. In addition, Trustee certification that certain events would be materially 14

15 c108615pu010 Proof 2: _15:16 B/L Revision: prejudicial to the interests of Bondholders is required before certain events will be deemed to constitute Events of Default. The security granted over the charged assets shall become enforceable, by the Trustee for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders, upon an event of default occurring. As described above in the context of mortgages, fixed charges and floating charges, if the security becomes enforceable, the Trustee would typically be entitled to take possession of the relevant assets and/or procure their sale. Any proceeds would be held on trust for the Trustee, the paying agents appointed with respect to the Bonds, and the Bondholders (in priority to any other creditors). Optional early repayment by Issuer The Bonds may be redeemed (i.e. repaid) early, at any time, if the Issuer chooses to do so, at 100 per cent. of their nominal amount or, if higher, an amount calculated by reference to the then current yield of the 4.75 per cent. United Kingdom Treasury Stock due 2020 plus a margin of 0.50 per cent., together with any accrued interest. Optional early repayment by Issuer for tax reasons In the event of certain tax changes caused by any change in, amendment to, or application or official interpretation of the laws or regulations of the United Kingdom on or after the Bonds have been issued, the Bonds may be repaid if the Issuer chooses to do so in whole, but not in part, at any time. The redemption price in these circumstances is at the nominal amount of the Bonds plus accrued interest. Optional early repayment by the Bondholders If a Change of Control Put Event occurs, a Bondholder may elect for its Bonds to be repaid at their nominal amount plus accrued interest. If 80 per cent. or more of the Bonds originally issued have been repaid in this way, the Issuer may, if it chooses to, repay all the remaining Bonds at their nominal amount plus accrued interest. A Change of Control Put Event might be expected to occur if a takeover or merger of the Bruntwood Group Limited leads to the acquisition of over 50 per cent. of the voting share capital of the Bruntwood Group Limited or Bruntwood Limited by any one entity (or a group of entities acting together) other than the Oglesby Family or the Oglesby Family Trusts. Meetings of Bondholders The Conditions of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting the interests of the Bondholders. These provisions permit certain majorities to bind all Bondholders including Bondholders who did not vote on the relevant resolution and Bondholders who did not vote in the same way as the majority did on that resolution. Modification, waiver and substitution The Conditions of the Bonds provide that the Trustee may, without the consent of Bondholders, agree, among other things: (a) any modification of any of the provisions of the Transaction Documents that is, in the opinion of the Trustee, of a formal, minor or technical nature or is made to correct a manifest error; (b) to waive, modify or authorise any proposed breach or breach of any provision of the Transaction Documents, if in the opinion of the Trustee such modification is not materially prejudicial to the interests of the Bondholders; or (c) the substitution of another company as principal debtor under the Bonds in place of the Issuer, the Guarantor or a previously substituted entity, in certain circumstances and subject to the satisfaction of certain conditions. 15

16 c108615pu010 Proof 2: _15:16 B/L Revision: C.9 A description of the rights attached to the Bonds including: * the nominal interest rate * the date from which interest becomes payable and the due dates for interest * where the rate is not fixed, description of the underlying on which it is based * maturity date and arrangements for the amortisation of the loan, including the repayment procedures * an indication of yield * name of representative of debt security holders C.10 If the Bond has a derivative component in the interest payment, provide a clear and comprehensive explanation to help investors understand how the value of their investment is affected by the value of the underlying instrument(s), especially under the circumstances when the risks are most evident. C.11 An indication as to whether the Bonds offered are or will be the object of an application for admission to trading, with a view to their distribution in a regulated market or other equivalent markets with indication of the markets in question. Interest rate The Bonds will accrue interest from and including the Issue Date at the fixed rate of 6.00 per cent. per annum. The interest on the Bonds is payable twice a year at the end of the interest period to which the payment relates. It is payable in equal instalments of 3 per 100 in nominal amount of the Bonds on 24 January and 24 July in each year. The final payment of interest will be made on 24 July Maturity Date Unless previously purchased and cancelled in accordance with the Conditions of the Bonds, the Bonds will mature on 24 July Indication of yield On the basis of the issue price of the Bonds being 100 per cent. of their nominal amount, the initial yield of the Bonds on the Issue Date is 6.00 per cent. on an annual basis. This initial yield is not an indication of future yield. Trustee U.S. Bank Trustees Limited Not applicable; the interest rate on the Bonds is fixed and there is not a derivative component in the interest payments made in respect of the Bonds. This means that the interest payments are not linked to specific market references, such as inflation, an index or otherwise. It is expected that the admission of the Bonds to the Official List and admission of the Bonds to trading will occur on or about 25 July 2013, after the publication of the Sizing Announcement and subject to the issue of the Global Bond. Application will be made to the United Kingdom Listing Authority for the Bonds to be admitted to its Official List and to the London Stock Exchange plc for such Bonds to be admitted to trading on its regulated market and through its order book for retail bonds. 16

17 c108615pu010 Proof 2: _15:16 B/L Revision: Section D Risks D.2 Key information on the key risks that are specific to the Issuer. Summary of key risks that may affect the Guarantor Group * If the Guarantor Group is unable to renegotiate or refinance existing debt facilities due to reasons mentioned in the below risk factor, there is a risk that the Guarantor Group would face insolvency or be placed into administration by the lenders. This would have an adverse effect on the Guarantor Group s business, results of operations, financial condition and/or prospects and on the Guarantor s ability to fulfil its commitments to Bondholders to make payment of interest and principal under the Bonds. * The ability of the Guarantor Group to refinance its existing borrowings which mature on dates ranging from 2014 to 2022 will depend on a number of factors, the most important of which is the willingness of financial institutions to lend to the Guarantor Group and to the property sector generally. If the Guarantor Group were to face a liquidity crisis in the future, it could lead to serious difficulties for the Guarantor Group in refinancing its debt or result in the Guarantor Group having insufficient funds to invest in new properties. The Guarantor Group could be forced to sell its assets and sales in such circumstances may not deliver the level of proceeds necessary to comply with the Guarantor Group s obligations. * The Group employs financial leverage with the aim of improving returns to shareholders. Whilst the use of borrowings should enhance the performance of the Group when the value of the Group s underlying assets is rising, it may have the opposite effect where the underlying asset value is falling. * The Guarantor Group s existing debt facilities are secured against all of the Guarantor Group s property portfolio. Bondholders will only have direct recourse to the assets secured under the Conditions of the Bonds and not the other properties within the Guarantor Group s property portfolio. Additionally, the Guarantor Group s existing debt facilities impose certain restrictions on the Guarantor Group. If the Guarantor Group were to seek to vary or waive any of these restrictions and the relevant lenders did not agree it, the restrictions may delay the implementation of certain of the Guarantor Group s development projects and may over the longer term limit the Guarantor Group s ability to plan for or react to market conditions, etc. * The Guarantor Group s future success is substantially dependent on the continued services and performance of its directors, senior managers and other key employees, and its ability to continue to attract and retain highly skilled and qualified personnel. The loss of the services of the directors, the senior managers and other key employees could materially adversely affect the Guarantor Group s business, financial condition or results of operations. Summary of key risks that may affect the Issuer s ability to fulfil its obligations under the Bonds * The Issuer acts as a special purpose company in order to raise money by the issue of the Bonds and to on-lend that money to other Guarantor Group members. Its ability to fulfil its payment obligations under the Bonds will depend upon its receipt of payments to be made to it by Guarantor Group members. Summary of key risks that may affect the Guarantor s ability to fulfil its obligations under the Guarantee * The Guarantor is an intermediate holding company within the Group and will be dependent on the financial performance of its subsidiaries 17

18 c108615pu010 Proof 2: _15:16 B/L Revision: D.3 Key information on the key risks that are specific and payments of dividends and inter-company payments to meet its obligations under the Guarantee. * Knight Frank LLP valued the properties that may initially secure the Bonds at 70,470,000 as at 24 May The market value of the initially charged property may not continue to be equal to such valuation. If a charged property is sold following a default under the Bonds, the net proceeds of sale may not be sufficient to pay all amounts due under the Bonds. * Deterioration of the Group s reputation could have a negative effect on the Guarantor Group s operating results, financial condition and prospects. * Security interests granted by way of fixed charges may be recharacterised as floating charges due to the degree of, or lack of, control exercised over certain underlying assets, including over bank accounts, and as a result of such re-characterisation the Bondholders will have lower priority to repayment from full proceeds of enforcement than fixed charge holders and may not receive all amounts outstanding under the Bonds. * Returns from the Guarantor Group s properties depend upon the amount of rental income generated as well as changes in their market value. Rental income and the market value of properties are often affected by general economic conditions in the locality in which the property assets are situated. * Rental income and the market value of properties may also be affected by competition from other available properties which may cause occupancy levels in the Guarantor Group s properties to decline. * 89 per cent. of the Guarantor Group s rental income relates to conventional office space. The Guarantor Group is therefore particularly subject to risks relating to office properties which include maintaining the attractiveness of the building to customers and which can be more costly for office properties than for other property types. * The Bonds are not protected by the Financial Services Compensation Scheme. to the Bonds. * The Bonds may be repaid early at the Issuer s option in certain circumstances. * Defined majorities may be permitted to bind all the Bondholders with respect to modification and waivers of the Conditions of the Bonds. * A market for the Bonds may not develop, or may not be very liquid and such illiquidity may have a severely adverse effect on the market value of the Bonds. * The Bonds bear interest at a fixed rate and the Issuer will pay principal and interest on the Bonds in pounds sterling, which potentially exposes the Bondholders to interest rate and inflation risk and exchange rate risk, respectively. 18

19 c108615pu010 Proof 2: _15:16 B/L Revision: Section E Offer E.2b Reasons for the offer and use of proceeds when different from making profit and/or hedging certain risks E.3 A description of the terms and conditions of the offer. E.4 A description of any interest that is material to the issue/offer including conflicting interests. The Issuer will lend the proceeds from the issue of Bonds to the Charging Company, which is also a wholly-owned subsidiary of the Guarantor. The Charging Company will use the proceeds to acquire, at market value, the Specifically Mortgaged Properties from other companies which are part of the Guarantor Group who will in turn use the proceeds received from the Charging Company to repay a proportion of the Guarantor Group s existing financing, at which point the commercial and property assets which will comprise the initial Specifically Mortgaged Property in relation to the Bonds will be released as security of the existing financing and will be held as part of the security to the Bonds. The offer is expected to open on 3 July 2013 and close at noon on 17 July 2013 or such earlier time and date as may be agreed amongst the Issuer, the Guarantor and the Manager and announced via a Regulatory Information Service (expected to be the RNS). You will be notified by the relevant Authorised Offeror of your allocation of Bonds and instructions for delivery of and payment for the Bonds. You may not be allocated all (or any) of the Bonds for which you apply. The Bonds will be issued at the issue price (which is 100 per cent. of the nominal amount of the Bonds) and the aggregate nominal amount of the Bonds to be issued will be specified in the Sizing Announcement published by the Issuer on a Regulatory Information Service after the end of the offer period. The issue of Bonds is conditional upon the Subscription Agreement being signed by the Issuer, the Guarantor, the Charging Company and the Manager. The Subscription Agreement will include certain conditions, customary for transactions of this type, which must be satisfied (including the issue of the Bonds and the delivery of legal opinions from legal counsel and comfort letters from the independent auditors of the Issuer, in each case satisfactory to the Manager). The minimum subscription amount per investor is for a nominal amount of 2,000 of the Bonds. The maximum amount of Bonds that the Issuer will issue pursuant to the offer is 70,000,000 in aggregate nominal amount. So far as the Issuer and the Guarantor are aware, no person involved in the offer of the Bonds has an interest material to the offer. There are no conflicts of interest which are material to the offer of the Bonds. E.7 Estimated expenses charged to the investor by the Issuer or the offeror. Neither the Issuer, the Guarantor nor the Manager will charge you any expenses relating to an application for or purchase of any Bonds. However, expenses may be charged to you by an Authorised Offeror. These expenses are beyond the control of the Issuer, are not set by the Issuer and should be disclosed to any potential investor by the relevant Authorised Offeror. 19

20 c108615pu020 Proof 2: _15:16 B/L Revision: 2 RISK FACTORS The following is a description of the principal risks and uncertainties which may affect the Issuer s or the Guarantor s, as the case may be, ability to fulfil their obligations under the Bonds. Before applying for any Bonds, you should consider whether the Bonds are a suitable investment for you. There are risks associated with an investment in the Bonds, many of which are outside the control of the Issuer and the Guarantor. These risks include those in this section. 20

21 c108615pu020 Proof 2: _15:16 B/L Revision: RISK FACTORS The Issuer and the Guarantor believe that the following factors may affect their ability to fulfil their respective obligations under the Bonds. Most of these factors are contingencies which may or may not occur and neither the Issuer nor the Guarantor is in a position to express a view on the likelihood of any such contingency occurring. In addition, factors which each of the Issuer and the Guarantor believes may be material for the purpose of assessing the market risks associated with the Bonds are described below. Each of the Issuer and the Guarantor believes that the factors described below represent the principal risks inherent in investing in the Bonds, but the inability of the Issuer or the Guarantor to pay interest, principal or other amounts on or in connection with the Bonds may occur for other reasons and, none of the Issuer or the Guarantor represents that the statements below regarding the risks of holding the Bonds are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Prospectus and reach their own views prior to making any investment decision. Risks relating to the Guarantor Group Ability to raise future debt financing The ability of the Guarantor Group to raise funds to roll-over or refinance on similar terms to the Guarantor Group s existing debt financing, or at all, its existing debt facilities, which are currently set to mature on dates ranging from 31 December 2013 to 2022, will be dependent on a number of factors including general economic, political, debt and equity capital market conditions, funding availability and, importantly, the appetite of financial institutions to lend to the property sector. An inability to raise funds to roll-over or to refinance the ten year medium term loan facility ( MTL Facility ) by 31 December 2013 or to repay certain of the commercial mortgage backed securitisation notes issue ( CMBS ) Notes in January 2014 or to refinance other facilities or borrowings when they become due may mean that the Guarantor Group will not have funds available to pay other debts (including under the Bonds) or to invest in or develop properties, which could result in the Guarantor Group being forced to sell assets. Sales in such circumstances may not deliver the level of proceeds that may otherwise be expected, in order to comply with the Guarantor Group s obligations. In addition, if the Guarantor Group is unable to renegotiate or refinance existing debt facilities, there is a risk that the Guarantor Group would face insolvency or be placed into administration by the lenders. This would have an adverse effect on the Guarantor Group s business, results of operations, financial condition and/or prospects and on the Guarantor s ability to fulfil its commitments to Bondholders to make payment of interest and principal under the Bonds. The Guarantor Group recognises this risk and has undertaken a strategy to mitigate the risk posed by concurrent maturity of its debt and provide certainty over the future financing of the Guarantor Group. As part of the Guarantor Group s on-going refinancing plans, the Guarantor Group has recently repaid 123,050,000 of the CMBS Notes, which was funded by a new 10 year loan facility ( Legal & General Facility ). The Guarantor Group is at an advanced stage of negotiations in respect of entry into a new 240 million five year MTL Facility, repayable in The increased amount of the new MTL Facility would be used to pay down part of the BE Loan and consequently to fund repayment of part of the CMBS Notes which are to be repaid in January 2014 as described above. The Guarantor Group also intends to diversify its sources of debt financing, including through the issue of the Bonds. There is however no guarantee that this strategy will be implemented or will be able to mitigate all of the Guarantor Group s refinancing risks. Guarantor Group s debt level The investment property sector tends to employ financial leverage with the aim of improving returns to shareholders. Whilst the use of borrowings should enhance the performance of the Guarantor Group when the value of the Guarantor Group s underlying assets is rising, it may have the opposite effect where the underlying asset value is falling. It is the Guarantor Group s current policy to hedge a proportion of its floating interest rate exposure to maintain the appropriate risk and interest profile. However, an increase in interest rates might materially adversely affect the results of the Guarantor Group s operations by increasing the financing cost of any unhedged portion of debt. As at 30 September 2012, the Guarantor Group has a net gearing level of per cent. loan to value ( LTV ), which is below the average when compared with net gearing of the United Kingdom property sector as a whole, and a 187 per cent. interest cover. As at 30 September 2012, 87 per cent. 21

22 c108615pu020 Proof 2: _15:16 B/L Revision: of the Guarantor Group s debt is hedged. The Guarantor Group will covenant to ensure all secured and unsecured borrowings ( Net Debt ) as a percentage of Tangible Fixed Assets does not exceed 75 per cent. This will be tested on an semi-annual consolidated basis and will be based on external valuation. The Guarantor Group will further covenant that the ratio of Gross profit to Net Financing Costs for each semi-annual financial period will be at least 150 per cent. on a consolidated basis. Net Financing Costs as used herein, is the Interest payable and similar charges figure taken from the Accounts, excluding exceptional costs and also excluding Interest receivable. Guarantor Group s debt facilities The Guarantor Group is financed through a combination of the CMBS Notes, the MTL Facility and the Legal & General Facility and an overdraft facility ( Overdraft Facility ), all incurred by subsidiaries of the Guarantor. As at the date of the Prospectus the total amount borrowed and outstanding under the CMBS Notes was 309,500,000. The CMBS Notes were refinanced in January ,350,000 of the CMBS Notes are repayable in January 2014 and the balance of 229,150,000 repayable in January The Guarantor Group owns 22,294,000 of the CMBS Notes which will be subordinated to the other outstanding CMBS Notes. This will reduce the net amount payable in January 2014 to 74,562,000 and the balance repayable in January 2016 to 212,644,000. These amounts repayable will be further reduced as the Guarantor Group will use a majority of the proceeds of the issue of the Bonds to repay them further. See Description of the Business of the Bruntwood Group CMBS Notes for more details relating to refinancing. As at the date of the Prospectus, the amount borrowed and outstanding under the MTL Facility was 165,000,000 and is repayable on 31 December The Guarantor Group is currently negotiating a replacement of this facility (See Ability to raise future debt financing below). As at the date of the Prospectus, the total amount borrowed and outstanding under the Legal & General Facility was 119,000,000 and is repayable on 21 December As at the date of the Prospectus, there is no amount borrowed and outstanding under the Overdraft Facility. Set out below is a table illustrating the Guarantor Group s outstanding facility amounts and debt maturity profile, each as at the date of this Prospectus (all terms as described in Description of the Bruntwood Group ). The re-profiling of debt maturities from time to time, as with generally all businesses, is part of an on-going process. Amounts Due 000 Facility MTL Facility (exp. 31 Dec 13) 165,000 CMBS Notes (exp. 15 Jan 14) 80,350 Self-held CMBS Notes redeemed in Jan 14 with the CMBS Notes (5,788) B2000 Loan under the CMBS Notes (exp. 15 Jan 16) 226,150 Self-held CMBS Notes to be redeemed in Jan 16 with the B2000 Loan (16,506) L&G Facility (exp. 20 Dec 22) 118,915 Net Expiry of Current Facilities 165,000 74, , ,915 (Note: that these amounts will be reduced following the issue of the Bonds because the proceeds from the Bonds will serve to reduce currently outstanding debt facility amounts.) In order to obtain this financing, the Guarantor Group has provided security for the total amount borrowed through these facilities against all of the commercial and property assets which form the Guarantor Group s property portfolio which as at May 2013, amounted to a total portfolio value of 891,080,000. The Guarantor Group proposes to use the proceeds raised by the issue of the Bonds to repay a proportion of the Guarantor Group s existing financing, at which point the commercial and property assets which will comprise the initial Specifically Mortgaged Properties in relation to the 22

23 c108615pu020 Proof 2: _15:16 B/L Revision: Bonds will be released as security of the existing financing and will be provided as security to the Bonds in the form of the Specifically Mortgaged Properties. The nature and extent of the security package associated with each financing does vary. See Description of the Guarantor and the Guarantor Group Borrowings and capital funding below for a further description of each of those security arrangements. If any such member defaults under its debt facilities, the relevant lender will take ownership of mortgaged properties and other assets, undertakings and rights of the affected member. This may as a consequence, preclude the Guarantor Group from using surplus cash flows from the member of the Guarantor Group to meet payment obligations under the Guarantee. In the event that the entire Guarantor Group defaults, holders of Bonds will have direct recourse to the Specifically Mortgaged Properties and not to other properties within the Guarantor Group s property portfolio. The Guarantor Group s debt facilities impose certain restrictions on the Guarantor Group. These restrictions may affect, limit or prohibit the Guarantor Group s ability to create or permit to subsist any charges, liens or other encumbrances in the nature of a security interest; incur additional indebtedness by way of borrowing, leasing commitments, factoring of debts or granting of guarantees; make any material changes in the nature of its business as presently conducted; sell, transfer, lease or otherwise dispose of all or a substantial part of its assets; amend, vary or waive the terms of certain acquisition documents or give any consent or exercise any discretion thereunder; acquire any businesses; or make any co-investments or investments over the longer term. If the Guarantor Group were to seek to vary or waive any of these restrictions and the relevant lenders did not agree to such variation or amendment, the restrictions may delay the implementation of certain of the Guarantor Group s development projects and may over the longer term limit the Guarantor Group s ability to plan for or react to market conditions, meet capital needs, or otherwise restrict the Guarantor Group s activities or business plans and adversely affect the Guarantor Group s ability to finance strategic acquisitions, investments and development projects. Management risks The Guarantor Group s future success is substantially dependent on the continued services and performance of its directors, senior managers and other key employees, and its ability to continue to attract and retain highly skilled and qualified personnel. Although measures are in place to reward and retain key individuals and to protect the Guarantor Group from the impact of excessive staff turnover, the Guarantor cannot give assurances that the directors, senior managers and other key employees will continue to remain with the Guarantor Group. Furthermore, in the event of the death or disability of any of the directors, senior managers or other key employees, no key-man insurance is in place to protect the Guarantor Group from this loss. The loss of the services of the directors, the senior managers and other key employees could materially adversely affect the Guarantor Group s business, financial condition or results of operations. Deterioration of the Guarantor Group s reputation could have a negative effect on the Guarantor Group s operating results, financial condition and prospects It is important that the Guarantor Group has the ability to maintain and increase the image and reputation of its existing brand, properties and property management style. The image and reputation of the Guarantor Group s brand, properties and property management styles may be impacted for various reasons including real or perceived quality issues, complaints from customers or regulatory authorities or litigation resulting from quality failure. If any of the foregoing were to occur, or if the Guarantor Group were to be involved in protracted litigation, found liable in respect of any complaint or litigation or subject to a costly settlement, the Guarantor Group s lettings could decline and restoring the image and reputation of the Guarantor Group s operations could be costly and time consuming. Any harm caused to the Guarantor Group s reputation could have an adverse impact on the Guarantor Group s operating results, financial condition and prospects. Counterparty credit risk The Guarantor Group is potentially exposed to counterparty credit risk on cash deposits and in respect of interest rate hedging agreements used to hedge interest rates if interest rates increase. There is a risk of a loss being sustained by the Guarantor Group as a result of payment default by the counterparty with whom the Guarantor Group has deposited cash or entered into hedging transactions. The extent of the Guarantor Group s loss could be the full amount of the deposit or the cost of replacing those hedging transactions. Under the Guarantor Group s treasury risk management policy, the Guarantor Group only deals with counterparties with certain minimum credit ratings and 23

24 c108615pu020 Proof 2: _15:16 B/L Revision: has set its maximum exposure to each of them with regard to credit ratings. There can be no assurance, however, that the Guarantor Group will successfully manage this risk or that such payment defaults by counterparties will not materially adversely affect the Guarantor Group s business, financial condition or results of operations. Factors that may affect the Issuer s ability to fulfil its obligations under the Bonds The Issuer acts as a special purpose company to raise capital by the issue of the Bonds The sole function of the Issuer is to act as a special purpose company to raise money by the issue of the Bonds. The net proceeds received by the Issuer from the issue of the Bonds will be lent by the Issuer to Bruntwood RB Limited (the Charging Company ), a wholly-owned subsidiary of the Guarantor which has been newly established for the purpose of holding the properties (the Specifically Mortgaged Properties ) and any other assets that will provide security for the Bonds. The Charging Company will, in turn, use the amounts lent to it by the Issuer to purchase the Specifically Mortgaged Properties from other members of the Bruntwood Group. The Issuer s only material assets will therefore be the obligation of the Charging Company to pay interest on and to repay such on-lent funds to it. As the funds to pay interest on the on-lent funds and repay the onlent funds will originate from cash-flow generated from the wider business of the consolidated Guarantor Group (which includes cash-flow generated from the Specifically Mortgaged Properties held in the Charging Company), the ability of the Charging Company to pay interest on such loan to the Issuer and to repay the loan and accordingly of the Issuer to pay interest on and repay the Bonds will be subject to all the risks to which the Guarantor Group is subject. See Factors that may affect the Guarantor s ability to fulfil its obligations under the Guarantee below for a further description of certain of these risks. Factors that may affect the Guarantor s ability to fulfil its obligations under the Guarantee The Guarantor is a holding company within the Guarantor Group If the Issuer or the Guarantor defaults on its obligations to make payments on or to repay the Bonds or to make payments under the Guarantee and if as a consequence the Trustee enforces the security provided over the charged assets, the Trustee will be entitled to apply the net proceeds of sale or other amounts received by it in respect of the charged assets (after deduction of certain expenses or prior claims, see Condition 2(c) (Application of Moneys)) in payment of outstanding amounts under the Bonds. If following such enforcement the net proceeds of sale of the charged assets (after deduction of certain expenses or prior claims) are insufficient to repay all amounts outstanding under the Bonds, Bondholders will have unsecured claims for any outstanding amount against the Guarantor under the Guarantee. Bondholders will not have any direct claim for such outstanding amount against any subsidiary of the Guarantor. See The Issuer acts as a special purpose company to raise capital by the issue of the Bonds above for a description of the risk in relation to the Issuer. The Guarantor s principal business is that of holding shares in its subsidiaries. In turn, all of its share capital is held by Bruntwood Group Limited, the ultimate holding company of the Group. As a holding company, the Guarantor conducts all of its operations through its subsidiaries and is dependent on the financial performance of its subsidiaries and payments of dividends and intercompany payments (both advances and repayments) from these subsidiaries to meet its debt obligations including its ability to fulfil its obligations under the Guarantee. Generally, creditors of a subsidiary, including trade creditors, secured creditors and creditors holding indebtedness and guarantees issued by the subsidiary and preferred shareholders (if any) of the subsidiary, will be entitled to the assets of that subsidiary before any of those assets can be distributed to its direct or indirect shareholders (including the Guarantor) upon its liquidation or winding up. The Guarantor s subsidiaries may have other liabilities, including secured liabilities and contingent liabilities, which could be substantial. See Risks relating to the Guarantor Group, Guarantor Group s debt facilities and Guarantor Group s debt level below. Notes 16 to 18 of the Guarantor s consolidated financial statements for the year ended 30 September 2012 provided an indication of the Guarantor s liabilities as at 30 September Since Bondholders are not creditors to these subsidiaries, their claims to the assets of the subsidiaries that generate the Guarantor s income (and consequently, their right to receive payments under the terms and conditions (the Conditions ) of the Bonds) are structurally subordinated to the creditors of these subsidiaries. In the event that members of the Guarantor Group are unable to remit funds to the Guarantor, the Guarantor s ability to fulfil its commitments to Bondholders to make payments under the Guarantee may be adversely affected. 24

25 c108615pu020 Proof 2: _15:16 B/L Revision: Risks relating to the taking of Specifically Mortgaged Properties as security Reliance on Valuation Reports The valuation reports (the Valuation Reports ) which are reproduced in the section headed Valuation Reports below are addressed to, among others, the Guarantor, the Issuer, the Trustee and the Manager but may only be relied on by each of them on the terms as more fully set out therein. Knight Frank LLP (the Valuer ) has valued the proposed initial Specifically Mortgaged Properties at 70,470,000 as at 24 May However, the market value of an initial Specifically Mortgaged Property may not continue to be equal to such valuation. Therefore, if any of the Specifically Mortgaged Properties is sold by or on behalf of the Trustee following an Event of Default under the Conditions, the net proceeds of such sale may not be sufficient to pay in full all amounts then due under the Bonds. The Issuer has undertaken to have a valuation of the charged properties at least once a year, and to ensure that such value attributed to the charged assets at such time is at least equal to the nominal amount of the Bonds outstanding at such time. Active management of the Specifically Mortgaged Properties All of the Specifically Mortgaged Properties (as defined in the Conditions of this Prospectus) and the remainder of the Guarantor Group s property portfolio have been, and will remain, under active property management by the Guarantor Group. The strategy of the Guarantor Group is to attract and retain customers on a long term basis. It sets out to achieve this by working in active partnership with its customers to meet their evolving requirements. This may result in the release of customers by the Guarantor Group from their obligations under their leases at a time when no replacement occupant has yet signed up to a lease, for instance in the circumstance where a customer has outgrown its current space and wishes to expand. The Guarantor Group makes every effort to meet the customer s requirements whether this is through the provision to that customer of additional space within its existing building or through relocation of that customer to another of the Guarantor Group s buildings. It should be noted that this policy will often benefit the Guarantor Group by increasing the amount of rent received from the customer and increasing the unexpired term of the lease agreement that such customer has with the Guarantor Group. There may also be beneficial circumstances in which a customer who previously did not occupy a building within the Specifically Mortgaged Properties is relocated to a building within the Specifically Mortgaged Properties which could increase the value of the security taken over the Specifically Mortgaged Properties. However, there may be circumstances in which it may be necessary to relocate a customer who previously occupied a building within the Specifically Mortgaged Properties to a building within the Guarantor Group which is not within the Specifically Mortgaged Properties. This, as a consequence, would have an adverse impact on the market value of the Specifically Mortgaged Properties as it would decrease the number of tenants and consequently, the number of income generating leases of such Specifically Mortgaged Property. This in turn would have an adverse impact on the value of security taken over the Specifically Mortgaged Properties and as a consequence, if this security is sold following an Event of Default under the Conditions, there can be no assurance that the net proceeds of such sale will be sufficient to pay in full all amounts due under the Bonds. Privity of contract Pursuant to the Landlord and Tenant (Covenants) Act 1995 (the Covenants Act ), in respect of a property lease granted after 1 January 1996 (other than one granted after such date pursuant to an agreement for lease entered into before such date or a court order granted before that date), where a tenant under the lease assigns such lease (having obtained all necessary consents (including that of the landlord if such is specified in the relevant lease)), that tenant s liability to the landlord ceases. However, the Covenants Act permits the lease to provide that, on such assignment, the assignor can be required to enter into an authorised guarantee of the assignee s obligations to the landlord under the lease. Such authorised guarantee only covers the obligations of the original assignee of that assignor while such assignee is a tenant under the lease but not any subsequent assignees. Substantially all of the leases (other than certain short term lettings and noting that only a sample of the leases have been reviewed) of the initial Specifically Mortgaged Properties require customers to provide an authorised guarantee of any assignee s obligations as part of the consent to assignment provisions, either as an absolute prerequisite to assignment or where reasonably required by the Guarantor Group. 25

26 c108615pu020 Proof 2: _15:16 B/L Revision: Notwithstanding these arrangements, there can be no assurance that any assignee of an affected lease will be of a similar credit quality to the original customer, or that any subsequent assignees (who will not be covered by the original customer s authorised guarantee) will be of a similar credit quality. Compulsory purchase Any Specifically Mortgaged Property or part thereof may at any time be compulsorily acquired by, among others, a local or public authority or a governmental department, generally in connection with proposed redevelopment or infrastructure projects (a Compulsory Purchase ). No such Compulsory Purchase order has been revealed in the Certificate of Title (as described below under Title ), issued in relation to each initial Specifically Mortgaged Property. However, if a Compulsory Purchase order is made in respect of the Specifically Mortgaged Properties (or part of any Specifically Mortgaged Property), compensation would be payable on the basis of what a willing seller in the open market may realise at such time. Following such a purchase the affected customer would cease to be obliged to make any further rental payments to the Guarantor Group under the affected lease (or rental payments from that affected customer would be reduced to reflect the Compulsory Purchase of a part of the Guarantor Group s Specifically Mortgaged Property, if applicable). The risk to Bondholders is that the Specifically Mortgaged Property will be worth less and its market value may not be sufficient to cover the unpaid principal, accrued interest and any other amounts due under the Bonds. Mortgagee in possession liability If, following an Event of Default under the Conditions, the Trustee exercises its rights in relation to the Specifically Mortgaged Property, it may (on enforcement of the security over the Specifically Mortgaged Property) be deemed to be a mortgagee in possession of that property if it physically enters into possession of such property or performs an act of control or influence which may amount to possession, such as submitting a demand direct to customers requiring them to pay rents to the Trustee. However, in a case where it is necessary to initiate enforcement procedures in respect of a Specifically Mortgaged Property, the Trustee is likely to appoint a receiver to collect the rental income on behalf of itself and any other creditor. This in itself should not have the effect that the Trustee is deemed to be a mortgagee in possession. A mortgagee in possession of land in England has an obligation to account for the income obtained from the relevant property and in the case of tenanted property will be liable to pay compensation to a tenant for any mismanagement of the relevant property. A mortgagee in possession may also be liable to pay compensation to third parties for any nuisance or negligence and, under certain statutes (including environmental legislation), can incur the liabilities of a property owner. The Trustee may determine not to take actions in relation to a Specifically Mortgaged Property if to do so might incur risks of it incurring such liability as a mortgagee in possession which in turn may delay the recovery of or reduce amounts recovered from the enforcement of security over Specifically Mortgaged Property and payment of such amounts to Bondholders. Title In connection with the taking of security over the initial Specifically Mortgaged Properties in connection with the issuance of the Bonds, the Guarantor s solicitor Addleshaw Goddard LLP undertook a review of title. They have prepared certificates of title on the 7 properties that will potentially secure the Bonds, representing 8 per cent. of the Guarantor Group s total property portfolio value (the Certificates of Title ). The Certificates of Title address the quality of title of each Specifically Mortgaged Property as at the date of this Prospectus and have been issued on the basis of a review of the title documents and the usual conveyancing searches and enquiries. However, given the number and diverse nature of the tenancies at the Specifically Mortgaged Properties, the Certificates of Title report only on a sample of such interests where the headline rent exceeds 50,000 per annum (save in relation to the Lancastrian Office Centre where tenancies with a headline rent of 40,000 have been reported on). Accordingly the Certificates of Title may not identify all information which is significant to evaluate income from, and issues adversely affecting the value of the Specifically Mortgaged Properties. Such information, if determined adversely, could have an adverse impact on the value of security taken over the Specifically Mortgaged Properties and as a consequence, if this security is sold following an Event of Default under the Conditions, there can be no assurance that the net proceeds of such sale will be sufficient to pay in full all amounts due under the Bonds. 26

27 c108615pu020 Proof 2: _15:16 B/L Revision: Planning matters The Issuer has confirmed by way of the relevant Certificate of Titles that the initial Specifically Mortgaged Properties have been constructed in substantial compliance with all relevant planning legislation save as disclosed in such Certificate of Title and, as far as it is aware, there are no material breaches of planning control existing on the relevant initial Specifically Mortgaged Property or any other property of the Guarantor Group save as disclosed in such Certificate of Title and excluding any works or uses by customers. In this regard, it should be noted that where customers are in breach of planning obligations or conditions, they would be required under the terms of their lease to take responsibility for such breach. Failure to comply with planning obligations or conditions could give rise to planning enforcement or other compliance action by the local planning authority which may affect the Guarantor Group s ability to receive rental income from the affected part of any Specifically Mortgaged Property or other property of the Guarantor Group. At any given time, there will be a number of ongoing planning obligations or restrictions which relate to certain elements of a Specifically Mortgaged Property or other property of the Guarantor Group. Risks relating to the taking of security by fixed charge Under the Security Deed, the Charging Company will grant a first fixed charge in favour of the Trustee for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the holders of the coupons (the Couponholders ) over (i) all of its rights, title and interest in and to contracts or policies of insurance from time to time taken out over the Specifically Mortgaged Properties and certain related rights; (ii) all of its present and future rights, title, interest and benefit in and to certain eligible investments; and (iii) all of its present and future rights, title, interest and benefit in monies held in a designated bank account and any rights, title and interest to such account and certain related rights, as security for the Bonds. A fixed charge attaches to an asset upon its creation and gives the Trustee on behalf of the Bondholders a claim over the proceeds generated by such asset in priority to other creditors (if any) of the Charging Company. In certain circumstances a security interest which states that it is to be taken as a fixed charge may nevertheless take effect as a floating charge. Under English law, for a charge to be characterised as a fixed charge, among other things, the charge holder is required to exercise appropriate control over the charged assets. Whilst the Trustee will benefit from a certain level of control over the assets subject to such first fixed charge, there is a risk that if the Trustee does not in fact exercise an appropriate level of control over such assets a court could determine that the first fixed charge takes effect as a floating charge only. A floating charge floats over the pool of assets subject to the charge but enables the Charging Company to deal with the assets until the occurrence of certain assets which causes the charge to fix on to the assets. It is less advantageous than a fixed charge as a claim to the assets made by a floating charge holder ranks behind that of a fixed charge holder in such cases (but still ahead of any unsecured senior creditors and shareholders). As a consequence, if the security over the assets were to be enforced following an Event of Default under the Conditions, any such assets may first be applied in payment of creditors of the Charging Company who are deemed under the provisions of English law to have higher priority to repayment prior to payment to holders of the Bonds. Any such payments may result in Bondholders not receiving all amounts outstanding under the Bonds. Priority of claims of the Trustee and Agents On an enforcement of the Security by the Trustee pursuant to the Conditions, the Bondholders and Couponholders will have the right to be paid amounts due to them only after payment of, firstly, the remuneration, costs, expenses and liabilities due and payable to the Trustee, including costs incurred by it in the enforcement of the Security and, secondly, remuneration, costs, expenses and liabilities due and payable to the paying agent in respect of the Bonds. Any such payments may result in Bondholders not receiving all amounts outstanding under the Bonds. Risks relating to investing in property Investment liquidity Investments in property are relatively illiquid and are typically more difficult, and/or take longer, to realise than certain other investments such as equities, gilts or bonds. This illiquidity may affect the Guarantor Group s ability to dispose of, or liquidate, assets from its property portfolio expeditiously and at satisfactory prices if it were required to do so. This could have a material adverse effect on the Guarantor Group s business, financial condition or results of operation. 27

28 c108615pu020 Proof 2: _15:16 B/L Revision: Dependence on factors outside the Guarantor Group s control Returns from an investment in property depend largely upon the amount of rental and other income generated by the property and the costs and expenses incurred in the maintenance and management of the property, as well as changes in its market value. The rental income and the market value of properties are often affected by general economic conditions and/or by the political and economic climate of the locality in which the property assets are situated, as well as in the rest of the world. Relevant economic factors which can affect rental incomes and property values include changes in growth of gross domestic product, employment trends, inflation and changes in interest rates. Together or in isolation, these may impact the level of demand for property by customers and the ability of owners of property to increase rents and the level of bad debts incurred as a result of customers entering into bankruptcy or insolvency, which may adversely affect the value of, and the rental income generated by, the Guarantor Group s property portfolio. In addition, property owners may be required to fund the costs of maintenance, insurance, periodic renovations and repairs of properties. When properties are vacant, the owner will often suffer void costs which may be significant, including business rates and operating expenses together with the costs of re-letting the property. Should the Guarantor Group find itself in such a situation, this could have a material adverse effect on the Guarantor Group s business, financial condition or results of operation. Legal and regulatory changes The Guarantor Group and any partners with whom the Guarantor Group may deal with are required to comply with regulations relating to planning, land use and building regulation standards. The institution and enforcement of such regulations could have the effect of increasing the expenses of, lowering the income from, and adversely affecting the value of, the Guarantor Group s assets. New laws may be introduced which may be retrospective and affect existing planning consents. In addition, investors should note that changes in the legal framework concerning planning rules in the UK may negatively influence the values of properties. This may have an adverse impact on the Guarantor Group s business, financial condition or results of operations. From time to time, regulations are introduced which can impact the costs of property ownership and affect returns. In recent times these have included provisions for the containment and management of asbestos in buildings, regulations concerning the provision of access for disabled persons, and provisions for the measurement and reporting of the energy efficiency of buildings. Property valuation The valuation of property and property-related assets is inherently subjective due to, amongst other factors, the individual nature of each property and, furthermore, the sensitivity of such valuations to changes in market sentiment. Property valuations are also made on the basis of assumptions which may prove to be inaccurate. Incorrect assumptions or flawed assessments underlying the property valuation report could negatively affect the Guarantor Group s financial condition and potentially inhibit the Guarantor Group s ability to realise a sale price that reflects the stated valuation. Further, if the Guarantor Group acquires properties based on inaccurate assumptions, the Guarantor Group s net assets and results of operations may be materially adversely affected. There is no assurance that the valuations of the Guarantor Group s current and prospective properties will be reflected in the actual transaction prices (even where any such transactions occur shortly after the relevant valuation date) or that estimated yield and annual rental income will prove to be attainable. Furthermore, property markets are subject to external market conditions, including the recent global financial crisis. It is possible that real estate prices and values could decrease or go through a period of heightened volatility which could have a material adverse impact on the Guarantor Group s business, financial condition or results of operations. Fall in net revenue The net revenue generated from the Guarantor Group s properties may depend on the financial stability of its customers. If for whatever reason the Guarantor Group s customers cease to pay rent or other charges, the revenue generated by the rental of properties will decrease. In the event of a number of customers defaulting, the Guarantor Group may experience delays in enforcing its rights as landlord and may incur costs, including litigation and related expenses, in protecting its investments and re-letting the relevant units. In the event of a customer going bankrupt 28

29 c108615pu020 Proof 2: _15:16 B/L Revision: or becoming insolvent, and thus seeking the protection of bankruptcy or insolvency laws, the Guarantor Group may experience delays in receipt of rental and/or other contractual payments or it may be unable to collect such payments at all. If for whatever reason a lease is terminated, the Guarantor Group may be unable to lease the property for the rent or other charges previously received or at all. In the event of a default by a customer leading to a vacancy or during any other period of vacancy, the Guarantor Group will suffer a rental shortfall and incur additional expenses until the property is re-let. These expenses could include legal and surveyor s costs in re-letting, maintenance costs, insurance, rates and marketing costs. Certain product areas within the Guarantor Group s business offer flexible leases with varying lengths of notice periods required to be served by parties to the lease in order to break such lease arrangements. Consequently, the Guarantor Group will experience turnover of customers. When a customer at one of the Guarantor Group s properties does not renew its lease, exercises a break clause, or otherwise elects to vacate its space, the Guarantor Group s rental income may be reduced until that unit is re-let and the Guarantor Group may be required to expend funds to construct new customer improvements in the vacant space or to provide financial inducements to re-let the vacant space to new customers. A consequence of the materialisation of any of these risks could have a material adverse effect on the Guarantor Group s business financial condition or results of operation. Increase in operating costs The Guarantor Group s operating and other expenses could increase without a corresponding increase in turnover or reimbursements of operating and other costs from customers. Factors which could increase operating and other expenses include: * increases in the rate of inflation; * increases in staff, telecommunications and energy and utility costs; * increases in property taxes and other statutory charges; * increases in insurance premiums; * increases in the costs of maintaining properties; and * failure to perform by sub-contractors leading to increases in operating costs. Such increases could have a material adverse effect on the Guarantor Group s business, financial condition or results of operations. Competition Both rental income and the market value of properties may be affected by factors specific to individual properties, such as competition from other nearby properties and the perceptions of prospective customers of the relative attractiveness, convenience and safety of properties. If there is an increasing availability of attractive properties to rent from existing or new public or private sector landlords in the market in which the Guarantor Group operates, this may cause occupancy levels in the Guarantor Group s properties to decline or may lead to a reduction in the number or quality of investment opportunities available to the Guarantor Group to further invest in or lead to a reduction in yield expectations that the Guarantor Group can expect from its investments, which may have negative implications on the Guarantor Group s ability to generate earnings and dividends. Additionally, the Guarantor Group may face significant competition from other investors to further invest in suitable properties, including competitors who may have greater resources at their disposal to identify and pursue investor opportunities. Competition in the property market may lead to prices for properties identified by the Guarantor Group as a suitable investment opportunity being driven up through competing bids by potential purchasers. Accordingly, the existence and extent of such competition may have a material adverse effect on the Guarantor Group s ability to acquire properties at satisfactory prices and otherwise on satisfactory terms. Concentration of properties and customer base All of the Guarantor Group s properties are located in the United Kingdom (the UK ) and are concentrated in Manchester (with a significant concentration of the Guarantor Group s properties in Manchester city centre), Greater Manchester, Liverpool, Birmingham and Leeds. The Guarantor 29

30 c108615pu020 Proof 2: _15:16 B/L Revision: Group s business is exposed to the risk of any downturn in the economies of the Guarantor Group s region of operations, the UK economy as a whole, a change in occupational patterns of any customer of the Guarantor Group that it may have significant exposure towards, or any other local factors which are beyond the control of the Guarantor Group. Emergence of this risk could materially adversely affect the Guarantor Group s business, financial condition or results of operations as well as the market value of the Guarantor Group s property portfolio. This risk is particularly significant as the Guarantor Group has only a limited ability to help offset such a downturn through alternative activities. The Guarantor Group attempts to mitigate this risk by keeping its customer base as diverse as possible through exposure to single person operations through to large blue-chip companies and government agencies and departments. Risks relating to office properties 89 per cent. of the rental income generated by the Guarantor Group s property portfolio relates to conventional office space (see Description of the Guarantor and the Guarantor Group Principal Activities and Markets Office space ). The income generated from and market value of an office property, and the consequential ability of the Guarantor Group to utilise the generated rental income of such office property to meet its payment obligations under the Bonds is subject to a number of risks. In particular, a given property s age, condition, design and ability to offer certain amenities to customers all affect the ability of such property to compete against other office properties in the area belonging to competitors in attracting and retaining customers. Other important factors that affect an office property of the Guarantor Group s ability to attract or retain customers include the quality of a building s existing occupiers, the attractiveness of the building and the surrounding area, access to public transportation and major roads and the public perception of safety in the surrounding neighbourhood. The Guarantor Group s ability to attract and retain customers of its office properties does require it to refit, repair or making improvements to its office space to accommodate the type of business conducted by prospective customers or a change in the type of business conducted by its existing major customers. Such refitting, repairing or improvements are often more costly for office properties than for other property types. Failure by the Guarantor Group to acquire and maintain office property of a type which attracts and retains customers may affect the Guarantor Group s ability to generate the necessary rental income to meet its payment obligations under the Bonds. Risks Relating to Retail Properties Eight per cent. of the rental income generated by the Guarantor Group s property portfolio relates to retail space (see Description of the Guarantor and the Guarantor Group Principal Activities and Markets Retail Space ). There can be no assurance that the Guarantor Group could, on termination of any lease of the Guarantor Group s retail properties, attract the types of retail tenants needed in the future to maintain the current range and quality of retail outlets at each of its properties. The ability of the Guarantor Group to attract the appropriate type and number of customers paying rents sufficient to allow the Guarantor Group to make payments due under the Bonds will depend on, among other things, the performance generally of the retail property market and, the quality and performance of the Guarantor Group s retail space. Rental levels, the quality of the building, the amenities and facilities offered, the convenience and location of each of its retail property space, the amount of space available, the transport infrastructure and the age of the building in comparison to the alternatives offered by competitors are all factors which influence retail tenant demand for the Guarantor Group s available retail space. There is no guarantee that changes to the infrastructure, demographics, planning regulations and economic circumstances relating to the surrounding areas on which a Guarantor Group s property depends for its consumer base will not adversely affect the ability of the Guarantor Group to attract customers to such property. Risks relating to Serviced Offices Some of the Guarantor Group s properties offer serviced office space (the Serviced Offices ). Serviced Offices currently represent three per cent. of the total lettable area of the Guarantor Group s property portfolio (see Description of the Guarantor and the Guarantor Group Principal Activities and Markets Serviced Offices ). The Guarantor Group s ability to meet its payment obligations under the Bonds secured by property which provides a serviced offering are subject to a number of risks that differ from those applicable specifically to the Guarantor Group s office space. The most significant risk relates to the shorter term of the licences and a higher turnover of the Serviced Office 30

31 c108615pu020 Proof 2: _15:16 B/L Revision: space licencee customers and the costs associated with provision of the services contracted to be provided (which may in some cases exceed the income received from customers for such services). If demand for Serviced Offices is reduced significantly, then it must be noted that some expenditure may need to be incurred by the Guarantor Group to re-organise the space in order to make it suitable for conventional letting. As an alternative, the Guarantor Group may have to incur costs to maintain the quality of the internal fabric of the space in order to continue to attract prospective occupiers of Serviced Offices. For example the quality and reliability of furniture, telecommunications and other Information Technology infrastructure located within the space and the level and quality of customer service provided by the Guarantor Group to customers of its space. Serviced Offices sit within the Guarantor Group s established office properties and therefore the list of factors affecting the ability of the Guarantor Group to attract and retain customers in Risks relating to offices properties, above, also apply to the retention of serviced space licencees for the Serviced Offices. Statutory rights of tenants In certain limited circumstances, customers who are tenants of properties within the Guarantor Group s property portfolio may have legal rights to require the member of the Guarantor Group who owns the relevant property to grant them future tenancies, pursuant to the Landlord and Tenant Act 1954 (as amended). Should such a right arise, the Guarantor Group may not have its normal freedom to negotiate the terms of the new tenancies with the tenant, such terms being imposed by the English court as being the same, save for the rent, as those under the previous tenancy of the relevant premises save for the rent. While it is the general practice of the English courts in lease renewals under the Landlord and Tenant Act 1954 (as amended) to grant a new tenancy on similar terms to the expiring tenancy, the basic annual rent will be adjusted in line with the market rents at the relevant time and there can be no guarantee as to the terms on which any new such tenancy will be granted. This could have an adverse effect on the rental income received by the Guarantor Group. Acquisition of property As part of its business, the Guarantor Group may acquire or invest in property assets. Such acquisitions and investments involve a number of risks inherent in assessing the values, strengths, weaknesses and profitability of properties, including adverse short-term effects on the Guarantor Group s operating results. Whilst it is the Guarantor Group s policy to undertake appropriate environmental and structural surveys in order to assess these risks, unexpected problems and latent liabilities or contingencies such as the existence of hazardous substances or other environmental liabilities, may still emerge. Further risks inherent in property acquisitions include risks that the acquired properties may not achieve anticipated rental rates or occupancy levels, and that business decisions with respect to improvements to increase the financial returns of acquired properties may not achieve the anticipated or desired results. Construction From time to time, the Guarantor Group engages in property redevelopment and improvement which requires substantial capital expenditure for land acquisition and construction. It may take considerable time before projects are completed and begin to generate positive cash flows. Certain general risks affect redevelopment and refurbishment activities. Construction and other project costs may exceed the Guarantor Group s original estimates for reasons including increases in material and labour costs, potentially making the project unprofitable. The Guarantor Group may not obtain, or may face delays in obtaining, necessary administrative permits and planning permissions. Furthermore, even when the Guarantor Group completes a redevelopment, it may not succeed in leasing newly acquired or redeveloped properties or at rents sufficient to cover its costs of redevelopment and operations. In addition, it may take some time before newly redeveloped properties achieve the Guarantor Group s target occupancy rates. Any of these risks could increase the cost, or could delay or prevent completion, of a project and could result in a loss of revenue or of capital invested. Failure by the Guarantor Group to complete an existing or future property redevelopment or improvement project in line with the original proposals may have a material adverse effect on the Guarantor Group s business, financial condition or results of operations. In addition, and despite insurance coverage, property redevelopment and improvement may also give rise to actions being brought against the Guarantor Group in connection with defects in the property. 31

32 c108615pu020 Proof 2: _15:16 B/L Revision: The Guarantor Group may face opposition over the development of its properties The Guarantor Group both acquires and develops properties, which involves a varying degree of construction. This may cause inconvenience, noise and pollution to residents living in the vicinity who may oppose the development and generate bad publicity surrounding the project. Additionally, the Guarantor Group may choose to develop high-rise buildings which may block out light to surrounding buildings, and overpower its surroundings. Affected local residents may launch campaigns or publically voice objections against the proposed developments by the Guarantor Group. Such actions may lead to delays in implementing the project and monetary losses which along with the reputational harm, could have a material adverse effect on the Guarantor Group s financial position and ability to meet its obligations under the Bonds. Terrorism The value of the Guarantor Group s current and future properties may be adversely affected by actual or threatened acts of terrorism. A terrorist attack in the UK might impact on the willingness of new customers to take up space, of current customers to renew leases, on the ability to dispose of assets and on the values achieved on any asset disposals. The resulting increase in vacancies in the market could reduce the ability of the Guarantor Group to let vacant space and cause property values to decrease, both of which could have a material adverse effect on the Guarantor Group s business, financial condition or operating results. The Guarantor Group may be subject to claims following the disposal of assets/properties The Guarantor Group may choose to dispose of properties and may be required to give representations and warranties about those properties and to pay damages to the extent that any such representations or warranties prove to be inaccurate. The Guarantor Group may become involved in disputes or litigation concerning such representations and warranties and may be required to make payments to third parties as a result of such disputes or litigation, which could have a material adverse effect on the Guarantor Group s business, financial condition or results of operations. Environmental The Guarantor Group may be liable for the costs of removal, investigation or remediation of any hazardous or toxic substances that are located on or in a property owned or occupied by it, or that are migrating or have migrated from a property owned or occupied by it. The costs of any required removal, investigation or remediation of such substances may be substantial regardless of whether the Guarantor Group originally caused the contamination. The presence of such substances, or the failure to remedy the situation properly, may also adversely affect the value of the property or the Guarantor Group s ability to sell, let or redevelop the property or to borrow using the property as security. The Guarantor Group could be required to remove or remediate any hazardous substances that it has caused or knowingly permitted to be located at any property that it has owned or occupied in the past. The Guarantor Group may also be liable in damages to customers and employees in respect of any such hazardous or toxic substances. In addition, the Guarantor Group may not have recourse to the previous owners of its properties for environmental issues, and even where such recourse is available, any claims the Guarantor Group may have are at risk of not being fully enforceable against previous owners. Such events could have a material adverse effect on the Guarantor Group s business, financial condition or results of operations. Laws and regulations, which may be amended over time, may also impose liability for the presence of certain materials or substances or for the release of certain materials or substances into the air, land or water or for the migration of certain materials or substances from an investment, including asbestos. Such presence, release or migration can form the basis for liability to third parties for personal injury or other damages. The Guarantor Group may be affected by the additional cost of environmental liabilities imposed by environmental regulation, which could have a material adverse effect on its business, financial condition or results of operations. Uninsured losses The Guarantor considers that all of the Guarantor Group s properties are adequately insured to cover any expected losses. However, changes in the costs or availability of insurance could expose the Guarantor Group to uninsured losses. In addition, certain types of risk may be, or may become in the future, uninsurable or not economically insurable or may not be currently, or in the future, covered by the Guarantor Group s insurance. In the event that any of the properties incurs a loss that is not fully covered by insurance, the value of the Guarantor Group s assets will be reduced by the amount of any such uninsured loss. In addition, the Guarantor Group may have no source of 32

33 c108615pu020 Proof 2: _15:16 B/L Revision: funding to repair or reconstruct the damaged property, and there can be no assurance that any such sources of funding will be available to it for such purposes in the future. Safety of visitors at premises of the Guarantor Group There is a risk of accidents involving the public at premises owned by the Guarantor Group. The Guarantor Group places great importance on health and safety and it has approved policies and procedures applicable to all its premises. In addition, the Guarantor Group has public liability insurance in place which the Guarantor considers provides an adequate level of protection against third party claims. However, should an accident attract publicity or be of a size and/or nature that is not adequately covered by insurance, the resulting publicity and costs could have a material adverse effect on the Guarantor Group s reputation, business, financial condition or results of operations. In such instance, the Guarantor Group s ability to put in place public liability insurance cover in the future may also be adversely affected. Factors which are material for the purpose of assessing the market risks associated with the Bonds Risks related to the Bonds The Bonds are not protected by the Financial Services Compensation Scheme Unlike a bank deposit, the Bonds are not protected by the FSCS. As a result, neither the FSCS nor any anyone else will pay compensation to you upon the failure of the Issuer, the Guarantor or the Group as a whole. If the Issuer, the Guarantor or the Charging Company go out of business or become insolvent, the Bondholders may lose all or part of their investment in the Bonds. No formal credit ratings The Bonds will not be assigned a credit rating by any rating agency on issue and nor does the Issuer currently have any intention of applying for a credit rating from any credit rating agency. However, one or more independent credit rating agencies may, on either a solicited or unsolicited basis, assign credit ratings to the Bonds prior to their redemption. Any such ratings may not reflect the potential impact of all risks relating to the market, additional factors discussed above and other factors that may affect the value of the Bonds. A credit rating is not a recommendation to buy, sell or hold the Bonds and may be revised or withdrawn by the relevant rating agency at any time. Risk of early repayment In the event that a change in law relating to taxation results in the Issuer becoming obliged to increase the amounts payable under the Bonds pursuant to Condition 10 (i.e. on account of tax), the Issuer may, if it chooses to, repay outstanding amounts under the Bonds early pursuant to Condition 8(b). See Appendix A (Terms and Conditions of the Bonds Redemption and Purchase Redemption for taxation reasons). In addition, the Bonds may be repaid early, at any time, if the Issuer chooses to do so pursuant to Condition 8(c), at 100 per cent. of their nominal amount or, if higher, an amount calculated by reference to the then current yield of the 4.75 per cent. United Kingdom Treasury Stock due 2020 plus a margin of 0.50 per cent., together with any accrued interest. Upon repayment of the Bonds, you may not be able to reinvest the repayment proceeds at an effective interest rate as high as the interest rate on the Bonds being repaid and may only be able to do so at a significantly lower rate. You should consider investment risk in light of other investments available at that time. Modification, waivers and substitution The Conditions of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit majorities of certain sizes to bind all Bondholders, including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a different manner than the majority did. The Conditions of the Bonds also provide that the Trustee may, without the consent of Bondholders, agree to: (a) any modification of any of the provisions of the Trust Deed that in the opinion of the Trustee is of a formal, minor or technical nature or is made to correct a manifest error; (b) any other modification of, and any waiver or authorisation of any breach or proposed breach of, any of the provisions of the Trust Deed if, in the opinion of the Trustee, it is not materially prejudicial to the interests of Bondholders; or (c) the substitution of another company as principal debtor under the Bonds in place of the Issuer, the Guarantor or any previous substitute, in the circumstances described in Condition 14(c), subject to the satisfaction of certain conditions. 33

34 c108615pu020 Proof 2: _15:16 B/L Revision: Trustee indemnity In certain circumstances, the Bondholders may be dependent on the Trustee to take certain actions in respect of the Bonds, in particular if the Security in respect of such Bonds becomes enforceable under the Conditions. Prior to taking such action, pursuant to the Conditions the Trustee may require to be indemnified and/or secured and or pre-funded to its satisfaction. If so, and the Trustee is not indemnified and/or secured and/or pre-funded to its satisfaction it may decide not to take such action and such inaction will not constitute a breach by it of its obligations under the Trust Deed. Consequently, the Bondholders would have to either provide such indemnity and/or security and/or pre-funding or accept the consequences of such inaction by the Trustee. Bondholders should be prepared to bear the costs associated with any such indemnity and/or security and/or pre-funding and/ or the consequences of any potential inaction by the Trustee. Such inaction by the Trustee will not entitle Bondholders to take action directly against the Issuer, the Guarantor or the Charging Company to pursue remedies for any breach by any of them of terms of the Trust Deed or the Bonds unless the Trustee has failed within a reasonable time to do so. The EU Directive on the taxation of savings income may result in the imposition of withholding taxes in certain jurisdictions Under EC Council Directive 2003/48/EC on the taxation of savings income (the Savings Directive ) EU Member States are required to provide to the tax authorities of another EU Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to (or for the benefit of) an individual resident in that other EU Member State or to (or for the benefit of) certain limited types of entities established in that other EU Member State. However, for a transitional period, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries) deducting tax at a rate of 35 per cent., subject to a procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld. A number of non-eu countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland). The current Luxembourg government has announced its intention to elect out of the withholding system in favour of an automatic exchange of information with effect as from 1 January At a meeting on 22 May 2013, the European Council called for the adoption of an amended savings Directive before the end of The European Commission has proposed certain amendments to the Savings Directive, which may, if implemented, amend or broaden the scope of the requirements described above. If a payment were to be made or collected through an EU Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Paying Agent nor any other person would be obliged to pay additional amounts with respect to any Bond as a result of the imposition of such withholding tax. The Issuer is required to maintain a Paying Agent in an EU Member State that is not obliged to withhold or deduct tax pursuant to the Savings Directive or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive. Holding CREST depository interests You may hold interests in the Bonds through Euroclear UK & Ireland Limited (formerly known as CREST Co Limited) ( CREST ) CREST through the issuance of dematerialised depository interests, held, settled and transferred through CREST ( CDIs ), representing the interests in the relevant Bonds underlying the CDIs (the Underlying Bonds ). Holders of CDIs (the CDI Holders ) will hold or have an interest in a separate legal instrument and not be the legal owners of the Underlying Bonds. The rights of CDI Holders to the Underlying Bonds are represented by the relevant entitlements against CREST Depository Limited (the CREST Depository ) which through CREST International Nominees Limited (the CREST Nominee ) holds interests in the Underlying Bonds. Accordingly, rights under the Underlying Bonds cannot be enforced by CDI Holders except indirectly through the intermediary depositaries and custodians. The enforcement of rights under the Underlying Bonds will be subject to the local law of the relevant intermediaries. This could result in an elimination or reduction in the payments that otherwise would have been made in respect of the Underlying Bonds in the event of any insolvency or liquidation of any of the relevant intermediaries, in particular where the Underlying Bonds held in clearing systems are not held in special purpose 34

35 c108615pu020 Proof 2: _15:16 B/L Revision: accounts and are fungible with other securities held in the same accounts on behalf of other customers of the relevant intermediaries. The rights of the CDI Holders will be governed by the arrangements between CREST, Euroclear, Clearstream, Luxembourg and the Issuer, including the global deed poll dated 25 June 2001 (as subsequently modified, supplemented and/or restated) ( CREST Deed Poll ). CREST Deed Poll. You should note that the provisions of the CREST Deed Poll, the CREST International Manual dated 14 April 2008 as amended, modified, varied or supplemented from time to time (the CREST Manual ) and the CREST Rules contained in the CREST Manual applicable to the CREST International Settlement Links Service (the CREST Rules ) contain indemnities, warranties, representations and undertakings to be given by CDI Holders and limitations on the liability of the CREST Depository. CDI Holders are bound by such provisions and may incur liabilities resulting from a breach of any such indemnities, warranties, representations and undertakings in excess of the amounts originally invested by them. As a result, the rights of and returns received by CDI Holders may differ from those of holders of Bonds which are not represented by CDIs. In addition, CDI Holders may be required to pay fees, charges, costs and expenses to the CREST Depository in connection with the use of the CREST International Settlement Links Service (the CREST International Settlement Links Service ). These will include the fees and expenses charged by the CREST Depository in respect of the provision of services by it under the CREST Deed Poll and any taxes, duties, charges, costs or expenses which may be or become payable in connection with the holding of the Bonds through the CREST International Settlement Links Service. You should note that none of the Issuer, the Guarantor, the Manager, the Trustee or the Paying Agent will have any responsibility for the performance by any intermediaries or their respective direct or indirect participants or accountholders of their respective obligations under the rules and procedures governing their operations. You should note that the CDIs are the result of the CREST settlement mechanics and are not the subject of this Prospectus. Payments on the Bonds May be Subject to U.S. Foreign Account Tax Compliance Act Withholding When Paid Through Non-Compliant Custodians or Other Intermediaries Whilst the Bonds are in global form and held within Euroclear Bank S.A./N.V. and Clearstream Banking, S.A. (together, the ICSDs ), in all but the most remote circumstances, it is not expected that Sections 1471 through 1474 of the U.S. Internal Revenue Code or regulations and other authoritative guidance thereunder ( FATCA ) will affect the amount of any payment received by the ICSDs. See Taxation-Foreign Account Tax Compliance Act below for further discussion of FATCA. However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain leading to the ultimate beneficial owner of a Bond if any such custodian or intermediary generally is unable to receive payments free of FATCA Withholding (as defined under Taxation ) and the relevant Bonds are treated, for U.S. federal tax purposes, either as equity instruments or as issued after the later of (i) 1 January 2014 or (ii) the date that is six months after the publication of final regulations defining the term foreign passthru payments for purposes of FATCA. FATCA also may affect payment to any ultimate beneficial owner that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate beneficial owner that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA Withholding. Prospective investors should choose custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA) and provide each custodian or intermediary with any information, forms, other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA Withholding. Prospective investors should consult their own tax adviser to obtain a more detailed explanation of FATCA and how FATCA may affect them. Pursuant to the Conditions of the Bonds, the Issuer s obligations under the Bonds are discharged once it has paid the common depositary or common safekeeper for the ICSDs (as holder of the Global Bond) and neither the Issuer nor any Paying Agent will be required to pay additional amounts should FATCA Withholding apply to any amount transmitted through the ICSDs and thereafter through custodians or other intermediaries. 35

36 c108615pu020 Proof 2: _15:16 B/L Revision: Risks related to the market generally Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk: There may not be a liquid secondary market for the Bonds and their market price may be volatile The Bonds may have no established trading market when issued, and one may never develop. Therefore, you may not be able to sell their Bonds easily or at prices that will provide you with a yield comparable to similar investments that have a developed secondary (i.e. after the issue date) market. The Bonds are sensitive to interest rate, currency or market risks and are designed to meet the investment requirements of limited categories of investors. For these reasons, the Bonds generally will have a limited secondary market. This lack of liquidity may have a severely adverse effect on the market value of Bonds. The Manager is expected to be appointed as a registered market-maker on the London Stock Exchange s order book for retail bonds in respect of the Bonds from the date of admission of the Bonds to trading. Market-making means that a person will quote prices for buying and selling the Bonds during trading hours. However, the Manager may not continue to act as a market-maker for the life of the Bonds. If a replacement market-maker was not appointed in such circumstances, this could have an adverse impact on your ability to sell the Bonds. Yield The indication of yield (i.e. the income return on the Bonds) stated within this Prospectus (see Section 3 (Information about this document and the Bonds What is the yield on the Bonds?)) applies only to investments made at (as opposed to above or below) the issue price of the Bonds. If you invest in the Bonds at a price other than the issue price of the Bonds, the yield on the investment will be different from the indication of yield on the Bonds as set out in this Prospectus. Realisation from sale of the Bonds If you choose to sell the Bonds at any time prior to their maturity, the price received from such sale could be less than the original investment you made. Factors that will influence the price may include, but are not limited to, market appetite, inflation, the time of redemption, interest rates and the current financial position and an assessment of the future prospects of the Issuer. Exchange rate fluctuations and exchange controls may adversely affect your return on your investments in the Bonds and/or the market value of the Bonds The Issuer will pay principal and interest on the Bonds in Sterling. This presents certain risks relating to currency conversions if an your financial activities are denominated principally in a currency or currency unit (the Investor s Currency ) other than Sterling. These include the risk that exchange rates may significantly change (including changes due to devaluation of Sterling or revaluation of the Investor s Currency) and the risk that authorities with jurisdiction over the Investor s Currency may impose or modify exchange controls. An appreciation in the value of the Investor s Currency relative to Sterling would decrease: (a) the Investor s Currency-equivalent yield on the Bonds; (b) the Investor s Currency equivalent value of the principal payable on the Bonds; and (c) the Investor s Currency equivalent market value of the Bonds. Changes in interest or inflation rates may adversely affect the value of the Bonds The Bonds bear interest at a fixed rate rather than by reference to an underlying index. Accordingly, you should note that if interest rates rise, then the income payable on the Bonds might become less attractive and the price that you could realise on a sale of the Bonds may fall. However, the market price of the Bonds from time to time has no effect on the total income you receive on maturity of the Bonds if you hold the Bonds until the Maturity Date. Further, inflation will reduce the real value of the Bonds over time, which may affect what you could buy with your investment in the future and may make the fixed rate payable on the Bonds less attractive in the future, again affecting the price that you could realise on a sale of the Bonds. The clearing systems Because the Global Bond may be held by or on behalf of Euroclear and Clearstream, Luxembourg, You will have to rely on their procedures for transfer, payment and communication with the Issuer. The Bonds will be represented by the Global Bond. Such Global Bond may be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the Global Bond, you will not be entitled to receive Definitive Bonds. Euroclear and 36

37 c108615pu020 Proof 2: _15:16 B/L Revision: Clearstream, Luxembourg will maintain records of the interests in the Global Bond. While the Bonds are represented by the Global Bond, you will be able to trade their interests only through Euroclear or Clearstream, Luxembourg. While the Bonds are represented by the Global Bond, the Issuer will discharge its payment obligations under such Bonds by making payments to the common depositary for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of an interest in the Global Bond must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the Bonds. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, interests in the Global Bond. Holders of interests in the Global Bond will not have a direct right to vote in respect of the Bonds. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear or Clearstream, Luxembourg. 37

38 c108615pu020 Proof 2: _15:16 B/L Revision: 3 INFORMATION ABOUT THIS DOCUMENT AND THE BONDS The full Conditions of the Bonds are contained in Appendix A. It is important that you read the entirety of this Prospectus, including the Conditions of the Bonds before deciding to invest in the Bonds. If you have any questions, you should seek advice from your financial adviser or other professional adviser before deciding to invest. 38

39 c108615pu020 Proof 2: _15:16 B/L Revision: INFORMATION ABOUT THE BONDS What are the Bonds? Who is issuing the Bonds? Who is guaranteeing the Bonds? What is the relationship between the Issuer, the Guarantor, the Charging Company and the Group? The Bonds are debt instruments issued by the Issuer. The Bonds will be subject to the Terms and Conditions of the Bonds which are set out in Appendix A. The Bonds: (a) entitle Bondholders to receive semi-annual interest payments at a fixed interest rate of 6.00 per cent. per annum; (b) have a nominal amount of 100 per Bond; (c) are guaranteed by the Guarantor; (d) must be paid back in full on 24 July 2020 (the Maturity Date ); (e) in certain circumstances however, may be repaid prior to the Maturity Date if the Issuer chooses to do so; (f) are secured over certain properties held by the Charging Company, and certain other assets; and (g) are intended to be admitted to trading on the London Stock Exchange plc s regulated market, and through its order book for retail bonds. The Bonds will be issued by Bruntwood Investments plc. The Bonds will be guaranteed by Bruntwood Limited. The Issuer is a special purpose company established to raise money for use by the Guarantor Group. The Issuer is a wholly owned subsidiary of Bruntwood Group Limited which is the ultimate holding company of the Group and which is in turn owned by the Oglesby family and family related trusts. The Guarantor is a holding company and it is the intermediate holding company of a group of subsidiary companies. The Guarantor is a wholly owned subsidiary of Bruntwood Group Limited. The Charging Company is a wholly owned subsidiary of the Guarantor. It is special purpose vehicle newly established to hold properties and other assets that are secured (as further described below) for the benefit of the Trustee for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders. Below is a table illustrating the Group structure at the date of the Prospectus: Retail Bonds Bruntwood Group Limited Bruntwood Alpha Plc Bruntwood Limited Bruntwood Investments Plc Bruntwood Estates Limited Bruntwood RB Limited Bruntwood 2000 Limited 50.01% 49.99% Bruntwood LG Holding Limited Bruntwood Estates Holdings Limited Bruntwood Management Services Limited Bruntwood 2000 Holdings Limited Bruntwood LG Limited Bruntwood 2000 Alpha Portfolio Limited Bruntwood 2000 Beta Portfolio Limited Bruntwood 2000 (NW Regen) Limited Bruntwood Corridor Company Limited 51% Cobco 907 Limited Bruntwood Estates Beta Portfolio Limited Bruntwood Estates Alpha Portfolio Limited Bruntwood St Chads Limited Citylabs Limited Manchester Science Park Limited 39

40 c108615pu020 Proof 2: _15:16 B/L Revision: How will the Bonds be secured? The Bonds will be secured on the Issue Date as follows: (a) a first legal mortgage (explained in more detail below) granted by the Charging Company over certain real estate properties located in England, including some or all of: Properties Alberton House, St Mary s Parsonage, Manchester, M3 2WJ ( Alberton House ) Exchange Court, 1 Dale Street, Liverpool, L2 2PP ( Exchange Court ) Lancastrian Office Centre, Talbot Road, Old Trafford, M32 0FP ( Lancastrian Office Centre ) West Gate, Grace Street, Leeds, LS1 2RP ( West Gate ) South Central, 11 Peter Street/ Deansgate, Manchester, M2 5QR ( South Central ) Wilderspool Business Park, Greenalls Avenue, Warrington, Cheshire, WA4 6HL ( Wilderspool Business Park ) Landmark House, Station Road, Cheadle Hulme, Cheshire, SK8 7BS ( Landmark House ) Title Number MAN66873 MS90846 and MS90821 LA WYK GM CH GM (b) a first mortgage granted by the Guarantor over the Charging Company s share capital; (c) a first fixed charge (explained in more detail below) granted by the Charging Company over the insurances relating to the charged properties; (d) a first fixed charge granted by the Charging Company over any eligible investments that it holds; (e) a first fixed charge granted by the Charging Company over any cash held in its designated bank account; and (f) a first floating charge (explained in more detail below) over all of the undertaking and assets, both present and future, of the Issuer and the Charging Company. Some legal terms summarised: A mortgage provides security over the specified assets of the person giving the security by transferring ownership of those assets from the mortgagor (i.e. the Charging Company) to the mortgagee (i.e. the Trustee for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders, along with the right to sell those assets if there is a default in obligations due under the Bonds. The first mortgage simultaneously imposes an obligation on the Trustee to re- 40

41 c108615pu020 Proof 2: _15:16 B/L Revision: transfer the title of the mortgaged assets back to the mortgagor after the discharge of the secured liabilities (i.e. once all the Bonds have been redeemed). A fixed charge unlike a legal mortgage, does not transfer title, ownership or possession of the charged assets to the Trustee (or to anyone else). Instead it allows the person giving the security to continue to own the charged assets during the period in which the Bonds are outstanding. However, such usage is subject to certain conditions designed to maintain the value of the charged assets and prevent the disposal of these assets without the consent of the mortgagee (i.e. the Trustee). The Charging Company, for instance, can continue to use the charged assets (subject to certain conditions) unless and until certain enforcement events (notably including any default in the Issuer s payment obligations under the Bonds, as set out in the Conditions of the Bonds) occur. On the occurrence of any enforcement event, the Trustee may either require the Charging Company to sell the charged assets or it may take possession of the charged assets and either sell the assets on its own or appoint a receiver to sell the charged assets (as per the provisions of the Security Deed). Pursuant to the fixed charge, the Trustee would have a claim over the proceeds of the sale of such charged assets in priority to any other creditors of the Charging Company. The Trustee would, in such an event, hold all proceeds of the charged assets on trust for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders. A floating charge enables a chargee (i.e. the Trustee) to take security over assets whilst at the same time enabling the chargor (i.e. the Charging Company and the Issuer) to continue to operate its business without the restrictions that would follow from granting fixed charges over those assets. The assets subject to a floating charge can generally be dealt with by the Charging Company and the Issuer in the ordinary course of their respective businesses (including sale of such assets from time to time). A floating charge hovers over a shifting pool of assets. However, on the occurrence of certain events (notably if a receiver or an administrator is appointed, or if there is a default in the Issuer s obligations under the Bonds) the floating charge crystallises and will effectively be converted into a fixed charge with respect to the assets which are at that point of time owned by the chargor, and prohibit them from disposing of any assets going forwards without the Trustee s consent. What does the security consist of? The Bonds will be secured on the Issue Date: Firstly, by a first legal mortgage granted by the Charging Company over some or all of the real estate properties mentioned above. Each of the Alberton House, Exchange Court, Lancastrian Office Centre, West Gate and South Central properties shall form part of the security package on the Issue Date. In addition, if the aggregate nominal amount of the Bonds issued on the Issue Date exceeds 50,000,000, the Issuer shall procure that Wilderspool Business Park and/or Landmark House shall also be included in the security package on the Issue Date. In determining whether or not Wilderspool Business Park and/or Landmark House are also to be secured on the Issue Date, the Issuer has undertaken that it will ensure that the aggregate value of the mortgaged properties will be at least equal to the aggregate nominal amount of the Bonds issued on the Issue Date. The aggregate nominal amount of the Bonds to be issued and the fact of whether Wilderspool Business Park and/or Landmark House will be included in the security package will be announced by the Issuer via a Regulatory Information Service (expected to be the RNS) at the end of the Offer Period (together with the Sizing Announcement). 41

42 c108615pu020 Proof 2: _15:16 B/L Revision: As described below under Can the charged assets be substituted or withdrawn by the Issuer or anyone else?, these properties can be withdrawn from the security package or substituted for other assets in certain circumstances. Therefore, the security package can change during the life of the Bonds. However, the Issuer has undertaken to ensure, for the life of the Bonds, that the value of the charged assets is maintained at least equal to the nominal amount of the Bonds for the time being outstanding. The Issuer has also undertaken to have a valuation of the charged properties at least once per year. Secondly, by a first mortgage granted by the Guarantor over the Charging Company s shares that the Guarantor owns; Thirdly, by a first fixed charge granted by the Charging Company over the insurances relating to the charged properties; Fourthly, by a first fixed charge granted by the Charging Company over any present or future eligible investments that it holds together with all moneys, income and proceeds payable or due to become payable in respect of such eligible investments and all interest accruing on them from time to time. Eligible investments means any sterling fixed rate securities, debenture, loan stock, security, note, bond, warrant, coupon, interest in any investment fund and any other investment (whether or not marketable) issued or guaranteed by Her Majesty s Government or the European Investment Bank maturing at no later date than two years from the date of their being charged and with a maturity falling no later than the maturity date of the Bonds. See How will the Security be valued, below, for a description of how value of any eligible investments will be attributed; Fifthly, by a first fixed charge granted by the Charging Company over any cash held in its designated bank account; where the designated bank account means the sterling currency account of the Charging Company opened with the Account Bank (as defined in the Conditions); and Sixthly, by a first floating charge over all of the undertaking and assets, both present and future, of the Issuer and the Charging Company. To the extent that the aggregate value of the Security is at least equal to the aggregate nominal amount of the Bonds outstanding (and, as such, any rental income or other receipts from the charged properties is not required to be included in the above-mentioned designated bank account of the Charging Company), the Charging Company may elect to transfer the rental income back to the Guarantor Group (i.e. it might not need to be secured for the benefit of the Bondholders). How will the security be valued? The charged real estate properties will be valued by either Knight Frank LLP (Chartered Surveyors) or such other firm or firms of independent professional valuers which is or are members of the Royal Institute of Chartered Surveyors as may from time to time be appointed at by the Issuer with the approval of the Trustee. Real estate property will be valued on an open market basis of the individual freehold and leasehold properties as fully equipped and trading entities having regard to their trading potential as part of the business of the Guarantor Group. In the case of eligible investments that are listed on the London Stock Exchange plc, the value will mean the price based on the average of the bid and offered prices thereof as derived from the London Stock Exchange plc on the dealing day last preceding the date on which the relevant valuation is made and, in relation to investments not listed on the London Stock Exchange plc, a valuation by an independent expert, appointed by the Issuer and approved by the Trustee. 42

43 c108615pu020 Proof 2: _15:16 B/L Revision: In case of cash held in the Charging Company s designated bank account, the amount thereof for the time being. Can the charged assets be substituted or withdrawn by the Issuer or anyone else? What will Bondholders receive in a winding up of the Group? The security package can be varied and/or the assets that are part of the security package at any time can be substituted for other eligible assets, subject to the Conditions. The Trustee may, at the Charging Company s request, allow the release of charged properties or assets from the security package provided that the remaining charged assets shall have a value of not less than 1.10 times the aggregate nominal amount of the Bonds then outstanding. The Trustee may also, at the Charging Company s request, allow the withdrawal of any charged asset from the security package and replace it with another charged asset provided that the value of the substituted charged asset is at least equal to the value of the charged asset withdrawn. In the event of Issuer and/or Guarantor s insolvency, the Bondholders, acting through the Trustee, will have recourse to the charged assets, which are secured for the benefit of the Trustee as described above. The security granted over the charged assets shall become enforceable, by the Trustee on behalf of the Bondholders, upon an event of default occurring. If the security becomes enforceable (which, most notably, would happen if the Issuer defaults on certain of its obligations under the Bonds), the Trustee would typically be able to take possession of the relevant assets and/or procure their sale or appoint a receiver to do so. Any proceeds would be held on trust for the Trustee and the Bondholders in priority to other creditors (if any) or shareholders of the Issuer or Charging Company. The Trustee and Bondholders will have a preferential claim to the proceeds of any charged assets of the Issuer or the Charging Company. However, notwithstanding that the Issuer has undertaken to procure a valuation of the charged properties and other assets at least once each year (and at such time to ensure that the value of the charged assets is at least equal to the nominal amount of the Bonds then outstanding), if the surplus proceeds from the disposal of the charged assets following an enforcement event proved to be insufficient to cover all amounts due and payable to Bondholders in respect of the Bonds (for instance, if there was a sudden decline in property prices in Manchester, Greater Manchester, Liverpool, Leeds or elsewhere in England following a Valuation of the charged properties but prior to an enforcement event), the Bondholders would be dependent on being able to receive money from the Guarantor (pursuant to the Guarantee) for satisfaction of any outstanding amounts. The Guarantor has given an irrevocable guarantee that if the Issuer does not pay any sum payable by it under the Bonds or the Coupons by the time and date required by the Conditions of the Bonds (whether on the original due date, on early repayment of the Bonds or otherwise) then the Guarantor will pay that sum. You should note however, that, as a holding company, the Guarantor would be dependent on receiving monies from its operating subsidiaries in order to be able to make any required payment under the Guarantee. You should further note that a number of the Guarantor s subsidiaries are the borrowers under the banking facility arrangements described in Section 6 (Description of the Bruntwood Group Material contracts relating to Bruntwood and/or the Group) and many of whom have granted security to the relevant lending bank. The Guarantor s rights to participate in a distribution of its subsidiaries assets upon their liquidation, re-organisation or insolvency would generally be subject to any claims made against the subsidiaries, including secured creditors such as any lending bank. The obligations of 43

44 c108615pu020 Proof 2: _15:16 B/L Revision: the Guarantor under the Bonds are therefore structurally subordinated to any liabilities of the Guarantor s subsidiaries and structural subordination in this context means that, in the event of a winding up or insolvency of the Guarantor s subsidiaries, any creditors of that subsidiary would have preferential claims to the assets of that subsidiary ahead of any creditors of the Guarantor (i.e. including Bondholders). For further information on this risk, see the section Risk Factors The Guarantor is a holding company within the Group. At the date of the Prospectus, the Guarantor Group is financed by three types of secured funding arrangement. These consist of a combination of Commercial Mortgage Backed Securitisation note issue ( CMBS Notes ), a medium term loan facility ( MTL Facility ) and a funding arrangement with Legal & General ( Legal & General Facility ). All funding agreements have varying security arrangements attached to them, the main component of each security package being the respective properties held by relevant subsidiaries in the Guarantor Group. As at the date of this Prospectus, all of the Guarantor Group s property portfolio was secured in favour of its various lenders under either the CMBS Notes, the MTL Facility or the Legal & General Facility. The table below illustrates the ranking in priority of payment to the various secured creditors of the Guarantor Group, including the proposed Bondholders. If the Guarantor Group s entire property portfolio was enforced by the various secured lenders (in the event of an insolvency, for instance), each category of lender would be expected to take recourse to its respective secured assets; in the case of the Bondholders, to charged properties and other assets of the Charging Company, in the case of the CMBS Note holders, to the CMBS charging companies, and so on. Working upwards through the diagram below, any first legal mortgage over the respective properties held in the respective charging company(ies) would take priority over all other creditors of that company; followed by any fixed charge, and so on. Once the payment obligations owing to all of the legal mortgage holders, fixed charge holders, floating charge holders and then unsecured creditors among any one category of secured lender have been satisfied in full, any residual monies would be payable to the shareholders of the respective charging companies. Any such residual amounts would be paid in turn to the intermediate holding company of the Group (i.e. the Guarantor). Until such time as any residual money has been paid to the shareholder(s) of the respective charging companies within the Guarantor Group, no category of secured lender has any right of enforcement or entitlement to payment of outstanding amounts by any of the other charging companies. Upon receipt of any residual money as described above, the Guarantor may be required, pursuant to the Guarantee in respect of the Bonds, to satisfy any amounts due and payable to holders of the Bonds and Coupons. 44

45 c108615pu020 Proof 2: _15:16 B/L Revision: Shareholders Remaining funds flow to equity shareholders Retail Bondholders Fi h Tier Security: Guarantee granted by Bruntwood Limited Required to make good any remaining outstanding liabili es due to Bondholders using own assets and receipts from subsidiaries (see note) Flow of residual funds Retail Bondholders Retail Bondholders Retail Bondholders CMBS Bondholders CMBS Bondholders CMBS Bondholders L&G L&G L&G Banking Club Banking Club Banking Club Fourth Tier Security: Unsecured creditors of relevant Charging Companies en tled to par cipate in residual assets not caught by First, Second & Third Tier security arrangements Third Tier Security: Floa ng Charges over any other assets of Charging Companies not caught by First & Second Tier security arrangements Second Tier Security: First fixed charge over property related assets Retail Bondholders CMBS Bondholders L&G Banking Club First Tier Security: First legal mortgage over specific ring fenced por olio of proper es held by Charging Companies Retail Bond Charging Company: Bruntwood RB CMBS Charging Companies: Estates Alpha Por olio 2000 Alpha Por olio L&G Charging Companies: Bruntwood LG MTL Charging Companies: Estates Beta Por olio 2000 Beta Por olio St Chad s Hotel 2000 (NW Regen) Note: No cross security between pools. A shor all in one pool would not be met by a surplus in another in priority to payments to Bruntwood Limited Why are the Bonds being issued? What will the proceeds be used for? The Issuer will lend the proceeds from the issue of Bonds to the Charging Company, which is also a wholly-owned subsidiary of the Guarantor. The Charging Company will use the proceeds to acquire, at market value, the Specifically Mortgaged Properties from other companies which are part of the Guarantor Group who will in turn use the proceeds received from the Charging Company to repay a proportion of the Guarantor Group s existing financing, at which point the commercial and property assets which will comprise the initial Specifically Mortgaged Property in relation to the Bonds will be released as security of the existing financing and will be held as part of the security for the Bonds. Set out below is a flow of funds diagram to show where the proceeds of the Bond issue are proposed to be directed within the Group. The diagram illustrates five steps in direction of funds: 1. Bond proceeds are paid to the Issuer on the Issue Date; 2. Bond proceeds are on-lent to the Charging Company; 45

46 c108615pu020 Proof 2: _15:16 B/L Revision: 3. the Charging Company applies funds needed to acquire secured properties from relevant subsidiaries within the Group; 4. any shortfall between the funds applied to the relevant subsidiary and the market value of the acquire properties is left outstanding within the relevant subsidiary of the Guarantor Group; and 5. current secured lenders to the Guarantor Group are repaid and corresponding outstanding facility amounts are reduced. Against movement of the funds, the properties that are intended to be secured for the benefit of the Trustee for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders are transferred from the relevant subsidiaries of the Guarantor Group into the Charging Company. How will interest payments on the Bonds be funded? What is the interest rate? Can the interest rate change? When will interest payments be made? How is the amount of interest payable calculated? What is the yield on the Bonds? Will I be able to trade the Bonds? Interest payments in respect of the Bonds will effectively be paid from cash flow generated from the business of the Guarantor Group which, as referred to in What is the relationship between the Issuer, the Guarantor and the Guarantor Group above, is generally conducted through the Guarantor s direct and indirect subsidiaries (i.e. including, but not limited to, the Charging Company) rather than by the Guarantor or the Issuer itself. The interest rate payable on the Bonds will be fixed until the Maturity Date at 6.00 per cent. per year. No, the interest rate payable on the Bonds is fixed for the life of the Bonds. The first payment of interest in relation to the Bonds is due to be made on 24 January Following the first payment, interest is expected to be paid on 24 July and 24 January in each year up to and including the date the Bonds are repaid. The Issuer will pay a fixed rate of 6.00 per cent. interest per year in respect of the Bonds. Interest will be payable in two semi-annual instalments. Therefore, for each 100 nominal amount of Bonds that you buy on 24 July 2013, for instance, you will receive 3 on 24 January 2014 and 3 on 24 July 2014, and so on every six months until and including the Maturity Date (unless you sell the Bonds or they are repaid by the Issuer before the Maturity Date). On the basis of the issue price of the Bonds of 100 per cent. of their nominal amount, the initial yield (being the interest received from the Bonds expressed as a percentage of their nominal amount) of the Bonds on the Issue Date is 6.00 per cent. on an annual basis. This initial yield is not an indication of future yield. Issuer will make an application for the Bonds to be admitted to trading on the London Stock Exchange plc, on its regulated market and through its electronic order book for retail bonds. If this application is accepted, the Bonds are expected to commence trading on 25 July Once admitted to trading, the Bonds may be purchased or sold through a broker. The market price of the Bonds may be higher or lower than their issue price depending on, among other things, the level of supply and demand for the Bonds, movements in interest rates and the financial performance of the Guarantor Group. See Section 2 (Risk Factors Risks related to the market generally There may not be a liquid secondary market for the Bonds and their market price may be volatile). 46

47 c108615pu020 Proof 2: _15:16 B/L Revision: Do the Bonds have a credit rating? When will the Bonds be repaid? Do the Bonds have voting rights? Who will represent the interests of the Bondholders? No, the Bonds will not when issued be rated by any credit rating agency. The Issuer currently does not have any intention of applying for a credit rating from any credit rating agency. The Issuer must repay all the Bonds on the Maturity Date (unless repaid earlier), which is 24 July The repayment price under such circumstances will be equal to the nominal amount of the Bonds. The Issuer may repay all or any part of the Bonds prior to the Maturity Date in certain circumstances. In the event that a change in law related to taxation results in the Issuer becoming obliged to increase the amounts payable under the Bonds, the Issuer may, if it chooses to, repay the Bonds early. If the Issuer repays the Bonds under such circumstances, the repayment price will be the nominal amount of the Bonds plus any accrued interest. If the Issuer exercises its right to repay the Bonds early, you will receive cash compensation for the loss of income you would have received had you invested in a high quality alternative, represented by bonds issued by Her Majesty s Treasury (commonly referred to as gilts ). Such payments will be made to you equal to the higher of the nominal amount of the Bonds (100) you hold, or a price whereby the yield given up will equal that of a gilt of comparable maturity plus a margin of 0.5 per cent., together with any accrued interest. For example, as the Bonds have a fixed interest rate of 6.00 per cent. a 24 July 2020 maturity date, if the Bonds were repaid on 1 July 2013 the cash payment would have amounted to for every bond issued at a nominal amount of 100. The Bonds may be repaid if the Bondholders so elect at their nominal amount plus accrued interest if a Change of Control Put Event occurs. If 80 per cent. or more of the Bonds originally issued have been repaid in this way by the Bondholders, the Issuer may, if it chooses to, repay all the remaining Bonds at their nominal amount plus accrued interest. In summary, a Change of Control Put Event might be expected to occur if a takeover or merger of the Group or the Guarantor leads to the acquisition of over 50 per cent. of the voting share capital of the Group of the Guarantor by any one entity (or a group of entities acting together) other than the Oglesby Family or the Oglesby Family Trusts where Group means Bruntwood Group Limited and its subsidiaries taken as a whole. Bondholders have certain rights to vote at meetings of the Bondholders, but are not entitled to vote at any meeting of shareholders of the Issuer, the Guarantor or any other member of the Group. The Conditions of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit majorities of certain sizes to bind all Bondholders, including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a different manner than the majority did. The Trustee is appointed to act on behalf of the Bondholders as an intermediary between Bondholders and the Issuer throughout the life of the Bonds. The main obligations of the Issuer, the Guarantor and the Charging Company (such as the obligation to pay and observe the various covenants in the Conditions of the Bonds) are owed to the Trustee. The Trustee also holds the benefit of the security on trust for and on behalf of itself, the paying agents under the Bonds, the Bondholders and the Couponholders. These obligations are enforceable by the Trustee only, 47

48 c108615pu020 Proof 2: _15:16 B/L Revision: not the Bondholders themselves. Although the entity chosen to act as Trustee is chosen and appointed by the Issuer, the Trustee s role is to protect the interests of the Bondholders. How do I apply for Bonds? What if I have further questions? Details on how to apply for the Bonds are set out in Section 4 (How to Apply for the Bonds). If you are unclear in relation to any matter, or uncertain if the Bonds are a suitable investment, you should seek professional advice from your broker, solicitor, accountant or other independent financial adviser before deciding whether or not to invest. 48

49 c108615pu020 Proof 2: _15:16 B/L Revision: 4 HOW TO APPLY FOR THE BONDS The following is a description of what you must do if you wish to apply for any Bonds. 49

50 c108615pu020 Proof 2: _15:16 B/L Revision: HOW TO APPLY FOR THE BONDS How and on what terms will Bonds be allocated to me? How many Bonds will be issued to investors? How and when must I pay for my allocation and when will that allocation be delivered to me? When can the Authorised Offerors offer the Bonds for sale? Is the offer of the Bonds conditional on anything else? Is it possible that I may not be issued with the number of Bonds I apply for? Will I be refunded for any excess amounts paid? Applications to purchase Bonds cannot be made directly to the Issuer. Bonds will be issued to you in accordance with the arrangements in place between you and your stockbroker or other financial intermediary, including as to application process, allocations, payment and delivery arrangements. You should approach your stockbroker or other financial intermediary to discuss any application arrangements that may be available to you. It is important to note that none of the Issuer, the Guarantor, the Manager or the Trustee are party to such arrangements between you and the relevant Authorised Offeror. You must therefore obtain this information from the relevant Authorised Offeror. Because they are not party to the dealings you may have with the Authorised Offeror, the Issuer, the Guarantor, the Manager and the Trustee will have no responsibility to you for any information provided to you by the Authorised Offeror. The total amount of the Bonds to be issued may depend on the amount of Bonds for which indicative offers to purchase Bonds are received during the Offer Period. This total amount will be specified in an announcement which the Issuer intends to publish through a Regulatory Information Service (which is expected to be the RNS) ( exchange/news/market-news/market-news-home.html)) on or about 18 July 2013 (the Sizing Announcement ). The maximum nominal amount of the Bonds to be issued will be 70,000,000. You will be notified by the relevant Authorised Offeror of your allocation of Bonds (if any) and the arrangements for the Bonds to be delivered to you in return for payment. An offer of the Bonds may be made by the Manager and the other Authorised Offerors in the United Kingdom, Guernsey, Jersey and/or the Isle of Man during the period from 3 July 2013 until noon on 17 July 2013, or such earlier time and date as agreed between the Issuer, the Guarantor and the Manager and announced via a Regulatory Information Service (which is expected to be the RNS) (the Offer Period ). The issue of the Bonds is conditional upon the Subscription Agreement being signed by the Issuer, the Guarantor, the Charging Company and the Manager. The Subscription Agreement will include certain conditions customary for transactions of this type which must be satisfied (including the delivery of legal opinions from legal counsel and comfort letters from the independent auditors of the Issuer and the Guarantor, in each case satisfactory to the Manager and the execution of the Trust Deed). If these conditions are not satisfied, the Manager may be released from its obligations under the Subscription Agreement before the issue of the Bonds. For further information on the Subscription Agreement, see Section 8 (Subscription and Sale). You may not be allocated all (or any) of the Bonds for which you apply. This might happen for example if the total amount of orders for the Bonds exceeds the number of Bonds that are issued. There will be no refund as you will not be required to pay for any Bonds until any application for Bonds has been accepted and the Bonds have been allocated to you. 50

51 c108615pu020 Proof 2: _15:16 B/L Revision: Is there a minimum or maximum amount of Bonds that I can apply for? How and when will the results of the offer of the Bonds be made public? Who can apply for the Bonds? Have any Bonds been reserved for certain countries? When and how will I be told of how many Bonds have been allotted to me? Have any steps been taken to allow dealings in the Bonds before investors are told how many Bonds have been allotted to them? What is the amount of any expenses and taxes specifically that will be charged to me? What are the names and addresses of those distributing the Bonds? The minimum application amount for each investor is 2,000. The maximum aggregate nominal amount of the Bonds to be issued on the Issue Date will be 70,000,000. The results of the offer of the Bonds will be made public in the Sizing Announcement, which will be published prior to the Issue Date. The Sizing Announcement is currently expected to be made on or around 18 July Subject to certain exceptions, Bonds may only be offered by the Authorised Offerors in the United Kingdom, Guernsey, Jersey and/or the Isle of Man during the Offer Period. No Bonds have been reserved for certain countries. You will be notified by the relevant Authorised Offeror of your allocation of Bonds (if any) in accordance with the arrangements in place between you and the Authorised Offeror. No steps have been taken to allow the Bonds to be traded before informing you of your allocation of Bonds. Neither the Issuer, the Guarantor nor the Manager will charge you any expenses relating to the issue of the bonds. An Authorised Offeror may charge you expenses. However, these are beyond the control of the Issuer, are not set by the Issuer and should be disclosed to any potential investor by the relevant Authorised Offeror. As of the date of this Prospectus, the persons listed below are the persons known to the Issuer, the Guarantor and the Manager who intend to offer and distribute the Bonds in the United Kingdom, Guernsey, Jersey and/or the Isle of Man during the Offer Period: Barclays Stockbrokers Limited 1 Churchill Place London, E14 5HP Brown Shipley & Co. Limited Founders Court Lothbury London, EC2R 7HE Interactive Investor Trading Limited Standon House 21 Mansell St London, E1 8AA Killik & Co LLP 46 Grosvenor Street London, W1K 3HN Redmayne Bentley LLP 9 Bond Court Leeds, LS1 2JZ Talos Securities Limited (trading as Selftrade) Boatman s House 2 Selsdon Way London, E14 9LA 51

52 c108615pu020 Proof 2: _15:16 B/L Revision: Investec Bank plc 2 Gresham Street London, EC2V 7QP Each of the Issuer and the Guarantor has granted consent to the use of this Prospectus by the persons listed above and other relevant stockbrokers and financial intermediaries in the United Kingdom during the Offer Period on the basis of and so long as they comply with the conditions described in Section 11 (Important Legal Information Consent). None of the Issuer, the Guarantor or the Manager has authorised, nor will they authorise, the making of any other offer of the Bonds in any other circumstances. Will a registered market-maker be appointed? The Manager will be appointed as a registered market-maker through the London Stock Exchange s order book for retail bonds in respect of the Bonds from the date on which the Bonds are admitted to trading on the London Stock Exchange plc s regulated market. Market-making means that a person will quote prices for buying and selling the Bonds during trading hours. 52

53 c108615pu030 Proof 2: _15:15 B/L Revision: 5 DESCRIPTION OF ISSUER This section sets out information about the Issuer. 53

54 c108615pu030 Proof 2: _15:15 B/L Revision: DESCRIPTION OF THE ISSUER Information about the Issuer The Issuer was incorporated and registered in England and Wales on 16 May 2013 under the Companies Act 2006 as a public limited company with registered number under the name of Bruntwood Investments Plc. The principal legislation under which the Issuer operates is the Companies Act The Issuer s registered office and principal place of business is City Tower, Piccadilly Plaza, Manchester, Greater Manchester M1 4BT and its telephone number is As of the date of this Prospectus, the total authorised share capital of the Issuer is 50,000 and the total allotted, issued and fully paid share capital of Issuer is 50,000 divided into 50,000 ordinary shares of 1 each, all of which are held by Bruntwood Group Limited. Principal activities The Issuer s objects and purposes are unrestricted. The Issuer is organised as a special purpose company. The Issuer was established to raise money for use by the Guarantor Group. Since its incorporation, the Issuer has not engaged in material activities other than those incidental to its registration as a public limited company under the Companies Act 2006 and those related to the issue of the Bonds. The Issuer has no employees. Directors and Secretary The directors of the Issuer and their other principal activities are: Position in the Issuer Position in relation to outside activities Principal outside activities Christopher George Oglesby... Company Director Non-Executive Director Governor Executive Director Kevin James Crotty... Company Director Executive Director The Corridor, Manchester Onside North West Limited Manchester International Festival The Grange School, Hartford The Group The company secretary of the Issuer is Katharine Jane Vokes. The business address of each of the above persons is City Tower, Piccadilly Plaza, Manchester, M1 4BT. There are no potential conflicts of interest between the private interests or other duties to third parties of the directors of the Issuer and their duties to the Issuer. Corporate Governance The Issuer is not a company with a primary equity listing and accordingly is not required to comply with the United Kingdom s corporate governance standards. Instead, as the Issuer is a wholly-owned subsidiary of the Bruntwood Group Limited and it adheres to the corporate governance policies applied by that company to all of it s subsidiaries. Use of Proceeds The Issuer will lend the proceeds from the issue of Bonds to Bruntwood RB Limited, which is also a wholly owned subsidiary of Bruntwood Limited. Bruntwood RB Limited will use the proceeds to acquire, at market value, the Specifically Mortgaged Properties from other Guarantor Group companies who will in turn use the proceeds to repay a proportion of the Guarantor Group s existing financing, at which point the commercial and property assets which will comprise the initial Specifically Mortgaged Property in relation to the Bonds will be released as security of the existing financing and will be provided as security to the Bonds in the form of the Specifically Mortgaged Property. 54

55 c108615pu030 Proof 2: _15:15 B/L Revision: Financial Information Since the date of its incorporation, the Issuer has not commenced operations and no financial statements of the Issuer have been prepared as at the date of this Prospectus. The Issuer intends to publish its first financial statements in respect of the period ending on 30 September The financial year of the Issuer ends on 30 September in each year. Reports and accounts published by the Issuer will, when published, be available for inspection during normal office hours at its business address set out above and within the Retail Bonds section of the Group s website. The Issuer has appointed Deloitte LLP of 2 Hardman Street, Manchester M60 2AT, as its auditors. Deloitte LLP is a member of the Institute of Chartered Accountants in England and Wales. 55

56 c108615pu030 Proof 2: _15:15 B/L Revision: 6 DESCRIPTION OF THE BRUNTWOOD GROUP This section sets out information about the Group and its business. 56

57 c108615pu030 Proof 2: _15:15 B/L Revision: DESCRIPTION OF THE BUSINESS OF THE BRUNTWOOD GROUP The Bond will be issued by the Issuer and guaranteed by Bruntwood Limited (the Guarantor ) and secured over certain real estate and other assets of the Guarantor Group in favour of the Trustee for the benefit of Bondholders during the life of the Bonds. The real estate properties to be secured will be transferred on or before the issue date of the Bonds to Bruntwood RB Limited, a company which has been newly established for the purpose of holding the charged properties during the life of the Bonds. Information on the Guarantor and the Guarantor Group The Guarantor was incorporated and registered in England and Wales on 4 December 2006 under the Companies Act 1985 as a private limited company with registered number under the name of Bruntwood Group Limited. The Guarantor changed its name from Bruntwood Group Limited to Bruntwood Limited on 31 December The principal legislation under which the Guarantor operates is the Companies Act The Guarantor s objects and purposes are unrestricted. The Guarantor s registered office and principal place of business is City Tower, Piccadilly Plaza, Manchester, Greater Manchester M1 4BT and its telephone number is Overview The Guarantor s business is that of a holding company and it is the intermediate holding company of a group of subsidiary companies. The Guarantor is a wholly owned subsidiary of Bruntwood Group Limited which is the ultimate holding company of the Group and which is in turn owned by the Oglesby family and family related trusts. The ultimate controlling shareholder of the Group, via investment through Bruntwood Group Limited, is considered by the Group s Board of Directors to be Mr C G Oglesby, close members of his family and Oglesby family trusts. The Group was founded in 1976 and is one of the United Kingdom s largest privately owned commercial property groups. The Group employs approximately 450 people. The Guarantor Group s main activity is the customer service led provision of conventional office space with ancillary retail premises, storage and car parking facilities to a range of customers including the public and private sectors. As at 30 September 2012 the Guarantor Group owned approximately 6.2 million square feet of space within 110 properties located in Manchester 3,030,500 square foot of space, Greater Manchester 1,481,000 square foot of space, Liverpool, Leeds and Birmingham and which were utilised by approximately 2,110 business customers. The Guarantor Group s turnover for the 12 months ended 30 September 2012 was million ( 99.0 million for the same period in 2011) of which the Guarantor Group s rental and related income contributed 85.0 million and the Guarantor Group s service charge income contributed 19.6 million (78.3 million and 20.7 million respectively for the same period in 2011). Of the Guarantor Group s rental and related income for the 12 months ended 30 September 2012, headline rent amounted to 74.5 million, passing rent amounted to 62.4 million and estimated rental value amounted to 84.9 million. The Guarantor Group s profit before taxation was 12.4 million ( 11.2 million for the same period in 2011). As at 30 September 2012, the Guarantor Group s total value of investment property and associated fixtures was million ( million as at 30 September 2011) which comprised freehold property with a net book value of million ( million as at 30 September 2011) and long leasehold property with a net book value of million ( million as at 30 September 2011). History and development The Group was established in 1976 by Mr M J Oglesby and his early business partner as a familyowned and managed property company. The purpose of the Group at its outset was to invest in old mills and industrial units such that they could be refurbished and repositioned for use by smaller owner managed businesses. However from 1979 onwards, the wider economy of the principle commercial centres of north-west England experienced a general move away from its traditional manufacturing industry to a service led industry. As a consequence, the Group changed its focus to the acquisition of well-located but often neglected commercial office properties in order to develop them to a higher presentational standard to let to its customer base. The first site was located in Manchester. Further sites were then acquired in Manchester and Greater Manchester, and later, Liverpool, Birmingham and Leeds. Today the Group is a leading regional provider of high quality office space to a wide range of public and private sector business customers located in Manchester, Greater Manchester, Liverpool, Leeds 57

58 c108615pu030 Proof 2: _15:15 B/L Revision: and Birmingham. The Group places an emphasis on its customer service by locating dedicated teams within each of its buildings in order to respond to each of its customers needs quickly and to ensure that all systems within the buildings continue to operate correctly. The Group places a particular emphasis on the development of strong relationships with its customers and it lets and manages its floor space according to the needs of its customers. The Group aims to achieve this by offering office space to its customers in a flexible and progressive manner through conventional leases and short term serviced office licences. A primary aim of the Group is to provide office space in this manner for each stage of a customer s business development cycle. The Group continues to adopt a family-owned and managed structure. Mr M J Oglesby is the chairman of the Group and his son, Mr C Oglesby, is the Chief Executive. Mr M J Oglesby s daughter, Mrs K Vokes (née Oglesby) is the Group s Marketing and Human Resources Director. The Guarantor Group s activities are run through a single unified corporate management and control structure which is run by the board of Directors (the Board ) sitting at the level of the Guarantor. The Board is responsible for designing and managing the strategic direction of the Guarantor Group and, on a day to day, basis controls the corporate management and operational structure of the Guarantor Group. All Guarantor Group staff are employed by a management service company, Bruntwood Management Services Limited, which is a 100 per cent. subsidiary of the Guarantor. Strategy and objectives of the Guarantor Group The Guarantor Group s objective is to assess each of its customer s needs in order to identify the best way to satisfy its goals. As a consequence, it hopes to be identified as the leading regional supplier of innovatively developed commercial space which is best suited to meet the evolving requirements of its business customers. The Guarantor Group seeks to achieve its objective by; * Developing, leasing, owning and managing a large concentration of branded offices in a limited number of locations. The Guarantor Group believes that this will enhance its market knowledge, help it to achieve economies of scale in the provision of its products and services, and enhance its close relationship with its customers. * Using its scale in the locations in which it operates to adopt a flexible approach allowing customers to move between the Guarantor Group s buildings and spaces and offering customers a selection of additional services (such as meeting rooms, virtual offices, utilities, storage and car parking) which are all delivered by the Guarantor Group s in-house teams. The Guarantor Group s strategy is as follows: To maintain a concentrated portfolio of well located buildings in cities with significant strategic value * The Guarantor Group believes that the regional cities in which it operates (Manchester, Leeds, Liverpool and Birmingham) are gaining in importance in the UK s regional marketplace as businesses look to relocate from out of town locations so as to utilise the available talent pools clustered around the city regions. * The Guarantor Group believes that these cities also benefit from a trend of businesses relocating their more commoditised operations away from London (with its higher rental costs) and from the growth of businesses from within the regions as a consequence of their increasingly international outlook and success in attracting inward foreign investment. * The Guarantor Group also believes that in a generally fragmented market-place, its ownership of a concentrated portfolio of office buildings will enable it to benefit from better market knowledge when identifying property to acquire and to develop a better understanding of its customers needs when designing developments and so allow it to let its vacant properties faster. * All of the Guarantor Group s property portfolio is located in and around these four cities. As at the date of this Prospectus, in Manchester the Guarantor Group owns approximately 20 per cent. of the city centre s office building stock including four of the city s largest office buildings. 58

59 c108615pu030 Proof 2: _15:15 B/L Revision: To maintain a varied property portfolio with a specialism in redevelopment * The Guarantor Group owns 110 properties with over 6.2 million square feet of office and retail space in Manchester 3,030,500 square foot of space, Greater Manchester 1,481,000 square foot of space, Leeds, Liverpool and Birmingham. The portfolio contains properties which range from architecturally-significant and refurbished listed buildings through to high-tech office centres and corporate headquarters. * With the economic environment resulting in relatively little new build activity in recent years, the Guarantor Group believes that there is a shortage of well-presented office stock in its market. In a markets that the Guarantor Group believes are likely to be dominated by refurbished properties in the next 10 years, the Guarantor Group believes that it is well-placed to continue to be a market leader in modernising neglected buildings so as to maximise their value. * Many of the Guarantor Group s properties have undergone redevelopment from states of neglect to modern, attractive and innovative properties which appeal to its wide ranging customer base. The Guarantor Group continually invests in its portfolio to ensure its properties remain at the forefront of the commercial office market in its region. To ensure that customer service is placed at the heart of the Guarantor Group s operating model * Whilst many property companies outsource customer facing activities, the Guarantor Group maintains its own customer service, development, sales and retention, marketing and facilities management functions. This results in a flexible and personal in house service offering which the Guarantor Group believes in turn results in customer retention rates of twice the national average. In 2012 the Guarantor Group achieved a customer retention rate at break of lease/ expiry of 70 per cent. compared to 29 per cent. across the regional office sector as a whole. * The Guarantor Group s high concentration of regional ownership allows the Guarantor Group to sell additional services to its customers thereby enhancing returns. These additional services include the provision of meeting rooms, virtual offices, storage, car parking, utilities and facilities management services. * The Guarantor Group holds property for the longer term which in turn allows it to offer a long term relationship with its customers. As such the Guarantor Group places significant emphasis on developing and closely managing those relationships. This results in a better understanding of each customer s strategic needs and allows the Guarantor Group to offer tailored office space solutions which evolve, often at short notice, to reflect its customers changing requirements. The Guarantor Group believes that the emphasis it places on understanding its customers contributed to a high retention rate of its existing customers. To maintain a diverse customer base with active management of occupancy levels * The Guarantor Group seeks to maintain a diverse customer base ranging from single person operations through to large blue-chip companies and government agencies and departments. This ensures that the Guarantor Group has no significant exposure to any one client, client type or business sector and that it maintains flexibility to take advantage of particular growth sectors. * As at 30 September 2012, the Guarantor Group had a customer base of approximately 2,114 customers of which the top 20 represented less than 25 per cent. of the Guarantor Group s total rental income. * As at 30 September 2012, the Guarantor Group s occupancy level was 81 per cent. (80 per cent as at 30 September 2011). Occupancy over recent years has been at lower levels than the Guarantor Group would typically expect as a result of the loss of several key occupiers, particularly Government Office North West. The Guarantor Group acquired the space occupied by that customer knowing that the space would be vacated as the customer had entered into a pre-let of new build space. Following the completion of extensive refurbishment programmes and a strong run of lettings of the refreshed spaces, the Guarantor Group has made significant headway in tackling vacancy levels such that as at 31 March 2013 the Guarantor Group was operating at an 86 per cent. occupancy level. 59

60 c108615pu030 Proof 2: _15:15 B/L Revision: To maintain strong internal risk systems * Cash management is important to the ongoing financial strength of the Guarantor Group. The Guarantor Group maintains strong internal systems which aim to achieve consistent cash collection and minimise customer default rates. * In 2012 the Guarantor Group experienced a customer default rate of 1 per cent. (1 per cent. in 2011) which is low when compared to industry standards across the UK. In 2011, customer default rates were 6.3 per cent. for the UK retail unit sector, and 4.2 per cent. for the UK office unit sector respectively (see page 2 of the IPD/Strutt &Parker UK Lease Events Review 2012 Executive Summary for more details). The Guarantor Group collected 65 per cent. of all payments owed to it by its customers by the quarter end date and a further 22 per cent. of all payments owed to it within 14 days of the quarter end date with the remaining 12 per cent collected prior to the next quarter end date. Stable ownership and management * The Guarantor Group believes that it has benefitted from stable family ownership which has allowed its executives to focus on maximising value. Its family ownership has enabled the Guarantor Group to take a long term investment view, putting the long term interests of the business ahead of the short term interests of shareholders. To grow through diversification * The Guarantor Group has in recent years looked to develop new products targeted at major United Kingdom growth sectors such as science & technology and businesses involved in the marketing, design, digital media and architectural sector which each have unique business space requirements. Examples include the acquisition of a per cent. controlling interest in Manchester Science Parks Limited and the acquisition and development of Citylabs, a 95,000 sq. ft. centre of excellence for the bio-medical sector developed on the site of Manchester s Former Royal Eye Hospital. * In order to target businesses involved in the marketing, design, digital media and architectural sector, the Guarantor Group has internally repositioned and redesigned a number of properties in the portfolio such that they are better suited to the needs of businesses operating in this sector. Principal Activities and Markets Office Space The Guarantor Group offers flexible office space within a range of building styles from architecturally-significant and refurbished listed buildings through to high tech office centres and corporate headquarters. The Guarantor Group owns a portfolio of 110 buildings across Manchester, Greater Manchester, Liverpool, Leeds and Birmingham. The Guarantor Group s customer base consists of businesses with staff head count totalling one person to several hundred people. The Guarantor Group owns its buildings through a combination of freehold and leasehold titles and each of its properties are operated by its in-house customer service and facilities management teams. The Guarantor Group offers its office space to its customers on leases which vary in tenure from one month to 25 years and upon flexible terms which enable customers to move their business within the Guarantor Group s office portfolio as their needs dictate. As part of its office space product offering, the Guarantor Group also provides fully serviced offices focused on smaller start up businesses looking to avoid the costs of committing to lengthy lease terms in their early years, meeting room facilities for use by new and existing customers, virtual offices, storage space and car parking. Retail Space The Guarantor Group s retail portfolio consists primarily of ancillary retail space located within the Guarantor Group s portfolio of buildings containing office space. The Guarantor Group believes its ancillary retail space enhances the attractiveness of the office environment of its buildings and therefore its ability to attract customers to its office space. The Guarantor Group s retail portfolio consists of coffee shops, restaurants, local supermarket, food and leisure operations whose product offering is aimed at office workers located within its buildings and trade from those passing by. The retail locations benefit from wide catchment areas with most located near to key transport hubs and 60

61 c108615pu030 Proof 2: _15:15 B/L Revision: associated significant passing customer traffic as well as customer footfall generated by other customers of the Guarantor Group occupying office space of the Guarantor Group at each location. The Guarantor Group s portfolio of retail space varies in both size and use targeting a range of customers from multi-national high-street names to independent retailers and leisure businesses. Competitors The Guarantor Group does not have a direct competitor of similar market focus and presence that offers a similar range of products in the principal markets in which the Guarantor Group operates. The competition that the Guarantor Group experiences is of a fragmented nature. The Guarantor Group experiences competition from smaller property companies with particular focus on some of the Guarantor Group s product areas within a specific city. The Guarantor Group also experiences competition in certain product areas from major institutional United Kingdom investors. Major institutional investors tend to own the freehold of certain large properties and compete in certain Guarantor Group product areas. Their properties are typically targeted towards larger single occupier properties let on longer lease terms. The Guarantor Group s strategy seeks to focus on multi-tenanted properties let to customers on shorter lease terms that are regularly reviewed and extended or replaced as the customers needs dictate. This strategy aims to ensure that the Guarantor Group is not exposed to the loss of any one customer or the gradual erosion in property value as longer leases move towards expiry. Outlook The United Kingdom commercial real estate market in which the Issuer, the Guarantor and the Group operates is experiencing a growing trend of positive investor sentiment. This trend has been supported by a number of factors such as (i) a slow and gradual return of confidence in the wider United Kingdom economy; (ii) a steadily increasing availability of bank debt financing to borrowers as a consequence of government initiatives and measures that the banks have taken to re-capitalise and re-finance themselves; and (iii) an attractive investment yield opportunity that the United Kingdom regional real estate market presently offers as an asset class to institutional investors as a consequence of its attractive purchase price (which reflects its suppressed valuation in recent years when compared to commercial property located within London) and the higher investment yields on offer to institutional investor s in order to enable them to service their on-going obligations. The Guarantor Group believes that the trends that it has identified above are reasonably likely to have a positive material effect on the total value of its property portfolio and therefore a positive material effect on the Guarantor Group s prospects over the next 12 months. However, this trend may not have a demonstrable material impact on the value of the Guarantor Group s property portfolio until after the next valuation of the Guarantor Group s property portfolio which takes place as at its 30 September 2013 year end date. This is due to the comparable transactional evidence valuation criteria which is used by the Royal Institution of Chartered Surveyors when compiling valuations. As a consequence of this valuation criteria, the effect of market conditions on the value of the Guarantor Group s property portfolio lags behind that of the market. The Guarantor Group s Properties The Guarantor Group owns approximately 6.2 million square feet of space within 110 properties which are utilised by approximately 2,114 business customers. As at 30 September 2012, the Guarantor Group s total value of investment property and associated fixtures was million ( million as at 30 September 2011) which comprised freehold property with a net book value of million ( million as at 30 September 2011) and long leasehold property with a net book value of million ( million as at 30 September 2011). The Specifically Mortgaged Properties The Trust Deed provides that the Guarantor Group must provide security over its Specifically Mortgaged Properties in favour of the Trustee for the benefit of Bondholders during the life of the Bonds. The Specifically Mortgaged Properties will be transferred on or before the Issue Date of the Bonds to Bruntwood RB Limited (a company which has been newly established for the purpose of holding the Specifically Mortgaged Properties during the life of the Bonds). The Trust Deed provides that the Guarantor Group must provide security over its property assets for the benefit of holders of the Bonds, having an aggregate Market Value (as defined below) which is at least equal to the 61

62 c108615pu030 Proof 2: _15:15 B/L Revision: amount of Bonds from time to time outstanding (after deducting from such nominal amount of Bonds then outstanding the sum of (a) any cash and (b) the market value of any cash equivalent investments reported in the most recent valuation prepared pursuant to the Trust Deed, then provided as security). On or before the date of issue of the Bonds, the Specifically Mortgaged Properties will be transferred by Guarantor Group companies to Bruntwood RB Limited which will grant security over the Specifically Mortgaged Properties and will also grant a floating charge over all its other assets, in each case pursuant to a Security Deed in favour of the Trustee on behalf of Bondholders. The properties that may initially be secured in favour of the Trustee and form the Specifically Mortgaged Properties on the Issue Date are described below: Alberton House Address... St Mary s Parsonage, Manchester, M3 2WJ Description... Twelve storey refurbished traditional office building Property type... Offices Area... 61,945 sq ft Age and tenure (if leasehold, state unexpired Constructed 1960s, Long leasehold, 150 years from length of lease to maturity) May 2006 Market value as at 24 May ,750,000 Gross rent ,474 Net Rent ,474 Estimated Rental Value ,470 Number of units Number of leases Number of tenants... 8 Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants years Vacant units... 2 Address... Description... Property type... Area... Age and tenure (if leasehold, state unexpired length of lease to maturity)... Market value as at 24 May ,680,000 Gross rent ,004 Net Rent ,004 Estimated Rental Value... 1,076,715 Number of units Number of leases Number of tenants Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants 2.40 years Vacant units... 2 Lancastrian Office Centre Talbot Road, Old Trafford, Man Four five storey interlinked office buildings fronting Talbot Road Offices 100,719 sq ft Constructed 19767, Freehold West Gate Address... Description... Property type... Area... Grace Street, Leeds, LS1 2RP Seven storey office building located on the fringe of Leeds commercial business district Offices 82,127 sq ft 62

63 c108615pu030 Proof 2: _15:15 B/L Revision: West Gate Age and tenure (if leasehold, state unexpired length of lease to maturity)... Freehold Market value as at 24 May ,400,000 Gross rent... 1,328,210 Net Rent... 1,328,210 Estimated Rental Value... 1,358,050 Number of units Number of leases (plus Bruntwood serviced space) Number of tenants Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants 3.01 years Vacant units... 1 Address... Description... South Central Property type... Area... Age and tenure (if leasehold, state unexpired length of lease to maturity)... Market value as at 24 May ,240,000 Gross rent ,139 Net Rent ,139 Estimated Rental Value ,646 Number of units Number of leases Number of tenants Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants 9.08 years Vacant units Peter Street, Deansgate, Manchester, M2 5QR Five storey period building with ground floor retail and leisure with offices above Offices 62,624 sq ft Constructed 1890, Freehold Exchange Court Address... 1 Dale Street, Liverpool, L2 2PP Description... Grade 2 listed building over five floors located in a prime pitch on Dale Street Property type... Offices Area... 51,549 sq ft Age and tenure (if leasehold, state unexpired length of lease to maturity)... Long leasehold 125 years from 24th March 1979 Market value as at 24 May ,030,000 Gross rent ,388 Net Rent ,888 Estimated Rental Value ,670 Number of units Number of leases Number of tenants... 8 Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants 2.85 years Vacant units

64 c108615pu030 Proof 2: _15:15 B/L Revision: Address... Description... Landmark House Property type... Area... Age and tenure (if leasehold, state unexpired length of lease to maturity)... Market value as at 24 May ,580,000 Gross rent ,170 Net Rent ,170 Estimated Rental Value ,779 Number of units Station Road, Cheadle Hulme, Cheshire, SK8 7BS Five storey office building located in good village centre location and prominent corner position with Monmouth Road Offices 53,901 sq ft Constructed 1970s, Freehold Number of leases (plus Bruntwood service space) Number of tenants Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants 3.58 years Vacant units... 2 Wilderspool Business Park Address... Greenhalls Avenue, Warrington, Cheshire, WA4 6HL Description... Four buildings on an eight acre site. The park is principally the refurbished and remodeled former brewery premises and owner s residence Property type... Offices Area... 89,927 sq ft Age and tenure (if leasehold, state unexpired length of lease to maturity)... Constructed 1790 to 1960s, Freehold Market value as at 24 May ,790,000 Gross rent... 1,204,825 Net Rent... 1,204,825 Estimated Rental Value... 1,411,094 Number of units Number of leases (plus Bruntwood service space) Number of tenants Weighted Average Lease Length to Expiry of tenants years Weighted Average Time to Lease Break of tenants 1.88 years Vacant units... 2 The Specifically Mortgaged Properties were valued by Knight Frank LLP as at 24 May 2013 by way of a market valuation of the individual freehold and leasehold properties and as part of the business of the Guarantor Group (the Market Value ). On this basis, the above properties, some or all of which will form part of the Specifically Mortgaged Properties on the Issue Date, were valued by Knight Frank LLP at 70,470,000 million as at 24 May A copy of the valuation report on the Specifically Mortgaged Properties is set out in Valuation Report below. Under the Trust Deed, the Guarantor Group is obliged to value such Specifically Mortgaged Properties at least annually and deliver to the Trustee a market valuation of any cash equivalent investments at the time of any such property valuation. If any such valuation demonstrates that the Market Value of the Specifically Mortgaged Properties is less than the amount of Bonds then outstanding (after deducting from such nominal amount of Bonds then outstanding the sum of (a) any cash and (b) the market value of any cash equivalent investments reported in the most recent valuation prepared pursuant to the Trust Deed, then provided as security), then the Guarantor Group is obliged to provide further security, within three months of such valuation, in the form of further 64

65 c108615pu030 Proof 2: _15:15 B/L Revision: property, cash or equivalents of cash (broadly Government or European Investment Bank securities) so that the Specifically Mortgaged Properties have a Market Value of at least the amount of Bonds then outstanding (after deducting from such nominal amount of Bonds then outstanding the sum of (a) any cash and (b) the market value of any cash equivalent investments reported in the most recent valuation prepared pursuant to the Trust Deed, then provided as security). In addition, if (i) any such valuation demonstrates that the Market Value of the Specifically Mortgaged Properties is greater than 1.10 times the nominal amount of Bonds then outstanding or (ii) Bonds have been purchased and cancelled by the Issuer and the valuation demonstrates that the Market Value of the charged properties is greater than 1.10 times the nominal amount of Bonds then outstanding (in each case, after deducting from such nominal amount of Bonds then outstanding the sum of (a) any cash and (b) the market value of any cash equivalent investments reported in the most recent valuation prepared pursuant to the Trust Deed, then provided as security), the Guarantor Group is entitled to request that the Trustee allows it to withdraw Specifically Mortgaged Properties (or any cash or cash equivalent investments) from the security package provided that the Market Value of the remaining Specifically Mortgaged Properties is not less than 1.10 times the nominal amount of Bonds then outstanding (after deducting from such nominal amount of Bonds then outstanding the sum of (a) any cash and (b) the market value of any cash equivalent investments reported in the most recent valuation prepared pursuant to the Trust Deed, then provided as security). The Guarantor Group is entitled at any time to withdraw any charged asset from the security package and replace it with another charged asset provided that the value or, where the charged asset to be substituted is a Specifically Mortgaged Property, the Market Value of the substitute charged asset is at least equal to the value (determined on the basis described in the Trust Deed) or, where the charged asset to be withdrawn is Specifically Mortgaged Property, the Market Value of the charged asset withdrawn or, if a valuation has been delivered within sixty days prior to the substitution, the substitution does not result in the Market Value of the charged properties falling to less than the nominal amount of Bonds then outstanding (after deducting from such nominal amount of Bonds then outstanding the sum of (a) any cash and (b) the market value of any cash equivalent investments then provided as security). The Guarantor Group will make available to the Trustee copies of the Guarantor s consolidated annual and interim report and accounts, and a list of all substitutions to, withdrawals from, and additions to, the secured assets each year, in addition to notifying the Trustee of any shortfall in security as well as when any such shortfall has been made good. The Guarantor Group must also: * maintain insurance over the Specifically Mortgaged Properties against all risks (but to the extent commercially available in the insurance market) and to a standard that is customary for companies carrying on a business the same or substantially the same as the Guarantor Group; and * comply with all applicable laws and regulations. Save as described above and under the Trust Deed, the Guarantor Group is free to deal with its assets, including its properties that are not secured in favour of Bondholders as it wishes and in particular is free to sell such assets and properties or to grant security over them in favour of other lenders. Further information on the valuation of the Specifically Mortgaged Properties is set out within the Valuation Report incorporated within this Prospectus. Sole Shareholder The Guarantor has one class of ordinary shares (the Ordinary Shares ). As of the date of this Prospectus, the total authorised share capital of the Guarantor is 903,725 and the total allotted, issued and fully paid share capital of the Guarantor is 903,725 divided into 903,725 Ordinary Shares of 1 each. The Ordinary Shares confer on the shareholders the right to attend and vote at general meetings and on a written resolution. Dividends are applied on a non-cumulative basis between the shareholders pro rata according to the number of such shares held by each of them respectively. On a return of capital, any surplus assets of the company remaining after the payment of its liabilities shall be 65

66 c108615pu030 Proof 2: _15:15 B/L Revision: applied in paying the shareholders any balance pro rata according to the number of Ordinary Shares held by the shareholders respectively. The Ordinary Shares are held solely by Bruntwood Group Limited. Subsidiaries The table below shows the significant Subsidiaries of the Guarantor (being those that the Guarantor considers are likely to have a significant effect on the assessment of its own assets and liabilities, financial position or profits and losses) as at the date of this Prospectus: Subsidiary Country of Incorporation Principal Activity Effective proportion of Ordinary shares Bruntwood 2000 Alpha Portfolio Limited... Bruntwood Estates Alpha Portfolio Limited... Bruntwood Estates Beta Portfolio Limited... Bruntwood 2000 Beta Portfolio Limited... England and Wales England and Wales England and Wales England and Wales The company holds the properties offered as security under the Guarantor Group s CMBS structure. The company holds the properties offered as security under the Guarantor Group s CMBS structure. The company holds the properties offered as security against the Guarantor Group s Medium Term Loan facility. The company holds the properties offered as security against the Guarantor Group s Medium Term Loan facility. Bruntwood LG Limited... England and Wales The company holds the properties offered as security against the Guarantor Group s loan facility with Legal & General. Bruntwood Management Services Limited... England and Wales The company acts as the Guarantor Group s management service company. 100% 100% 100% 100% 100% 100% Board of Directors of the Guarantor The Directors and Company Secretary of the Guarantor, all of whose business addresses are at City Tower, Piccadilly Plaza, Manchester, United Kingdom, M1 4BT are as follows: Christopher Oglesby (Chief Executive Officer of the Group) Christopher Oglesby took over as Chief Executive Officer (the CEO ) of the Group at the end of 1999, in succession to his father, Mr M Oglesby. He was appointed to the Board on 4 December He previously worked in the investment team in the City of London Office of St Quintin (now CBRE), before returning to work for the Group in He has been a qualified Chartered Surveyor since Michael Oglesby (Chairman of the Group) Michael Oglesby founded the Group, which is privately held and owned by the Oglesby family, in At the end of 1999, he gave up the joint role of Chief Executive Officer and Chairman of the Group and his son, Mr C Oglesby, took over the day-to-day running of the Group. He was appointed to the Board on 4 December He presently devotes 20 per cent. of his time to the Group in his role as Executive Chairman and the remainder to an extensive range of civic and charitable interests. Katharine Vokes (Marketing & Human Resources Director of the Group) Katherine Vokes (née Oglesby) joined the family business in She was appointed to the Board on 4 December 2006 and is the Group s Director of Human Resources and is responsible for the 66

67 c108615pu030 Proof 2: _15:15 B/L Revision: recruitment and development of personnel. She has previously worked at Anderson Consulting, Fayrefield Foods (Sales), Rank Hovis McDougall (Marketing) and Safeway (Buying). She is also the Company Secretary of the Guarantor. Kevin Crotty (Chief Financial Officer of the Group) Kevin Crotty joined the Group in 2002 having qualified as a Chartered Accountant with Deloitte in Kevin was head of the Group s business planning function and then moved to look after the Group s treasury and taxation functions, being appointed to the Board as Banking Director on 11 January Kevin was promoted to Chief Financial Officer of the Group in October Kevin lead the issue of the successful 440 million CMBS Notes in 2007 and has raised all of the Group s finance since, including the recent 120 million Legal & General 10 year loan. Rowena Burns (Chief Operating Officer of the Group) Rowena Burns joined the Group as Chief Operating Officer in 2008 following 10 years with Manchester Airports Group. She was appointed to the Board on 10 April Her early career was spent in the public sector in a variety of transport and economic development roles. As Manchester Airport s Group Commercial Director her brief included airport acquisitions, economic regulation and overall business strategy. From 2013, Rowena will assume the role of Chief Executive at Manchester Science Parks Limited. Robert Yates (Director of Asset Management of the Group) Robert is a Chartered Surveyor with a 30 year track record. He joined the Group in 1989 and became a main director of the Group in He was appointed to the Board on 4 December He is responsible for the strategic and operational management of the portfolio, including all aspects of customer service. Peter Crowther (Development Director of the Group) Peter joined the Group in 1997 and was appointed to the as Development Director of the Group in He was appointed to the Board on 11 January Peter takes the leading role in many of the Group s development projects. Recent projects include leading the acquisition and refurbishment of one of Birmingham s largest office buildings, Centre City. Christopher Roberts (Development Director of the Group) Christopher joined the Group in 1993 and has worked on both the sales and development side of the Group s business. He was appointed as Development Director of the Group in 2004 and, and appointed to the Board on 15 July He plays a significant role in leading the Group s development activity in the Science and Technology sector. Iain Grant (Buildings Management Director of the Group) Iain is a qualified Chartered Surveyor and joined the Group in He became a Director in and was appointed to the Board on 11 January He is responsible for the operational performance of the Group s property assets including environmental performance improvements. John Marland (Project Management Director of the Group) John joined the Group in 1991 and qualified as a Chartered Surveyor with the Group in He was appointed as a Director of the Group in 2004 and to the Board on 11 January He is responsible for the refurbishment of all vacated space and the delivery of bespoke fit-out projects for the Group s customers. Andrew Butterworth (Sales Director of the Group) Andrew joined the Group in 1997 with a Masters degree in Commercial Property Management and was appointed as Sales Director of the Group in He was appointed to the Board on 7 January Andrew manages the Group s team of in-house sales surveyors which has responsibility for customer sales and retention across the portfolio. 67

68 c108615pu030 Proof 2: _15:15 B/L Revision: The principal outside activities of the Directors of the Guarantor are as follows: Name Position Principal outside activities Christopher Oglesby... Non-Executive Director The Corridor, Manchester Onside North West Limited Manchester International Festival Governor The Grange School, Hartford Michael Oglesby... Feoffee Chetham s School of Music Chairman Steering Board for Manchester Cancer Research Centre Chairman MIDAS (the inward investment organisation) Trustee Oglesby Charitable Trust Advisor Boards of Greater Manchester LEP, North West Business Leadership Team, the Manchester China Forum and EZ Strategic Board Katharine Vokes... Chairperson The Factory Youth Zone Trustee The Oglesby Charitable Trust Peter Crowther... Non Executive Director Oldham Coliseum Theatre Rowena Burns... Board Member CityCo Non-Executive Director Salford Royal NHS Foundation Trust Andrew Butterworth... Non Executive Director Business Centre Association Save as disclosed in the next paragraph, there are no potential conflicts of interest between duties to the Guarantor of its Directors and Company Secretary and their private interests and other duties. A balance of 416,000 is included in the Debtors falling due after one year line item of the Guarantor s 30 September 2012 audited financial statements and is owed to the Guarantor Group by Roundthorn Group Pension and Life Assurance Scheme. This loan was advanced by the Guarantor on properly documented arms length terms but there is a potential conflict because the Scheme s trustees include Mr C Oglesby, Mr M J Oglesby and Mrs K Vokes. Board practices and governance The Guarantor does not maintain an audit committee and does not otherwise comply with the United Kingdom s corporate governance regime as the Guarantor is not a company with a primary equity listing and accordingly is not required to comply with the United Kingdom s corporate governance standards. Auditors Deloitte LLP whose address is 2 Hardman Street, Manchester M60 2AT, are the auditors of the Guarantor Group and audited the financial statements of the Guarantor Group for the 52 weeks ended 30 September 2011 and the 52 weeks ended 30 September Their reports in respect of the financial statements for each of the 52 weeks ended 30 September 2011 and the 52 weeks ended 30 September 2012 were unqualified. Deloitte LLP is a member of the Institute of Chartered Accountants in England and Wales. Borrowings and capital funding The Guarantor Group is financed through a combination of a Commercial Mortgage Backed Securitisation note issue ( CMBS Notes ), a medium term loan facility ( MTL Facility ), a funding arrangement with Legal & General ( Legal & General Facility ) and an overdraft facility ( Overdraft Facility ). The Guarantor Group has also entered into a number of interest rate hedging agreements connected to its various funding arrangements. All funding agreements have varying security arrangements attached to them, the main component of the security package being the properties held by the Guarantor Group. As at May 2013, all of the Guarantor Group s property portfolio was secured in favour of its lenders under the CMBS Notes, the MTL Facility and the Legal & General Facility. The Overdraft Facility is unsecured. As at 30 September 2012, the net gearing for the Guarantor Group was per cent. LTV. The Guarantor Group s exposure to interest rate risk is mitigated in two ways. Firstly, by securing low borrowing margins, and secondly by hedging the Guarantor Group s interest rate exposure through the use of interest rate swaps. 68

69 c108615pu030 Proof 2: _15:15 B/L Revision: CMBS Notes In 2007, the Guarantor Group undertook a refinancing exercise. This involved the issue of 440 million of CMBS Notes in the Eurobond market by Bruntwood Alpha plc (a 100 per cent. subsidiary of Bruntwood Group Limited and a sister company to the Guarantor). The proceeds of the issue were on lent to two subsidiaries of the Guarantor. A principal amount of 236,000,000 (the B2000 Loan ) was lent to Bruntwood 2000 Alpha Portfolio Limited ( B2000 ) and a principal amount of 204,000,000 (the BE Loan ) was lent to Bruntwood Estates Alpha Portfolio Limited ( BE ). Whilst the final maturity date of the CMBS Notes was January 2017, both the B2000 Loan and the BE Loan were repayable on 15 January The CMBS Notes were in turn repayable on that date from the funds received upon repayment by B2000 and BE respectively of the B2000 Loan and the BE Loan. Borrowings under the CMBS Notes do not contain any provisions requiring them to be repaid early if any other member of the Guarantor Group defaults in relation to other debt obligations. The CMBS Notes are secured over certain of the Guarantor Group s properties which will exclude the Specifically Mortgaged Properties which are provided as security for the Bonds. On 19 February 2013, the Guarantor Group undertook a restructuring of the CMBS Notes the primary purpose of which was to mitigate the risk posed by concurrent maturity of the Guarantor Group s debts and to provide greater certainty over the future financing of the Guarantor Group. In summary, the restructuring resulted in: * the maturity date of the B2000 Loan being extended to 15 January 2016 * repayment of 123,050,000 of the BE Loan and consequent repayment of the same amount of CMBS Notes. The repayment (plus associated costs) was funded by (a) the sale of one of the Guarantor Group s properties, Edmundson House, to its occupier in January 2013 and (b) borrowings under the newly agreed Legal & General Facility described below * agreement that a further 80,350,000 of the CMBS Notes will be repaid on or before the current maturity date of the BE Loan in January 2014 * an extension of the maturity date of the B2000 Loan (which has an outstanding principal amount of 229,150,000) from January 2014 to January 2016 * an increase in interest rates on each class of the remaining CMBS Notes by 0.6 per cent. from the 20 February 2013 until January 2014 * an increase in the interest rates of varying degrees on the remaining CMBS Notes from January 2014 until their final maturity * an extension of the final maturity date of each of the remaining CMBS Notes from January 2017 to January As at the date of this Prospectus the current amount of CMBS Notes outstanding is 309,500,000. As at the date of this Prospectus a total of 22,294,052 of the CMBS Notes are held by the Guarantor Group. As part of the refinancing, in January 2014 the Guarantor Group will subordinate any CMBS Notes it holds to the remaining CMBS Notes outstanding. MTL Facility The Guarantor Group currently has a medium term loan facility with Barclays Bank plc, HSBC plc and The Royal Bank of Scotland plc. As at the date of this Prospectus, the amount outstanding under the MTL Facility was 165 million. The MTL Facility is guaranteed by each of Bruntwood 2000 Holdings Limited and Bruntwood Estates Holdings Limited. The MTL Facility currently expires and is repayable in full on 31 December The MTL Facility does not contain any provisions requiring it to be repaid early if any other member of the Guarantor Group defaults in relation to other debt obligations. The MTL Facility is secured over certain of the Guarantor Group s commercial properties which will exclude the Specifically Mortgaged Properties which are provided as security for the Bonds. The Guarantor Group is at an advanced stage of negotiations in respect of a new 240 million five year facility with the existing MTL Facility lenders and which would replace the existing MTL Facility. It is intended that the repayment date of the new MTL Facility would be in The increased amount of the new MTL Facility would be used to pay down part of the BE Loan and consequently to fund repayment of part of the CMBS Notes which are to be repaid in January

70 c108615pu030 Proof 2: _15:15 B/L Revision: as described above. The MTL Facility amount is likely to be reduced following the issue of the Bonds. Legal & General Facility On 21 December 2012 the Guarantor Group borrowed 120 million from Legal & General as part of its refinancing strategy. The loan has a 10 year term and has a fixed interest rate of per cent. per annum. The funds borrowed under the terms of the Legal & General Facility were utilised to repay the BE Loan as part of the restructure of the CMBS Notes described above. As at the date of this Prospectus, the total amount borrowed and outstanding under the Legal & General Facility was 119 million, and it is repayable on 21 December The Legal & General Facility is guaranteed by Bruntwood Estates Limited which is a wholly-owned subsidiary of the Guarantor. The Legal & General Facility does not contain any provisions requiring it to be repaid early if any other member of the Guarantor Group defaults in relation to other debt obligations. The Legal & General Facility is secured over certain of the Guarantor Group s commercial properties which will exclude the Specifically Mortgaged Properties which are provided as security for the Bonds. Security for the CMBS Notes, the MTL Facility and the Legal & General Facility The CMBS Notes are secured over: * the commercial property and property related assets of each of B2000 and BE; * the issued share capital of each of B2000 and BE; and * all the other assets of each of B2000 and BE. The MTL Facility is secured by security over: * all the commercial property and property related assets of Bruntwood 2000 Beta Portfolio Limited ( B2000 Beta ), Bruntwood Estates Beta Portfolio ( BE Beta ), Bruntwood 2000 (NW Regen) Ltd ( B2000 NWR ) and Bruntwood St Chads Hotel Ltd ( St Chads ); * all the other assets of each of B2000 Beta, BE Beta, B2000 NWR and St Chads; and * the issued shares of each of B2000 Beta, BE Beta, B2000 NWR and St Chads. The Legal & General Facility is secured by security over: * all the commercial property and property related assets of Bruntwood LG Limited ( LG ); * all the other assets of LG; and * the issued share capital of LG. The commercial property provided as security by the Guarantor Group for the CMBS Notes, the MTL Facility and the Legal & General Facility as described above represents all of the commercial property assets of the Guarantor Group. The property which will secure the Bonds will upon issue of the Bonds be released as security from the Guarantor Group s existing financing and will be provided as security to the Bonds in the form of the Specifically Mortgaged Property. 70

71 c108615pu030 Proof 2: _15:15 B/L Revision: 7 SELECTED FINANCIAL INFORMATION This section sets out important historical financial information relating to the Guarantor Group. 71

72 c108615pu030 Proof 2: _15:15 B/L Revision: SELECTED FINANCIAL INFORMATION FOR THE GUARANTOR GROUP The financial summary set out below in relation to the six months ended 31 March 2013 has been extracted without material adjustment from the unaudited interim condensed consolidated financial statements of the Guarantor for the six months ended 31 March Such selected financial information should be read together with such unaudited interim condensed consolidated financial statements. The unaudited interim condensed consolidated financial statements of the Guarantor for the six months ended 31 March 2013 are set out in Appendix E of this Prospectus. The financial summary set out below in relation to the years ended 30 September 2012 and 30 September 2011 has been extracted without material adjustment from the audited consolidated financial statements of the Guarantor for the years ended 30 September 2012 and 30 September Such selected financial information should be read together with such consolidated financial statements. The audited consolidated financial statements of the Guarantor for the years ended 30 September 2012 and 30 September 2011 are set out in Appendix E of this Prospectus. Profit and loss account Unaudited Six months ended 31 March 2013 Unaudited Six months ended 31 March 2012 Audited year ended 30 September 2012 Audited year ended 30 September 2011 ( 000) ( 000) ( 000) ( 000) Turnover... 50,624 48, ,630 99,049 Cost of Sales... (22,354) (21,420) (48,290) (42,697) Gross Profit... 28,270 27,209 56,340 56,352 Administrative expenses... (7,197) (6,378) (14,262) (14,662) Operating Profit... 21,073 20,831 42,078 41,690 Profit on sale of investment properties Interest receivable and similar income... 1,993 1,344 2,894 2,051 Interest payable and similar charges... (16,504) (16,297) (33,198) (32,537) Exceptional swap break cost... (5,411) Profit on ordinary activities before taxation... 1,293 5,878 12,351 11,204 Tax on profit on ordinary activities... (601) (563) (1,380) (1,134) Profit for the financial year after taxation ,315 10,791 10,070 72

73 c108615pu030 Proof 2: _15:15 B/L Revision: Consolidated Balance Sheet Unaudited as at 31 March 2013 Audited as at 30 September 2012 Audited as at 30 September 2011 ( 000) ( 000) ( 000) Fixed Assets Tangible Assets , , ,189 Intangible Assets Investments... 22,277 27,939 24,477 Investment in Joint Ventures Share of gross assets... 1,621 1,616 Share of gross liabilities... (47) (42) 941, , ,295 Current Assets Debtors: amounts falling due within one year... 19,256 23,027 17,764 Debtors: amounts falling due after more than one year... 16,235 14,536 12,280 Investments held for re-sale ,242 Cash at bank... 12,230 17,393 9,630 47,818 55,082 42,916 Creditors: amounts falling due within one year... (233,156) (75,789) (65,475) Net current liabilities... (185,338) (20,707) (22,559) Total assets less current liabilities , , ,736 Creditors: amounts falling due after more than one year... (451,644) (621,019) (604,766) Provisions for liabilities... (22,913) (22,587) (21,009) Net Assets , , ,961 Capital and Reserves Called up share capital Revaluation reserve , , ,699 Other reserves... (258) (258) (258) Profit and loss account... 73,649 71,056 75,616 Shareholders funds , , ,961 Minority Interests... 10,443 10,205 Total equity , , ,961 73

74 c108615pu030 Proof 2: _15:15 B/L Revision: Consolidated cash flow statement Audited year ended 30 September 2012 Audited year ended 30 September 2011 ( 000) ( 000) Net cash inflow from operating activities... 43,319 35,859 Return on investments and servicing of finance... (31,331) (31,131) Taxation (1,038) Net cash outflow from capital expenditure and financial investment... 11,965 (19,355) Acquisition & Disposal... (1,812) Dividend paid... (2,900) (3,769) Net cash outflow before financing... 19,535 (19,434) Net cash (outflow)/inflow from financing... (11,596) 8,657 Increase/(decrease in cash in year... 7,939 (10,777) 74

75 c108615pu030 Proof 2: _15:15 B/L Revision: 8 SUBSCRIPTION AND SALE This section contains a description of the material provisions of the Subscription Agreement. 75

76 c108615pu030 Proof 2: _15:15 B/L Revision: SUBSCRIPTION AND SALE Under a subscription agreement expected to be dated on or about 18 July 2013 (the Subscription Agreement ), the Manager is expected to agree to procure subscribers for the Bonds at the issue price of 100 per cent. of the nominal amount of the Bonds, less arrangement, management and distribution fees. The Manager will receive fees of 0.75 per cent. of the nominal amount of the Bonds. In addition, Authorised Offerors are also eligible to a distribution fee of 0.50 per cent. of the nominal amount of the Bonds allotted to them. The Issuer will also reimburse the Manager in respect of certain of its expenses incurred in connection with the issue of the Bonds. The Subscription Agreement may be terminated in certain circumstances prior to the issue of the Bonds. The issue of the Bonds will not be underwritten by the Manager, the Authorised Offerors or any other person. Selling restrictions Under the terms of the Subscription Agreement, the Issuer, the Guarantor, the Charging Company and the Manager have agreed to comply with the selling restrictions set out below. The Authorised Offerors are also required to comply with these restrictions under the Authorised Offeror Terms. See Section 11 (Important Legal Information Consent). United States The Bonds and the Guarantee have not been and will not be registered under the United States Securities Act of 1933 and the Bonds are subject to U.S. tax law requirements. Subject to certain exceptions, the Bonds may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons. The Manager has agreed that it will not offer, sell or deliver any Bonds within the United States or to, or for the account or benefit of, U.S. persons. Pursuant to U.S. Treas. Reg (c)(2)(i)(C) (the C Rules ), the Bonds must be issued and delivered outside the United States and its possessions in connection with their original issue. The Lead Manager has not offered, sold or delivered, and it will not offer, sell or deliver, directly or indirectly, Bonds within the United States or its possessions in connection with their original issue. Further, in connection with the original issue of Bonds, the Lead Manager has not communicated, and it will not communicate, directly or indirectly, with a prospective purchaser if either of the Lead Manager or such purchaser is within the United States or its possessions or otherwise involve the Lead Manager s U.S. office in the offer or sale of Bonds. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and regulations thereunder, including the C Rules. United Kingdom The Manager has represented and agreed that: (a) 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 FSMA) received by it in connection with the issue or sale of any Bonds in circumstances in which section 21(1) of FSMA would not apply to the Issuer or the Guarantor; and (b) it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to any Bonds in, from or otherwise involving the United Kingdom. Jersey The Manager has represented and agreed that there will be no circulation in Jersey of any offer for subscription, sale or exchange of the Bonds unless such offer is circulated in Jersey by a person or persons authorised to conduct investment business under the Financial Services (Jersey) Law 1998, as amended and (a) such offer does not for the purposes of Article 8 of the Control of Borrowing (Jersey) Order 1958, as amended, constitute an offer to the public; or (b) an identical offer is for the time being circulated in the UK without contravening the FSMA and is, mutatis mutandis, circulated in Jersey only to persons similar to those to whom, and in a manner similar to that in which, it is for the time being circulated in the United Kingdom. 76

77 c108615pu030 Proof 2: _15:15 B/L Revision: Guernsey The Manager has represented and agreed that: (a) (b) (c) the Bonds cannot be marketed, offered or sold in or to persons resident in Guernsey other than in compliance with the licensing requirements of the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended, and the regulations enacted thereunder, or any exemption therefrom; this Prospectus has not been approved or authorised by the Guernsey Financial Services Commission for circulation in Guernsey; and this Prospectus may not be distributed or circulated, directly or indirectly, to any persons in the Bailiwick of Guernsey other than: (i) (ii) by a person licensed to do so under the terms of the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended; or to those persons regulated by the Guernsey Financial Services Commission as licensees under the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended, the Banking Supervision (Bailiwick of Guernsey) Law 1994, the Insurance Business (Bailiwick of Guernsey) Law 2002 or the Regulation of Fiduciaries, Administration Business and Company Directors etc. (Bailiwick of Guernsey) Law Isle of Man The Manager has represented and agreed that any offer for subscription, sale or exchange of the Bonds within the Isle of Man shall be made by (i) an Isle of Man financial services licenceholder licensed under Section 7 of the Financial Services Act 2008 to do so or (ii) in accordance with any relevant exclusion contained within the Regulated Activities Order 2011 or exemption contained in the Financial Services (Exemptions) Regulations Public offer selling restriction under the Prospectus Directive In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State ), the Manager has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date ) it has not made and will not make an offer of Bonds which are the subject of the offering contemplated by this Prospectus to the public in that Relevant Member State other than the offers contemplated in the Prospectus in the United Kingdom from the time the Prospectus has been approved by the competent authority in the United Kingdom and published in accordance with the Prospectus Directive as implemented in the United Kingdom until the Issue Date or such later date as the Issuer may permit, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Bonds to the public in that Relevant Member State: (a) (b) (c) to any legal entity which is a qualified investor as defined in the Prospectus Directive; to fewer than 100, or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the Manager; or in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Bonds referred shall require the Issuer or the Manager to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. In this provision, the expression an offer of Bonds to the public in relation to any Bonds in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Bonds to be offered so as to enable an investor to decide to purchase or subscribe the Bonds, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/ED (and amendments thereto, including the 2010 PD Amending Directive to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression PD Amending Directive means Directive 2010/73/EU. 77

78 c108615pu030 Proof 2: _15:15 B/L Revision: General No action has been taken by the Issuer, the Guarantor, the Charging Company or the Manager that would, or is intended to, permit a public offer of the Bonds in any country or jurisdiction where any such action for that purpose is required. Accordingly, the Manager has agreed that it will comply to the best of its knowledge and belief in all material respects with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Bonds or has in its possession or distributes this Prospectus or any amendment or supplement thereto or any other offering material, in all cases at its own expense. 78

79 c108615pu030 Proof 2: _15:15 B/L Revision: 9 TAXATION If you are considering applying for Bonds, it is important that you understand the taxation consequences of investing in the Bonds. You should read this section and discuss the taxation consequences with your tax adviser, financial adviser or other professional adviser before deciding whether to invest. 79

80 c108615pu030 Proof 2: _15:15 B/L Revision: TAXATION United Kingdom The summary set out below describes certain taxation matters of the United Kingdom based on the Issuer s understanding of current law and Her Majesty s Revenue and Customs ( HMRC ) practice in the United Kingdom as of the date of this Prospectus, both of which are subject to change, possibly with retrospective effect. They do not necessarily apply where the income is deemed for tax purposes to be the income of any other person. The summary is intended as a general guide only and is not intended to be, nor should it be construed to be, legal or tax advice. The summary assumes that the Finance Bill, as printed on 28 March 2013, will be enacted without amendment other than by Government amendments tabled before the date of this Prospectus. The summary set out below applies only to persons who are the absolute beneficial owners of Bonds who hold their Bonds as investments. In particular, Bondholders holding their Bonds via a depositary receipt system or clearance service should note that they may not always be the beneficial owners thereof. Some aspects do not apply to certain classes of person (such as dealers, certain professional investors and persons connected with the Issuer) to whom special rules may apply. The United Kingdom tax treatment of prospective Bondholders depends on their individual circumstances and may therefore differ to that set out below or may be subject to change in the future (possibly with retrospective effect). If you may be subject to tax in a jurisdiction other than the United Kingdom or are unsure as to your tax position, you should seek your own professional advice. This summary only deals with the matters expressly set out below. Interest on the Bonds Withholding tax on the Bonds Payments of interest on the Bonds may be made without deduction of or withholding on account of United Kingdom income tax provided that the Bonds continue to be listed on a recognised stock exchange within the meaning of section 1005 of the Income Tax Act 2007 (the ITA ). The London Stock Exchange is a recognised stock exchange for these purposes. Securities will be treated as listed on the London Stock Exchange if they are included in the Official List (within the meaning of and in accordance with the provisions of Part 6 of FSMA) and admitted to trading on the London Stock Exchange. Provided, therefore, that the Bonds remain so listed, interest on the Bonds will be payable without withholding or deduction on account of United Kingdom tax. Where the Bonds cease to be listed, interest on the Bonds may be paid without withholding or deduction on account of United Kingdom tax where (a) interest on the Bonds is paid by a company and, at the time the payment is made, the Issuer reasonably believes that the person beneficially entitled to the interest is: (i) a company resident in the United Kingdom; or (ii) a company not resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account the interest in computing its United Kingdom taxable profits; or (iii) a partnership each member of which is a company referred to in (i) or (ii) above or a combination of companies referred to in (i) or (ii) above, provided that HMRC has not given a direction (in circumstances where it has reasonable grounds to believe that it is likely that one of the above exemptions is not available in respect of such payment of interest at the time the payment is made) that the interest should be paid under deduction of tax, (b) another relief applies, or (c) the Issuer has received a direction permitting payment without withholding or deduction from HMRC in respect of such relief as may be available pursuant to the provisions of any applicable double taxation treaty. In other cases, an amount must generally be withheld from payments of interest on the Bonds on account of United Kingdom income tax at the basic rate (currently 20 per cent.). If interest were paid under deduction of United Kingdom income tax, Bondholders who are not resident in the United Kingdom may be able to recover all or part of the tax deducted if there is an appropriate provision in an applicable double taxation treaty. Provision of information and Savings Directive Bondholders may wish to note that, in certain circumstances, HMRC has power to obtain information (including details of the beneficial owners of the Bonds (or the persons for whom the Bonds are held) or the persons to whom payments derived from the Bonds are or may be paid and information and documents in connection with transactions relating to the Bonds) from, amongst 80

81 c108615pu030 Proof 2: _15:15 B/L Revision: others, the holders of the Bonds, persons by (or via) whom payments derived from the Bonds are made or who receive (or would be entitled to receive) such payments, persons who effect or are a party to transactions relating to the Bonds on behalf of others and certain registrars or administrators. Information so obtained may, in certain circumstances, be exchanged by HMRC with the tax authorities in other countries. Under the Savings Directive, EU Member States are required to provide to the tax authorities of another EU Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to (or for the benefit of) an individual resident in that other EU Member State or to (or for the benefit of) certain limited types of entities established in that other EU Member State. However, for a transitional period, Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries) deducting at a rate of 35 per cent., subject to a procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld. A number of non-eu countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland). The current Luxembourg government has announced its intention to elect out of the withholding system in favour of an automatic exchange of information with effect as from 1 January At a meeting on 22 May 2013, the European Council called for the adoption of an amended savings Directive before the end of The European Commission has proposed certain amendments to the Savings Directive, which may, if implemented, amend or broaden the scope of the requirements described above. Further United Kingdom income tax issues Interest on the Bonds constitutes United Kingdom source income for tax purposes and, as such, may be subject to income tax by direct assessment even where paid without withholding, irrespective of the residence of the Bondholder. However, interest with a United Kingdom source properly received without deduction or withholding on account of United Kingdom tax will not be chargeable to United Kingdom tax in the hands of a Bondholder (other than certain trustees) who is not resident for tax purposes in the United Kingdom unless that Bondholder carries on a trade, profession or vocation in the United Kingdom through a United Kingdom branch or agency or, in the case of a corporate Bondholder, unless that Bondholder carries on a trade in the United Kingdom through a permanent establishment in connection with which the interest is received or to which the Bonds are attributable. There are exemptions for interest received by certain categories of agent (such as some brokers and investment managers). The provisions of an applicable double taxation treaty may also be relevant for such Bondholders. Bondholders should note that the provisions relating to additional amounts referred to in Appendix A(Terms and Conditions of the Bonds Taxation) above would not apply if HMRC sought to assess directly the person entitled to the relevant interest to United Kingdom tax. However exemption from, or reduction of, such United Kingdom tax liability might be available under an applicable double taxation treaty. Payments in respect of the Guarantee The United Kingdom withholding tax treatment of payments by the Guarantor under the terms of the Guarantee in respect of interest on the Bonds (or other amounts due under the Bonds other than the repayment of amounts subscribed for the Bonds) is uncertain. In particular, such payments by the Guarantor may not be eligible for the exemption in respect of bonds listed on a recognised stock exchange described above in relation to payments of interest by the Issuer. Accordingly, if the Guarantor makes any such payments, these may be subject to United Kingdom withholding tax at the basic rate. United Kingdom corporation tax payers In general, Bondholders which are within the charge to United Kingdom corporation tax (including non-resident Bondholders whose Bonds are used, held or acquired for the purposes of a trade carried on in the United Kingdom through a permanent establishment) will be charged to tax as income on all returns, profits or gains on, and fluctuations in value of, the Bonds (whether attributable to currency fluctuations or otherwise) broadly in accordance with their statutory accounting treatment so long as the accounting treatment is in accordance with generally accepted accounting practice as that term is defined for tax purposes. 81

82 c108615pu030 Proof 2: _15:15 B/L Revision: Other United Kingdom tax payers Interest Bondholders who are either individuals or trustees and are resident for tax purposes in the United Kingdom or who carry on a trade, profession or vocation in the United Kingdom through a branch or agency to which the Bonds are attributable will generally be liable to United Kingdom tax on the amount of any interest received in respect of the Bonds. Transfer (including redemption) The Bonds will constitute qualifying corporate bonds within the meaning of section 117 of the Taxation of Chargeable Gains Act Accordingly, a disposal by a Bondholder of a Bond will not give rise to a chargeable gain or an allowable loss for the purposes of United Kingdom taxation of chargeable gains. Accrued income scheme On a transfer of a Bond by a Bondholder, any interest which has accrued since the last interest payment date may be chargeable to tax as income under the rules of the accrued income scheme as set out in Part 12 of the ITA, if that Bondholder is resident in the United Kingdom or carries on a trade in the United Kingdom through a branch or agency to which the Bonds are attributable. Individual Savings Accounts The Bonds will be qualifying investments for the stocks and shares component of an account (an ISA ) under the Individual Savings Account Regulations 1998 (the ISA Regulations ) provided that (i) at the date the Bonds are first held under the account, the Bonds are not required to be repurchased or redeemed nor allow Bondholders to require the Bonds to be repurchased or redeemed except in circumstances which are neither certain nor likely to occur, in each case within the period of five years from that date and (ii) the Bonds are listed on the official list of a recognised stock exchange within the meaning of section 1005 of the ITA. The London Stock Exchange is a recognised stock exchanges for these purposes. Individual Bondholders who acquire or hold their Bonds through an ISA and who satisfy the requirements for tax exemption in the ISA Regulations will not be subject to United Kingdom tax on interest or other amounts received in respect of the Bonds. The opportunity to invest in Bonds through an ISA is restricted to individuals. Individuals wishing to purchase the Bonds through an ISA should contact their professional advisers regarding their eligibility. Stamp duty and Stamp Duty Reserve Tax No United Kingdom stamp duty or stamp duty reserve tax is payable on the issue or transfer by delivery of the Bonds or on their redemption. Proposed Financial Transactions Tax ( FTT ) The European Commission has published a proposal for a Directive for a common FTT in Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain (the participating Member States ). The proposed FTT has very broad scope and could, if enacted in its current form, apply in certain circumstances to persons outside the participating Member States. The proposal remains subject to negotiation between the participating Member States and is the subject of a legal challenge. Accordingly it is not clear when the FTT will be implemented, if at all, and what form it will take if it is implemented. However, if implemented in the form currently proposed, the FTT might apply to certain dealings in the Bonds. Prospective holders of the Bonds are advised to seek their own professional advice in relation to the FTT. Foreign Account Tax Compliance Act Under Sections 1471 through 1474 of the U.S. Internal Revenue Code, commonly referred to as FATCA, and administrative guidance and regulations implementing FATCA, payments on equity instruments issued at any time and debt instruments issued or materially modified after 1 January 2014 (or, if later, the date that is six months after final regulations defining foreign passthru payments for purposes of FATCA are published) (such instruments, FATCA Affected Obligations ) may be subject to U.S. withholding tax at rates up to 30 per cent. ( FATCA Withholding ) when such payments are paid by or through a foreign financial institution ( FFI ) that does not comply with FATCA or with an intergovernmental agreement between the United States and the jurisdiction 82

83 c108615pu030 Proof 2: _15:15 B/L Revision: in which such FFI operates implementing an alternative reporting regime for compliance with FATCA (an IGA ). For purposes of FATCA, an FFI includes certain investment entities. The United States and the United Kingdom have entered into an IGA (the UK IGA ) and the United Kingdom has recently promulgated regulations implementing the UK IGA for UK resident FFIs under United Kingdom law. Under the UK IGA, an FFI or an FFI s branch that is treated as tax resident in the United Kingdom and that complies with the requirements of the UK IGA will not be subject to FATCA Withholding on payments it receives on FATCA Affected Obligations and generally will not be required to make a FATCA Withholding on payments it makes. The Issuer does not believe that it or the Charging Company will be considered a financial institution for purposes of the UK IGA. However, the Issuer s determination is not binding on any party to the UK IGA and is a factual determination based on its and the Charging Company s current income, assets and activities. If, contrary to expectation, the Issuer or the Charging Company were considered a financial institution for purposes of the UK IGA but were unable to comply with the requirements of the UK IGA and the recently published United Kingdom legislation implementing the UK IGA, then (i) the Issuer could become subject to FATCA Withholding on any payments it receives on FATCA Affected Obligations from U.S. source (or proceeds of disposing of FATCA Affected Obligations treated as paying income from U.S. source) and on foreign passthru payments received from other FFIs, if any, which could reduce the amount of cash available for distribution to Bondholders and (ii) payments on the Bonds made after 31 December 2016 may be subject to FATCA Withholding to the extent, if at all, the Bonds are treated as FATCA Affected Obligations. If a FATCA Withholding were to be deducted or withheld from any payments on the Bonds, neither the Issuer nor the Paying Agent nor any other person would, pursuant to the terms and conditions of the Bonds or otherwise, be required to pay additional amounts as a result of such FATCA Withholding. Whilst the Bonds are in global form and held within Euroclear Bank SA/N. or Clearstream Banking, S.A. (together, the ICSDs ), it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Bonds by the Issuer, any paying agent and the common depositary or common safekeeper, given that each of the entities in the payment chain beginning with the Issuer and ending with the ICSDs is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an intergovernmental agreement will be unlikely to affect the securities. The documentation expressly contemplates the possibility that the securities may go into definitive form and therefore that they may be taken out of the ICSDs. If this were to happen, then a non-fatca compliant holder could be subject to withholding. However, definitive bonds will only be printed in remote circumstances. FATCA is particularly complex and its application is uncertain at this time. The above description is based in part on regulations and official guidance, which are subject to change or may be implemented in a materially different form. Each prospective investor should consult its own tax adviser as to how these rules may apply to the Issuer and to payments you may receive in connection with the Bonds. 83

84 c108615pu040 Proof 2: _15:15 B/L Revision: 10 ADDITIONAL INFORMATION You should be aware of a number of other matters that may not have been addressed in detail elsewhere in this Prospectus. These include the availability of certain relevant documents for inspection, confirmations from the Issuer and details of the listing of the Bonds 84

85 c108615pu040 Proof 2: _15:15 B/L Revision: 1. Listing and admission to trading of the Bonds ADDITIONAL INFORMATION It is expected that the admission of the Bonds to the Official List and admission of the Bonds to trading will occur on or about 25 July 2013, after the publication of the Sizing Announcement subject only to the issue of the Global Bond. Application will be made to the United Kingdom Listing Authority for the Bonds to be admitted to the Official List and to the London Stock Exchange plc for such Bonds to be admitted to trading on the regulated market and through its order books for retail bonds. The amount of expenses related to the admission to trading of the Bonds will be specified in the Sizing Announcement. The London Stock Exchange plc s regulated market is a regulated market for the purposes of Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments ( MiFID ). MiFID governs the organisation and conduct of the business of investment firms and the operation of regulated markets across the European Economic Area in order to seek to promote cross-border business, market transparency and the protection of investors. 2. Issuer s, Guarantor s and Charging Company s authorisation The issue of the Bonds and the granting of Security was duly authorised by a resolution of the Board of Directors of the Issuer passed on 2 July The guarantee of the Bonds and the granting of Security was authorised by a resolution of the Board of Directors of the Guarantor passed on 2 July The Charging Company authorised the granting of Security in respect of the Bonds and the Guarantee by a resolution of its Board of Directors passed on 2 July The Issuer, the Guarantor and the Charging Company have obtained all necessary consents, approvals and authorisations in England and Wales in connection with the issue and performance of the Bonds, the giving of the Guarantee and the granting of the Security. 3. Significant or material change statement There has been no significant change in the financial or trading position of the Guarantor or the Guarantor Group since 31 March 2013 and there has been no material adverse change in the prospects of the Guarantor or the Guarantor Group since 30 September There has been no significant change in the financial or trading position of the Issuer, and there has been no material adverse change in the prospects of the Issuer, in either case since its incorporation. 4. Litigation statement There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer, the Guarantor or any member of the Guarantor Group is aware) during the 12 month period preceding the date of this Prospectus which may have, or have had in the recent past, significant effects on the Issuer s, the Guarantor s and/or the Guarantor Group s financial position or profitability. 5. Clearing systems information and Bond security codes The Bonds will initially be represented by a global Bond (the Global Bond ), which will be deposited with a common depository on behalf of Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) and Euroclear Bank S.A./N.V. ( Euroclear ) on or about the Issue Date. The Global Bond will be exchangeable for definitive Bonds ( Definitive Bonds ) in bearer form in the denomination of 100 not less than 60 days following the request of the Issuer or the holder in the limited circumstances set out in it. See Appendix B (Summary of Provisions Relating to the Bonds while in Global Form in the Clearing Systems) of this Prospectus. The Bonds have been accepted for clearance through Euroclear and Clearstream, Luxembourg. In addition, the Bonds will be accepted for settlement in CREST via the CDI mechanism. Interests in the Bonds may also be held through CREST through the issuance of CDIs 85

86 c108615pu040 Proof 2: _15:15 B/L Revision: representing the Underlying Bonds. You should note that the CDIs are the result of the CREST settlement mechanics and are not the subject of this Prospectus. The ISIN for the Bonds is XS and the Common Code is The address of Euroclear is Euroclear Bank S.A./N.V., 1 Boulevard du Roi Albert II, B-1210 Brussels, the address of Clearstream, Luxembourg is Clearstream Banking société anonyme, 42 Avenue JF Kennedy, L-1855 Luxembourg and the address of CREST is Euroclear UK & Ireland, 33 Cannon Street, London EC4M 5SB. 6. Documents available for inspection For the period of 12 months following the date of this Prospectus, copies of the following documents will, when published, be available for inspection from the registered office of the Issuer: (a) the memorandum and articles of association of the Issuer; (b) the memorandum and articles of association of the Guarantor; (c) the audited consolidated financial statements of the Guarantor in respect of the financial years ended 30 September 2011 and 2012, in each case together with the audit reports prepared in connection therewith; (d) the most recently published interim financial statements (if any) of the Issuer and the Guarantor, together with any audit or review reports prepared in connection therewith; (e) the Trust Deed, the Security Deed and the Paying Agency Agreement; (f) a copy of this Prospectus; (g) a copy of the Valuation Report; and (h) any future prospectuses and supplements to this Prospectus and any other documents incorporated therein or herein by reference. 7. Consent to include the Valuation Report Details of the valuation of the Charging Company s properties by the Knight Frank LLP (the Valuer ) has been included in this Prospectus, in the form and context in which it is included, with the consent of the Valuer who has authorised the contents set out in Valuation Report dated 2 July 2013 (the Valuation Report ). The address of the Valuer is No.1 Marsden Street, Manchester M1 2HW. The valuation has been prepared in accordance with Valuation Professional Standards (March 2012 Global & UK edition) published by the Royal Institute of Chartered Surveyors (RICS). The Issuer affirms that there has been no material change since 24 May The Valuer is independent of, and has no material interest in, the Issuer, the Guarantor, the Charging Company or the Guarantor Group. 8. Auditors and auditors confirmation The consolidated financial statements of the Guarantor for the financial years ended 30 September 2011 and 2012 have been audited without qualification by Deloitte LLP, member firm of the Institute of Chartered Accountants of England and Wales. 9. Material and conflicts of interest in the offer So far as the Issuer is aware, no person involved in the offer of the Bonds has an interest material to the offer. There are no conflicts of interest which are material to the offer of the Bonds. 10. Material Contracts There are no material contracts entered into other than in the ordinary course of the Guarantor Group s business which could result in any member of the Guarantor Group being under an obligation or entitlement that is material to the Issuer s, or the Guarantor s, as the case may be, ability to meet its obligations to Bondholders in respect of the Bonds being issued. 86

87 c108615pu040 Proof 2: _15:15 B/L Revision: 11 IMPORTANT LEGAL INFORMATION This section contains some important legal information regarding the basis on which this Prospectus may be used, forward-looking statements and other matters. 87

88 c108615pu040 Proof 2: _15:15 B/L Revision: IMPORTANT LEGAL INFORMATION This Prospectus has been prepared on a basis that permits a Public Offer (being an offer of Bonds that is not within an exemption from the requirement to publish a prospectus under Article 5.4 of the Prospectus Directive) in the United Kingdom. Any person making or intending to make a Public Offer of Bonds in the United Kingdom on the basis of this Prospectus must do so only with the Issuer s consent see Consent given in accordance with Article 3.2 of the Prospectus Directive below. Consent given in accordance with Article 3.2 of the Prospectus Directive In the context of any Public Offer of Bonds in the United Kingdom, each of the Issuer and the Guarantor accepts responsibility, in the United Kingdom, for the content of this Prospectus under section 90 of FSMA in relation to any person in the United Kingdom to whom an offer of any Bonds is made by a financial intermediary (including Investec Bank plc) to whom each of the Issuer and the Guarantor has given its consent to use the Prospectus, where the offer is made in compliance with all conditions attached to the giving of such consent. Such consent and the attached conditions are described below under Consent below. Except in the circumstances described below, none of the Issuer, the Guarantor or the Manager has authorised the making of any Public Offer and neither the Issuer nor the Guarantor has not consented to the use of this Prospectus by any other person in connection with any offer of the Bonds. Any offer made without the consent of the Issuer and the Guarantor is unauthorised and none of the Issuer, the Gurantor or the Manager accepts any responsibility in relation to such offer. If, in the context of a Public Offer, you are offered Bonds by a person which is not an Authorised Offeror, you should check with such person whether anyone is responsible for this Prospectus for the purpose of section 90 of FSMA in the context of the Public Offer and, if so, who that person is. If you are in any doubt about whether you can rely on this Prospectus and/or who is responsible for its contents, you should take legal advice. Consent The Issuer consents to the use of this Prospectus in connection with any Public Offer of Bonds in the United Kingdom during the Offer Period by: (i) (ii) the Manager; and any financial intermediary which satisfies the Authorised Offer Terms and other conditions as set out below (any such intermediary, an Authorised Offeror ). The Authorised Offeror Terms are that the relevant financial intermediary represents and agrees that it: (a) (b) is authorised to make such offers under Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments ( MiFID ) (in which regard, you should consult the register of authorised entities maintained by the FCA at systems-reporting/register). MiFID governs the organisation and conduct of the business of investment firms and the operation of regulated markets across the European Economic Area in order to seek to promote cross-border business, market transparency and the protection of investors; acts in accordance with all applicable laws, rules, regulations and guidance of any applicable regulatory bodies (the Rules ), including the Rules published by the FCA (including its guidance for distributors in The Responsibilities of Providers and Distributors for the Fair Treatment of Customers ) from time to time including, without limitation and in each case, Rules relating to both the appropriateness or suitability of any investment in the Bonds by any person and disclosure to any potential investor; (c) complies with the restrictions set out under Section 8 (Subscription and Sale Selling restrictions) in this Prospectus which would apply as if the relevant financial intermediary was the Manager; (d) ensures that any fee, commission, benefits of any kind, rebate received or paid by that financial intermediary in relation to the offer or sale of the Bonds does not violate the Rules and is fully and clearly disclosed to investors or potential investors; 88

89 c108615pu040 Proof 2: _15:15 B/L Revision: (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) holds all licences, consents, approvals and permissions required in connection with solicitation of interest in, or offers or sales of, the Bonds under the Rules, including authorisation under FSMA and/or the Financial Services Act 2012; complies with and takes appropriate steps in relation to applicable anti-money laundering, antibribery, prevention of corruption and know your client Rules, and does not permit any application for Bonds in circumstances where the financial intermediary has any suspicions as to the source of the application monies; retains investor identification records for at least the minimum period required under applicable Rules, and will, if so requested and to the extent permitted by the Rules, make such records available to the Manager, the Issuer and the Guarantor or directly to the appropriate authorities with jurisdiction over the Issuer, the Guarantor and/or the Manager in order to enable the Issuer, the Guarantor and/or the Manager to comply with anti-money laundering, anti-bribery and know your client Rules applying to the Issuer, the Guarantor and/or the Manager; does not, directly or indirectly, cause the Issuer, the Guarantor or the Manager to breach any Rule or subject the Issuer, the Guarantor or the Manager to any requirement to obtain or make any filing, authorisation or consent in any jurisdiction; agrees and undertakes to indemnify each of the Issuer, the Guarantor and the Manager (in each case on behalf of such entity and its respective directors, officers, employees, agents, affiliates and controlling persons) against any losses, liabilities, costs, claims, charges, expenses, actions or demands (including reasonable costs of investigation and any defence raised thereto and counsel s fees and disbursements associated with any such investigation or defence) which any of them may incur or which may be made against any of them arising out of or in relation to, or in connection with, any breach of any of the foregoing agreements, representations or undertakings by such financial intermediary, including (without limitation) any unauthorised action by such financial intermediary or failure by such financial intermediary to observe any of the above restrictions or requirements or the making by such financial intermediary of any unauthorised representation or the giving or use by it of any information which has not been authorised for such purposes by the Issuer, the Guarantor or the Manager; immediately gives notice to the Issuer, the Guarantor and the Manager if at any time such Authorised Offeror becomes aware or suspects that they are or may be in violation of any Rules or the terms of this paragraph, and takes all appropriate steps to remedy such violation and comply with such Rules and this paragraph in all respects; does not give any information other than that contained in this document (as may be amended or supplemented by the Issuer from time to time) or make any representation in connection with the offering or sale of, or the solicitation of interest in, the Bonds; agrees that any communication in which it attaches or otherwise includes any announcement published by the Issuer via a Regulatory Information Service at the end of the Offer Period will be consistent with the Prospectus, and (in any case) must be fair, clear and not misleading and in compliance with the Rules and must state that such Authorised Officer has provided it independently from the Issuer and the Guarantor and must expressly confirm that neither the Issuer nor the Guarantor accepts any responsibility for the content of any such communication; does not use the legal or publicity names of the Manager, the Issuer, the Guarantor or any other name, brand or logo registered by any member of the Group or any material over which any member of the Group retains a proprietary interest or in any statements (oral or written), marketing material or documentation in relation to the Bonds; and agrees and accepts that: (i) the contract between the Issuer, the Guarantor and the financial intermediary formed upon acceptance by the financial intermediary of the Issuer and the Guarantor s offer to use the Prospectus with its consent in connection with the relevant Public Offer (the Authorised Offeror Contract ), and any non-contractual obligations arising out of or in connection with the Authorised Offeror Contract, shall be governed by, and construed in accordance with, English law; 89

90 c108615pu040 Proof 2: _15:15 B/L Revision: (ii) (iii) the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Authorised Offeror Contract (including a dispute relating to any non-contractual obligations arising out of or in connection with the Authorised Offeror Contract) and accordingly submits to the exclusive jurisdiction of the English courts; and the Manager will, pursuant to the Contracts (Rights of Third Parties) Act 1999, be entitled to enforce those provisions of the Authorised Offeror Contract which are, or are expressed to be, for its benefit, including the agreements, representations, undertakings and indemnity given by the financial intermediary pursuant to the Authorised Offeror Terms. Any financial intermediary who wishes to use this Prospectus in connection with a Public Offer as set out above is required, for the duration of the Offer Period, to publish on its website that it is using this Prospectus for such Public Offer in accordance with the consent of the Issuer and the conditions attached thereto in the following form (with the information in square brackets completed with the relevant information): We, [insert legal name of financial intermediary], refer to the 6.00 per cent. secured Bonds due 2020 of Bruntwood Investments plc. We hereby accept the offer by Bruntwood Investments plc of its consent to our use of the Prospectus dated 2 July 2013 relating to the Bonds in connection with the offer of the Bonds in the United Kingdom (the Public Offer ) in accordance with the Authorised Offeror Terms and subject to the conditions to such consent, each as specified in the Prospectus, and we are using the Prospectus in connection with the Public Offer accordingly. A Public Offer may only be made, subject to the conditions set out above, during the Offer Period by any of the Manager or the other Authorised Offerors. Other than as set out above, none of the Issuer, the Guarantor or the Manager has authorised the making of any Public Offer by any person in any circumstances and such person is not permitted to use this Prospectus in connection with any offer of Bonds. Any such offers are not made on behalf of the Issuer, the Guarantor or by the Manager or other Authorised Offerors and none of the Issuer, the Guarantor or the Manager or other Authorised Offerors has any responsibility or liability for the actions of any person making such offers. Arrangements between you and the financial intermediaries who will distribute the Bonds None of the Issuer, the Guarantor or the Manager has any responsibility for any of the actions of any Authorised Offeror, including compliance by an Authorised Offeror with applicable conduct of business rules or other local regulatory requirements or other securities law requirements in relation to such offer. If you intend to acquire or do acquire any Bonds from an Authorised Offeror, you will do so, and offers and sales of the Bonds to you by such an Authorised Offeror will be made, in accordance with any terms and other arrangements in place between such Authorised Offeror and you including as to price, allocations and settlement arrangements. Neither the Issuer nor the Guarantor will be a party to any such arrangements with you in connection with the offer or sale of the Bonds and, accordingly, this Prospectus does not contain such information. The information relating to the procedure for making applications will be provided by the relevant Authorised Offeror to you at the relevant time. None of the Issuer, the Guarantor or the Manager or other Authorised Offerors has any responsibility or liability for such information. Notice to investors The Bonds may not be a suitable investment for all investors. You must determine the suitability of any investment in light of your own circumstances. In particular, you may wish to consider, either on your own or with the help of your financial and other professional advisers, whether you: (a) (b) have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained in this Prospectus (and any applicable supplement to this Prospectus); have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact the Bonds will have on your overall investment portfolio; 90

91 c108615pu040 Proof 2: _15:15 B/L Revision: (c) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds, including where the currency for principal or interest payments (sterling) is different from the currency which you usually use; (d) understand thoroughly the terms of the Bonds and are familiar with the behaviour of the financial markets; and (e) are able to evaluate possible scenarios for economic, interest rate and other factors that may affect your investment and your ability to bear the applicable risks. No person is or has been authorised by the Issuer, the Guarantor, the Manager or the Trustee to give any information or to make any representation not contained in or not consistent with this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, the Guarantor, the Manager or the Trustee. Neither the publication of this Prospectus nor the offering, sale or delivery of the Bonds shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or the Guarantor since the date of this Prospectus or that there has been no adverse change in the financial position of the Issuer or the Guarantor since the date of this Prospectus or that any other information supplied in connection with the offering of the Bonds is correct as of any time subsequent to the date indicated in the document containing the same. Neither the Manager nor the Trustee undertake to review the financial condition or affairs of the Issuer during the life of the Bonds or to advise any investor in the Bonds of any information coming to their attention. Neither this Prospectus nor any other information supplied in connection with the offering of the Bonds should be considered as a recommendation by the Issuer, the Guarantor, the Manager or the Trustee that any recipient of this Prospectus or any other information supplied in connection with the offering of the Bonds should purchase any Bonds. Each potential purchaser of Bonds should determine for itself the relevance of the information contained in this Prospectus and any purchase of Bonds should be based upon such investigation as it deems necessary. The Manager and the Trustee Neither the Manager nor the Trustee has independently confirmed the information contained in this Prospectus. No representation, warranty or undertaking, express or implied, is made by the Manager or the Trustee as to the accuracy or completeness of the information contained in this Prospectus or any other information provided by the Issuer in connection with the offering of the Bonds. Neither the Manager nor the Trustee accepts liability in relation to the information contained in this Prospectus or any other information provided by the Issuer in connection with the offering of the Bonds or their distribution. The Manager and its affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services for, the Issuer and its affiliates in the ordinary course of business. No incorporation of websites The contents of the websites of the Group do not form part of this Prospectus, and you should not rely on them. Forward-looking statements This Prospectus includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking expressions, including the terms believes, estimates, anticipates, expects, intends, may, will, or should or, in each case, their negative or other variations or similar expressions, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Prospectus and include, but are not limited to, the following: statements regarding the intentions, beliefs or current expectations of the Issuer and the Guarantor Group concerning, amongst other things, the Guarantor Group s results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which the Guarantor Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of the Guarantor Group s operations, financial condition and liquidity, and the development of the countries and the industries in which the Guarantor Group operates may differ 91

92 c108615pu040 Proof 2: _15:15 B/L Revision: materially from those described in, or suggested by, the forward-looking statements contained in this Prospectus. In addition, even if the results of operations, financial condition and liquidity, and the development of the countries and the industries in which the Guarantor Group operates, are consistent with the forward-looking statements contained in this Prospectus, those results or developments may not be indicative of results or developments in subsequent periods. These and other factors are discussed in more detail under Section 2 (Risk Factors) and Section 6 (Description of the Bruntwood Group). Many of these factors are beyond the control of the Issuer, the Guarantor and the Guarantor Group. Should one or more of these risks or uncertainties materialise, or should underlying assumptions on which the forward-looking statements are based prove incorrect, actual results may vary materially from those described in this Prospectus as anticipated, believed, estimated or expected. Except to the extent required by laws and regulations, the Issuer and the Guarantor does not intend, and do not assume any obligation, to update any forward-looking statements set out in this Prospectus. This Prospectus is based on English law in effect as of the date of issue of this Prospectus. Except to the extent required by laws and regulations, the Issuer and the Guarantor do not intend, and do not assume any obligation, to update the Prospectus in light of the impact of any judicial decision or change to English law or administrative practice after the date of this Prospectus. CREST depository interests In certain circumstances, investors may also hold interests in the Bonds through CREST through the issue of CDIs representing interests in Underlying Bonds. CDIs are independent securities constituted under English law and transferred through CREST and will be issued by CREST Depository Limited pursuant to the global deed poll dated 25 June 2001 (as subsequently modified, supplemented and/or restated). Neither the Bonds nor any rights attached to the Bonds will be issued, settled, held or transferred within the CREST system other than through the issue, settlement, holding or transfer of CDIs. CDI Holders will not be entitled to deal directly in the Bonds and, accordingly, all dealings in the Bonds will be effected through CREST in relation to the holding of CDIs. You should note that the CDIs are the result of the CREST settlement mechanics and are not the subject of this Prospectus. Selling restrictions This Prospectus does not constitute or form part of an offer to sell, or the solicitation of an offer to buy, Bonds to any person in any jurisdiction to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful. This Prospectus is not for distribution in the United States, Australia, Canada or Japan. The Bonds and the Guarantee have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ) or qualified for sale under the laws of the United States or under any applicable securities laws of Australia, Canada or Japan. Subject to certain exceptions, the Bonds may not be offered, sold or delivered within the United States or to, or for the account or benefit of U.S. persons. The distribution of this Prospectus and the offer or sale of the Bonds in certain jurisdictions may be restricted by law. No action has been or will be taken by the Issuer, the Guarantor, the Manager or the Trustee anywhere which is intended to permit a public offering of the Bonds or the distribution of this Prospectus in any jurisdiction, other than in the United Kingdom. You must inform yourself about, and observe, any such restrictions. 92

93 c108615pu040 Proof 2: _15:15 B/L Revision: APPENDIX A TERMS AND CONDITIONS OF THE BONDS 93

94 c108615pu040 Proof 2: _15:15 B/L Revision: TERMS AND CONDITIONS OF THE BONDS The following are the terms and conditions substantially in the form to be endorsed on the Bonds in definitive form (if issued): The issue of the sterling denominated 6.00 per cent. secured bonds due 2020 (the Bonds ) and the granting of the security was authorised by a resolution of the Board of Directors of Bruntwood Investments plc (the Issuer ) passed on 2 July 2013 and the guarantee of the Bonds and the granting of security was authorised by a resolution of the Board of Directors of Bruntwood Limited (the Guarantor ) passed on 2 July The Bonds are constituted by a Trust Deed (the Trust Deed ) dated 24 July 2013 (the Issue Date ) between the Issuer, the Guarantor, Bruntwood RB Limited (the Charging Company ) and U.S. Bank Trustees Limited (the Trustee which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the holders of the Bonds (the Bondholders ). These terms and conditions (the Conditions ) include summaries of, and are subject to, the detailed provisions of (a) the Trust Deed, which includes the form of the Bonds and the coupons relating to them (the Coupons ) and (b) the Security Deed (as defined below). Security for, among other things, the Bonds and the Guarantee is created by the Security Deed dated the Issue Date between the Issuer, the Guarantor, the Charging Company and the Trustee (the Security Deed ). Copies of the Trust Deed, the Security Deed and of the Paying Agency Agreement dated on or around the Issue Date relating to the Bonds between the Issuer, the Guarantor, the Trustee and the initial principal paying agent named in it (the Paying Agency Agreement ), are available for inspection during usual business hours at the specified office of the Trustee (presently at Fifth Floor, 125 Old Broad Street, London EC2N 1AR) and at the specified offices of the principal paying agent for the time being (the Principal Paying Agent ) and the other paying agents (if any) for the time being (the Paying Agents, which expression shall include the Principal Paying Agent). The Bondholders and the holders of the Coupons (whether or not attached to the relevant Bonds) (the Couponholders ) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Security Deed and are deemed to have notice of those provisions applicable to them of the Paying Agency Agreement. 1. Form, Denomination and Title (a) Form and denomination: The Bonds are serially numbered and in bearer form in the denomination of 100 each, with Coupons attached on issue. (b) Title: Title to the Bonds and Coupons passes by delivery. The holder of any Bond or Coupon will (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it, any writing on it, or its theft or loss) and no person will be liable for so treating the holder. 2. Guarantee, Status and Application of Moneys (a) Guarantee: The Guarantor has unconditionally and irrevocably guaranteed the due payment of all sums expressed to be payable by the Issuer under the Trust Deed, the Bonds and the Coupons. Its obligations in that respect (the Guarantee ) are contained in the Trust Deed. (b) Status of Bonds and Guarantee: The Bonds and Coupons constitute direct, secured and unconditional obligations of the Issuer, secured in the manner described in Condition 3, and shall at all times rank pari passu and without any preference among themselves. The Guarantee constitutes direct, secured and unconditional obligations of the Guarantor, secured in the manner described in Condition 3. The payment obligations of the Issuer under the Bonds and the Coupons and of the Guarantor under the Guarantee shall, save for such exceptions as may be provided by applicable legislation and subject to Conditions 2(c) and 3, at all times rank at least equally with all their respective other present and future unsubordinated obligations. (c) Application of Moneys: All moneys received by the Trustee in respect of the Bonds or recovered by the Trustee or any Receiver following the enforcement of the Security (defined in Condition 21) despite any appropriation of all or part of them by the Issuer, the Guarantor, the Charging Company or any other member of the Guarantor Group (including any moneys which represent principal or interest in respect of Bonds or 94

95 c108615pu040 Proof 2: _15:15 B/L Revision: Coupons which have become void under the Conditions) shall be held by the Trustee on trust to apply them in the following order of priority pursuant to the terms of the Trust Deed: (i) first, in or towards satisfaction of (i) the costs, expenses, fees or other remuneration and indemnity payments (if any) and any other amounts incurred by the Trustee in preparing and executing the trusts under the Transaction Documents and (ii) the costs, expenses, fees or other remuneration and indemnity payments (if any) and any other amounts payable to any Receiver, including in either case the costs of enforcing and/or realising any Security; (ii) second, in or towards satisfaction of the costs, expenses, fees or other remuneration and indemnity payments (if any) and any other amounts payable to the Paying Agents under the Transaction Documents; (iii) third, in or towards payment of all arrears of interest remaining unpaid in respect of the Bonds or Coupons and all principal moneys due on or in respect of the Bonds; and (iv) fourth, the balance (if any) in payment to the Issuer or the Charging Company (as the case may be). 3. Security (a) Grant of Security: The Trustee, the Bondholders and the other Secured Creditors will share in the benefit of the Security. The Security is granted by the Issuer, the Guarantor and the Charging Company under the Security Deed in the favour of the Trustee, on trust for and on behalf of itself, the Bondholders and the other Secured Creditors on the terms of the Trust Deed and the Security Deed, as security for the Secured Liabilities. (b) Fixed Charges: The Security comprises of: (i) a first legal mortgage (which shall take effect as an equitable mortgage until requisite registrations have been made by the Charging Company) (and to the extent that they are not subject to a mortgage by way of first fixed charge) granted by the Charging Company with respect to all of its respective rights, title, interest and benefit existing now and in the future, in and to some or all (as described below) of the following properties: Properties (some or all of which may comprise the Specifically Mortgaged Properties on the Issue Date) Alberton House, St Mary s Parsonage, Manchester M3 2WJ ( Alberton House )... Exchange Court, 1 Dale Street, Liverpool L2 2PP ( Exchange Court )... Lancastrian Office Centre, Talbot Road, Old Trafford M32 0FP ( Lancastrian Office Centre )... West Gate, Grace Street, Leeds LS1 2RP ( West Gate )... South Central, 11 Peter Street/Deansgate, Manchester M2 5QR ( South Central )... Wilderspool Business Park, Greenalls Avenue, Warrington, Cheshire WA4 6HL ( Wilderspool Business Park )... Landmark House, Station Road, Cheadle Hulme, Cheshire SK8 7BS ( Landmark House )... Title Number MAN66873 MS90846 and MS90821 LA WYK GM CH GM Alberton House, Exchange Court, Lancastrian Office Centre, West Gate and South Central shall each form part of the Initial Specifically Mortgaged Properties. In addition, if the aggregate nominal amount of the Bonds issued on the Issue Date exceeds 50,000,000, the Issuer shall procure that Wilderspool Business Park and/or Landmark House shall also be Initial Specifically Mortgaged Properties (the Additional Initial Specifically Mortgaged Properties ). 95

96 c108615pu040 Proof 2: _15:15 B/L Revision: Prior to the Issue Date the Issuer shall determine which properties, if any, are to comprise the Additional Initial Specifically Mortgaged Properties on the Issue Date. In making such determination, the Issuer undertakes to ensure that the aggregate Value of the Initial Specifically Mortgaged Properties will be at least equal to the aggregate nominal amount of the Bonds issued on the Issue Date. (c) (ii) a first mortgage granted by the Guarantor over all of its rights, title and interest from time to time in and to the Shares of the Charging Company; (iii) a first fixed charge granted by the Guarantor over all of its Related Rights in relation to the Shares of the Charging Company, to the extent not validly and effectively mortgaged under Condition 3(b)(ii) above; (iv) a first fixed charge granted by the Charging Company over all of its rights, title and interest from time to time in and to the Insurances; (v) a first fixed charge granted by the Charging Company over all its present and future rights, title, interest and benefit in and to Cash Equivalent Investments, together with all moneys, income and proceeds payable or due to become payable in respect of such Cash Equivalent Investments and all interest accruing on them from time to time and all Related Rights; and (vi) a first fixed charge granted by the Charging Company over all its present and future rights, title, interest and benefit in and to the Cash Collateral Account together with all moneys from time to time standing to the credit thereof (including any interest thereon), all debts represented by those amounts and all Related Rights, all as more particularly set out in the Security Deed. Floating Charge: In addition, the Issuer s present and future payment obligations under the Transaction Documents and each Bond and Coupon, and the Guarantor s present and future payment obligations under the Transaction Documents and the Guarantee, are secured in favour of the Trustee, pursuant to the Security Deed, by way of first floating charge over all of the undertaking and assets, both present and future, of the Issuer and the Charging Company (including but not limited to the assets expressed to be mortgaged or charged by Condition 3(b)). 4. Covenants (a) General Covenants of the Issuer and the Charging Company: so long as any Bond or Coupon remains outstanding (as defined in the Trust Deed), (i) neither the Issuer nor the Charging Company will create, permit to subsist or have outstanding, any Security Interest or any Quasi Security, other than the Security, upon the whole or any part of its present or future undertaking, assets or revenues (including but not limited to the Charged Assets or any of the Related Rights) and (ii) the Issuer will not, without the prior written consent of the Trustee, engage in any activity or do any thing other than: (x) carry out the business of a company which has as its purpose raising finance and on-lending such finance for the benefit of the members of the Guarantor Group; and (y) perform any act incidental to or necessary in connection with (x). (b) Negative Pledge of the Guarantor: So long as any Bond or Coupon remains outstanding (as defined in the Trust Deed), the Guarantor will not create, permit to subsist or have outstanding, any Security Interest, upon the whole or any part of its present or future undertaking, assets or revenues (including any uncalled capital) to secure any Relevant Indebtedness or to secure any guarantee or indemnity in respect of any Relevant Indebtedness, without at the same time or prior thereto according to the Bonds and the Coupons the same security as is created or subsisting to secure any such Relevant Indebtedness, guarantee or indemnity or such other security as either (i) the Trustee shall in its absolute discretion deem not materially less beneficial to the interest of the Bondholders or (ii) shall be approved by an Extraordinary Resolution of the Bondholders. (c) Security Covenant: so long as any Bond or Coupon remains outstanding (as defined in the Trust Deed), the Issuer, the Guarantor and the Charging Company shall ensure that, as at any Valuation Date, the aggregate Value of the Charged Assets as shown by any such Valuation will be at least equal to the aggregate nominal amount of the Bonds for the time being outstanding. 96

97 c108615pu040 Proof 2: _15:15 B/L Revision: (d) Financial Covenants: so long as any Bond or Coupon remains outstanding (as defined in the Trust Deed), the Issuer, the Guarantor and the Charging Company shall ensure that: (i) as at any LTV Reporting Date, Net Debt does not exceed 75 per cent. of Tangible Fixed Assets; and (ii) as at and for the 12 month period ending on any Interest Coverage Ratio Reporting Date, the ratio of Gross Profit to Net Financing Costs for the same period will be at least 1.5 : 1.0. (e) Additional Charging Company Covenants: So long as any Bond or Coupon remains outstanding (as defined in the Trust Deed), the Charging Company shall not (save as permitted by, or provided for in, the Transaction Documents or with the prior written consent of the Trustee): (i) Restriction on Activities: (x) engage in any activity which is not incidental to or necessary in connection with any of the activities which these Conditions and the Transaction Documents provide or envisage that the Charging Company will engage in (such activities which the Charging Company will engage in to include the ownership and letting of the properties described in Condition 3(b)(i)); or (y) have or form any subsidiaries or employees or premises, act as a director of any company or maintain any pension scheme; (f) (ii) (iii) (iv) (v) (vi) Disposal of Assets: transfer, sell, lend, invest, part with or otherwise dispose of or deal with or grant any option over or any present or future right to acquire any of its assets or undertaking or any interest, estate, right, title or benefit therein or agree or attempt or purport to do any of the foregoing, provided that the Charging Company may do any of the foregoing with respect to (x) the leasing and licencing of its properties described in Condition 3(b)(i); (y) any of the activities which these Conditions and the Transaction Documents provide or envisage that the Charging Company will engage in; and (z) Fixtures if it is at Fair Market Value; Equitable Interests: permit any person, other than the Trustee, to have any equitable or beneficial interest in any of its assets or undertakings or any interest, estate, right, title or benefit therein; Dividends or Distributions: at any time that an Event of Default or any event of circumstance which could, with the giving of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement provided for in Condition 11, become an Event of Default has occurred and is continuing, pay any dividend or make any other distribution to its shareholder or issue any further shares or alter any rights attaching to its shares; Indebtedness: incur any indebtedness in respect of borrowed moneys whatsoever, unless such indebtedness is a Subordinated Obligation with respect to another member of the Guarantor Group, or give any guarantee or indemnity in respect of any indebtedness or obligation of any person; Merger: consolidate or merge with any other person or convey or transfer its properties or assets substantially or as an entirety to any other person; (vii) Tax Residence: do any act or thing, the effect of which would be to make the Charging Company resident for tax purposes in any jurisdiction other than the United Kingdom; or (viii) Waivers or Consents: permit any of the Transaction Documents to which it is a party to become invalid or ineffective or the priority of the Charged Assets created thereby to be reduced, amended, terminated or discharged. Valuation Reports and Financial Information: (i) the Charging Company, failing which the Guarantor, shall promptly after its preparation in accordance with Condition 5(a), send to the Trustee, and at the same time procure publication on the Group s website of, a summary of any Valuation made pursuant to Condition 5(a) and, at such time, a list of all substitutions to, withdrawals from and/or additions to the Charged Assets occurring since the previously applicable Valuation Date provided that such summary shall only be required to contain such information as is necessary in order to determine compliance with the covenants contained in Condition 4(c), (ii) within four months of its most recent 97

98 c108615pu040 Proof 2: _15:15 B/L Revision: (g) (h) (i) financial year-end, the Guarantor shall send to the Trustee, and at the same time procure publication on the Group s website of, a copy of its audited annual Consolidated Financial Statements for such financial year, together with the report thereon of the Guarantor s independent auditors; and (iii) within two months of the end of the first half of each financial year, the Guarantor shall send to the Trustee, and at the same time procure publication on the Group s website of, a copy of its semi-annual Consolidated Financial Statements as at, and for the period ending on, the end of such period. Compliance Certificate: the Guarantor shall, concurrently with the delivery of each of the Valuation summary and/or the annual and interim Consolidated Financial Statements referred to in Condition 4(f), provide to the Trustee a certificate or certificates (x) signed by two Directors of the Guarantor confirming compliance with each of the covenants contained in Condition 4(d) as at the most recent LTV Reporting Date and the most recent Interest Coverage Ratio Reporting Date, as the case may be, and (y) signed by two Directors of the Charging Company confirming compliance with Condition 4(c) as at the most recent Valuation Date or, if not compliant with such conditions, setting out the details of such non-compliance and any proposed action to be taken in connection therewith; upon which certificate(s) the Trustee may rely absolutely without any liability to any person for so doing or further enquiry being required. Calculation Adjustment: in the event that UK GAAP changes from UK GAAP applicable as at the Issue Date, Net Debt, Tangible Fixed Assets, Gross Profit, and Net Financing Costs shall (for the purposes of the calculations in Condition 4(d) above) be adjusted so that the relevant amounts are determined on the same basis as if UK GAAP as at the Issue Date were still applicable. So long as any Bond remains outstanding, the Guarantor shall prepare and publish, in its Consolidated Financial Statements, the breakdown of specific line items that are referred to in Condition 21 and are otherwise necessary in order to illustrate the amounts and ratios described in Condition 4(d). Insurance: The Charging Company will procure that every policy of Insurance taken out by it is endorsed with a memorandum of interest of the Trustee as mortgagee or secured creditor and will direct the relevant insurer(s) to pay any moneys payable under any such policy directly into Cash Collateral Account, unless an Event of Default has occurred and is continuing in which case direct to the Trustee and duly pay all premiums or other sums payable for the purpose and produce to the Trustee, when so requested, every policy of Insurance and the receipt for the last premium payable thereunder. 5. Valuation, withdrawal and top-up (a) Periodic Valuation: (i) The Charging Company shall have the right at any time and from time to time after the Issue Date to require a Valuation of the Specifically Mortgaged Properties for the purposes of these Conditions. (ii) The Charging Company undertakes that it will require the Valuers to produce a Valuation of all Specifically Mortgaged Properties for the purposes of these Conditions: (x) as at a date no later than 30 September in each calendar year which will be published by a date not later than 15 November in each calendar year, the date of the first such Valuation to be published on a date not later than 15 November 2013, (y) within three months prior to any Further Issue, as described in Condition 17 and (z) within six months prior to any substitution in accordance with Condition 6, provided that, in the context of any such substitution, a Valuation shall only be required in respect of any of the Specifically Mortgaged Properties which are being withdrawn from the Specifically Mortgaged Properties or are intended to become part of the Charged Assets. (iii) The Charging Company further undertakes that, if the Value ascribed to any Specifically Mortgaged Property at any time has decreased by 20 per cent. or more when compared to the Value previously ascribed to such Specifically Mortgaged Property on the last Valuation, the Charging Company will promptly procure a Valuation of all of the Specifically Mortgaged Properties. 98

99 c108615pu040 Proof 2: _15:15 B/L Revision: (iv) (v) Following an Event of Default or if the Charging Company fails to provide a Valuation pursuant to 5(a)(ii), the Trustee shall have the right but not the obligation on behalf of the Charging Company to instruct the Valuers to provide, as soon as reasonably practicable, the same at the expense of the Issuer. In addition to any other Valuation required or made pursuant to this Condition 5(a) or otherwise, if so requested in writing by holders of at least one-quarter in nominal amount of the Bonds then outstanding (as defined in the Trust Deed) or directed by an Extraordinary Resolution (and subject to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction) the Trustee shall instruct the Valuers to provide a Valuation at any time at the expense of the requesting holders provided that not more than one such Valuation shall be made in any six month period unless the Charging Company otherwise agrees. (b) (c) Withdrawal: The Charging Company may send a request to the Trustee, within three months after the Valuation Date but prior to the next Valuation used for Condition 17 or carried out pursuant to Condition 5(a), to withdraw a part or parts of the Charged Assets from the Security without substituting other Specifically Mortgaged Properties and/or Cash Equivalent Investments and/or Cash, provided that the Specifically Mortgaged Properties remaining immediately after such withdrawal shall have a Value as shown by such Valuation of not less than 1.10 times the nominal amount of the Bonds outstanding immediately after such withdrawal (after deducting from such nominal amount of the Bonds then outstanding the sum of (i) any Cash and (ii) any Cash Equivalent Investments, each if and to the extent provided as Security at that time). The Trustee may, without liability for so doing, release the relevant Charged Assets from the Security and execute any documents requested by the Issuer, the Guarantor and/or the Charging Company in order to effect such release, without further authorisation from the other Secured Creditors, provided it has received a certificate signed by two directors of the Guarantor and a Valuation in writing confirming that (i) no Event of Default or Potential Event of Default has occurred and (ii) the foregoing conditions have been met. All rights of withdrawal under this Condition 5(b) shall cease upon an Event of Default or Potential Event of Default. Top-up: If the aggregate Value of the Charged Assets as shown by any such Valuation shall be less than the nominal amount of the Bonds outstanding on the relevant Valuation Date then promptly, and in any event within 14 calendar days, after the date of delivery of any such Valuation the deficiency below such cover ratio shall be compensated by the Charging Company specifically securing in favour of the Trustee and to its satisfaction as part of the Charged Assets further Specifically Mortgaged Properties and/or Cash Equivalent Investments and/or Cash (in the same manner and to the same extent as assets of that type have been secured under the Security Deed), the aggregate Value of which is not less than the amount of the aforementioned deficiency. 6. Substitution of Charged Assets The Charging Company may send a request to the Trustee to withdraw all or any part of the Charged Assets upon the Charging Company specifically charging by way of fixed charge in favour of the Trustee and to its satisfaction Specifically Mortgaged Properties and/or Cash Equivalent Investments and/or Cash, in each case to be held as part of the Charged Assets. The Trustee may, without liability for so doing, release of the relevant Charged Assets from the Security without further authorisation from the Secured Creditors, and execute any documents requested by the Issuer, the Guarantor and/or the Charging Company in order to effect such release, provided it has received a certificate signed by two directors of the Guarantor and a Valuation in writing confirming that (i) no Event of Default or Potential Event of Default has occurred and (ii) the Value of the Specifically Mortgaged Properties and/or Cash Equivalent Investments and/or Cash being substituted, as the case may be, is at least equal to the Value of any Charged Assets or part thereof being withdrawn from the Security. Any excess in the Value of the Specifically Mortgaged Properties and/or Cash Equivalent Investments and/or Cash substituted over the Value or amount of the Charged Assets or part thereof released may, if the Issuer so requests, subject to the provisions of the Security Deed, be 99

100 c108615pu040 Proof 2: _15:15 B/L Revision: taken into account in any subsequent substitution within three months of the relevant Valuation Date but prior to the next Valuation used for the purpose of Condition 17 or carried out pursuant to Condition 5(a). All rights of substitution under this Condition 6 shall cease upon an Event of Default or Potential Event of Default. 7. Interest The Bonds bear interest from and including the Issue Date at the rate of 6.00 per cent. per annum, payable semi-annually in arrear in equal instalments of 3 per 100 in nominal amount of the Bonds on 24 January and 24 July in each year (each an Interest Payment Date ). Each Bond will cease to bear interest from the due date for redemption unless, upon due presentation, payment of principal is improperly withheld or refused. In such event it shall continue to bear interest at such rate (both before and after judgment) until whichever is the earlier of: (a) the day on which all sums due in respect of such Bond up to that day are received by or on behalf of the relevant holder, and (b) the day seven days after the Trustee or the Principal Paying Agent has notified Bondholders of receipt of all sums due in respect of all the Bonds up to that seventh day (except to the extent that there is failure in the subsequent payment to the relevant holders under these Conditions). In these Conditions, the period beginning on and including the Issue Date and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date is called an Interest Period. Interest in respect of any Bond shall be calculated per 100 in nominal amount of the Bonds. The amount of interest payable per 100 for any period shall, save as provided above in relation to equal instalments, be equal to the product of 6.00 per cent., 100 and the day-count fraction for the relevant period, rounding the resulting figure to the nearest penny (half a penny being rounded upwards). 8. Redemption and Purchase (a) Final redemption: Unless previously redeemed, or purchased and cancelled, the Bonds will be redeemed at their nominal amount on the Maturity Date. The Bonds may not be redeemed at the option of the Issuer other than in accordance with this Condition 8. (b) Redemption for taxation reasons: The Bonds may be redeemed at the option of the Issuer in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days notice to the Bondholders in accordance with Condition 18 (which notice shall be irrevocable), at their nominal amount, (together with interest accrued to but excluding the date fixed for redemption), if (i) the Issuer satisfies the Trustee immediately prior to the giving of such notice that it (or, if the Guarantee were called, the Guarantor) has or will become obliged to pay additional amounts as provided or referred to in Condition 10 as a result of any change in, or amendment to, the laws or regulations of the United Kingdom or, any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the Issue Date, and (ii) such obligation cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer (or the Guarantor, as the case may be) would be obliged to pay such additional amounts were a payment in respect of the Bonds (or the Guarantee, as the case may be) then due. Prior to the publication of any notice of redemption pursuant to this Condition 8(b), the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer (or the Guarantor, as the case may be) stating that the obligation referred to in (i) above cannot be avoided by the Issuer (or the Guarantor, as the case may be) taking reasonable measures available to it and (ii) an opinion of independent legal advisers of recognised standing to the effect that the Issuer (or the Guarantor, as the case may be) has or will become obliged to pay such additional amounts and the Trustee shall be entitled to accept such certificate and legal opinion as sufficient evidence of the satisfaction of the conditions precedent set out in (i) and (ii) above, in which event it shall be conclusive and binding on the Bondholders and the Couponholders. 100

101 c108615pu040 Proof 2: _15:15 B/L Revision: (c) Redemption at the option of the Issuer: The Issuer may at any time, having given not less than 30 nor more than 60 days irrevocable notice to the Bondholders in accordance with Condition 18 (which notice shall specify the date fixed for redemption (the Optional Redemption Date ) redeem, all (but not some only) of the Bonds for the time being outstanding at any time at the Redemption Price (as defined below) together with interest accrued to (but excluding) the Optional Redemption Date. The Redemption Price shall be the higher of: (i) the nominal amount outstanding of the Bonds; and (ii) the nominal amount outstanding of the Bonds multiplied by the price (expressed as a percentage in relation to the nominal amount outstanding of the Bonds) (as reported in writing to the Issuer and the Trustee by an independent financial adviser appointed at its own expense by the Issuer and approved in writing by the Trustee) at which the Gross Redemption Yield (if the Bonds were to remain outstanding to their original maturity) on the Bonds on the Calculation Date is equal to the Gross Redemption Yield at a.m. (London time) on the Calculation Date of 4.75 per cent. United Kingdom Government Treasury Stock due 2020 (or, where such financial adviser advises the Issuer and the Trustee that for reasons of illiquidity or otherwise, such stock is not appropriate for such purpose, such other government stock as such independent financial adviser may recommend for such purposes) plus 0.5 per cent. For such purposes, Calculation Date means the date which is the second London Business Day prior to the Optional Redemption Date. Any notice given pursuant to this Condition 8(c) shall be irrevocable and shall specify the Optional Redemption Date. Upon the expiry of any such notice, the Issuer (or the Guarantor, as the case may be) shall be bound to redeem or, as the case may be, purchase or procure the purchase of (and the Bondholders shall be bound to sell) the Bonds at the applicable Redemption Price on the Optional Redemption Date together with accrued interest as aforesaid unless previously redeemed or purchased. The Trustee shall rely absolutely and without further enquiry on the advice of any financial adviser appointed as provided in this Condition 8(c) and shall not be liable to any person for doing so. (d) Redemption at the option of the Bondholder: If a Change of Control Put Event (as defined below) occurs, the holder of each Bond will have the option (a Change of Control Put Option ) (unless prior to the giving of the relevant Change of Control Put Event Notice (as defined below) the Issuer has given notice of redemption under Condition 8(b) or 8(c) above) to require the Issuer to redeem or, at the Issuer s option, purchase (or procure the purchase of) that Bond on the Put Date (as defined below) date (the Change of Control Put Date ) which is seven calendar days after the expiration of the Change of Control Put Period (as defined below) provided that such day is a day (other than a Saturday or a Sunday) on which banks are generally open for business in London or, if not, the next such day, at its nominal amount together with (or, where purchased, together with an amount equal to) interest (if any) accrued to (but excluding) the Change of Control Put Date. Promptly upon, and in any event within 14 days after, the Issuer becoming aware that a Change of Control Put Event has occurred the Issuer shall, and at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested by the holders of at least one-fifth in nominal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution of the Bondholders, shall, (subject in each case to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction) give notice (a Change of Control Put Event Notice ) to the Bondholders in accordance with Condition 18 specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option. To exercise the Change of Control Put Option, the holder of the Bond must deposit such Bond with the specified office of any Paying Agent at its specified office at any time during normal business hours of such Paying Agent falling within the period (the Change of Control Put Period ) of 30 days after a Change of Control Put Event Notice is given, accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent (a Change of Control Put Notice ). 101

102 c108615pu040 Proof 2: _15:15 B/L Revision: (e) The Bond should be delivered together with all Coupons appertaining thereto maturing after the Put Date, failing which the Paying Agent will require payment from or on behalf of the relevant Bondholder of an amount equal to the face value of any such missing Coupon. Any amount so paid will be reimbursed by the Paying Agent to the Bondholder against presentation and surrender of the relevant missing Coupon (or any replacement therefor issued pursuant to Condition 13) at any time after such payment but before the expiry of 10 years from the date on which such Coupon would have become due. The Paying Agent to which such Bond and Change of Control Put Notice are delivered will issue to the Bondholder concerned a non-transferable receipt in respect of the Bond so delivered. Payment in respect of any Bond so delivered will be made, if the holder duly specified a bank account (in Sterling) in the Change of Control Put Notice to which payment is to be made, on the Put Date by transfer to that bank account and, in every other case, on or after the Put Date against presentation and surrender or (as the case may be) endorsement of the non-transferable receipt in respect of such Bond mentioned in the immediately preceding paragraph of this Condition 8(d) at the specified office of any Paying Agent. A Change of Control Put Notice, once given, shall be irrevocable. For the purposes of these Conditions, receipts issued pursuant to this Condition 8(d) shall be treated as if they were Bonds. No Bond so deposited and option so exercised may be withdrawn (except as provided in the Paying Agency Agreement) without the prior consent of the Issuer. The Issuer shall redeem or purchase (or procure the purchase of) the relevant Bonds on the Change of Control Put Date unless previously redeemed (or purchased) and cancelled. If 80 per cent. or more in nominal amount of the Bonds originally issued have been redeemed or purchased pursuant to this Condition 8(d), the Issuer may, on giving not less than 30 nor more than 60 days notice to the Bondholders (such notice being given within 30 days after the Change of Control Put Date), redeem or purchase (or procure the purchase of), at its option, all but not some only of the remaining outstanding Bonds at their nominal amount, together with interest accrued to (but excluding) the date fixed for such redemption or purchase. The Trustee is under no obligation or responsibility to ascertain or monitor whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event has occurred or will occur, until it shall have actual knowledge or express notice pursuant to the Trust Deed to the contrary, the Trustee may assume without liability that no Change of Control Put Event or other such event has occurred. For the purpose of this Condition 8(d): A Change of Control Put Event shall occur if, other than the Oglesby Family or the Oglesby Family Trusts, any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), or any person(s) acting on behalf of such person(s), shall become interested (within the meaning of Part 22 of the Companies Act 2006) in: (i) more than 50 per cent. of the issued or allotted ordinary share capital of Bruntwood Group Limited or Bruntwood Limited; or (ii) shares in the capital of Bruntwood Group Limited or Bruntwood Limited carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of Bruntwood Group Limited or Bruntwood Limited; or (iii) more than 50 per cent. of the issued or allotted ordinary share capital of any direct or indirect Holding Company of Bruntwood Group Limited or Bruntwood Limited; or (iv) shares in the capital of any direct or indirect Holding Company of Bruntwood Group Limited or Bruntwood Limited carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the direct or indirect Holding Company of Bruntwood Group Limited or Bruntwood Limited; Notice of redemption: All Bonds in respect of which any notice of redemption is given under this Condition 8 shall be redeemed on the date specified in such notice in accordance with this Condition

103 c108615pu040 Proof 2: _15:15 B/L Revision: (f) (g) Purchase: Each of the Issuer, the Guarantor, the Charging Company and their respective Subsidiaries may at any time purchase Bonds in the open market or otherwise at any price (provided that, if they should be cancelled under Condition 8(g) below, they are purchased together with all unmatured Coupons relating to them). The Bonds so purchased, while held by or on behalf of the Issuer, the Guarantor, the Charging Company or any such Subsidiary, shall not entitle the holder to vote at any meetings of the Bondholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Bondholders or for the purposes of these Conditions. Cancellation: All Bonds which are purchased by the Issuer, the Guarantor, the Charging Company or any of their respective Subsidiaries may be held and/or subsequently resold or surrendered to the Principal Paying Agent for cancellation. Any Bonds which are redeemed or otherwise surrendered to the Principal Paying Agent for cancellation shall forthwith be cancelled together with all unmatured Coupons attached thereto or surrendered therewith, and accordingly cannot be held, reissued or sold. 9. Payments (a) Method of Payment: Payments of principal and interest will be made against presentation and surrender (or, in the case of a partial payment, endorsement) of Bonds or the appropriate Coupons (as the case may be) at the specified office of any Paying Agent by sterling cheque drawn on, or by transfer to a sterling account maintained by the payee with, a bank in the United Kingdom. Payments of interest due in respect of any Bond other than on presentation and surrender of matured Coupons shall be made only against presentation and either surrender or endorsement (as appropriate) of the relevant Bond. (b) (c) (d) (e) Payments subject to Laws: Save as provided in Condition 10, payments will be subject in all cases to any applicable fiscal or other laws, regulations and directives in the place of payment or other laws and regulations to which the Issuer or the Guarantor or their respective agents agree to be subject and neither the Issuer nor the Guarantor will be liable for any taxes or duties of whatever nature imposed or levied by such laws, regulations, directives or agreements. No commission or expenses shall be charged to the Bondholders or Couponholders in respect of such payments. Surrender of unmatured Coupons: Each Bond should be presented for redemption together with all unmatured Coupons relating to it, failing which the amount of any such missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the amount of such missing unmatured Coupon which the sum of principal so paid bears to the total nominal amount due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relevant missing Coupon not later than 10 years after the Relevant Date (as defined in Condition 21) for the relevant payment of principal. Payments on business days: A Bond or Coupon may only be presented for payment on a day which is a business day in the place of presentation (and, in the case of payment by transfer to a sterling account, a London Business Day). No further interest or other payment will be made as a consequence of the day on which the relevant Bond or Coupon may be presented for payment under this Condition 9 falling after the due date. Paying Agents: The initial Paying Agent(s) and their initial specified offices are listed below. The Issuer and the Guarantor reserve the right at any time with the approval in writing of the Trustee to vary or terminate the appointment of any Paying Agent and appoint additional or other Paying Agents, provided that they will maintain (i) a Principal Paying Agent, (ii) a Paying Agent having a specified office in London and/or any other major European city approved by the Trustee and (iii) a Paying Agent with a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to any law implementing European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive and (iv) a Paying Agent in a European Union member state other than the United Kingdom if and when applicable law in the United Kingdom requires a withholding or deduction for or on 103

104 c108615pu040 Proof 2: _15:15 B/L Revision: account of any Taxes (as defined below). Notice of any change in the Paying Agents or their specified offices will promptly be given to the Bondholders in accordance with Condition Taxation All payments of principal and interest by or on behalf of the Issuer or the Guarantor in respect of the Bonds and the Coupons or under the Guarantee shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature ( Taxes ) imposed, levied, collected, withheld or assessed by the United Kingdom or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. In that event the Issuer or, as the case may be, the Guarantor shall pay such additional amounts as will result in receipt by the Bondholders and/or the Couponholders of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Bond or Coupon presented for payment: (a) Other connection: by or on behalf of a holder who is liable to such taxes, duties, assessments or governmental charges in respect of such Bond or Coupon by reason of his having some connection with the United Kingdom other than the mere holding of the Bond or Coupon or (b) (c) (d) Presentation more than 30 days after the Relevant Date: more than 30 days after the Relevant Date except to the extent that the holder of it would have been entitled to such additional amounts on presenting such Bond or Coupon for payment on the last day of such period of 30 days or Payment to individuals: where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/ EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive or Payment by another Paying Agent: by or on behalf of a Bondholder or a Couponholder who would have been able to avoid such withholding or deduction by presenting the relevant Bond or Coupon to another Paying Agent in a Member State of the European Union. Any reference in these Conditions to principal and/or interest shall be deemed to include any additional amounts which may be payable under this Condition 10 or any undertaking given in addition to or substitution for it under the Trust Deed. 11. Events of Default If any of the following events occurs the Trustee at its discretion may, and (subject to it being indemnified and/or secured and/or prefunded to its satisfaction) if so requested by holders of at least one-quarter in nominal amount of the Bonds then outstanding (as defined in the Trust Deed) or if so directed by an Extraordinary Resolution shall, give notice (an Acceleration Notice ) to the Issuer that the Bonds are, and they shall immediately become, due and payable at their nominal amount together (if applicable) with accrued interest: (a) Non-Payment: any default is made in the payment of any principal of or interest on any of the Bonds and such default continues for a period of 14 days or (b) Breach of Other Obligations: the Issuer, the Guarantor or the Charging Company does not perform or comply with any one or more of its other obligations in the Bonds, the Trust Deed or the Security Deed which default is in the opinion of the Trustee incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not in the opinion of the Trustee remedied within 30 days after notice of such default shall have been given to the Issuer, the Guarantor or the Charging Company by the Trustee or (c) Cross-Acceleration: (i) any other present or future indebtedness of the Issuer, the Guarantor or the Charging Company or any of their respective Subsidiaries for or in respect of moneys borrowed or raised is declared due and payable prior to its stated maturity by reason of any actual or potential default, event of default or the like (howsoever described), or (ii) any such indebtedness is not paid when due or, as the case 104

105 c108615pu040 Proof 2: _15:15 B/L Revision: may be, within any originally applicable grace period, or (iii) the Issuer, the Guarantor, the Charging Company or any of their respective Subsidiaries fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect of which one or more of the events mentioned above in this Condition 11(c) have occurred equals or exceeds 10,000,000 or its equivalent or (d) (e) (f) (g) (h) (i) (j) (k) (l) Enforcement Proceedings: a distress, attachment, execution or other legal process is levied, enforced or sued out on or against any part of the property, assets or revenues of the Issuer, the Guarantor, the Charging Company or any of their respective Subsidiaries and is not discharged or stayed within 30 days or Insolvency: the Issuer, the Guarantor, the Charging Company or any of their respective Subsidiaries is (or is, or could be (other than where a demand is made for less than 1,000,000 under Section 123(1)(a) of the Insolvency Act 1986), deemed by law or a court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or suspend payment of all or (in the opinion of the Trustee) a material part of (or of a particular type of) its debts, proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared or comes into effect in respect of or affecting all or any part of (or of a particular type of) the debts of the Issuer, the Guarantor, the Charging Company or any of their respective Subsidiaries or Winding-up: an administrator is appointed, an order is made or an effective resolution passed for the winding-up or dissolution or administration of the Issuer, the Guarantor, Charging Company or any of their respective Subsidiaries, or the Issuer, the Guarantor or the Charging Company ceases or threatens to cease to carry on all or substantially all of its business or operations, except for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation (i) on terms approved by the Trustee or by an Extraordinary Resolution of the Bondholders, or (ii) in the case of a Subsidiary, whereby the undertaking and, assets of the Subsidiary are transferred to or otherwise vested in the Issuer or the Guarantor or the Charging Company (as the case may be) or another of their respective Subsidiaries or Ownership: (i) the Issuer ceases to be directly or indirectly wholly-owned and controlled by Bruntwood Group Limited and/or (ii) the Charging Company ceases to be directly whollyowned and controlled by Bruntwood Limited or Authorisation and Consents: any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer, the Guarantor and the Charging Company lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under the Bonds and the Transaction Documents, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make the Bonds and the Transaction Documents admissible in evidence in the courts of England and Wales is not taken, fulfilled or done or Illegality: it is or will become unlawful for the Issuer, the Guarantor or the Charging Company to perform or comply with any one or more of its respective obligations under any of the Bonds or the Transaction Documents or Security: the Security Deed is not in full force and effect or does not create the Security which it is expressed to create with the ranking and priority that it is expressed to have or Guarantee: the Guarantee is not (or is claimed by the Guarantor not to be) in full force and effect or Analogous Events: any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of the foregoing paragraphs of this Condition 11, 105

106 c108615pu040 Proof 2: _15:15 B/L Revision: provided that in the case of paragraphs (b), (d), (h) and (i) and so far as it relates to any of the paragraphs specifically mentioned in this proviso, paragraph (l) and, in respect of Subsidiaries of the Guarantor (other than the Charging Company) only, paragraphs (e) and (f), the Trustee shall have certified that in its opinion such event is materially prejudicial to the interests of Bondholders. The Security constituted by the Security Deed and held on the terms of the Trust Deed shall become enforceable upon the delivery of an Acceleration Notice by the Trustee. 12. Prescription Claims in respect of principal and interest will become void unless presentation for payment is made as required by Condition 9 within a period of 10 years in the case of principal and five years in the case of interest from the appropriate Relevant Date. 13. Replacement of Bonds and Coupons If any Bond or Coupon is lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Paying Agent in London subject to all applicable laws and stock exchange or other relevant authority requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer and the Guarantor may require (provided that the requirement is reasonable in the light of prevailing market practice). Mutilated or defaced Bonds or Coupons must be surrendered before replacements will be issued. 14. Meetings of Bondholders, Modification, Waiver and Substitution (a) Meetings of Bondholders: The Trust Deed contains provisions for convening meetings of Bondholders to consider matters affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of these Conditions or any provisions of the Transaction Documents. Such a meeting may be convened by the Issuer, the Guarantor, the Trustee or by Bondholders holding not less than 10 per cent. in nominal amount of the Bonds for the time being outstanding. The quorum for any meeting convened to consider an Extraordinary Resolution will be two or more persons holding or representing a clear majority in nominal amount of the Bonds for the time being outstanding, or at any adjourned meeting two or more persons being or representing Bondholders whatever the nominal amount of the Bonds held or represented, unless the business of such meeting includes consideration of proposals, inter alia, (i) to modify the maturity of the Bonds or the dates on which interest is payable in respect of the Bonds, (ii) to reduce or cancel the nominal amount of, or interest on, the Bonds, (iii) to change the currency of payment of the Bonds or the Coupons, or (iv) to modify the provisions concerning the quorum required at any meeting of Bondholders or the majority required to pass an Extraordinary Resolution, (v) to modify or cancel the Guarantee or (vi) to modify, amend, waive or release any part of the Security (other than as provided for in the Conditions), in which case the necessary quorum will be two or more persons holding or representing not less than 66 per cent., or at any adjourned meeting not less than 25 per cent., in nominal amount of the Bonds for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Bondholders (whether or not they were present at the meeting at which such resolution was passed) and on all Couponholders. The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not less than 75 per cent. in nominal amount of the Bonds outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Bondholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Bondholders. (b) Modification and Waiver: The Trustee may agree, without the consent of the Bondholders or Couponholders, to (i) any modification of any of the provisions of the Transaction Documents that is in the opinion of the Trustee of a formal, minor or technical nature or is made to correct a manifest error or an error which in the opinion of the Trustee is proven, and (ii) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Transaction Documents that is in the opinion of the Trustee not materially prejudicial to 106

107 c108615pu040 Proof 2: _15:15 B/L Revision: (c) (d) the interests of the Bondholders. Any such modification, authorisation or waiver shall be binding on the Bondholders and the Couponholders and, if the Trustee so requires, such modification shall be notified to the Bondholders as soon as practicable in accordance with Condition 18. Substitution: The Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment of the Trust Deed and such other conditions as the Trustee may require, but without the consent of the Bondholders or the Couponholders, to the substitution of certain other entities in place of the Issuer or Guarantor, or of any previous substituted company, as principal debtor or guarantor under the Trust Deed and the Bonds if requested in writing to do so by the Issuer (or any previous substituted company). In the case of such a substitution the Trustee may agree, without the consent of the Bondholders or Couponholders, to a change of the law governing the Bonds, the Coupons and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Bondholders. Entitlement of the Trustee: In connection with the exercise of its functions (including but not limited to those referred to in this Condition) the Trustee shall have regard to the interests of the Bondholders as a class and shall not have regard to the consequences of such exercise for individual Bondholders or Couponholders and the Trustee shall not be entitled to require, nor shall any Bondholder or Couponholder be entitled to claim, from the Issuer or the Guarantor any indemnification or payment in respect of any tax consequence of any such exercise upon individual Bondholders or Couponholders. 15. Enforcement (a) At any time after the Bonds become due and payable, the Trustee may, at its discretion and without further notice, institute such proceedings or take such steps or actions against the Issuer, the Guarantor and/or the Charging Company as it may think fit to enforce the terms of the Transaction Documents, the Bonds and the Coupons and, at any time after the Security has become enforceable the Trustee, may in its discretion and without further notice, take such steps, actions and proceedings as it may see fit to enforce the Security, but it need not take any such steps, actions and proceedings unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by Bondholders holding at least one-quarter in nominal amount of the Bonds outstanding, and (b) it shall have been indemnified and/or secured and/or prefunded to its satisfaction. No Bondholder or Couponholder may proceed directly against the Issuer, the Guarantor or the Charging Company unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing. (b) Only the Trustee may enforce the Security, in accordance with and subject to the terms of the Security Deed and the Trust Deed. 16. Indemnification of the Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility. The Trustee is entitled to enter into business transactions with the Issuer, the Guarantor, the Charging Company and any entity related to the Issuer, the Guarantor or the Charging Company without accounting for any profit. The Trustee may rely without liability on a report, confirmation or certificate or any advice of any accountants, financial advisers, financial institution or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report, confirmation or certificate or advice and such report, confirmation or certificate or advice shall be binding on the Issuer, the Trustee, the Bondholders and the Couponholders. 17. Further Issues The Issuer may from time to time without the consent of the Bondholders or Couponholders create and issue further securities (any such issue, a Further Issue ) either having the same terms and conditions as the Bonds in all respects (or in all respects except for the first payment of interest on them) and secured by the Charged Assets, and so that such Further Issue shall be 107

108 c108615pu040 Proof 2: _15:15 B/L Revision: consolidated and form a single series with the outstanding securities of any series (including the Bonds), or otherwise upon such terms as the Issuer may determine at the time of their issue provided that no Further Issues shall be issued unless the Trustee is satisfied that immediately thereafter the aggregate Value of the Charged Assets, relative to the nominal amount of the Bonds outstanding immediately thereafter, would not be less than the minimum Value of the Charged Assets required in accordance with Condition 4(c). References in these Conditions to the Bonds include (unless the context requires otherwise) any other securities issued pursuant to this Condition and forming a single series with the Bonds. Any further securities forming a single series with the outstanding securities of any series (including the Bonds) constituted by the Trust Deed or any deed supplemental to it shall, and any other securities may (with the consent of the Trustee), be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Bondholders and the holders of securities of other series where the Trustee so decides. 18. Notices Notices to Bondholders will be valid if published in a leading newspaper having general circulation in London (which is expected to be the Financial Times) or, the Trustee is satisfied that such publication shall not be practicable, in an English language newspaper of general circulation in the United Kingdom. Any such notice shall be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the first date on which publication is made. Couponholders will be deemed for all purposes to have notice of the contents of any notice given to the Bondholders in accordance with this Condition Contracts (Rights of Third Parties) Act 1999 No person shall have any right to enforce any term or condition of the Bonds under the Contracts (Rights of Third Parties) Act Governing Law The Trust Deed, the Bonds and the Coupons and any non-contractual obligations arising out of or in connection with them are governed by and shall be construed in accordance with English law. 21. Definitions Account Bank means (a) Elavon Financial Services Limited, UK Branch or (b) any bank, building society or financial institution with a rating equal to or higher than (i) A-2 (short-term) (or the equivalent) by S&P; (ii) F2 (short term) (or the equivalent) by Fitch; or (iii) P-2 (short term) (or the equivalent) by Moody s or (c) any other bank, building society or financial institution appointed by the Issuer at its own expense and approved in writing by the Trustee with whom the Cash Collateral Account is maintained by the Charging Company. Cash means money for the time being held in and standing to the credit of the Cash Collateral Account. Cash Collateral Account means the sterling currency account of the Charging Company with sort code and account number opened with the Account Bank or any replacement therefor. Cash Equivalent Investments means any sterling fixed rate securities, debenture, loan stock, security, note, bond, warrant, coupon, interest in any investment fund and any other investment (whether or not marketable) issued or guaranteed by Her Majesty s Government or the European Investment Bank maturing at no later date than two years from the date of their being charged under the Security Deed or any Supplemental Security Deed and with a maturity falling no later than the Maturity Date and whether held directly by or to the order of the Charging Company or by any trustee, fiduciary or clearance system on its behalf and all Related Rights. Charged Assets means all of the Real Property, Cash Collateral Account and Cash Equivalent Investments of the Charging Company, from time to time mortgaged, charged or assigned (or expressed to be mortgaged, charged or assigned) pursuant to the Security Deed or any Supplemental Security Deed. 108

109 c108615pu040 Proof 2: _15:15 B/L Revision: Consolidated Financial Statements means the Guarantor s audited annual consolidated financial statements or its unaudited half-year consolidated financial statements, as the case may be, including the relevant accounting policies and notes to the accounts and in each case prepared in accordance with UK GAAP, consistently applied, (and if there has been a change in accounting practices since the Issue Date, the relevant Consolidated Financial Statements shall be accompanied by a description of any change necessary for Gross Profits, Net Debt, Net Financing Costs or Tangible Fixed Assets to reflect the same under UK GAAP as at the Issue Date). Eligible Property means freehold and leasehold property in England and Wales in respect of which the following have been provided to the Trustee: (a) save in the case of the Initial Specifically Mortgaged Properties, a Valuation dated not more than three months prior to the date on which the property is intended to be charged pursuant to the Security Deed or any Supplemental Security Deed and carried out by the Valuers in accordance with the Security Deed; (b) (c) a certificate of title dated not more than three months prior to the date on which the property is intended to be charged pursuant to the Security Deed or any Supplemental Security Deed; and Land Registry searches in favour of the Trustee against all the titles comprising such property, showing no third party security entry or evidence that any existing third party security over such property has been discharged or will be discharged on or prior to the date on which such property is to be charged pursuant to the Security Deed or any Supplemental Security Deed. Extraordinary Resolution has the meaning given to it in the Trust Deed. Fair Market Value means, with respect to any asset or property, the price which could be negotiated in an arm s length market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value will be determined in good faith by the Chief Financial Officer of the Guarantor Group or, for transactions involving a payment of more than 500,000 (or its equivalent in another currency), in writing by an Independent Appraiser. Financial Indebtedness means any indebtedness for or in respect of: (a) moneys borrowed; (b) any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with UK GAAP, be treated as a finance or capital lease; (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); (f) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); (h) shares which are expressed to be redeemable; (i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and (j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above. Fitch means Fitch Ratings Ltd. or any successor to its rating business. Fixtures means fixtures, fittings and fixed plant, machinery and apparatus. Group means Bruntwood Group Limited and its Subsidiaries taken as a whole. Gross Profits means, for any period, Turnover less Cost of sales for the Guarantor Group as shown in the Consolidated Financial Statements for such period. Gross Redemption Yield means, with respect to a security, the gross redemption yield on such security (as calculated by the independent financial adviser on the basis set out in the United Kingdom Debt Management Office in the paper Formulae for Calculating Gilt Prices from Yields page 5, Section One: Price/Yield Formulae Conventional Gilts: Double-dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date (published on 8 June

110 c108615pu040 Proof 2: _15:15 B/L Revision: and updated on 15 January 2002 and 16 March 2005 and as further updated, amended or replaced) on a semi-annual compounding basis (converted on an annualised yield and rounded up (if necessary) to four decimal places)). Guarantor Group means the Guarantor and its Subsidiaries taken as a whole. Holding Company is means a holding company within the meaning of Section 1159 of the Companies Act Independent Appraiser means (i) the Valuers or (ii) any of Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLC, PricewaterhouseCoopers LLC or such other reputable financial institution, accountancy or appraisal firm appointed at its expense by the Issuer and approved in writing by the Trustee. Initial Specifically Mortgaged Properties means some or all of the properties specifically referred to in Condition 3(b)(i) including, if any, the Additional Initial Specifically Mortgaged Properties and which comprise the Specifically Mortgaged Properties on the Issue Date. Insurances means any contract or policy of insurance of any kind from time to time taken out by or on behalf of it in respect of the Specifically Mortgaged Properties and all Related Rights. Interest Coverage Ratio Reporting Date means 30 September and 31 March in each year or such other date as at which the Guarantor prepares its audited annual Consolidated Financial Statements or unaudited semi annual Consolidated Financial Statements, as the case may be. London Business Day means a day on which commercial banks and foreign exchange markets are open for business in London. LTV Reporting Date means 30 September and 31 March in each year or such other date as at which the Guarantor prepares its audited annual Consolidated Financial Statements or unaudited semi annual Consolidated Financial Statements, as the case may be. Maturity Date means 24 July Moody s means Moody s Investors Service or any successor to its rating business. Net Debt means, on any LTV Reporting Date, closing Net Debt as per the Analysis of Changes Net Debt note in the Guarantor s Consolidated Financial Statements, less the balance of Redeemable notes as per the Fixed Asset Investment note, in each case of the Guarantor Group and as shown in the Consolidated Financial Statements for such LTV Reporting Date. Net Financing Costs means, for any period, Interest payable and similar charges less Interest receivable and similar income for the Guarantor Group as shown in the Consolidated Financial Statements for such period excluding any items which are non-recurring and therefore disclosed as exceptional in nature. Oglesby Family and the Oglesby Family Trusts means Michael and Jean Oglesby, their children and/or grandchildren (and their respective spouses) and trusts held for the benefit of the Oglesby family. Person means an individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, government, or any agency or subdivision thereof or any other entity. Put Date means the day which is 10 days after the expiration of the Change of Control Put Period provided that such day is a day (other than a Saturday or Sunday) on which banks are open generally for business in London, or, if not, the next such day. Potential Event of Default means an event or circumstance which could with the giving of notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement provided for in Condition 11 become an Event of Default. Quasi Security means a transaction under which the Issuer or the Charging Company will: (a) sell, transfer or otherwise dispose of any of its receivables on recourse terms; (b) enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or (c) enter into any other preferential arrangement having a similar effect, 110

111 c108615pu040 Proof 2: _15:15 B/L Revision: in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset. Real Property means all estates and interests in Eligible Properties identified in: (a) Condition 3(b)(i) which are expressed by the Security Deed to be secured on the Issue Date; and (b) any Supplemental Security Deed, and, in each case, all Fixtures from time to time on that property and all Related Rights. Receiver means a receiver and manager or other receiver appointed under the Security Deed by the Trustee in respect of all or part of any Charged Assets and shall, if allowed by law, include an administrative receiver. Related Rights means, in relation to any asset: (a) all rights under any licence, agreement for sale or agreement for lease or other use in respect of all or any part of that asset; (b) all rights, powers, benefits, claims, contracts, warranties, remedies, covenants for title, security, guarantees or indemnities in respect of any part of that asset; (c) the proceeds of sale, transfer or other disposal, lease, licence, or agreement for sale, transfer or other disposal, lease or licence of all or any part of that asset; (d) any other moneys paid or payable in respect of that asset; (e) any awards or judgements in favour of the Issuer, the Guarantor or the Charging Company in relation to that asset; and (f) any right against any clearance system and any right under any custodian or other agreement. Relevant Date means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received in London by the Principal Paying Agent or the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Bondholders. Relevant Indebtedness means any indebtedness which is in the form of, or represented or evidenced by, bonds, notes, debentures, loan stock or other securities in each case which for the time being are, or are intended to be, quoted, listed or dealt in or traded on any stock exchange or over-the-counter or other securities market. S&P means Standard & Poor s Rating Services, a division of the McGraw Hill Companies, Inc. or any successor to its rating business. Security means any Security Interest created, evidenced or conferred by or under the Security Deed or any Supplemental Security Deed. Secured Creditors means each of (a) the Bondholders, (b) the Couponholders, (c) the Trustee and (d) the Agents. Security Interest means any mortgage, lien, charge, assignment, hypothecation or security interest or any other arrangement having a similar effect under the laws of any applicable jurisdiction. Secured Liabilities means all present and future moneys, debts and liabilities due, owing or incurred by the Issuer and/or the Guarantor, and/or indirectly by the Charging Company, to the Secured Creditors under or in connection with any Transaction Document (in each case, whether alone or jointly, or jointly and severally, with any other person, whether actually or contingently and whether as principal, guarantor, surety or otherwise); Shares means, in relation to any person: (a) all shares presently issued by such person and any other shares issued in the future by such person; (b) warrants, options and other rights to subscribe for, purchase or otherwise acquire any such shares; (c) any other securities or investments deriving from any such shares or any rights attaching or relating to any such shares, 111

112 c108615pu040 Proof 2: _15:15 B/L Revision: in each case including any rights against any custodian, nominee, clearing system or other similar person holding any such right, title or interest on its behalf, and all dividends and other Related Rights. Specifically Mortgaged Properties means each Eligible Property for the time being charged by way of a first legal mortgage in favour of the Trustee pursuant to the Security Deed or any Supplemental Security Deed. Subordinated Obligations means, with respect to a Person, any indebtedness of such Person which is subordinate and junior in right of payments in respect of the Secured Liabilities pursuant to contractual agreement to that effect. Subsidiary means a subsidiary or a subsidiary undertaking within the respective meanings of section 1159 and 1162 of the Companies Act Supplemental Security Deed means any deed supplemental to the Security Deed pursuant to which Security Interests are granted by the Issuer, the Guarantor and/or the Charging Company in favour of the Trustee by way of security for the Secured Liabilities. Tangible Fixed Assets means, on any LTV Reporting Date, the sum of Tangible fixed assets for the Guarantor Group as shown in the Consolidated Financial Statements for such LTV Reporting Date. Transaction Documents means the Trust Deed, the Security Deed and the Paying Agency Agreement. UK GAAP means the generally accepted accounting practice and principles in the United Kingdom applicable to the business that the Guarantor Group conducts. Valuation means in relation to: (a) Real Property, a valuation made pursuant to the Security Deed by the Valuers on an open market basis of the individual freehold and leasehold properties as fully equipped and trading entities having regard to their trading potential as part of the business of the Guarantor Group; and (b) Cash Equivalent Investments, the price thereof based on the mean of the bid and offered prices thereof as derived from the London Stock Exchange plc on the dealing day last preceding the date on which the relevant valuation is made and, in relation to investments not so listed, a valuation by an independent expert in writing, appointed at its own expense by the Issuer and approved in writing by the Trustee; and (c) Cash, the amount thereof for the time being. Valuation Date means, in relation to any Valuation, the date as at which such Valuation was made. Value means the value ascribed thereto by a Valuation as at a date not more than three months (or not more than six months in the case of a substitution made in accordance with Condition 5(a)(ii) and Condition 6) before the date at which such Value falls to be determined. Valuers means (i) Knight Frank LLP, Chartered Surveyors or (ii) such other firm or firms of independent professional valuers which is or are members of the Royal Institute of Chartered Surveyors as may from time to time be appointed at its own expense by the Issuer with the written approval of the Trustee. 112

113 c108615pu040 Proof 2: _15:15 B/L Revision: APPENDIX B SUMMARY OF PROVISIONS RELATING TO THE BONDS WHILE IN GLOBAL FORM IN THE CLEARING SYSTEMS The Global Bond contains provisions which apply to the Bonds while they are held in global form by the clearing systems, some of which include minor and/or technical modifications to the Conditions of the Bonds set out in this Prospectus. The following is a summary of certain parts of those provisions. 113

114 c108615pu040 Proof 2: _15:15 B/L Revision: SUMMARY OF PROVISIONS RELATING TO THE BONDS WHILE IN GLOBAL FORM IN THE CLEARING SYSTEMS 1. Exchange of Global Bonds for Definitive Bonds in limited circumstances The Global Bond is exchangeable in whole but not in part (free of charge to the holder) for the Definitive Bonds described below if the Global Bond is held on behalf of a clearing system and such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so. Thereupon, the holder may give notice to the Principal Paying Agent of its intention to exchange the Global Bond for Definitive Bonds on or after the Exchange Date (as defined below) specified in the notice. On or after the Exchange Date (as defined below) the holder of the Global Bond may surrender the Global Bond to or to the order of the Principal Paying Agent. In exchange for the Global Bond, the Issuer shall deliver, or procure the delivery of, an equal aggregate principal amount of duly executed and authenticated Definitive Bonds (having attached to them all Coupons in respect of interest which has not already been paid on the Global Bond), security printed in accordance with any applicable legal and stock exchange requirements and in or substantially in the form set out in Schedule 1 to the Trust Deed. On exchange of the Global Bond, the Issuer will, if the holder so requests, procure that it is cancelled and returned to the holder together with any relevant Definitive Bonds. Exchange Date means a day falling not less than 60 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Principal Paying Agent is located and in the cities in which the relevant clearing system is located. 2. Payments of principal and interest Payments of principal and interest in respect of Bonds represented by the Global Bond will be made against presentation for endorsement and, if no further payment falls to be made in respect of the Bonds, surrender of the Global Bond to or to the order of the Principal Paying Agent or such other Paying Agent as shall have been notified to the Bondholders for such purpose. A record of each payment so made will be endorsed in the appropriate schedule to the Global Bond, which endorsement will be prima facie evidence that such payment has been made in respect of the Bonds. Condition 9(e)(iii) and Condition 10(d) will apply to the Definitive Bonds only. For the purpose of any payments made in respect of the Global Bond, Condition 9(d) shall not apply, and all such payments shall be made on a day on which commercial banks and foreign exchange markets are open in the financial centre of the currency of the Bonds. 3. Notices to Bondholders So long as the Bonds are represented by the Global Bond and the Global Bond is held on behalf of a clearing system, notices to Bondholders may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by Condition 18. Any such notice shall be deemed to have been given to Bondholders on the day after the day on which such notice is delivered to the relevant clearing system. 4. Prescription periods for claims against the Issuer Claims against the Issuer and the Guarantor in respect of principal and interest on the Bonds while the Bonds are represented by the Global Bond will become void unless it is presented for payment within a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in Condition 21). 5. Bondholders Put Option relating to the Bonds The Bondholders put option in Condition 8(d) may be exercised by the holder of the Global Bond, giving notice to the Principal Paying Agent in accordance with the standard procedures of the relevant clearing systems (which may include notice being given on such entitled accountholder s instructions by the relevant clearing systems or any common depository for them to the Principal Paying Agent by electronic means), and in a form acceptable to the 114

115 c108615pu040 Proof 2: _15:15 B/L Revision: relevant clearing systems, of the principal amount of Bonds in respect of which the option is exercised and presenting the Global Bond for endorsement of exercise within the time limits specified in Condition 8(d). 6. Meetings of Bondholders The holder of the Global Bond shall be treated as being two persons for the purposes of any quorum requirements of a meeting of Bondholders and, at any such meeting, as having one vote in respect of each 100 in nominal amount of Bonds at any meeting of the Bondholders. 7. Purchase and cancellation of the Bonds Cancellation of any Bond at the option of the Issuer following its purchase will be effected by reduction in the nominal amount of the Global Bond by endorsement on the relevant part of the Schedule thereto. 8. Trustee s powers In considering the interests of Bondholders while the Global Bond is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to the Global Bond and may consider such interests as if such accountholders were the holder of the Global Bond. 9. Euroclear and Clearstream, Luxembourg References in the Global Bond and this summary to Euroclear and/or Clearstream Luxembourg shall be deemed to include references to any other clearing system approved by the Trustee. 115

116 c108615pu050 Proof 2: _15:14 B/L Revision: APPENDIX C GLOSSARY OF DEFINED TERMS 116

117 c108615pu050 Proof 2: _15:14 B/L Revision: Acceleration Notice Account Bank Additional Initial Specifically Mortgaged Properties...95 Alberton House... 12, 40, 95 Authorised Offeror... 5, 88 Authorised Offeror Contract... 6, 89 Authorised Offeror Terms... 5, 88 B B2000 Beta...70 B2000 Loan...69 B2000 NWR...70 BE...69 BE Beta...70 BE Loan...69 Board...58 Bondholders...94 Bonds... 2, 94 Calculation Date Cash Cash Collateral Account Cash Equivalent Investments CDI Holders...34 CDIs...34 CEO...66 Certificates of Title...26 Change of Control Put Date Change of Control Put Event...15, 102 Change of Control Put Event Notice Change of Control Put Notice Change of Control Put Option Change of Control Put Period Charged Assets Charging Company... 2, 24, 94 Clearstream, Luxembourg...85 CMBS...21 CMBS Notes... 44, 68 Compulsory Purchase...26 Conditions... 14, 24, 94 Consolidated Financial Statements Couponholders... 11, 27, 94 Coupons...94 Covenants Act...25 CREST...34 CREST Deed Poll...35 CREST Depository...34 CREST International Settlement Links Service..35 CREST Manual...35 CREST Nominee...34 CREST Rules...35 Definitive Bonds...85 Elements... 5 Eligible investments...42 Eligible Property Euroclear...85 Exchange Court... 12, 40, 95 Exchange Date Extraordinary Resolution Fair Market Value FATCA... 35, 82 FATCA Affected Obligations...82 FATCA Withholding...82 FCA... 2 FFI...82 Financial Indebtedness Fitch Fixtures FSCS... 2 FSMA... 5 Further Issue Global Bond...85 Gross Profits Gross Redemption Yield Group... 2, 47, 109 Group members... 2 Guarantee... 2, 94 Guarantor... 2, 57, 94 Guarantor Group... 2, 110 HMRC...80 Holding Company ICSDs... 35, 83 IGA...83 Independent Appraiser Initial Specifically Mortgaged Properties Insurances Interest Coverage Ratio Reporting Date Interest Payment Date Interest Period Investor s Currency...36 ISA...82 ISA Regulations...82 ISIN...11 Issue Date... 11, 94 Issuer... 2, 94 ITA...80 Lancastrian Office Centre... 12, 40, 95 Landmark House... 12, 40, 95 Legal & General Facility... 21, 44, 68 LG...70 London Business Day LTV...21 LTV Reporting Date Manager... 5 Market Value...64 Maturity Date...39, 110 member of the Group... 2 MiFID... 5, 85, 88 Moody s MTL Facility... 21, 44, 68 Net Debt...22, 110 Net Financing Costs...22, 110 offer of Bonds to the public...77 Offer Period...50 Oglesby Family and the Oglesby Family Trusts Optional Redemption Date Ordinary Shares...65 Overdraft Facility... 22,

118 c108615pu050 Proof 2: _15:14 B/L Revision: participating Member States...82 Paying Agency Agreement...94 Paying Agents...94 PD Amending Directive...77 Person Potential Event of Default Principal Paying Agent...94 Prospectus... 2 Prospectus Directive...77 Public Offer... 7, 88 Put Date Quasi Security Real Property Receiver Redemption Price Related Rights Relevant Date Relevant Implementation Date...77 Relevant Indebtedness Relevant Member State...77 RNS... 2 Rules... 5, 88 S&P Savings Directive...34 Secured Creditors Secured Liabilities Securities Act...92 Security... 2, 111 Security Deed...94 Security Interest Serviced Offices...30 Shares Sizing Announcement...50 South Central... 12, 40, 95 Specifically Mortgaged Properties...24, 112 St Chads...70 Subordinated Obligations Subscription Agreement...76 Subsidiary Supplemental Security Deed Tangible Fixed Assets Taxes Transaction Documents Trust Deed... 11, 94 Trustee... 11, 94 UK...29 UK GAAP UK IGA...83 Underlying Bonds...34 Valuation Valuation Date Valuation Report...86 Valuation Reports...25 Value Valuer... 25, 86 Valuers West Gate... 12, 40, 95 Wilderspool Business Park... 12, 40,

119 c108615pu050 Proof 2: _15:14 B/L Revision: APPENDIX D VALUATION REPORT 119

120 Valuation report Project Beethoven Prepared on behalf of Bruntwood Ltd 2 July 2013 Contact details Bruntwood Ltd Knight Frank LLP, No.1 Marsden Street, Manchester, M1 2HW Richard Moor MRICS, , richard.moor@knightfrank.com KF ref: Knight Frank LLP is a limited liability partnership registered in England with registered number OC Our registered office is 55 Baker Street, London, W1U 8AN where you may look at a list of members names. 120

121 U.S. Bank Trustees Limited (in its capacity as Trustee for and on behalf of the Bondholders (as defined in the Prospectus)) 125 Old Broad Street, London EC2N 1AR Investec Bank Plc (as Manager) 2 Gresham Street London EC2V 7QP Bruntwood Investments Plc (as Issuer), Bruntwood Ltd (as Guarantor) & Bruntwood RB Ltd (as Charging Company) City Tower Piccadilly Plaza Manchester M1 4BT 2 July 2013 Ref: AG/RM/ Dear Sirs Project Beethoven Portfolio comprising 7 office buildings as detailed below Valuation date 24 May 2013 In accordance with the instructions of the Issuer, the Guarantor and the Charging Company we have pleasure in enclosing our Valuation Report (the Report) and associated valuation appendices (the Valuation Reports). We are instructed to report to you the Market Value of the properties identified herein (the Portfolio). This report is issued to the Issuer, the Guarantor and the Charging Company for inclusion within a prospectus dated 2 July 2013 (the Prospectus) relating to the proposed issue of up to 70,000,000 sterling denominated secured bonds, that are proposed to be issued by Bruntwood Investments Plc (as Issuer) and guaranteed by Bruntwood Ltd (as Guarantor) dated the date hereof and may only be used in connection with the transaction referred to in this Report and for the purposes of the Prospectus. Valuation report Project Beethoven KF Ref: Page 2 Prepared on behalf of Bruntwood Ltd 24 May

122 The valuation has been undertaken in accordance with the relevant provisions of the Prospectus Rules issued by the Financial Conduct Authority and the ESMA update of the CESR recommendations for the consistent implementation of Commission Regulation (EU) No. 809/2004 implementing the Prospectus Directive. We declare that, to the best of our knowledge (having taken all reasonable care to ensure that such is the case) the information given in this report is in accordance with the facts. We have relied upon this as being complete and correct and on there being no undisclosed matters which would affect our valuation. Before the Report or any part of it is reproduced or referred to in any document our written approval as to the form and context of such publication must be obtained. We have reviewed Certificates of Title relating to the Portfolio prepared by Addleshaw Goddard LLP and dated 2 July We can confirm that our valuations fully reflects the disclosures contained therein. We have reconciled the valuations contained herein with the values disclosed in the Guarantors accounts for the year ending 30 September The valuations provided herein are the current Market Value of the Freehold and Leasehold properties. Reviewed (but not undertaken) by; Richard Moor BSc (Hons) MRICS RICS Registered Valuer Partner, Manchester Valuation For and on behalf of Knight Frank LLP Charles Ardern BSc (Hons) MRICS RICS Registered Valuer Partner, Manchester Valuation For and on behalf of Knight Frank LLP Valuation report Project Beethoven KF Ref: Page 3 Prepared on behalf of Bruntwood Ltd 24 May

123 Contents 1 Instructions 5 Engagement of Knight Frank LLP 5 Scope of enquiries & investigations 7 The Portfolio 7 Valuation bases 8 2 Valuation Summary 9 3 The Portfolio 10 4 Valuation Assumptions 10 Accommodation 10 Services 10 Legal title 10 Tenancies 11 Condition 11 Environmental considerations 11 Planning 12 Highways and access 13 5 Building reinstatement cost guidance 14 Building reinstatement cost guidance 14 6 Valuation 15 Methodology 15 Valuation bases 15 Valuation date 15 Market Value 15 Market Rent 17 Reinstatement Cost 18 7 Responsibility 19 Appendices Appendix 1 - Appendix 2 - Instruction documentation Valuation Reports Valuation report Project Beethoven KF Ref: Page 4 Prepared on behalf of Bruntwood Ltd 24 May

124 1 Instructions Engagement of Knight Frank LLP Instructions 1.1 We refer to your instructions and to our subsequent Terms of Engagement letter and General Terms of Business for Valuations of 20 May 2013, to provide Valuation Reports on 7 office buildings, (the Portfolio). Copies of these documents are attached at Appendix This valuation has been carried out in accordance with our General Terms of Business for Valuations ( General Terms of Business ), as attached at Appendix 1. Client 1.3 Our client for this instruction is Bruntwood Ltd Valuation standards 1.4 This valuation has been undertaken in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation - Professional Standards (March 2012), Global & UK edition ( the Red Book ). RICS considers that a valuation complying with the Red Book also complies with International Valuation Standards 1.5 The valuation has been undertaken in accordance with the relevant provisions of the Prospectus Rules issued by the Financial Conduct Authority and the ESMA update of the CESR recommendations for the consistent implementation of Commission Regulation (EU) No. 809/2004 implementing the Prospectus Directive. Purpose of valuation Conflict of interest 1.6 You have confirmed that this valuation report is required for inclusion within a prospectus dated 2 July 2013 (the Prospectus) relating to the proposed issue of up to 70,000,000 sterling denominated secured bonds, that are proposed to be issued by Bruntwood Investments Plc (the Issuer). 1.7 We disclose that Knight Frank LLP have an on-going contractual relationship with Bruntwood providing annual valuation advice for secured lending and accounts purposes in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation - Professional Standards (March 2012), Global & UK edition ( the Red Book ). We consider this to be an arm s length relationship. We do not consider that a conflict of interest arises for us in preparing this Valuation Report. The Client has confirmed to us that they also consider this to be the case. 1.8 We further confirm that, in relation to Knight Frank LLP s preceding financial year, the proportion of the total fees paid by Bruntwood Ltd to the total fee income of Knight Frank LLP was less than 5%. We recognise and support the RICS Rules of Conduct and have established procedures for identifying conflicts of interest. 1.9 We are acting as External Valuers. Valuation report Project Beethoven KF Ref: Page 5 Prepared on behalf of Bruntwood Ltd 24 May

125 Responsibility to 1.10 This Valuation Report has been prepared for inclusion in the Prospectus and may not third parties be reproduced or used in connection with any other purpose without our prior consent Save for any responsibility arising under Prospectus Rule 5.5.4R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this Valuation Report or our statement, required by and given solely for the purposes of complying with Annex IV item 16.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus For the purpose of Prospectus Rule 5.5.4R(2)(f), we accept responsibility for the information within this Valuation Report and declare that we have taken all reasonable care to ensure that the information contained in this Valuation Report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex IV item 1.2 of the Prospectus Directive Regulation. Disclosure & publication Limitations on liability 1.13 Other than in the Prospectus, neither the whole nor any part of this valuation nor any reference thereto may be included in any published document, circular or statement nor published in any way without our prior written approval of the form or context in which it may appear. If our opinion of values is disclosed to persons other than the addressee of this report, the basis of valuation should be stated No claim arising out of or in connection with this valuation report may be brought against any member, employee, partner or consultant of Knight Frank LLP. Those individuals will not have a personal duty of care to any party and any claim for losses must be brought against Knight Frank LLP Knight Frank LLP s total liability for any direct loss or damage caused by negligence or breach of contract in relation to this instruction and valuation report is limited to the amount specified in the Terms of Engagement letter, a copy of which is attached. We do not accept liability for any indirect or consequential loss (such as loss of profits) The above provisions shall not exclude or limit our liability in respect of fraud or for death or personal injury caused by our negligence or for any other liability to the extent that such liability may not be excluded or limited as a matter of law. Expertise 1.17 The valuer, on behalf of Knight Frank LLP, with the responsibility for this report is Richard Moor MRICS (Partner), RICS Registered Valuer. Parts of this valuation have been undertaken by additional valuers, as listed on our file in accordance with Valuation report Project Beethoven KF Ref: Page 6 Prepared on behalf of Bruntwood Ltd 24 May

126 VS1.6.4 of the Red Book. We confirm that the valuer and additional valuers meet the requirements of RICS Valuation - Professional Standards VS 1.6, having sufficient current knowledge of the particular market and the skills and understanding to undertake the valuation competently. Additional Valuers 1.18 The additional valuers are as follows: 1. Charles Ardern MRICS (Partner). 2. Paul Hallam MRICS (Partner). 3. Aaron Graham MRICS (Associate). 4. John Seed MRICS (Senior Surveyor). 5. Martin Smith MRICS (Partner). Vetting 1.19 This report has been vetted as part of Knight Frank LLP s quality assurance procedures. Scope of enquiries & investigations Inspection 1.20 We were instructed to carry out an internal and external inspection of the properties. Our inspection of the properties was undertaken over the period April 2013 by Richard Moor MRICS, Charles Ardern MRICS, Paul Hallam MRICS and Aaron Graham MRICS, John Seed MRICS and Martin Smith MRICS Our inspection was limited by the tenants occupation of the buildings and the timeframe imposed on the instruction. We have undertaken a sample inspection of the accommodation within each building. Enquiries Information provided 1.22 The extent of enquiries made is set out in our General Terms of Business. In carrying out this instruction we have undertaken verbal / web based enquiries referred to in the relevant sections of this report. We have relied upon this information as being accurate and complete In this report we have been provided with information by Bruntwood, its advisors and other third parties. We have relied upon this information as being materially correct in all aspects In particular, we detail the following: Tenancy and floor area information dated 19 April 2013 provided by Bruntwood. The Portfolio The Properties 1.25 The properties comprise 7 office buildings as detailed below: Valuation report Project Beethoven KF Ref: Page 7 Prepared on behalf of Bruntwood Ltd 24 May

127 1. Alberton House, St Marys Parsonage, Manchester, M3 2WJ. 2. Exchange Court, 1 Dale Street, Liverpool, L2 2PP. 3. Lancastrian Office Centre, Talbot Road, Old Trafford, Manchester, M32 0FP. 4. Landmark House, Station Road, Cheadle Hulme, Cheshire, SK8 7BS. 5. South Central, Peter Street, Manchester, M2 5QR. 6. West Gate, Grace Street, Leeds, LS1 2RP. 7. Wilderspool Business Park, Greenalls Avenue, off Wilderspool Causeway, Warrington, Cheshire, WA4 6HL. Valuation bases 1.26 In accordance with your instructions, we have provided opinions of value on the following bases:- Market Value (MV) Market Value on Special Assumption of Vacant Possession Market Rent (MR) 1.27 The Market Value of the freehold / leasehold interest in the properties in their current physical condition, subject to the existing tenancies The Market Value of the freehold / leasehold interest in the properties in their current physical condition, subject to vacant possession The Market Rent of the properties. Valuation date 1.30 The valuation date is 24 May Valuation report Project Beethoven KF Ref: Page 8 Prepared on behalf of Bruntwood Ltd 24 May

128 2 Valuation Summary 2.1 We have provided below a summary of the Market Value figures contained within the individual Valuation reports along with primary data: Table 1: Summary Table Property Market Value Current Rent Market Rent NIY EQY Alberton House Exchange Court Lancastrian Office Centre Landmark House 9,750, , , % 8.44% 6,030, , , % 8.80% 9,680, ,004 1,076, % 10.03% 7,580, , , % 9.76% South Central 9,240, , , % 8.47% West Gate 15,400,000 1,328,210 1,358, % 8.32% Wilderspool Business Park 12,790,000 1,204,825 1,411, % 9.62% Total 70,470,000 5,770,210 7,190,424 Source: Knight Frank Valuation Valuation report Project Beethoven KF Ref: Page 9 Prepared on behalf of Bruntwood Ltd 24 May

129 3 The Portfolio 3.1 The properties comprise: Freehold 3.2 Lancastrian Office Centre, Talbot Road, Old Trafford, Manchester, M32 0FP. South Central, Peter Street, Manchester, M2 5QR. West Gate, Grace Street, Leeds, LS1 2RP. Leasehold 3.3 Alberton House, St Mary s Parsonage, Manchester, M3 2WJ. Freehold and Leasehold Exchange Court, 1 Dale Street, Liverpool, L2 2PP. Landmark House, Station Road, Cheadle Hulme, Cheshire, SK8 7BS. Wilderspool Business Park, Greenalls Avenue, off Wilderspool Causeway, Warrington, Cheshire, WA4 6HL. 4 Valuation Assumptions Accommodation Measurement 4.1 As agreed with the client, we have relied upon floor areas provided to us by Bruntwood, we have assumed these areas are measured in accordance with the RICS Code of Measuring Practice, Sixth Edition on a Net Internal Area (NIA) basis. Services 4.2 In accordance with the General Terms of Business enclosed at Appendix 1, no tests have been undertaken on any of the services. 4.3 We have assumed for the purposes of this valuation that mains gas, water, electricity, drainage and telecommunications are all available to the properties. Legal title Land register searches 4.4 As stated in our General Terms of Business, we do not undertake searches or inspections of any kind (including web based searches) for title or price paid information in any publicly available land registers, including the Land Registry for England & Wales, Registers of Scotland and Land & Property Services in Northern Ireland. Valuation report Project Beethoven KF Ref: Page 10 Prepared on behalf of Bruntwood Ltd 24 May

130 Sources of Information 4.5 We have been provided with Certificates of Title prepared by Addleshaw Goddard, dated 2 July 2013 upon which we have relied. We confirm that the properties valued are the properties described in the Certificate of Title. We also confirm that we have taken the Certificates of Title into account in arriving at our valuation and that there is nothing contained within the Certificates on Title that would cause us to alter our Valuation Report. 4.6 In our valuation, we have assumed a good and marketable title and that all documentation is satisfactorily drawn. 4.7 We recommend that our understanding of all legal title issues is referred to your legal advisers for their confirmation that our understanding is correct. 4.8 If any matters come to light as a result of your legal adviser s review of these issues, we request that these matters are referred back to us as this information may have an important bearing upon the values reported. Tenancies Tenancy information 4.9 We have been provided with the tenancy information by Addleshaw Goddard and Bruntwood and have relied on that information as being correct. An overview of the tenancy information is contained within the individual Valuation Reports. Condition Scope of inspection Comments Ground conditions 4.10 As stated in the General Terms of Business attached, we have not undertaken a building or site survey of the properties Apart from any matters specifically referred to within the individual valuation reports, we have assumed that the properties are in sound order and free from structural faults, rot, infestation or other defects, and that the services are in a satisfactory condition We have not been provided with a copy of a ground condition report for the properties. Unless a statement to the contrary is contained within the individual Valuation Reports we have assumed that there are no adverse ground or soil conditions and that the load bearing qualities of the site are sufficient to support the buildings constructed thereon. Environmental considerations Flooding 4.13 We have used the website of the Environment Agency s Indicative Floodplain Maps to provide a general overview of lands in natural floodplains and therefore potentially at risk of flooding from rivers or the sea. The maps use the best information currently Valuation report Project Beethoven KF Ref: Page 11 Prepared on behalf of Bruntwood Ltd 24 May

131 available, based on historical flood records and geographical models. They indicate where flooding from rivers, streams, watercourses or the sea is possible. Unless a statement to the contrary is contained within the individual Valuation Reports we have assumed that the properties are unaffected. Contamination 4.14 As stated in the General Terms of Business, investigations into environmental matters would usually be commissioned from suitably qualified environmental specialists. Knight Frank LLP is not qualified to undertake scientific investigations of sites or buildings to establish the existence or otherwise of any environmental contamination, nor do we undertake searches of public archives to seek evidence of past activities which might identify potential for contamination. Unless a statement to the contrary is contained within the individual Valuation Reports we have assumed that the properties are unaffected Subject to the above, while carrying out our valuation inspection, we have not been made aware of any uses conducted at the subject properties that would give cause for concern as to possible environmental contamination. Our valuation is provided on the assumption that the properties are unaffected. High voltage equipment Asbestos 4.16 The possible effects of electric and magnetic fields have been the subject of media coverage, with the result that where there is high-voltage electrical supply equipment close to the property, there is a risk that public perception may affect marketability and value. Unless a statement to the contrary is contained within the individual Valuation Reports we have assumed that the properties are unaffected Since 1999, the use within a building of asbestos containing materials (ACM s) has been banned. These are commonly found although are often in areas not visible from an inspection of the surface elements. While these can be sealed in place, public alarm is such that their removal and safe disposal is the more likely course of action and this can be particularly expensive. Removal and disposal will require specialist advice. Knight Frank LLP does not specifically inspect for ACM s. We have assumed that no ACM s are contained within the properties. Planning Sources of planning information 4.18 Planning enquiries are contained within the individual Valuation Reports These enquiries should not be taken as personal searches and information on the relevant website is assumed to be both accurate and up to date. For a formal planning enquiry to be made, the Local Authority will require written representation Valuation report Project Beethoven KF Ref: Page 12 Prepared on behalf of Bruntwood Ltd 24 May

132 which has not been possible as part of our report. Highways and access Highways 4.20 We have made verbal enquiries of the appropriate Highways Authority. Unless a statement to the contrary is contained within the individual Valuation Reports we have assumed that the properties have direct access to the adopted highway. Valuation report Project Beethoven KF Ref: Page 13 Prepared on behalf of Bruntwood Ltd 24 May

133 5 Building reinstatement cost guidance Building reinstatement cost guidance Purpose, scope & reliance 5.1 You have requested that we provide you with an indication of the current likely reinstatement cost of the existing buildings for insurance purposes. We do not hold ourselves out to be construction cost advisers and a formal estimate can only be given by a specialist construction cost consultant. We would emphasise that this figure is for guidance only, to assist you in your assessment of the adequacy of the existing cover. Our reinstatement assessment should be compared with the existing cover and if there is a material difference you should consider commissioning a building reinstatement assessment from a suitably qualified specialist. Items included 5.2 Our estimate is inclusive of demolition costs, site clearance costs and professional fees. Items excluded 5.3 Our estimate excludes VAT, loss of rent, the cost of alternative accommodation for the reinstatement period and any allowance for inflation. The addition of VAT and an allowance for inflation should be discussed with insurers. Our estimate also excludes furniture and other contents, process plant or machinery or trade fixtures and fittings and any consequential loss. Reinstatement guidance 5.4 The current reinstatement cost, for insurance purposes, is contained within the individual Valuation Reports. We emphasise that this figure should be used for general guidance only. 5.5 Formal assessments of reinstatement, particularly on buildings of this individual nature are normally undertaken by a qualified quantity surveyor or equivalent expert following inspection of the entire building. Valuation report Project Beethoven KF Ref: Page 14 Prepared on behalf of Bruntwood Ltd 24 May

134 6 Valuation Methodology 6.1 Our valuation has been undertaken using appropriate valuation methodology and our professional judgement. Investment method 6.2 Our valuation has been carried out using the comparative and investment methods. In undertaking our valuation of the property, we have made our assessment on the basis of a collation and analysis of appropriate comparable investment and rental transactions, together with evidence of demand within the vicinity of the subject property. With the benefit of such transactions we have then applied these to the property, taking into account size, location, terms, covenant and other material factors. Valuation bases Market Value 6.3 Market Value is defined within RICS Valuation - Professional Standards as: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. Portfolios 6.4 In a valuation of a property portfolio, we have valued the individual properties separately and we have assumed that the individual properties have been marketed in an orderly way. Market Rent 6.5 The basis of valuation for our opinion of rental value is Market Rent. This is defined in RICS Valuation - Professional Standards as: The estimated amount for which a property, would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm slength transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. Valuation date Valuation date 6.6 The valuation date is 24 May Market Value Assumptions 6.7 Our valuation is necessarily based on a number of assumptions which have been Valuation report Project Beethoven KF Ref: Page 15 Prepared on behalf of Bruntwood Ltd 24 May

135 drawn to your attention in our General Terms of Business, Terms of Engagement Letter and within this report. Key assumptions 6.8 Whilst we have not provided a summary of all these assumptions here, we would in particular draw your attention to a key assumption that: There are no material changes to the property since the date of our last full inspection. There are no rental arrears. That the tenants are of sufficient financial standing to meet their lease obligations. Special assumptions 6.9 As instructed by with you, our valuation is also undertaken the following special assumptions:- A special assumption that the property is vacant. Market Value 6.10 We are of the opinion that the Market Value of the freehold / leasehold interest in the properties, subject to the existing tenancies, at the valuation date is: 70,470,000 (Seventy Million, Four Hundred and Seventy Thousand Pounds). Table 2: Market Value Property Market Value Alberton House 9,750,000 Exchange Court 6,030,000 Lancastrian Office Centre 9,680,000 Landmark House 7,580,000 South Central 9,240,000 West Gate 15,400,000 Wilderspool Business Park 12,790,000 Total 70,470,000 Valuation report Project Beethoven KF Ref: Page 16 Prepared on behalf of Bruntwood Ltd 24 May

136 Source: Knight Frank Valuation 6.11 The above has been calculated after allowing for purchaser s costs of 5.8%, in accordance with standard market practice. These comprise of 4.00% Stamp Duty Land Tax, agent s fees of 1.00% and legal fees of 0.50% with VAT of 20% on the agents and legal fees. Market Value on special assumption 6.12 We are of the opinion that the Market Value of the freehold / leasehold interest in the properties, on the special assumption of vacant possession, as at the valuation date is: 39,900,000 (Thirty Nine Million, Nine Hundred Thousand Pounds). Table 3: Market Value on the Special Assumption of Vacant Possession Property Market Value on Special Assumption of Vacant Possession Alberton House 5,650,000 Exchange Court 3,250,000 Lancastrian Office Centre 6,600,000 Landmark House 4,600,000 South Central 6,300,000 West Gate 6,000,000 Wilderspool Business Park 7,500,000 Total 39,900,000 Source: Knight Frank Valuation Market Rent 6.13 Our opinion of Market Rent is as follows: Table 4: Market Rent Valuation report Project Beethoven KF Ref: Page 17 Prepared on behalf of Bruntwood Ltd 24 May

137 Property Market Rent Alberton House 991,470 Exchange Court 601,670 Lancastrian Office Centre 1,076,715 Landmark House 840,779 South Central 910,646 West Gate 1,358,050 Wilderspool Business Park 1,411,094 Total 7,190,424 Reinstatement Cost Source: Knight Frank Valuation 6.14 Our reinstatement costs are as follows: Table 5: Reinstatement Cost Property Reinstatement Cost Alberton House 12,370,000 Exchange Court 10,380,000 Lancastrian Office Centre 18,870,000 Landmark House 9,560,000 South Central 13,000,000 West Gate 17,820,000 Wilderspool Business Park 17,360,000 Total 99,360,000 Source: Knight Frank Valuation Valuation report Project Beethoven KF Ref: Page 18 Prepared on behalf of Bruntwood Ltd 24 May

138 7 Responsibility 7.1 This Valuation Report has been prepared for inclusion in the Prospectus and may not be reproduced or used in connection with any other purpose without our prior consent. Save for any responsibility arising under Prospectus Rule 5.5.4R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this Valuation Report or our statement, required by and given solely for the purposes of complying with Annex IV item 16.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus. For the purpose of Prospectus Rule 5.5.4R(2)(f), we accept responsibility for the information within this Valuation Report and declare that we have taken all reasonable care to ensure that the information contained in this Valuation Report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex IV item 1.2 of the Prospectus Directive Regulation. Valuation report Project Beethoven KF Ref: Page 19 Prepared on behalf of Bruntwood Ltd 24 May

139 Appendix 1 - Instruction documentation Valuation report Project Beethoven KF Ref: Prepared on behalf of Bruntwood Ltd 24 May

140 Bruntwood Ltd City Tower Piccadilly Plaza Manchester M1 4BT Attn: Chris Oglesby 20 May 2013 Dear Sir Our Terms of Engagement for a Valuation of the properties outlined herein and known as Project Beethoven Client: Bruntwood Ltd Thank you for your of 15 May 2013 requesting a valuation of the above properties (the portfolio ). We are writing to set out our Terms of Engagement for carrying out a valuation of the above portfolio. Our Terms of Engagement for this instruction comprise our General Terms of Business for Valuations which are attached to this letter, together with the specific terms contained within this letter. This letter shall take precedence, to the extent that there is any inconsistency with the General Terms of Business for Valuations A copy of this letter and our General Terms of Business for Valuations are attached for you to sign and return to us, signifying your acceptance of the terms contained therein. In addition to our General Terms of Business for Valuations, our Terms of Engagement for carrying out this instruction include the following: 1.0 Our Client is: Bruntwood Ltd 2.0 Purpose of valuation: The valuation is required for the purpose of Financial Reporting. This valuation is issued to US Bank (in its capacity as Trustee for and on behalf of the Bondholders (as defined in the Prospectus)) Bruntwood Ltd (as Guarantor), Investec Bank Plc (as Manager) for inclusion within a prospectus relating to the proposed issue of up to 70,000,000 Sterling secured bonds (the Prospectus) that are proposed to be issued by Bruntwood Investments Plc (as Issuer) and guaranteed by Bruntwood Ltd (as Guarantor). 3.0 Property to be valued: The properties within the portfolio are as follows: Valuation report Project Beethoven KF Ref: Prepared on behalf of Bruntwood Ltd 24 May

141 1. Alberton House St Marys Parsonage, Manchester, M3 2WJ 2. Lancastrian Office Centre Talbot Road, Old Trafford, Manchester, M32 0FP 3. West Gate Grace Street, Leeds, LS1 2RP 4. South Central Peter Street, Manchester, M2 5QR 5. Exchange Court 1 Dale Street, Liverpool, L2 2PP 6. Landmark House Station Road, Cheadle Hulme, Cheshire, SK8 7BS 7. Wilderspool Business Park Greenalls Avenue, off Wilderspool Causeway, Warrington, Cheshire, WA4 6HL 4.0 Interest to be valued: Freehold and Leasehold as detailed within the individual Valuation Reports. 5.0 Property type and use: Offices which are tenanted. 6.0 Basis of valuation: Market Value in accordance with the RICS Valuation Professional Standards (March 2012), Global & UK edition. Where valuation of assets is required for financial reporting purposes of an entity preparing financial statements in accordance with UK GAAP the required basis of value is Market Value. 7.0 Key Assumptions and Special Assumptions: We will also value the properties on the Special Assumption of Vacant Possession. 8.0 Valuation date: The valuation date is 24 May Conflicts of interest: We have already confirmed to you that we have an on-going relationship with Bruntwood providing annual Valuations for accounting purposes. We do not consider that this creates a Conflict of Interest. We further confirm that, in relation to Knight Frank LLP s preceding financial year, the proportion of the total fees paid by Bruntwood to the total fee income of Knight Frank LLP was less than 5%. We recognise and support the RICS Rules of Conduct and have established procedures for identifying conflicts of interest. Valuation report Project Beethoven KF Ref: Prepared on behalf of Bruntwood Ltd 24 May

142 It is not anticipated that there will be a material increase in the proportion of the fees payable, or likely to be payable, by the Client Status of valuer: External valuers 11.0 Valuer and Competence Disclosure The valuer, on behalf of Knight Frank LLP, with responsibility for this report will be Richard Moor BSc (Hons) MRICS, RICS Registered Valuer. Parts of this valuation will be undertaken by additional valuers. We confirm that the valuer and additional valuers collectively meet the requirements of RICS Valuation Standards VS 1.6 having sufficient current knowledge of the particular market and the skills and understanding to undertake the valuation competently Currency to be adopted: Pounds Sterling Extent of inspection and investigations: Our General Terms of Business set out the scope of our on site inspection and investigations. Unless prevented from doing so, we will inspect the properties internally, as well as externally Information to be relied upon: We will rely on information provided to us by Bruntwood Ltd (or a third party) and will assume it to be correct. We recommend reliance is not placed on our interpretation of title and lease documents and that independent legal advice is sought Fees: Our fee for undertaking this instruction will be 50,000 excluding VAT. We reserve the right to charge interest on fees unpaid 30 days after the date of the invoice Limitation of liability Clause 3 of our General Terms of Business for Valuations limits our liability under this instruction. Notwithstanding Clause 3.3. of our General Terms of Business for Valuations, it has been agreed between us that our maximum total liability for any direct loss or damage whether caused by our negligence or breach of contract or otherwise is Valuation report Project Beethoven KF Ref: Prepared on behalf of Bruntwood Ltd 24 May

143 limited to 25% of Market Value Liability to parties other than the Client: Pursuant to clause 3.4 we do not accept liability for any indirect or consequential loss (such as loss of profits). No responsibility is accepted to any third party for the whole or any part of its contents. We will include the following confirmation in the Prospectus Valuation Report: This Valuation Report has been prepared for inclusion in the Prospectus. Save for any responsibility arising under Prospectus Rule 5.5.4R(2)(f) to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this Valuation Report or our statement, required by and given solely for the purposes of complying with Annex IV item 16.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus. For the purpose of Prospectus Rule 5.5.4R(2)(f), we accept responsibility for the information within this Valuation Report and declare that we have taken all reasonable care to ensure that the information contained in this Valuation Report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with Annex IV item 1.2 of the Prospectus Directive Regulation. If any of the details set out above are incorrect please let us know we will assume they are correct unless you tell us otherwise. Please will you sign and return the duplicate copy of the Terms of Engagement, signifying your agreement to the terms contained therein. We should point out that the report will not be discussed or disclosed before these Terms have been returned. Valuation report Project Beethoven KF Ref: Prepared on behalf of Bruntwood Ltd 24 May