MWB Business Exchange Plc

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document you should consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities. This document does not constitute a prospectus (as defined in the Prospectus Rules) but is an admission document drawn up in accordance with the rules for AIM published by London Stock Exchange plc. This document has been issued in connection with the application for admission to trading on AIM of MWB Business Exchange s issued Ordinary Shares. Application has been made for all of the issued Ordinary Shares to be admitted to trading on AIM. The Ordinary Shares are not dealt on any other recognised investment exchange and no other such applications have been made. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admitted to the Official List of the UK Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. London Stock Exchange plc has not examined or approved the contents of this document. Prospective investors should read the whole text and contents of this document and should assume that an investment in the Company is speculative and involves a degree of risk. In particular prospective investors should carefully consider the section entitled Risk Factors in this document before taking any action. MWB Business Exchange and each of the Directors, whose names appear on page 3, declare that, having taken all reasonable care to ensure that such is the case, the information contained in this document is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import. MWB Business Exchange Plc Admission to trading on AIM and Placing of 18,750,000 Ordinary Shares at 80p per Ordinary Share by KBC Peel Hunt Ltd Nominated Adviser and Broker KBC Peel Hunt, which is regulated by the Financial Services Authority, is acting as the Company s Nominated Adviser in connection with the proposed admission of the Company s Ordinary Shares to trading on AIM. Its responsibilities as the Company s Nominated Adviser under the AIM Rules are owed solely to London Stock Exchange plc and are not owed to the Company or to any Director or to any other person in respect of his decision to acquire Ordinary Shares in reliance on any part of this document. No representation or warranty, express or implied, is made by KBC Peel Hunt as to any of the contents of this document (without limiting the statutory rights of any person to whom this document is issued). KBC Peel Hunt will not be offering advice and will not otherwise be responsible for providing customer protections to recipients of this document in respect of the Placing or any acquisition of Ordinary Shares. The distribution of this document outside the UK may be restricted by law and therefore persons outside the UK into whose possession this document comes should inform themselves about and observe any restrictions as to the Placing, the Ordinary Shares or the distribution of this document. The Ordinary Shares have not been, nor will be, registered in the United States under the United States Securities Act of 1933, as amended, or under the securities laws of Canada, Australia or Japan or any other law and they may not be offered or sold directly or indirectly within the United States, Canada, Australia, or Japan or any other jurisdiction where its distribution may be restricted by law or to, or for the account or benefit of, any national, citizen or resident of the United States, Canada, Australia or Japan. This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful.

2 CONTENTS Placing Statistics 2 Expected Timetable 2 Directors and Principal Advisers 3 Definitions 4 Glossary of Terms 6 Key Information 8 Risk Factors 10 Forward Looking Statements 12 Part I Information on the BX Group 13 Part II Financial Information on the Company 24 Financial Information on MWB Business Exchange UK Limited 27 Part III Unaudited Pro-forma Statement of Net Assets of the BX Group 42 Part IV Additional Information 44 PLACING STATISTICS Placing Price 80 pence Number of Placing Shares to be placed on behalf of the Company 18,750,000 Placing Shares as a percentage of the Ordinary Shares in issue on Admission 27.1 % Number of Ordinary Shares in issue on Admission following the Placing 69,100,000 Gross proceeds of the Placing 15.0 million Net proceeds of the Placing receivable by the Company 13.0 million Market capitalisation of the Company at the Placing Price 55.3 million Page EXPECTED TIMETABLE Publication of this document Admission and dealings in Ordinary Shares to commence on AIM Uncertificated Placing Shares credited to CREST accounts Definitive share certificates despatched by December 21 December 21 December January 2

3 DIRECTORS AND PRINCIPAL ADVISERS Directors Richard Gary Balfour-Lynn (Non-Executive Chairman) John Robert Spencer (Chief Executive ) Guy Richard Aspland-Robinson (Executive Director) Keval Pankhania (Finance Director) Jagtar Singh (Non-Executive Director) all of: Principal Place of Business 1 West Garden Place Kendal Street London W2 2AQ Tel: Registered Office Secretary Nominated Adviser and Broker Auditors and Reporting Accountants Solicitors to the Company Solicitors to the Placing Bankers Registrars ISIN number 179 Great Portland Street London W1W 5LS Filex Services Limited KBC Peel Hunt Ltd 111 Old Broad Street London EC2N 1PH KPMG Audit Plc 8 Salisbury Square London EC4Y 8BB Dechert LLP 160 Queen Victoria Street London EC4V 4QQ Nabarro Nathanson Lacon House Theobald s Road London WC1X 8RW Deutsche Postbank AG, London Branch 61 Queen Street London EC4R 1AF Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU GB00B0S53N07 3

4 DEFINITIONS The following definitions apply throughout this document, unless the context otherwise requires: Act Admission AIM AIM Rules Board BX Centres BX Group BXUK Company or MWB Business Exchange CREST CRESTCo CREST Regulations Directors Executive Directors KBC Peel Hunt London Stock Exchange MWB Group Ordinary Shares Placing Placing Agreement the Companies Act 1985 (as amended) the admission of the Ordinary Shares (currently issued and to be issued pursuant to the Placing) to trading on AIM becoming effective in accordance with the AIM Rules a market operated by London Stock Exchange the rules published from time to time by London Stock Exchange relating to AIM the board of directors of the Company from time to time Business Exchange Centres Limited, the principal operating subsidiary of the Company upon Admission prior to Admission, BXUK and, where the context requires, its subsidiary undertakings, and on and from Admission, the Company and, where the context requires, its subsidiary undertakings MWB Business Exchange UK Limited, the principal operating subsidiary of the Company prior to Admission and, where the context requires, its subsidiary undertakings MWB Business Exchange Plc the computerised system operated by CrestCo for trading shares in uncertificated form in the UK CRESTCo Limited, the operator (as defined in the CREST Regulations) of the system for trading shares in uncertificated form known as CREST the Uncertificated Securities Regulations 1995 (as amended) the directors of the Company, whose names are set out on page 3 John Spencer, Keval Pankhania and Rick Aspland-Robinson KBC Peel Hunt Ltd London Stock Exchange plc Marylebone Warwick Balfour Group Plc and, where the context requires, its subsidiary undertakings ordinary shares of 0.1p each in the share capital of the Company the conditional placing by KBC Peel Hunt, on behalf and as agent for the Company, of the Placing Shares, pursuant to the Placing Agreement the conditional agreement dated 16 December 2005 between the Company, the Directors, MWB Group and KBC Peel Hunt relating to the Placing, further details of which are set out in paragraph 10 of Part IV 4

5 Placing Price Placing Shares Prospectus Rules Share Option Scheme Shareholders UK 80p per Ordinary Share 18,750,000 Ordinary Shares to be placed pursuant to the Placing the prospectus rules published from time to time by the Financial Services Authority the MWB Business Exchange Plc Executive Share Option Scheme 2005 holders of Ordinary Shares the United Kingdom of Great Britain and Northern Ireland 5

6 GLOSSARY OF TERMS The following terms apply throughout this document, unless the context otherwise requires: back-to-back leases business centres or serviced offices Business Exchange Centres City Executive Centres Corporate Real Estate Partnerships dedicated office or dedicated meeting and conference room leases of business centres which are co-terminous with licence agreements granted by the BX Group to occupiers of such business centres commercial premises used by occupiers on flexible terms, for periods of one month to five years and typically charging occupiers for full service accommodation including IT and telecoms infrastructure, heating, air conditioning, electricity, facilities management and security systems a business operated by the BX Group in the 4/5 star segment of the serviced offices, specialising in short to medium term serviced office solutions for Start-Ups, SMEs and corporates in the UK a business operated by the BX Group in the 3 star segment of the serviced office market specialising in medium and long term serviced offices for the Start-Ups and SME market place in the UK a business operated by the BX Group delivering flexible property solutions that are designed to address the needs of corporates, landlords, building owners and commercial property agents an office or a meeting or conference room where a single client is the sole occupant EBITDA earnings before interest, taxation, depreciation and amortisation IT licence fee management agreement Meeting and Conference Rooms OMA REVPAW or revenue per available workstation information technology, typically computer based the fee payable for occupation of serviced office space which is usually inclusive of rates, service charges, building management, building insurance (but excluding client contents), lighting, heating, cleaning, security and the use of reception and kitchen facilities a management agreement with a landlord or tenant of a property under which the BX Group operates or manages a serviced office for a fixed fee and in some cases for a share of profits, but where the operating and financial risk of running the property is borne by the landlord or tenant a business operated by the BX Group providing meeting and conference rooms to both the clients using the BX Groups serviced offices and others an operating and management agreement with a landlord or tenant of a property under which the BX Group operates or manages a serviced office, bears some of the initial setup costs and shares the operating risk of running a serviced office with the landlord or tenant of the property concerned license fees and services income receivable, divided by the number of available workstations 6

7 REVPOW or revenue per occupied workstation shared office SMEs Start Ups sq ft virtual office space workstation license fees and services income receivable, divided by the number of occupied workstations an office shared with other clients as the occupants small and medium sized enterprises newly formed businesses area per square foot mail receiving and telephone answering services provided by the BX Group to certain of its clients an area occupied by one individual, and which typically includes a desk, chair, pedestal and IT and telecoms equipment 7

8 KEY INFORMATION This is an introduction to this document and any decision to invest in Ordinary Shares should be based on consideration of the whole of this admission document and not solely on the key information. This information is derived from, and should be read in conjunction with, the full text of this document. The BX Group Š The BX Group operates business centres which represent an alternative to conventional office space. These business centres offer advantages of convenience, flexibility and immediate availability for SMEs, corporate and other clients (including government bodies). The BX Group s business centres can prove economical to clients, depending upon the term of occupancy and the number of workstations required for employees in each office. Š The BX Group delivers a high quality 3 to 5 star serviced office product and operates a portfolio of over 880,000 sq ft of prime office, meeting and conference room space across 51 UK locations. With over 12,500 workstations and in excess of 190 available meeting and conference rooms, MWB Business Exchange is the second largest provider of serviced office space in the UK, and is one of the seven operators managing one-third of the UK s serviced office market. Š The BX Group s primary business is the provision of dedicated office space for use by clients. 88 per cent. of the BX Group s revenue is generated from licence fees and service income receivable from office space. The BX Group also provides shared office space suitable for Start-Up and SMEs (which do not always require dedicated office space), virtual office services and meeting and conference rooms. Š The BX Group currently operates 51 business centres across the UK in its four operating divisions of which 34 are leaseholds and 17 are operated under either a management agreement or an OMA. All of the business centres have been developed to reflect one or more of the BX Group s four business divisions: 4/5 star Business Exchange Centres; 3 star City Executive Centres; Corporate Real Estate Partnerships; and Meeting and Conference Rooms. Š Currently serviced offices in the UK account for only 1.7 per cent. of UK properties available for business use, compared to 15 per cent. in the United States. The UK serviced office market is expected to experience a sustained rise in occupancy levels over the next three years, with an additional 30,000 workstations to come to market by December This is as a result of operator expansions and to satisfy the anticipated increase in demand for flexible office space. Š The growing UK meeting and conference room market is currently estimated at approximately 12.9 billion per annum, over 2.1 billion of which is made up of nonresidential business meetings. The major operators in the market are the large hotel groups who are able to charge high rates with little flexibility for clients due to high levels of demand. In many cases service delivery has not been to a high standard, the facilities are very similar and they may not be business focused. The Directors believe there is strong, untapped demand in this sector particularly for the provision of professional and dedicated business meeting and training rooms for organisations of all sizes. As such, there is the opportunity to create a stand-alone branded meeting solution that the Directors believe will help the BX Group to clearly target this developing area for the provision of dedicated meeting and conference rooms for hourly or daily bookings. Occupation levels continue to grow as a result of focused activity to centre and non-centre users in addition to conference agents. Š The Directors expect office rentals between 2006 and 2008 in London s West End to increase by 7.7 per cent. per annum, London s Mid Town to increase by 6.0 per cent. per annum and London City to increase by 6.3 per cent. per annum. The BX Group is already experiencing an increase in licence fee rates as a result of these expected rises in office rentals. 8

9 Š Š Š The Directors plan that Business Exchange Centres will grow organically by improving yield. The two key drivers in the division are occupancy and price. The strategy is to maintain occupancy at approximately 80 per cent. and to increase revenues from both existing and new clients. Because of the strong operational gearing of Business Exchange Centres, emanating from the fact that this is a predominantly fixed cost division, the increased revenue produces a similar increase in EBITDA and pre-tax profit, thus substantially enhancing the rate of return of the division. Business Exchange Centres will continue to reduce operational risk, by reducing its reliance on clients that occupy more than 15 per cent. of any business centre and continually reviewing its sector reliance. The organic growth strategy for City Executive Centres is to improve the performance of each business centre it manages, to maximise profit share to the BX Group. The Board is confident that it will add further management agreements to its City Executive Centre division and management agreements for regional business centres. The Corporate Real Estate Partnerships division will look to acquire OMAs, freeholds, and selective leasehold assets so that it can increase the number of business centres for the BX Group. This growth strategy should increase revenues and profitability, and is also designed to reduce the operational risk to the BX Group by balancing its property portfolio with the addition of OMAs, management agreements, freeholds and further back-to-back leases. Trading record Š Since July 2005, occupancy has increased by 3 per cent. to 84 per cent. and the average rate per workstation at Business Exchange Centres leasehold interests has increased by 3.5 per cent., following the implementation of further sales and occupancy initiatives. In addition, service income over this five month period has increased due to additional focus on new initiatives, the results of which are demonstrated by the increased REVPAW and REVPOW figures. These initiatives will continue into the future. Reasons for Admission and use of proceeds of the Placing Š The Directors believe that the greater capital base of the Company following the Placing will improve the Company s flexibility in funding, and that its status as a company admitted to trading on AIM will also be beneficial in realising some of the larger and varied, freehold, leasehold and OMA opportunities that are now being offered to the BX Group. Š The Company is proposing to raise approximately 15.0 million before expenses through the Placing which will be used to finance the proposed expansion of the BX Group. Dividend policy Š The Directors intend to commence payment of dividends for the financial year ending 31 December 2006 and propose to follow a progressive and sustainable dividend policy thereafter. Financial information Š Your attention is drawn to the sections entitled Trading record and Key performance indicators on pages 18 and 19 in this document. Š Part II of this document sets out an accountant s report on the Company and an accountant s report on BXUK, both reported on by KPMG Audit Plc, Chartered Accountants regulated by the Institute of Chartered Accountants in England and Wales. Risk factors Š Your attention is drawn to the section entitled Risk Factors on pages 10 to 12 in this document. Additional information Š Detailed information about the BX Group including a summary of the articles of association of the Company, interests of Directors and material contracts is set out in Part IV. 9

10 RISK FACTORS An investment in the Company involves a degree of risk. Investors should consider carefully the following risks, before deciding to buy any Ordinary Shares. Additional risks and uncertainties not currently known to the Directors or that the Directors currently deem to be immaterial may also impair the business operations of the BX Group. Investors may lose all or part of their investment as a result of such risks or other factors. If any of the following risks actually occur the BX Group s business, financial condition, capital resources, results and/or future operations could be materially affected. In such case the price of the Ordinary Shares may fall and investors may lose some or all of the investment. Reliance on key business centres and the London market Approximately 47 per cent. of the BX Group s turnover is generated by 10 of its business centres. The BX Group s portfolio is London based; the 21 London centres (4 of which are operated under management agreements or OMAs) account for 49 per cent. of the BX Group s total workstations and 62 per cent. of total turnover. 59 per cent. of London turnover is attributable to West End and Mid Town centres. Reliance on key clients Although over the last two years, the BX Group has significantly reduced its dependence on large clients for revenue and occupancy, certain of its key revenue generating business centres are reliant on one client for over 20 per cent. of their revenue. Loss of Executive Directors The loss of any of the Executive Directors could harm the BX Group or cause delay in the implementation of the BX Group s strategy due to the loss of input from those individuals. The future success of the BX Group is, in part, dependent upon the ability of its existing management team and on the BX Group s ability to motivate and retain staff with the requisite experience. Changes in property market If the conventional property market changes significantly, and landlords begin to offer shorter leases or more flexible lease terms, to give significant rent reductions or to provide significant rent free periods, the BX Group s business centres may become less attractive to both existing and potential clients. Changes in long term growth drivers There can be no assurance that the factors the Directors expect to drive the long-term growth in the serviced office market in the future will in fact do so. For example, the trends towards flexible working styles and increased outsourcing of office and related services may not develop as expected by the Directors. Changes in working practices could occur which would be detrimental to the BX Group, such as more employees working from home. Changes in competitive landscape There are few barriers to entry into the serviced office market at the local and national level because there are no significant legislative or regulatory barriers. Although it is harder to establish a national network this may not deter new entrants or existing competitors. In addition, there is the potential for local operators to establish wider networks, for example, by forming alliances amongst operators to provide a scale similar to that operated by the BX Group. There is also the potential for other companies in related sectors such as property companies and hotel operators, to enter the serviced office market, either alone or in collaboration with other service providers, thereby increasing competition to the BX Group. If the BX Group is unable to respond adequately to the competitive challenges it faces, or to establish a sustainable competitive advantage, it may be unable to maintain its position and it may lose market share. In addition, in competitive markets there is often downward pressure on prices that the BX Group can charge for its business centres, which may cause an adverse impact on the BX Group s revenue and profitability. 10

11 Long-term cost base does not match short-term revenue profile The BX Group currently leases the majority of its properties. The length of the leases and the time at which the BX Group may exercise any break option in such leases is nearly always longer, and usually significantly longer, than the duration of the period of the occupation of its clients. If revenues decline, the BX Group will not be able to reduce significantly its property related cost base throughout the period of the lease. Some of the BX Group s leases contain restrictions that prevent the BX Group from transferring the lease without prior consent from the relevant landlord. Consequently, significant costs could be incurred if the BX Group wishes to close down or dispose of unprofitable business centres. Refurbishment and reinstatement costs The terms of most of the property leases held by the BX Group require it to ensure that the property concerned is kept in good repair throughout the lease term and that the property is reinstated at the end of the lease to the condition prior to any alterations carried out to the premises. Reinstatement costs and, if the BX Group has failed to comply with its repairing obligations during the lease term, full repair costs may be incurred on termination of such leases, causing an adverse impact on the BX Group s operations and financial condition. Further investment in IT The BX Group provides its clients with access to IT and telecommunications equipment. Significant developments in the technology which businesses use would require the BX Group to make further investments in that new technology. Historic financial performance The BX Group does not have an established profitable trading record over the three financial years ended The BX Group s prospects should be considered in the light of the risks associated with companies in their growth stage. Influence of the principal shareholder MWB Group will own 67.9 per cent. of the Company s enlarged issued share capital on Admission. In addition, Richard Balfour-Lynn, the BX Group s Chairman and Jag Singh, a Non- Executive Director of the Company, are directors of MWB Group and hold shares in MWB Group. Both of these directors are considered by the Panel on Takeovers and Mergers to be acting in concert with certain other MWB Group directors and shareholders with regard to the share capital of MWB Group. As a consequence of these shareholdings and directorships, MWB Group will be able to exercise a significant amount of control over the business of the BX Group and voting in the Company. For example, where the consent of 50 per cent. or more of the Shareholders of the Company is required in general meeting it will not be possible to obtain that majority unless MWB Group votes in favour of or abstains from voting on the resolution. It is MWB Group s stated intention to realise all of its assets in order to return cash or cash equivalents to its shareholders by the end of This cash distribution programme is likely therefore to involve a sale, disposal or demerger of the MWB Group shareholding in the Company and this may have an adverse impact on the Company s share price. Lack of independent non-executive directors The Directors are currently considering a number of potential individuals to become independent non-executive directors of the Company. It is intended that at least one independent non-executive director will be appointed to the Board by Both of the current non-executive directors of the company, including the chairman, are executive directors of, and shareholders in, MWB Group and therefore are not regarded as independent for the purposes of the Combined Code on Corporate Governance. 11

12 Reliance on MWB Group guarantees A number of the BX Group s leases and its existing bank facilities were guaranteed by MWB Group when they were entered into. MWB Group has stated to the Company that it is not willing to provide lease guarantees on new leasehold properties or guarantees of any new banking facilities entered into by the BX Group after Admission. This might adversely affect the BX Group s ability to expand. Volatility in share price and liquidity Admission to trading on AIM does not guarantee that there will be a liquid market in Ordinary Shares. An active public market in the Ordinary Shares may not develop or be sustained after Admission and the market price may fall below the price of which Ordinary Shares are placed under the Placing. AIM The AIM Rules are less demanding than those of the Listing Rules of the UK Financial Services Authority. An investment in shares that are admitted to trading on AIM is likely to carry a higher risk than an investment in shares listed on the Official List. The investment offered hereby may not be suitable for all recipients of this document. Investors are, accordingly, advised to consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities before making their decision. FORWARD LOOKING STATEMENTS This document contains certain statements that are not historical facts and may be forwardlooking statements that are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statement made by the BX Group. These factors include, but are not limited to, certain risks and uncertainties for the BX Group that are specifically described above in the section of this document headed Risk Factors. If one or more of these risks or uncertainties materialises, or if underlying assumptions prove incorrect, the BX Group s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements. Neither the Directors nor the Company undertake any obligation to update forward-looking statements or risk factors other than as required by the AIM Rules or by applicable law, whether as a result of new information, future events or otherwise. 12

13 PART I INFORMATION ON THE BX GROUP Introduction The BX Group operates business centres which represent an alternative to conventional office space. These business centres offer advantages of convenience, flexibility and immediate availability for SMEs, corporate and other clients (including government bodies). The BX Group s business centres can prove economical to clients, depending upon the term of occupancy and the number of workstations required for employees in each office. The BX Group delivers a range of flexible serviced offices, including Meeting and Conference Rooms, IT and telecoms, with high standards of office design, fixtures and fittings. The BX Group s business centres have developed a range of flexible products and services that have allowed it to meet the requirements of clients of all sizes. The BX Group delivers a high quality 3 to 5 star serviced office product and operates a portfolio of over 880,000 sq ft of prime office, meeting and conference room space across 51 UK locations. With over 12,500 workstations and in excess of 190 available meeting and conference rooms, MWB Business Exchange is the second largest provider of serviced office space in the UK, and is one of the seven operators managing one-third of the UK s serviced office market. The BX Group s portfolio is London based; the 21 London centres (4 of which are operated under management agreements or OMAs) account for 49 per cent. of the BX Group s total workstations and 62 per cent. of total turnover. 59 per cent. of London turnover is attributable to West End and Mid Town centres. History and development MWB Group established a serviced office business in 1996 when it acquired five business centres based in Southern England. The business has been expanded significantly over the period from its formation in 1996 to date. Whilst certain operating problems were encountered during the two financial years ended 2003, the BX Group has been generally successful and the financial year ended 2005 showed stronger results than the previous financial year. By June 2001 the BX Group operated 38 business centres, providing over 12,000 workstations throughout the UK and Europe. By June 2001, turnover more than doubled from June 2000 to approximately 70 million, EBITDA increased to 15 million and pre-tax profits of 6.2 million were recorded. At that year end, occupancy at mature centres was 84 per cent. and 72 per cent. across all the BX Group s business centres. During 2001 and 2002, a major expansion in Europe was undertaken by MWB Group with new business centres opened in France, Germany and the Netherlands. Eleven new business centres were opened during that period, bringing the total number of business centres operated by the BX Group to 48. However, the combination of a very difficult economic environment, especially in technology related sectors, an over-supply of space in the general office market, a weakening of demand, coupled with fierce price competition, caused significant losses during the year ended By 1 July 2002, overall occupancy across the BX Group had reduced to 61 per cent. During the difficult operating conditions in 2002 and 2003, the BX Group s business centres in Europe were closed and the BX Group no longer has any liability in respect of these former operations. By 2003, the UK operations of Business Exchange centres totalled approximately 9,300 workstations which were achieving occupancy levels of 76 per cent. This mirrored the average level achieved throughout the year and was a significant improvement over the position at the previous year end. During the year ended 2004, the business experienced significant large corporate client move-outs, especially in London, reducing occupancy levels to 68 per cent. by the year end. There was also less activity throughout that year by clients in taking vacant space. Changes in 13

14 the management team and, in particular, the appointment of John Spencer as Chief Executive and Keval Pankhania as Finance Director of the BX Group heralded a significant change and the new management team has developed a clear strategy, diversifying the client base to include more SMEs and Start Ups. This enabled the BX Group to create a number of differing but complementary income streams. In November 2004 the BX Group sold the freehold interests in three business centres (accounting for 560 workstations) and the proceeds were used to reduce the BX Group s bank debt. In addition to the BX Group s original 4/5 star rated serviced offices, the acquisition in January 2005 by the BX Group of 15 further serviced offices managed by its City Executive Centres division enabled the provision of a mid-market 3 star brand. Further, the BX Group has recently developed a Corporate Real Estate Partnerships division to work closely with potential occupiers and landlords in providing property solutions, including OMAs, within the framework of its serviced office business. At that time, the BX Group also developed a Meeting and Conference Room division focused on increasing cashflow and profit to the BX Group. By 2005, the BX Group had a clear business model based on four business divisions: 4/5 star Business Exchange Centres; 3 star City Executive Centres; Corporate Real Estate Partnerships; and Meeting and Conference Rooms. Occupancy and returns during that financial year both improved, resulting in occupancy as at 2005 being 80 per cent. One of the features behind this growth was a 35 per cent. increase in market leads. This demonstrated the increased professionalism and skill that was being developed across the BX Group s core areas of income generation. During that financial year the BX Group also signed its first OMA on 30,000 sq ft of space in Citigroup s Canary Wharf head office building. Two major deals were also concluded in Leeds through the Corporate Real Estate Partnerships division where the BX Group was able to source buildings on favourable terms, which included back-to-back break options with the landlord and the BX Group s client, thereby eliminating any contingent property liability for the BX Group or its clients. Services provided by the BX Group The BX Group s primary business is the provision of dedicated office space for use by clients. 88 per cent. of the BX Group s revenue is generated from licence fees and service income receivable from office space. The BX Group also provides shared office space suitable for Start- Up and SMEs (which do not always require dedicated office space), virtual office services and meeting and conference rooms. The BX Group also assists companies and landlords in operating and managing their surplus conventional office space through subletting and OMAs. OMAs provide a fixed income to the BX Group and the ability to achieve profit bonuses, without incurring significant financial liabilities to the BX Group. The BX Group manages a business centre within a third party s vacant space. The turnover is paid to the landlord, less a fixed management fee payable to the BX Group. The landlord remains responsible for all overheads including property costs and salaries. MWB Business Exchange addresses the serviced office and meeting room needs of: (i) (ii) medium to large corporate end-users and government bodies; SMEs; and (iii) Start-Ups; by offering services under the BX Group s four divisions, which are as follows: 1. Business Exchange Centres Business Exchange Centres provides high quality short to medium term serviced office solutions to start-up, SMEs and other corporate clients. The division operates in the 4/5 star segment of the market where clients demand strategic business locations, top quality offices, excellent service together with the flexibility in contract term. The average size of location is approximately 20,000 sq ft accommodating an average of 281 workstations. The division operates 32 leased 14

15 business centres, 2 back-to-back leased centres and 2 centres under OMAs. The majority of the divisions properties are sited in prime city centre locations with close proximity to major transport links. 36 per cent. (13 centres) are located in Central London of which 9 are in the West End and Mid Town districts. The Central London locations of Business Exchange Centres account for approximately 40 per cent. of the divisions total workstations available and approximately 50 per cent. of turnover. During the 18 months immediately preceding Admission, the Business Exchange Centres division has concentrated on increasing the number of SMEs and smaller corporate clients within its centres, thereby reducing its reliance on a small number of larger clients. As a result, the number of clients who occupy more than 15 per cent. of any one centre across the portfolio has been significantly reduced. Of approximately 1,000 clients who were occupying space in the division s centres at 31 October 2005, over 63 per cent. occupied between 1 and 5 workstations. Currently the principal client sectors for this division are: IT services (19 per cent.), recruitment (12 per cent.), business services and consultancy (10 per cent.), banking and finance (10 per cent.) and property (5 per cent.) The division s clients contract on average for an initial term of 8 months and approximately 80 per cent. of clients extend their contract beyond the initial term. Client occupation in this division ranges from 1 month to 5 years, with an average of 15 months. 2. City Executive Centres City Executive Centres specialises in providing medium and long term serviced offices to the start-up and SME marketplace across 15 centres in the UK, which are operated under management agreements. The division focuses primarily on the regional, SME and Start-Up markets and operates within the 3 star segment of the serviced office market. The average size of location is approximately 10,000 sq ft providing an alternative to the larger and higher quality Business Exchange Centre s sites which average 20,000 sq ft. Clients remain with the division for an average of 24 months. The Directors believe that the 3 star segment of the serviced office market has strong demand characteristics especially in regional markets with an undersupply of flexible office space. The Directors believe that the City Executive Centres division will provide the BX Group with long term sustainable revenue, especially in times of a weaker UK economy. 3. Meeting and Conference Rooms Meeting and Conference Rooms is the BX Group s specialist provider of meeting and conference rooms for businesses in the UK, operating over 190 dedicated meeting and conference rooms at the date of this document. The Directors believe that this division will be able to provide a significant growth opportunity to the BX Group as it improves the return from the existing business centres without incurring significant additional cost. The Directors have identified the opportunity to create a stand-alone branded meeting and conference rooms solution that they believe will help the BX Group to clearly target this niche for the provision of dedicated meeting and conference rooms for hourly or daily bookings. Because of the initiatives undertaken, the Directors believe that the BX Group will soon be recognised across its key target market as a dedicated provider of meeting and conference rooms, rather than as solely a serviced office provider that also provides meeting facilities. 4. Corporate Real Estate Partnerships Corporate Real Estate Partnerships specialise in delivering flexible property solutions that primarily address the needs of corporate end users, property owners and landlords. The Corporate Real Estate Partnerships division also works alongside commercial property agents. The Directors established this division to become a catalyst for growth in the other three divisions, whilst also reducing property risk to the BX Group overall. 15

16 The division works with property owners and landlords to help manage their surplus space and to provide income. The division already has strong relationships with commercial property agents who introduce the division to corporate end users, property owners and landlords who may require flexible property solutions. In many instances corporate end users have excess space from which they wish to receive an income stream, or insufficient space in locations where they wish to create or increase their presence. The Corporate Real Estate Partnerships division identifies suitable space and works with the client to negotiate an OMA or management agreement to convert the space into a business centre to be run either by Business Exchange Centres or City Executive Centres. The term of the OMA or management agreement will generally require the client to provide the space and fit out whilst the BX Group provides the management. When a client is short of space, the division will recommend suitable space in a Business Exchange Centre or a City Executive Centre for the client to occupy on a licence agreement. In instances where a suitable centre is not available or where there is insufficient available space, the division will seek to source suitable space for the client without the obligation of long term liabilities, on a managed fixed cost solution. The division will aim to secure this space on a back-to-back lease arrangement, and fit out the space to the client s specification. The lease term, which management would typically secure for between one and five years, is mirrored by the client s licence agreement, so that there is little or no leasehold risk to the BX Group. The business centre is then run by either Business Exchange Centres or City Executive Centres. The Corporate Real Estate Partnerships division has driven the expansion of both Business Exchange Centres and City Executive Centres over the last year and the Directors believe it provides significant opportunities for the future. Business centre locations The BX Group currently operates 51 business centres across the UK in its four operating divisions of which 34 are leaseholds and 17 are operated under either a management agreement or an OMA. All of the business centres have been developed to reflect one or more of the BX Group s four operating divisions. The business centres are summarised in the following table: Location Number of serviced business centres Business Exchange workstations City Executive Centres workstations Number of Meeting & Conference Rooms London City 5 1, London Mid Town London West End 8 2, Rest of London 6 1, Rest of the UK 30 4,287 2, Total 51 10,221 2, During the year to 31 December 2006, the BX Group is proposing to replace the Cannon Centre with a similar centre in a nearby location and to replace the BX Group s business centre in Deansgate, Manchester with a higher specification and larger business centre in Portland Street, Manchester. In addition the Board has authorised a refurbishment and increased leasehold interest in the BX Group s Birmingham business centre, which will involve the centre being doubled in size during that period. Market opportunities Currently serviced offices in the UK account for only 1.7 per cent. of UK properties available for business use, compared to 15 per cent. in the United States. Historically, the UK property sector has tied occupiers to 10 to 15 year leases that are often inflexible. The Directors believe that the serviced office market will benefit from the continuing corporate trend towards flexibility of overheads, particularly property related. The nature of today s economic environment means that it is difficult for businesses to predict what their property requirements will be over such a 16

17 timescale. Many UK regions are under-represented by serviced offices, offering potential for business centre expansion which the BX Group propose to pursue through management agreements or OMAs. The UK serviced office market is expected to experience a sustained rise in occupancy levels over the next three years, with an additional 30,000 workstations to come to market by December This is as a result of operator expansions and to satisfy the anticipated increase in demand for flexible office space. Operators of serviced office s were able to increase prices during 2004, with an average rise of 3.3 per cent. across the UK. DTZ Debenham Tie Leung concluded in 2005 that in London s West End, development intensity will remain relatively low following the fall in speculative development activity since Lambert Smith Hampton reinforces this view, stating in 2005 that the central London market is heading for a shortage of grade A business properties by 2008 unless more speculative construction is started by the end of The Directors expect office rentals between 2006 and 2008 in London s West End to increase by 7.7 per cent. per annum, London s Mid Town to increase by 6.0 per cent. per annum and London City to increase by 6.3 per cent. per annum. The BX Group is already experiencing an increase in licence fee rates as a result of these expected rises in office rentals. The SME and Start Up sectors provide the stability and foundation for the growth of BX Group s Business Exchange Centres and City Executive Centres division. Over 50 per cent. of the BX Group s clients fall into this category. According to the Department of Trade and Industry (2005) there were an estimated 4.3 million business enterprises in the UK at the start of 2004, up from an estimated 4.0 million at the start of Over 99 per cent. of these enterprises were small (0-49 employees). The growth in this sector provides the BX Group with continuing expansion opportunities in its core areas of operation. The growing UK meeting and conference room market is currently estimated at approximately 12.9 billion per annum, over 2.1 billion of which is made up of non-residential business meetings. The major operators in the market are the large hotel groups who are able to charge high rates with little flexibility for clients due to high levels of demand. In many cases service delivery has not been to a high standard, the facilities are very similar and they may not be business focused. The Directors believe there is strong, untapped demand in this sector particularly for the provision of professional and dedicated business meeting and training rooms for organisations of all sizes. As such, there is the opportunity to create a stand-alone branded meeting solution that the Directors believe will help the BX Group to clearly target this developing area for the provision of dedicated meeting and conference rooms for hourly or daily bookings. Year on year occupancy levels continue to grow as a result of focused activity to centre and non-centre users in addition to conference agents. International Financial Reporting Standards have introduced new rules on lease classification. The Directors believe that these new standards may present an opportunity for the BX Group to capitalise on its ability to provide flexible licenses and property solutions that can help clients remove their potential exposure to newly recorded accounting liabilities. Strategy The Directors have developed a clear strategy for the BX Group which is to build long-term financial returns through the development of sustainable income streams, whilst reducing operational risk. Strong organic and acquisitive programmes will be underwritten by dedicated risk mitigation strategies. The Directors plan that Business Exchange Centres will grow organically by improving yield. The two key drivers in the division are occupancy and price. The strategy is to maintain occupancy at approximately 80 per cent. and to increase revenues from both existing and new clients. Because of the strong operational gearing of Business Exchange Centres, emanating from the fact that this is a predominantly fixed cost division, the increased revenue produces a similar increase in EBITDA and pre-tax profit, thus substantially enhancing the rate of return of the division. Business Exchange Centres will continue to reduce operational risk, by reducing its reliance on clients that occupy more than 15 per cent. of any business centre and continually reviewing its sector reliance. 17

18 The organic growth strategy for City Executive Centres is to improve the performance of each business centre it manages, to maximise profit share to the BX Group. The Board is confident that it will add further management agreements to its City Executive Centre division and 2 management agreements for regional business centres have recently been signed. The Corporate Real Estate Partnerships division will look to acquire OMAs, freeholds, and selective leasehold assets so that it can increase the number of business centres for the BX Group. This growth strategy should increase revenues and profitability, and is also designed to reduce the operational risk to the BX Group by balancing its property portfolio with the addition of OMAs, management agreements, freeholds and further back-to-back leases. The BX Group has always provided meeting and conference rooms as part of its business centre service and the Board sees this as a core growth opportunity for the BX Group. The Board s strategy for the Meeting and Conference Rooms division is to continue to develop this division and to grow occupancy, whilst driving yield, from both existing clients and the external client market. Trading record Historical financial information The table below sets out summary financial information for the BX Group for the three financial years ended This information has been extracted from the financial information reported upon by the Company s reporting accountants, as set out in Part II. Year ended 1July 2003 Year ended 2004 Year ended 2005 Year ended Turnover 63,510 59,017 59,751 EBITDA 9,285 3,052 2,391 Profit/(loss) on ordinary activities before taxation (16,878) (7,346) 3,190 Bank debt and finance leases less cash at year end (34,641) (28,294) (14,114) Current financial information The BX Group s current unaudited trading performance since 2005 to 30 November 2005 as extracted from the BX Group s monthly management accounts adjusted to reflect the BX Group s current accounting policies is set out below: Jul 2005 Aug 2005 Sept 2005 Oct 2005 Nov 2005 Month ended estimate Turnover for the month 5,249 5,425 5,983 6,086 6,032 EBITDA for the month Profit/(loss) on ordinary activities before tax for the month Bank debt and finance leases less cash at month end (9,562) (7,837) (9,961) (8,023) (7,751)* * This figure comprises bank debt of 8.8 million and finance leases of 1.9 million, less cash of 3 million. On Admission, the bank debt will be reduced to 5 million as detailed in paragraph 10.8 of Part IV. Key performance indicators The following key performance indicators are used by the Board to control and measure the BX Group s performance. At 1 July 2003, the BX Group was reliant on a significant portion of its revenue being generated by a relatively small number of large corporate clients. When the licence agreements for these corporate clients expired in the financial year to 2004, there was a material adverse effect on the BX Group s financial performance which is demonstrated in the table below. Since 2004, the directors of the BX Group have focused strategically on attracting a larger number of smaller clients to its business centres and consequently its key performance indicators improved during the year ended 2005 and this trend has continued thereafter. 18

19 The number of available workstations was reduced by 560 during the year ended 2005 as a result of the sale in November 2004 of the freehold interests in three business centres as detailed in paragraph 10.1 of Part IV. The number of available workstations below relates to Business Exchange Centres leasehold interests only. It excludes the 2 back-to-back leases, City Executive Centres management agreements and OMAs, as the income receivable by the BX Group from such leases and agreements is not directly dependant upon the number of occupied workstations. The BX Group has 3,907 further workstations under the 2 back-to-back leases, City Executive Centres management agreements and OMAs, bringing the total number of workstations currently operated by the BX Group to 12,630. Historic key performance indicators Year ended 1July Number of available workstations at year end 9,283 9,283 8,723 Occupancy at year end 76% 66% 80% Monthly rate per workstation at year end ( ) Annualised REVPAW at year end ( ) 6,477 5,422 6,781 Annualised REVPOW at year end ( ) 8,473 8,215 8,402 Meeting and Conference Room income for the year ( 000) 2,641 2,761 3,910 Annualised EBITDA per available workstation at year end Current key performance indicators The BX Group s key performance indicators since 2005 to 30 November 2005 is set out below: Month ended Jul 2005 Aug 2005 Sept 2005 Oct 2005 Nov 2005 estimate Number of available workstations at month end 8,723 8,723 8,723 8,723 8,723 Occupancy at month end 81% 81% 83% 84% 84% Monthly rate per workstation at month end ( ) Annualised REVPAW at month end ( ) 6,637 6,523 7,175 7,312 7,299 Annualised REVPOW at month end ( ) 8,237 8,028 8,604 8,663 8,728 Meeting and Conference Room income for the month ( 000) Annualised EBITDA per available workstation at month end ( ) Prospects Since 2005, occupancy has increased by 3 per cent. to 84 per cent. and the rate per workstation has increased by 3.5 per cent., following the implementation of further sales and occupancy initiatives. In addition, service income over this five month period has increased due to additional focus on new initiatives, the results of which are demonstrated by the increased REVPAW and REVPOW figures. These initiatives will continue into the future. Meeting and Conference Room income has steadily increased as a result of focused marketing to new clients. This income stream is subject to seasonal fluctuations, particularly in July and August and again in the month of December, by reference to business holidays and lower related usage levels. The BX Group has recently implemented an integrated booking and yield management system. This is designed to provide real time management and stock optimisation capability of the Meeting and Conference Rooms division. This in turn is expected by the Directors to lead to an improved reservation process which, coupled with an on-line reservation facility, is expected by the Directors to increase revenues in this division. 19

20 The Directors believe that the relative infancy of the UK s serviced office market compared to that of the United States, coupled with the expected growth in demand for serviced offices and flexible office solutions, creates an opportunity for a substantial and profitable business in the future. Overall, the Directors believe the BX Group is well placed to increase revenues, not only from developing its existing property network, but also from driving occupancy, pricing and service revenue initiatives. Directors Details of the Directors, their roles and their backgrounds are as follows: Richard Balfour-Lynn, Non-Executive Chairman (aged 52) Richard formed Warwick Balfour Properties Plc in 1982, a commercial and residential property development and investment company, working in established and growth areas of central London. He co-founded MWB Group in 1994 and is the chief executive of and a substantial shareholder in that company. He has been a director of BXUK and its subsidiaries since the MWB Group s formation of this division in 1996 and has been a Director of the Company since November He is responsible for leading the Board in determining the BX Group s strategy and the achievement of its objectives. John Spencer, Chief Executive Officer (aged 47) John joined the BX Group as Chief Executive in April For the 11 years prior to joining the BX Group, John worked for Chubb plc, the last four of those as Managing Director of Chubb Fire Limited. He has been a director of BXUK and its subsidiaries since he joined the Group in 2004 and he has been a Director of the Company since November He is responsible for running the business and for formulating and implementing the Board s strategy for delivering profitability and shareholder value. He is responsible for liaison between the Company and its shareholders. Rick Aspland-Robinson, Executive Director (aged 45) Rick joined MWB Group in He has been a director of BXUK and its subsidiaries since 2004 and has been a Director of the Company since November He is responsible for property acquisitions and the negotiation of major tenancies and licences as well as all Corporate Real Estate Partnerships agreements. Keval Pankhania, Finance Director, FCCA, MBA (aged 33) Keval, a certified accountant, joined MWB Group as a finance team executive in He transferred to the BX Group as its Finance Director in August 2003 and has been a Director of the Company since November He is responsible for financial management across the BX Group, including accounts issued by the BX Group to its shareholders and debt and equity raising undertaken by the BX Group. He is also responsible for liaison between the Company and its shareholders. Jag Singh, Non-Executive Director (aged 47) Jag joined Hill Samuel in 1980 specialising in investment management. He moved to Lombard Odier et Cie. in 1985 where he was responsible for corporate and investment finance for quoted companies. He joined the board of MWB Group in November 1998 and amongst his other responsibilities in MWB Group, he has managed that group s investment in Business Exchange Centres. He has been a director of BXUK and its subsidiaries for a number of years and he has been a Director of the Company since November Employees The BX Group currently manages approximately 310 staff, of which approximately 280 are direct employees of the BX Group and the balance are employed in City Executive Centres under the BX Group s management agreements. All of the BX Group s staff are employed in the 20

21 UK. Approximately 200 employees work in the business centres which are each controlled by a manager. 8 regional managers oversee the business centre managers in their individual regions and a sales team of approximately 20 employees operates across the whole of the UK. Head office, consisting of approximately 51 employees including the Executive Directors, manages and controls all the BX Group s functions including IT, finance and Human Resources. Share option and incentive schemes On 12 December 2005 the Company adopted the Share Option Scheme which comprises an element which will be approved by HM Revenue and Customs and an element which will not be approved. A summary of the principal terms of the Share Option Scheme is contained in paragraph 6.1 of Part IV. At the date of this document, no options have been granted under the Share Option Scheme but the Directors intend to grant options in respect of up to 1,390,521 Ordinary Shares, representing approximately 2.0 per cent. of the issued share capital of the Company, at the Placing Price, on Admission to certain employees (other than Directors) of the BX Group. The Executive Directors and certain members of the executive management (to be determined by the Remuneration Committee) will, conditional on Admission, be entitled to participate in the Company s long term incentive scheme (the LTIS ). The relevant participants in the LTIS will be entitled to receive payments under the LTIS upon specific events, including a sale or takeover of the Company, or a valuation of the Company at 2010, subject to the attainment of certain minimum values for the BX Group. Further details are set out in paragraph 6.2 of Part IV. Details of the interests of the Directors in Ordinary Shares are set out in paragraph 7 of Part IV. Corporate governance The Directors recognise the value of the Principles of Good Governance and Code of Best Practice (the Combined Code ) and will take such measures as are necessary to ensure that the Company complies with the Combined Code as is appropriate for a company of its size. The Directors have established an Audit Committee, a Remuneration Committee and a Nomination Committee, each with formally delegated duties and responsibilities. The members of these committees are, or will be, Non-Executive Directors. It is proposed that the Audit Committee will be chaired by an independent non-executive director, when appointed. This Committee will determine the terms of engagement of the Company s auditors and, in consultation with the Company s auditors, the scope of the audit. It will receive and review reports from management and the Company s auditors relating to the interim and annual accounts and the accounting and internal control systems in use by the BX Group. The audit committee will have unrestricted access to the Company s auditors. The Remuneration Committee, which will be chaired by Richard Balfour-Lynn, will review the scale and structure of the executive directors remuneration, including the grant of options, and also the terms of their service contracts. The Board as a whole will determine the remuneration of the non-executive directors. It is proposed that the Nomination Committee will be chaired by an independent non-executive director when appointed. This committee will be responsible for reviewing the structure, size and composition of the Board, preparing a description of the role and capabilities required for a particular appointment and identifying and nominating candidates to fill Board positions as and when they arise. The Company has adopted a share dealing code for the Directors and relevant employees in accordance with the AIM Rules and will take proper steps to ensure compliance by the Directors and those employees. The Company currently does not have any independent non-executive directors on the Board. The Directors are considering a number of potential individuals to become independent non- 21

22 executive directors of the Company and they intend to appoint at least 1 independent non-executive director by Accounting reference date The Directors have changed the accounting reference date of the Company to 31 December and the subsidiaries are currently in the course of changing their accounting reference dates to 31 December. The BX Group will produce audited financial statements for the period ending 31 December 2005 and expects to publish these accounts by 31 March Thereafter, the BX Group will produce unaudited interim results for the six months ending and audited financial statements for each year ending 31 December. Dividend policy The Directors intend to commence payment of dividends for the financial year ending 31 December 2006 and propose to follow a progressive and sustainable dividend policy thereafter. At 2005, the BX Group had negative distributable reserves, all of which were in subsidiaries of the Company. However, due to a restructuring of the BX Group, on Admission those negative reserves will not be in the accounts of the Company or in its principal operating subsidiary. Accordingly, dividend payments by the Company to its Shareholders after Admission will be sourced from profits of the principal operating subsidiary and would not be adversely affected by the negative distributable reserves elsewhere in the BX Group. Reasons for Admission and use of proceeds of the Placing The Directors believe that the greater capital base of the Company following the Placing will improve the Company s flexibility in funding and that its status as a company admitted to trading on AIM will also be beneficial in realising some of the larger and varied, freehold, leasehold and OMA opportunities that are now being offered to the BX Group. The Company is proposing to raise approximately 15.0 million before expenses through the Placing which will be used to finance the proposed expansion of the BX Group. Conditional on Admission, MWB Group has agreed to lend approximately 2.7 million to the BX Group, in addition to a loan of 1.1 million currently due to the MWB Group for monies advanced to the BX Group to fund the acquisition of two leasehold business centres in Leeds since June On Admission, MWB Group has agreed to write off these loans totalling 3.8 million which will enable the BX Group to reduce its bank borrowings from 8.8 million to 5.0 million. Details of the Placing KBC Peel Hunt, as agent for the Company, has conditionally placed 18,750,000 new Ordinary Shares with investors at the Placing Price. The Placing, which is not underwritten, is conditional, inter alia, upon the admission of the Company s Ordinary Shares to trading on AIM by 21 December 2005, or such later time as KBC Peel Hunt and the Company agree. The Placing is intended to raise 15.0 million for the Company, before expenses. After the expenses of the Placing and Admission, estimated in total at 2.0 million (excluding VAT), the Placing is intended to raise 13.0 million. It is expected that the proceeds of the Placing will be received by the Company on or around 21 December It is expected that the CREST accounts of placees will be credited with the Placing Shares comprising their Placing participation with effect from 21 December In the case of placees requesting Placing Shares in certificated form, it is expected that certificates in respect of the Placing Shares will be dispatched by post, within 14 days of the date of Admission. Pending Admission becoming effective, funds from placees will be held in a designated account. Should Admission not occur for any reason funds will be returned by cheque without interest by post to the relevant place at such person s own risk. Pending despatch of share certificates or crediting of CREST accounts, the Company s registrar will certify any instruments of transfer against the register. Further details of the Placing Agreement are set out in paragraph of Part IV. 22

23 Restrictions on dealing by MWB Group and the Directors Following the Placing, MWB Group will be interested, in aggregate, in 46,951,379 Ordinary Shares, representing approximately 67.9 per cent. and the Directors will be interested, in aggregate, in 249,998 Ordinary Shares, representing approximately 0.4 per cent. of the enlarged issued ordinary share capital of the Company. MWB Group is not selling any Ordinary Shares pursuant to the Placing. MWB Group and the Directors have agreed not to dispose of any interests in the Company s share capital for a period of one year from Admission, except in certain strictly limited circumstances as agreed with KBC Peel Hunt. Thereafter, MWB Group and the Directors have also undertaken only to sell Ordinary Shares through KBC Peel Hunt, for as long as KBC Peel Hunt remains broker to the Company. CREST and commencement of dealings CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument. The Company has applied for the Ordinary Shares to be admitted to CREST and it is expected that the Ordinary Shares will be so admitted and accordingly enabled for settlement in CREST on the date of Admission. It is expected that Admission will become effective and dealings in the Ordinary Shares will commence on 21 December Accordingly, settlement of transactions in Ordinary Shares following Admission may take place within the CREST system if any Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so. Persons acquiring Ordinary Shares as part of the Placing may elect to receive evidence of their Ordinary Shares in uncertificated form if, but only if, that person is a system member (as defined in the CREST Regulations) in relation to CREST. In all other cases, placees will receive share certificates as evidence of their holding. Taxation Your attention is drawn to the section on taxation contained in paragraph 11 of Part IV. Further Information Your attention is drawn to the additional information in Parts II to IV. 23

24 PART II FINANCIAL INFORMATION ON THE COMPANY The following is the text of a report received from the Company s reporting accountants: KPMG Audit Plc 8 Salsibury Square London EC4Y 8BB The Directors MWB Business Exchange Plc 1 West Garden Place Kendal Street London W2 2AQ The Directors KBC Peel Hunt Ltd 111 Old Broad Street London EC2N 1PH 16 December 2005 Dear Sirs Accountant s Report on historical financial information - MWB Business Exchange Plc ( the Company ) We report on the financial information set out on pages 25 and 26 of the AIM admission document dated 16 December 2005 of MWB Business Exchange Plc ( the Admission Document ). This financial information has been prepared for inclusion in the Admission Document on the basis of the accounting policies set out in note 1 to the financial information. This report is required by paragraph (a) of Schedule Two of the AIM Rules and is given for the purpose of complying with that paragraph and for no other purpose. Responsibilities The Directors of the Company are responsible for preparing the financial information in accordance with the basis of preparation set out in note 1 to the financial information and in accordance with UK accounting standards. It is our responsibility to form an opinion on the financial information and to report our opinion to you. Basis of opinion We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of the significant estimates and judgments made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the entity s circumstances, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error. 24

25 Opinion In our opinion, the financial information gives, for the purposes of the Admission Document dated 16 December 2005, a true and fair view of the state of affairs of MWB Business Exchange Plc as at the date stated, in accordance with the basis of preparation set out in note 1 and in accordance with UK accounting standards. Declaration For the purposes of Paragraph (a) of Schedule Two of the AIM Rules we are responsible for this report as part of the Admission Document and declare that we have taken all reasonable care to ensure that the information contained in this 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 Admission Document in compliance with Schedule Two of the AIM Rules. Yours faithfully KPMG Audit Plc The following information relating to the Company has been prepared by the Directors of MWB Business Exchange Plc. Balance sheet at 28 November 2005 Fixed assets Investment 1 Current assets Debtors 50,000 Current liabilities Creditors: amounts falling due within one year (1) Net Current Assets 49,999 Net Assets 50,000 Capital and reserves Share capital 50,000 Notes to the financial information 1. Basis of preparation The financial information has been drawn up in accordance with applicable accounting standards and under the historical cost accounting convention. The financial information does not constitute statutory accounts of the Company. The Company was incorporated on 18 November 2005 as Business Exchange London Limited. At the date of incorporation, the Company had an authorised share capital of 150,000 divided into 150 million ordinary shares of 0.1p each. 50 million shares of 0.1p each were issued to the subscribers of the Memorandum of Association of the Company. On 23 November 2005, the company changed its name to MWB Business Exchange Limited. The Company was re-registered as a public limited company on 6 December 2005 under the name of MWB Business Exchange Plc pursuant to a written resolution of the Company. The Company has not yet commenced business, no audited financial statements have been made up and no dividends have been declared or paid since the date of incorporation. 25

26 2. Share capital Ordinary shares of 0.1p each Authorised Allotted, called up and fully paid 150,000,000 50,000, Reconciliation of movement in equity shareholders funds On incorporation Issue of ordinary share capital 50,000 At 28 November , Post balance sheet events On 30 November 2005, the Company entered into an agreement conditional on the admission of the ordinary shares of 0.1p each in the Company to trading on AIM, to acquire the entire issued share capital of MWB Business Exchange UK Limited, in exchange for the allotment and issue of 350,000 ordinary shares of 0.1p each in the Company. 26

27 FINANCIAL INFORMATION ON MWB BUSINESS EXCHANGE UK LIMITED The following is the text of a report received from the Company s reporting accountants: KPMG Audit Plc 8 Salisbury Square London EC4Y 8BB The Directors MWB Business Exchange Plc 1 West Garden Place Kendal Street London W2 2AQ The Directors KBC Peel Hunt Ltd 111 Old Broad Street London EC2N 1PH 16 December 2005 Dear Sirs Accountant s Report on historical financial information MWB Business Exchange UK Limited ( BXUK or the Company ). We report on the financial information set out on pages 28 to 41 of the AIM admission document dated 16 December 2005 of MWB Business Exchange Plc (the Admission Document ). This financial information has been prepared for inclusion in the Admission Document on the basis of the accounting policies set out in note 1 to the financial information. This report is required by paragraph (a) of Schedule Two of the AIM Rules and is given for the purpose of complying with that paragraph and for no other purpose. Responsibilities The Directors of the Company are responsible for preparing the financial information in accordance with the paragraph entitled Basis of preparation set out in note 1 to the financial information and in accordance with UK accounting standards. It is our responsibility to form an opinion on the financial information and to report our opinion to you. Basis of opinion We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of the significant estimates and judgments made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the entity s circumstances, consistently applied and adequately disclosed. We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error. Opinion In our opinion, the financial information gives, for the purposes of the Admission Document dated 16 December 2005, a true and fair view of the state of affairs of BXUK and its subsidiaries 27

28 at the dates stated and of its profits, losses, cash flows and changes in equity for the periods then ended, in accordance with the basis of preparation set out on page 30 and in accordance with UK accounting standards. Declaration For the purposes of paragraph (a) of Schedule Two of the AIM Rules, we are responsible for this report as part of the Admission Document and declare that we have taken all reasonable care to ensure that the information contained in this 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 Admission Document in compliance with Schedule Two of the AIM Rules. Yours faithfully KPMG Audit Plc The following information relating to BXUK has been prepared by the directors of MWB Business Exchange Plc. Consolidated profit and loss account Year ended 1July 2003 Year ended 2004 Year ended 2005 Notes Turnover 63,510 59,017 59,751 Cost of sales (75,455) (66,162) (59,668) Gross profit/(loss) (11,945) (7,145) 83 Administrative expenses (1,495) (441) (1,115) Operating loss (13,440) (7,586) (1,032) Profit on sale of properties 1,090 4,205 Profit/(loss) on ordinary activities before interest (12,350) (7,586) 3,173 Net interest (payable)/receivable 5 (4,528) Profit/(loss) on ordinary activities before taxation 6 (16,878) (7,346) 3,190 Tax (charge)/credit on profit/(loss) on ordinary activities (4) 212 Profit/(loss) after taxation (16,496) (7,350) 3,402 Undeclared preference dividends (7,065) (7,332) Retained loss for the year (16,496) (14,415) (3,930) All activities are classed as continuing. No other gains or losses were recognised in the three years ended

29 Consolidated balance sheets 1July Notes Fixed assets Tangible assets 8 38,672 28,480 16,450 Current assets Debtors 9 52,801 55,981 62,074 Cash at bank 1,199 1,915 54,000 57,896 62,074 Creditors: amounts falling due within one year 10 (30,698) (26,020) (25,986) Net current assets 23,302 31,876 36,088 Total assets less current liabilities 61,974 60,356 52,538 Creditors: amounts falling due after more than one year 11 (34,449) (37,181) (25,961) Net assets 27,525 23,175 26,577 Capital and reserves Called up share capital 14 44,302 47,302 47,302 Merger reserve 15 44,302 44,302 44,302 Profit and loss account 15 (61,079) (68,429) (65,027) 27,525 23,175 26,577 Represented by: Equity shareholders deficit (16,776) (31,191) (35,121) Non-equity shareholders funds 16 44,301 54,366 61,698 Consolidated cash flow statements Notes 27,525 23,175 26,577 Year ended Year ended Year ended 1July Net cash inflow from operating activities 19 8,943 6,665 3,351 Returns on investments and servicing of finance 20 (4,188) (2,869) (2,340) Taxation (381) (4) (6) Capital expenditure and financial investment (445) 11,146 Net cash inflow before financing 5,283 3,347 12,151 Financing 22 (6,347) (2,631) (16,095) Increase/(decrease) in cash during year 23 (1,064) 716 (3,944) Reconciliation of net cash flow to movements in net debt Notes Year ended Year ended Year ended 1July Increase/(decrease) in cash during year (1,064) 716 (3,944) Cash outflow from decrease in debt and finance leases 6,347 5,631 18,124 Decrease in net debt resulting from cash flows 5,283 6,347 14,180 Net debt at start of period (39,924) (34,641) (28,294) Net debt at period end 23 (34,641) (28,294) (14,114) 29

30 Reconciliation of movements in shareholders funds 1July Retained loss for the year (16,496) (14,415) (3,930) Preference share capital issued 3,000 Undeclared preference dividends 7,065 7,332 Net increase/(decrease) in shareholders funds (16,496) (4,350) 3,402 Opening shareholders funds 44,021 27,525 23,175 Closing shareholders funds 27,525 23,175 26, Notes to the financial information The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the special purpose accounts of BXUK. Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting convention. The accounts of MWB Business Exchange UK Limited for the five month period ended 1 July 2003 and for the year ended 2004 and the consolidated accounts of MWB Business Exchange UK Limited for the year ended 2005 have been audited by KPMG Audit Plc, Chartered Accountants and Registered Auditors whose address is 8 Salisbury Square, London EC4Y 8BB. The accounts for the period ended 1 July 2003 and the years ended 2004 and 2005 have been filed with the Registrar of Companies. The audit reports on these accounts were unqualified and did not include statements under section 237(2) or (3) of the Act. Consolidated accounts for MWB Business Exchange UK Limited were not prepared for the period ended 1 July 2003 and for the year ended 2004, although consolidated financial returns were prepared for the purposes of the consolidated accounts of Marylebone Warwick Balfour Group Plc ( MWB Group ) for the year then ended. For the purposes of the Admission Document, the Directors of MWB Business Exchange Plc have prepared special purpose accounts containing combined consolidated financial information for BXUK, being MWB Business Exchange UK Limited and all its subsidiaries for the three years ended 2005, adjusted to exclude the trading and balances relating to MWB Business Exchange Europe Limited and its non-uk subsidiaries which were closed in July 2003 and four companies that were sold in November 2005 and were previously subsidiaries of MWB Business Exchange UK Limited, namely Flowchart Limited, Gableworth Limited, Manorcall Limited and Bellside Limited. These special purpose accounts are based on the statutory accounts and the financial returns prepared for consolidation purposes within the MWB Group for these periods as referred to above, and have been prepared under UK GAAP on the basis of the accounting policies set out below. Basis of consolidation The acquisition method of accounting has been adopted for all acquisitions of subsidiaries undertaken by BXUK, except as noted below. Under this method, the results of subsidiary undertakings acquired or disposed of during the year are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal. On 1 July 2003, BXUK acquired the entire share capital of MWB Business Exchange (Europe) Limited in exchange for the issue of ordinary and preference shares. In accordance with the provisions of FRS6 Acquisitions and Mergers, the consolidation has been accounted for using merger accounting principles. 30

31 Tangible fixed assets and depreciation Operational properties are included in the balance sheet at their existing use value at the balance sheet date on the basis of historic cost and straight line depreciation. Impairment of operational properties to below their depreciated historical cost is charged directly to the profit and loss account. Additions include costs of a capital nature and certain refurbishment expenditure. Interest and other net outgoings directly attributable to operational properties in the course of development are treated as part of the cost of the properties. All other costs associated with operational properties are written off as incurred. Depreciation is provided to write off the cost less estimated residual value of tangible fixed assets by equal annual instalments over their estimated useful economic lives as follows: Freehold properties 50 years Short leasehold improvements Machinery and electrical The useful economic life but not more than 50 years Ceilings, floors and partitions 15 years or to end of lease if shorter Front of house 7 years or to end of lease if shorter Fixtures and equipment 4 to 10 years Operational properties in the course of development and freehold land are not depreciated. Depreciation of properties commences once a centre is available for use. Leased assets Fixed assets acquired under finance lease agreements are capitalised and depreciated over the shorter of the lease term and estimated useful economic life. Obligations under such agreements are included in creditors, net of finance charges of future years. Finance charges are allocated to accounting periods during the lease term so as to produce a constant periodic rate of charge on the remaining balance of the obligation for each accounting period. Operating lease charges are written off to the profit and loss account on a straight line basis over the lease term. Turnover Turnover is stated net of value added tax and is derived from licencing and servicing of business accommodation in the United Kingdom. Interest payable Interest incurred on loans specific to properties in the course of development is capitalised. All other interest payable is charged to the profit and loss account. Corporation tax and deferred taxation The charge for taxation is based on the result for the year, which takes account of taxation deferred because of timing differences between the treatment of certain items for taxation purposes and the treatment under the BX Group s accounting policies. In accordance with FRS19, deferred tax is provided in respect of all timing differences that have originated, but not reversed at the balance sheet date that may give rise to an obligation to pay more or less tax in the future except as otherwise required by FRS19. Deferred tax is measured on a non-discounted basis. 31

32 2. Earnings before interest, taxation, depreciation and amortisation ( EBITDA ) Year ended 1July 2003 Year ended 2004 Year ended Profit/(loss) on ordinary activities before interest for the year (12,350) (7,586) 3,173 Add depreciation and impairment of fixed assets 22,725 10,638 3,423 Less profit on sale of properties (1,090) (4,205) EBITDA 9,285 3,052 2, Directors remuneration and interests The remuneration of the Directors of BXUK (who are also Directors of MWB Business Exchange Plc) is set out below. The amounts include recharges of salary and salary related costs made by MWB Group and its subsidiaries to BXUK and its subsidiaries during the three years ended 2005 which have been recorded in the profit and loss account of the BX Group for the years then ended. Year ended 1 July 2003 No Directors remuneration was paid or recharged during the year ended 1 July Year ended 2004 Basic salary Bonus Benefits (note a) Total excluding pensions Executive Directors of MWB Business Exchange John Spencer (3 months) Rick Aspland-Robinson Keval Pankhania Non-Executive Directors of MWB Business Exchange Richard Balfour-Lynn Jag Singh Year ended 2005 Basic salary 000 Bonus 000 Benefits (note a) 000 Total excluding pensions 000 Executive Directors of MWB Business Exchange John Spencer Rick Aspland-Robinson Keval Pankhania Non-Executive Directors of MWB Business Exchange Richard Balfour-Lynn Jag Singh Notes (a) Benefits represent the deemed monetary value of pensions, health care and life assurance provided to Directors, in a similar manner to other employees of the Group. 32

33 (b) The Directors received no Director s fees or realised any share option gains during any of the three years ended (c) The Directors received no long term incentive awards during any of the three years ended BXUK and its subsidiaries operate a defined contribution pension scheme for all employees of the Group, including Directors (d) None of the Directors and their families had any interests in the share capital of BXUK during any of three years ended Employees including Directors Year ended 1 July 2003 Year ended 2004 Year ended Staff costs Wages and salaries 7,456 6,845 7,499 Social security costs Pension contributions ,333 7,581 8,356 The average number of employees during the year ended 2005 was 267 (2004: 266; 2003: 357) 5. Net interest (payable)/receivable Year ended Year ended Year ended 1 July Bank loans and overdrafts (3,967) (2,469) (1,315) Finance lease and hire purchase interest (703) (638) (400) Loan from ultimate holding company (37) (540) Bank charges (109) (96) (90) (4,779) (3,240) (2,345) Less interest receivable On cash deposits On shareholder loans (note 17) 3,255 2,215 (4,528) Profit/(loss) on ordinary activities before taxation Year ended 1 July 2003 Year ended 2004 Year ended Profit/(loss) on ordinary activities before taxation is stated after charging: Depreciation of fixed assets Owned Leased 8,060 5,001 3,199 Impairment of fixed assets 14,131 5,303 Profit on disposal of fixed assets 1,090 4,205 Operating lease payments 22,766 19,986 23,750 Auditors remuneration Remuneration for other services to KPMG Audit Plc and its associates: - Taxation advice

34 7. Tax (charge)/credit on profit/(loss) on ordinary activities Year ended 1 July 2003 Year ended 2004 Year ended In respect of the current year Adjustment in respect of prior years 382 (4) 212 Tax (charge)/credit for the year 382 (4) 212 The tax (charge)/credit arising on the profit/(loss) on ordinary activities has been (reduced)/ increased from the amount that would arise from applying the prevailing corporation tax rate as follows: Year ended 1 July 2003 Year ended 2004 Year ended Tax on loss/(profit) on ordinary activities at 30% 5,063 2,204 (957) Non-taxable/(deductible) income and expenditure 365 (1,688) 480 Excess of depreciation charged over capital allowances claimed (4,496) (1,296) (285) Excess/(deficit) of profit on disposal of fixed assets over chargeable gains (28) 1,262 Tax losses carried forward to later years from current year (1,031) (253) (1,494) Losses claimed from other MWB Group companies for no consideration 127 1, Tax (charge)/credit for current year BXUK and its subsidiaries have trading tax losses and capital allowances of approximately 13 million that are available to be carried forward against future taxable profits of BXUK and its subsidiaries. 34

35 8. Tangible fixed assets Freehold properties Short leasehold improvements Fixtures & equipment Total Cost At 1 July ,645 54,295 16,489 83,429 Additions ,004 Disposals (748) (748) At 1 July ,897 55,005 16,783 83,685 Additions At ,897 55,006 17,228 84,131 Additions 1, ,876 Disposals (11,897) (1,593) (13,490) At June ,293 16,224 72,517 Depreciation At 1 July 2002 (1,093) (13,324) (7,930) (22,347) Charge for the year (202) (4,380) (4,012) (8,594) Impairment (14,131) (14,131) Disposals At 1 July 2003 (1,285) (31,835) (11,893) (45,013) Charge for the year (192) (2,537) (2,606) (5,335) Impairment (4,709) (594) (5,303) At 2004 (1,477) (39,081) (15,093) (55,651) Charge for the year (2,094) (1,329) (3,423) Disposals 1,477 1,530 3,007 At 2005 (41,175) (14,892) (56,067) Net Book Value at 1 July ,612 23,170 4,890 38,672 Net Book Value at ,420 15,925 2,135 28,480 Net Book Value at ,118 1,332 16,450 The net book value of assets held under finance leases at 2005 was 1,157,000. (2004: 1,855,000; 2003: 4,249,000) 9. Debtors 1July Trade debtors ,823 Amounts owed by MWB Group subsidiaries (note 17) 404 1,480 1,705 Amounts due from shareholders (note 17) 44,302 47,557 49,772 Other debtors Prepayments and accrued income 6,879 6,376 8,244 52,801 55,981 62,074 The amounts due from shareholders represents an interest bearing loan received in consideration for the issue of shares by BXUK. The loan was redeemed on 10 November

36 10. Creditors: amounts falling due within one year 1July Bank overdraft (secured) 2,029 Obligations under finance leases 5,861 4,158 2,985 Trade creditors 1,712 1, Amount owed to MWB Group subsidiaries (note 17) Taxation and social security Client deposits 9,169 9,230 9,860 Accruals and deferred income 13,499 9,992 9,373 30,698 26,020 25, Creditors: amounts falling due after more than one year 1July Bank loan (secured) 22,724 22,724 8,780 Obligations under finance leases 7,255 3, Amounts owed to MWB Group subsidiaries (note 17) 8,983 15,363 Accruals and deferred income 4,470 2,147 1,498 34,449 37,181 25,961 The maturity profile of the Group s borrowing is shown below: 1July Between one and two years 8,780 Between two and five years 22,724 22,724 At 2005, the bank loan attracts interest at the rate of LIBOR plus per cent. on 5.7 million and LIBOR plus per cent. on 3.1 million. The loan is secured by fixed charges on the BX Group s properties and by floating charges over BXUK and its subsidiaries. 12. Financial instruments BXUK holds or issues financial instruments mainly to finance its operations, for the temporary investment of short-term funds, and to manage interest rate risks arising from its operations and sources of finance. In addition, various financial amounts for example trade debtors and trade creditors arise directly from BXUK s normal trading operations. Disclosures have been made in respect of current and long term financial liabilities of BXUK. These are expressed in total and by reference to the associated financial instruments used to manage the interest rate exposures arising there from. The inclusion of short term debtors and creditors in the following information would not, in the opinion of the Directors, have a material effect on the information provided. Accordingly, BXUK has adopted the exemption under FRS13: Derivatives and Other Financial Instruments Disclosures, for short term debtors and creditors to be excluded from the following disclosures. Liquidity risk profile The maturity profile of BXUK s financial liabilities at 2005 and at the two previous year ends, is set out below: 1July Within one year or on demand 5,861 4,158 5,014 Between one and two years 4,158 2,985 9,100 Between two and five years 25,821 23,066 35,840 30,209 14,114 36

37 Interest risk profile The interest risk profile of the BXUK s financial hedging at 2005 and at the two previous year ends, is set out below: 1July Fixed rate liabilities 22,724 22,724 Hedge profile type of protection The type of protection in the BXUK s financial hedging at 2005 and at the two previous year ends, is set out below: 1July Fixed Rate Average rate 6.7% 6.7% Average length 1.5 years 0.2 years Hedge profile maturity of protection The maturity profile of BXUK s financial hedging at 2005 and at the previous year ends, is set out below: 1July Fixed Rate Within one year or less 22,724 Between two and five years 22,724 Fair values The following table shows the book values, or where applicable notional values of derivative instruments, together with the fair values of BXUK s financial instruments, at 2003, 2004 and The book values are included in the balance sheet, with the exception of derivative financial instruments held to manage interest rate exposure, where only a notional value and its fair value are appropriate. The fair values of the financial instruments are the amounts at which the instruments could be exchanged in a current transaction at the balance sheet date between willing parties. The fair value of BXUK s financial instruments not included in the table below are not materially different from the carrying amounts, because they incur interest at variable rates. The fair value of BXUK s financial hedging at 2005 and at the two previous year ends, is set out below: Negative Book Notional Fair fair value value value value adjustment 1 July Derivative financial instruments held to manage interest rate exposure Interest rate swaps 22,724 1,216 (1,216) Book value Notional value Fair value Negative fair value adjustment Derivative financial instruments held to manage interest rate exposure Interest rate swaps 22, (354) 2005 There were no derivative financial instruments held by BXUK at

38 13. Deferred taxation 1July At start of year Potential tax on short term timing differences (88) (74) (68) Trading tax losses and accelerated capital allowances At end of year The amounts provided for deferred taxation and the amounts not provided are set out below:- Provided 1July Provided Provided Unprovided 1July Unprovided Unprovided Short term timing differences (88) (74) (68) Accelerated capital allowances ,180 Trading tax losses 19 1,012 1,265 2,759 Deferred tax asset 1,012 2,193 3, Called up share capital 1July Authorised 1,250 ordinary shares of 1 each ,312,090 First A preference shares of 1 each 18,312 18,312 18,312 4,250,000 First B preference shares of 1 each 4,250 4,250 4,250 15,000,000 First C preference shares of 1 each 15,000 15,000 15,000 11,000,000 Second preference shares of 1 each 11,000 11,000 11,000 1,250 Third preference shares of 1 each ,437,910 Fourth preference shares of 1 each 22,438 22,438 22,438 71,002 71,002 71,002 Allotted, called up and fully paid 1,250 ordinary shares of 1 each ,312,090 First A preference shares of 1 each 18,312 18,312 18,312 4,250,000 First B preference shares of 1 each 4,250 4,250 4,250 15,000,000 First C preference shares of 1 each 12,000 15,000 15,000 1,250 Third preference shares of 1 each ,737,910 Fourth preference shares of 1 each 9,738 9,738 9,738 44,302 47,302 47,302 On 1 July 2003, BXUK issued 44.3 million of preference share capital at par in consideration for the ordinary and preference share capital of MWB Business Exchange Europe Limited and an interest bearing loan from the shareholders (see note 18). On 26 September 2003 BXUK issued 2.3 million of first C preference shares of 1 each at par and on 25 March 2004, BXUK issued 700,000 of first C preference shares of 1 each at par, in each case for cash consideration. Dividends and voting rights of shareholders The First A preference shares are entitled to a cumulative dividend of 12 per cent. per annum. The First B and Fourth preference shares are each entitled to a cumulative dividend of 15 per cent. per annum. The First C preference shares are entitled to a cumulative dividend of 20 per cent. per annum. The Second preference shares receive no dividend. The Third preference shares are entitled to a cumulative dividend of 5 per cent. per annum. 38

39 The rates of preference dividend referred to above, whilst being cumulative, are not payable until the Company has sufficient distributable reserves from which to meet the payment of dividends. The ordinary shares are entitled to receive dividends approved by shareholders to the extent that there are available distributable reserves after the payment of all arrears of preference dividends. The various classes of preference shares are not entitled to receive notices of, attend at or vote at general meetings of the Company. Holders of the ordinary shares are entitled to receive notice of, attend at and vote at any general meeting of the Company. Rights of shareholders on a return of capital On a return of capital by the Company, the assets available for distribution to members will be applied first towards any arrears of fixed preference dividend and then to the amount paid up on the preference shares, in the order of First A preference shares, First B preference shares, First C preference shares, and Third preference shares. The Third preference shares are also entitled to 6.6 million on a return of capital, increasing by a further 300,000 per annum. Thereafter, arrears of fixed preference dividend and the amount paid up on the Fourth preference shares will be paid, with the balance being distributed pro rata to ordinary shareholders. Due to a deficiency of distributable reserves, the preference shares are currently in arrears of dividend for a total of 21.0 million. 15. Reserves Merger reserve 000 Profit and loss account 000 At 1 July 2002 (44,583) Retained loss for the year (16,496) Merger reserve arising during the year 44,302 At 1 July ,302 (61,079) Retained loss for the year (14,415) Undeclared preference dividends 7,065 At ,302 (68,429) Retained loss for the year (3,930) Undeclared preference dividends 7,332 At ,302 (65,027) The merger reserve arose during the year ended 1 July This arose from the acquisition by BXUK of the business, assets and liabilities of the UK business centre activities previously undertaken by MWB Business Exchange Europe Limited and the merger accounting of that acquisition in the accounts of BXUK. 16. Non-equity shareholders funds The movement in non-equity shareholders funds arose as follows: 1July At start of year 44,301 54,366 Undeclared preference dividends 7,065 7,332 Preference shares issued in the year 44,301 3,000 At end of year 44,301 54,366 61,698 39

40 17. Related party transactions 1July Shareholder loans 44,302 47,557 49,772 Amounts owed (to)/ from subsidiaries of MWB Group 404 (8,432) (14,178) The shareholder loans, and interest charged thereon, by each shareholder is analysed below: Balance at 1 July 2003 Interest charged Year to 2004 Interest charged Year to MWB Serviced Office Holdings Limited 23,063 1,695 1,153 MWB Investments Limited 18,312 1, Bellerive Limited 1, Cavendish Newbrent Limited 1, ,302 3,255 2,215 No interest was charged on Shareholder loans during the year ended 1 July MWB Group charged the sum of 0.7 million (2004: 0.7 million, 2003: nil) to BXUK in respect of salary costs and accommodation costs. These amounts are included in Amounts owed to MWB Group subsidiaries at Post balance sheet events On 10 November 2005 BXUK purchased 18,312,090 First A Preference shares, 4,250,000 First B Preference shares 12,000,000 First C Preference shares, 1,250 Third preference shares and 9,737,910 Fourth preference shares all of 1 each in BXUK comprising an aggregate nominal value of 44,301,250, for an aggregate consideration of 50,699,671. On 10 November 2005 BXUK issued 18,312,090 New First A Preference shares, 4,250,000 First B preference shares, 12,000,000 New First C preference shares, 1,250 New Third preference shares and 9,737,910 New Fourth preference shares, all of 0.001p each, for an aggregate consideration of Net cash inflow from operating activities Year ended 1July Year ended Year ended Operating loss (13,440) (7,586) (1,032) Depreciation and impairment of fixed assets 22,725 10,638 3,423 Increase in debtors (9,573) (74) (3,877) Increase in creditors 9,231 3,687 4,837 Net cash inflow from operating activities 8,943 6,665 3, Returns on investments and servicing of finance Year ended Year ended Year ended 1July Interest received Interest paid (4,439) (3,094) (2,454) (4,188) (2,869) (2,340) 40

41 21. Capital expenditure and financial investment Year ended Year ended Year ended 1July Purchase of tangible fixed assets (1,004) (445) (1,876) Sale of tangible assets 1,913 13,022 Net cash inflow/(outflow) for capital expenditure and financial investment 909 (445) 11, Financing Year ended Year ended Year ended 1July Issue of preference shares 3,000 Increase in short term borrowings 2,029 Repayment of loan (13,944) Repayment of finance leases (6,347) (5,631) (4,180) Net cash outflow from financing (6,347) (2,631) (16,095) 23. Analysis of net debt 1July 2003 Movement in year (2003 to 2004) 2004 Movement in year (2004 to 2005) Cash 1, ,915 (3,944) (2,029) Hire purchase and leasing contracts (13,116) 5,631 (7,485) 4,180 (3,305) Bank loans (22,724) (22,724) 13,944 (8,780) Net debt (34,641) 6,347 (28,294) 14,180 (14,114) 24. Operating lease commitments Year ended 1July 2003 Year ended 2004 Year ended Annual payments due on operating leases expiring: Within one year Between two and five years 442 1,990 2,097 More than five years 22,324 17,888 21,214 41

42 PART III UNAUDITED PRO-FORMA STATEMENT OF NET ASSETS OF THE BX GROUP The unaudited pro-forma statement of net assets for the BX Group set out below is based on the balance sheet of BXUK as at 2005 as set out in the financial information on the BX Group in Part II of this document, adjusted for the incorporation of the Company, the share buy back and related capital restructuring and the MWB Group loan write-off, which are detailed in paragraphs 10.3, 10.4, 10.6 and 10.8 of Part IV of this document and the Placing. This unaudited pro-forma statement of net assets has been prepared for illustrative purposes only, it does not include any adjustment for trading undertaken since 2005 and because of its nature, it may not give a true reflection of the BX Group s financial position or results. BXUK at 2005 Adjustments Placing adjustments (note 1) (notes 2-5) (note 6) Pro-Forma BX Group net assets 000 Tangible fixed assets 16,450 16,450 Current assets Debtors 62,074 (49,772) 12,302 Cash at bank 50 13,000 13,050 62,074 (49,722) 13,000 25,352 Creditors: amounts falling due within one year (25,986) (25,986) Net current assets 36,088 (49,722) 13,000 (634) Total assets less current liabilities 52,538 (49,722) 13,000 15,816 Creditors: amounts falling due after more than one year (25,961) 19,706 (6,255) Net assets 26,577 (30,016) 13,000 9,561 Notes 1. The figures included in the column entitled BXUK at 2005 have been extracted from the financial information on BXUK at 2005 as set out in Part II of this document. 2. The adjustments in this column relate to the incorporation of the Company, the share buy back and related capital restructuring, and the MWB Group loan write-off. 3. The share buy back and related capital restructuring adjustments relate to the agreements referred to in paragraphs 10.3 and 10.4 of Part IV. The adjustments consist of the following: (i) the acquisition on 10 November 2005 by BXUK of 44.3 million of its issued preference share capital for a consideration of 50.7 million, including interest of 6.4 million of which 5.5 million had accrued at 2005, which was set off against a similar amount owing by its shareholders which was previously included in Debtors above; (ii) the subscription by the shareholders in BXUK of 443 for new preference shares in BXUK; and (iii) the waiver of amounts due to MWB Group totalling 9.6 million and the subsequent issue to MWB Group of one 2005 A preference share of 1 in BXUK on 23 August

43 4. The incorporation adjustment relates to: (i) the subscription for 50,000,000 Ordinary Shares of 0.1p at par on incorporation of the Company on 18 November 2005 for a total consideration of 50,000; and (ii) the issue (subject to Admission) by the Company of 350,000 Ordinary Shares to the shareholders in BXUK, in exchange for the Company acquiring the entire issued share capital of BXUK from those shareholders as set out in paragraph 10.6 of Part IV. 5. The MWB Group loan write off adjustment, further details of which are set out in the agreement referred to in paragraph 10.8 of Part IV, relates to: (i) a loan of 2.7 million to be made by MWB Group to the BX Group on Admission; (ii) the write off by MWB Group of any obligation on the BX Group to repay a loan of 1.1 million made by MWB Group to BX Group since 2005 and a similar write off of any obligation on the BX Group to repay the loan referred to in note 5(i) above; and (iii) the repayment on Admission by the BX Group to its bankers of 3.8 million, thereby reducing its indebtedness to its bankers to 5 million. 6. The Placing adjustments represent the issue of 18,750,000 new Ordinary Shares which will raise a net amount of approximately 13.0 million, after estimated expenses of 2.0 million. These have been shown as an increase in cash balances. 7. Other than as described above, no adjustments have been made to reflect the results of the BX Group since 2005, the date to which the financial information on the BX Group has been prepared as set out in Part II. In particular, no adjustments have been made to reflect the trading or movements in debt and cash balances since

44 PART IV ADDITIONAL INFORMATION 1 Responsibility The Directors, whose names appear on page 3, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. 2 Incorporation and status of the Company 2.1 The Company was incorporated and registered in England and Wales under the Act on 18 November 2005 with registered number as a private limited company under the name Business Exchange London Limited. The Company was incorporated with an authorised share capital of 150,000 divided into 150 million Ordinary Shares and an issued share capital of 50,000 divided into 50 million Ordinary Shares. These shares were subscribed by the subscribers to the memorandum of association of the Company, being MWB Serviced Office Holdings Limited MWB Investments Limited, Bellerive Limited, Cavendish Newbrent Limited and Graham Balfour-Lynn. The liability of the members of the Company is limited. On 28 November 2005 each of MWB Serviced Office Holdings Limited and MWB Investments Limited transferred part of their holding of Ordinary Shares to MWB Management Services Limited. The subscribers to the memorandum of association and MWB Management Services Limited are the current shareholders of BXUK and who have agreed, conditional on Admission, to exchange their shares in BXUK for shares in the Company, in accordance with the agreement referred to in paragraph 10.6 of Part IV below. 2.2 The Company changed its name to MWB Business Exchange Limited on 23 November The Company was re-registered as a public limited company on 6 December 2005 under the name of MWB Business Exchange Plc pursuant to a written resolution of the Company. 2.3 The principal legislation under which the Company operates is the Act and regulations made thereunder. 2.4 The Company s registered office of the Company is at 179 Great Portland Street, London W1W 5LS. The principal place of business of the BX Group is 1 West Garden Place, Kendal Street, London W2 2AQ. 2.5 The Company will, on Admission, act as the holding company of the BX Group, the principal activity of which is the provision of flexible office, conference and meeting room solutions. The objects of the Company are set out in full in clause 4 of the memorandum of association of the Company. 2.6 The accounting reference date of the Company s subsidiaries is currently (other than for BX Centres which is currently 31 July) and the financial information relating to the BX Group in Part II has been prepared to 1 July or in each of the financial years ended 1 July 2003 to The Company recently changed its accounting reference date to 31 December and the subsidiaries are currently in the course of changing their accounting reference dates to 31 December. Accordingly, the next audited financial statements of the BX Group will be for the period ending 31 December Share capital of the Company 3.1 The authorised and issued and fully paid share capital of the Company prior to the Placing and as it will be immediately following the Placing (assuming full subscription of the Placing Shares) is set out below: Authorised Issued and fully paid 44 Number of Ordinary Shares Nominal value of Ordinary Shares Number of Ordinary Shares Nominal value of Ordinary Shares Prior to the Placing 150,000, ,000 50,350,000 50,350 Following the Placing 150,000, ,000 69,100,000 69,100

45 3.2 On 30 November 2005, the Company entered into a conditional share sale and purchase agreement with MWB Serviced Office Holdings Limited, MWB Investments Limited, MWB Management Services Limited, Bellerive Limited, Cavendish Newbrent Limited, Graham Balfour-Lynn and Mourant & Co. Trustees Limited (together the Vendors ) pursuant to which the Company acquired the entire issued share capital of BXUK from the Vendors, in exchange for the allotment and issue to the Vendors (other than Mourant) of an aggregate of 350,000 Ordinary Shares ( Consideration Shares ) and the payment by the Company to Mourant of 1,000. This agreement is conditional on Admission. 3.3 Pursuant to resolutions of shareholders of the Company passed on 16 December 2005 subject to Admission: the Directors were authorised to allot relevant securities pursuant to section 80 of the Act for the purposes of the Placing, as reserved for issue under the Share Option Scheme and up to an aggregate nominal amount of 23,033 (being equivalent to one third of the Company s enlarged issued share capital upon Admission) for the period until the next annual general meeting of the Company or fifteen months from the date of passing of the resolution (whichever is the earlier), unless previously revoked or varied by the Company in general meeting; the Directors were empowered for the period until the next annual general meeting of the Company or fifteen months from the date of passing of the resolution (whichever is the earlier) to allot equity securities for cash pursuant to the authority referred to in paragraph above as if section 89(1) of the Act did not apply to such allotment provided that the power was limited to: the allotment of Ordinary Shares by way of rights issue or otherwise generally available to all Shareholders in proportion to their holdings of shares; the allotment of Ordinary Shares up to a nominal amount of 18,750 in connection with the Placing; and otherwise than pursuant to paragraphs and above, the allotment of Ordinary Shares up to an aggregate nominal amount of 3,455 being equivalent to 5 per cent. of the Company s enlarged issued share capital upon Admission. 3.4 On 16 December 2005, the Company created the Share Option Scheme, details of which are set out in paragraph 6 of this Part IV. The Directors intend to grant options over no more than 1,390,521 Ordinary Shares on Admission, representing approximately 2.0 per cent. of the enlarged issued share capital of the Company. 3.5 Save in connection with the allotment and issue of the Consideration Shares, the Placing Shares and the grant of options under the Share Option Scheme (i) no share or loan capital of the Company is proposed to be issued or is issued under option or agreed, conditionally or unconditionally, to be issued or put under option, (ii) no persons have any rights to subscribe any authorised but unissued share capital of the Company or any of its subsidiaries and (iii) there is no present intention to issue any of the authorised but unissued share capital of the Company. 3.6 The Placing Shares will, when issued, rank equally in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after Admission in respect of the Company s Ordinary Shares. 3.7 On Admission the Company will hold no treasury shares in the Company. 45

46 4 Memorandum of Association The memorandum of association of the Company provides that the Company s principal object is to carry on business as a general commercial company. The objects and powers of the Company are set out in full in clause 4 of the memorandum of association. 5 Articles of Association The articles of association of the Company ( Articles ) will contain, on Admission, inter alia, the following provisions: 5.1 Variation of class rights and changes of capital The special rights attached to any class of shares may, subject to any applicable law, be varied or abrogated in such manner (if any) as may be provided by such rights or, in the absence of any such provision, either with the consent in writing of the holders of three quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of shares of the class and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of winding up. The Company may by ordinary resolution increase its share capital, consolidate and divide all or any of its shares into shares of a larger amount, cancel any shares not taken or agreed to be taken by any person and sub-divide its shares into shares of a smaller amount. The Company may by special resolution reduce its share capital or any capital redemption reserve fund, share premium account or other undistributable reserve subject to authority required by law. Subject to applicable law, and to sanction by an extraordinary resolution, the Company may purchase its own shares. 5.2 Class meetings The provisions of the Articles relating to general meetings apply mutatis mutandis to every such meeting. The necessary quorum is two persons holding, or representing by proxy, or as the duly authorised representative of a corporation, one third in nominal amount of the issued shares of the class, except where there is only one holder of the relevant class of shares in which case the quorum shall be that holder. 5.3 Votes of members Subject to statute and any special rights or restrictions as to voting attached to any class of shares, at any general meeting, on a show of hands, every member who is present in person has one vote and, in the case of a poll, every member present in person or by proxy has one vote for every share of which he is the holder. No member is entitled to attend or vote at a general meeting either personally or by proxy if he or any person appearing to be interested in shares held by him has been duly served with a notice under section 212 of the Act and is in default for the prescribed period in supplying to the Company the information required thereby or, unless the directors determine otherwise, if any calls from him have not been paid. 5.4 Borrowing powers The directors may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property, assets (present and future) and uncalled capital and, subject to applicable law, to issue debenture and other loan stock and debentures and other securities. 46

47 5.5 Directors A director is not required to hold any qualification shares The amount of any fees payable to directors shall be determined by the directors provided that they shall not in any year exceed an aggregate amount of 150,000 or such other sum as may from time to time be approved by ordinary resolution. Any such fees shall be divisible among the directors as they may agree, or failing agreement, equally. The directors are also entitled to be repaid all reasonable expenses incurred by them respectively in the performance of their duties. Any director holding an executive office or otherwise performing services which in the opinion of the directors are outside the scope of his ordinary duties as a director may be paid such remuneration as the directors may determine The directors may establish and maintain the establishment of any non-contributory or contributory pension or superannuation funds for the benefit of, and give donations, gratuities, pensions, allowances or emoluments to, any persons who are or were at any time in the employment or service of, or directors or officers of and holding any salaried employment or office in, the Company or any other company which is its holding company, or in which the Company or such holding company has any interest or which is allied to or associated with the Company or of any company which is a subsidiary undertaking of the Company or of any such other company ( associated companies ) and the families and dependents of any such persons; and the directors shall have power to purchase and maintain insurance against liability for any persons who are or were at any time directors, officers, employees of, the Company or, its associated companies and for trustees of any pension fund in which employees of the Company or its associated companies are interested The directors may from time to time appoint one or more of their body to be the holder of any executive office (including the office of chairman, deputy chairman, managing director or chief executive) on such terms and for such period as they may determine Subject to the provisions of applicable law and provided that he has disclosed to the directors the nature and extent of any material interest of his, a director notwithstanding his office:- (a) (b) (c) (d) may be a party to, or otherwise interested in, any contract, transaction or arrangement with the Company or in which the Company is otherwise interested; and may be a director or other officer of, or employed by, or a party to, any transaction or arrangement with, or otherwise interested in any body corporate promoted by the Company or in which the Company is otherwise interested; and may hold any other office or place of profit under the Company (except that of auditor or auditor of a subsidiary of the Company) in conjunction with the office of director and may act by himself or through his firm in a professional capacity to the Company and in any such case on such terms as to remuneration and otherwise as the directors may arrange; and shall not, by reason of his office, be accountable to the Company for any benefit which he derives from any such office or employment or from any such contract, transaction or arrangement or from any interest in any such body corporate, and no such contract, transaction or arrangement shall be liable to be avoided on the grounds of any such interest or benefit Save as specifically provided in the Articles, a director may not vote in respect of any contract, transaction or arrangement or any other proposal whatsoever in which he has any material interest otherwise than by virtue of his interests in shares or debentures or other securities of, or otherwise in or through, the Company. A director will not be 47

48 counted in the quorum of a meeting in relation to any resolution on which he is debarred from voting Subject to applicable law, a director is (in the absence of some other material interest than is indicated below) entitled to vote (and will be counted in the quorum) in respect of any resolution concerning any of the following matters, namely:- (a) (b) (c) (d) (e) (f) (g) the giving of any guarantee, security or indemnity to him in respect of money lent or obligations incurred by him at the request of or for the benefit of the Company or of its subsidiary undertakings; the giving of any guarantee, security or indemnity to a third party in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; any contract, transaction, arrangement or proposal concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings for subscription or purchase in which offer he is or is to be interested as a participant in the underwriting or sub-underwriting thereof; any contract, transaction, arrangement or proposal to which the Company is or is to be a party concerning any other body corporate in which he (together with any persons connected with him) does not to his knowledge hold an interest in shares (as that term is used in Part VI of the Act) representing one per cent. or more of either any class of the equity share capital or the voting rights in such body corporate; any contract, transaction, arrangement or proposal concerning the adoption, modification or operation of a superannuation fund or retirement, death or disability benefits scheme under which he may benefit and which has been approved by, or is subject to and conditional on approval by, HM Revenue and Customs for taxation purposes; any contract, transaction, arrangement or proposal for the benefit of the employees of the Company or any of its subsidiary undertakings and which does not award any director any privilege or benefit not generally awarded to the employees to whom such arrangement relates; and any contract, transaction, arrangement or proposal concerning any insurance against liability which the Company is empowered to purchase and/or maintain for, or for the benefit of, any directors or group of persons who include directors Subject to any applicable law, the Company may by ordinary resolution suspend or relax the provisions summarised in the paragraphs and/or of this Part IV either relating to voting by directors generally or in relation to any particular matter, or ratify any transaction not duly authorised by reason of a contravention of such provision A resolution for the appointment of two or more persons as directors by a single resolution shall not be moved at any general meeting unless a resolution that it shall be so moved has first been agreed by the meeting without any vote being given against it, and any resolution moved in contravention of this provision of the Articles shall be void The Articles provide that statutory provisions which would have the effect of rendering any person ineligible for appointment as a director or liable to vacate office as a director on account of his having reached any specified age, or of requiring special notice or any other special formality in connection with the appointment of any director over a specified age, shall not apply to the Company. 48

49 5.6 Transfer of shares All transfers of shares may be effected by transfer in writing in any usual form or in any other form acceptable to the directors and shall be executed by or on behalf of the transferor and, if the share is partly paid, the transferee. The Articles do not contain any restriction on the transferability of fully paid shares, provided that the Company has no lien over the shares, the instrument of transfer is in favour of not more than four transferees and in respect of only one class of shares and is duly stamped (if so required), the provisions in the Articles relating to the deposit of instruments of transfer accompanied by the relevant share certificate have been complied with and the member is not in default of any notice duly served under section 212 of the Act as referred to in the Articles. 5.7 Pre-emption rights The Articles do not contain any provisions which set out a procedure for the exercise of pre-emption rights for members in addition to that provided for by the Act. 5.8 Redemption There are no provisions relating to the redemption of Ordinary Shares. 5.9 Suspension of rights If a member or any other person appearing to be interested in shares held by such shareholder has been duly served with notice under section 212 of the Act and is in default in supplying to the Company within such period as may be specified in such notice the information thereby required, or makes a statement which is false or inadequate in any material way, then (if the directors so resolve) such member shall not be entitled to be present or to vote or to exercise any right conferred by membership in relation to meetings of the Company in respect of the shares which are the subject of such notice (the default shares ) and (where the holding represents at least 0.25 per cent. of the issued shares of that class) the payment of dividends may be withheld, and such transfers of shares of that member may not be registered unless: (i) the member is not himself in default in supplying the information requested and the shares transferred are not default shares; or (ii) the transfer is an approved transfer Dividends Subject to the provisions of any relevant legislation, the Company may by ordinary resolution, from time to time, declare dividends to be paid in accordance with the respective rights of the members but no dividend shall be declared in excess of the amount recommended by the Board Distribution of assets on a winding up If the Company shall be wound up, the liquidator may, with the sanction of an extraordinary resolution and, subject to any other sanction required by any relevant legislation: divide among the members in specie or in kind the whole or any part of the assets of the Company and may, for such purpose, value any assets and determine how such division shall be carried out as between the members or different classes of members; and vest any part of the assets in trustees upon such trusts for the benefit of the members as the liquidator, with the like sanction, may determine; but no member shall be compelled to accept any assets upon which there is any liability. 49

50 5.12 Forfeiture and lien If a member fails to pay in full any call on the due date for payment, the Board may at any time serve a notice on him/her requiring payment and stating that in the event of non-payment in accordance with such notice the shares on which the call was made will be liable to be forfeited. Any share so forfeited may be disposed of by the Company within three years, otherwise it shall be cancelled. The Company shall have a first and paramount lien on every share (not being a fully paid share) for all monies (whether presently or not) called or payable at a fixed time in respect of such share. The Company may sell in such manner as the Board thinks fit any share on which the Company has a lien, fourteen days after a notice in writing stating and demanding payment of the sum presently payable and giving notice of intention to sell. 6 Share option and incentive schemes 6.1 On 12 December 2005 the Company, subject to Admission, adopted the Share Option Scheme which comprises a part which will be approved by the HM Revenue and Customs and a part which will not. The two parts are identical in all material respects unless indicated to the contrary below or as is consequential on their differing taxation status. Set out below are summaries of the principal terms of the Share Option Scheme: All employees of the BX Group regardless of the number of hours of work, directors who are obliged to devote at least 25 hours a week to their duties, and, unless the Board determines otherwise, are not within two years of their contractual retirement age, are eligible to participate in the Share Option Scheme. Decisions relating to the Share Option Scheme will be made by the Board or a duly authorised committee of the Board. Options are a matter entirely separate from participants contracts of employment Save for options to be granted at Admission, while the Ordinary Shares of the Company are admitted to trading on AIM, options may be granted within the 42 days commencing with the fourth dealing day after an announcement by the Company of its results for any period or at other times which the Board considers to be exceptional. Options are not transferable other than where, by virtue of a participant s death, they may be exercised by his personal representatives The maximum number of Ordinary Shares over which options may be granted under the Share Option Scheme, including any granted on Admission, shall be 10 per cent. of the Company s issued Ordinary Share capital. Options which lapse or are waived or cancelled do not count for the purposes of this limit In respect of options granted after Admission, no person may, unless the Board determines otherwise (in which case the applicable limit will be as determined by the Board), in a calendar year be granted options over Ordinary Shares worth more than 100% of his annual remuneration. This limit is increased to four times remuneration in respect of the first grant of options to an eligible executive after he joins the BX Group The aggregate market value (at the date of grant) of Ordinary Shares which may be held under option by an individual at any one time under the HM Revenue and Customs approved part of the Share Option Scheme or any other approved executive share option scheme established by the Company shall not exceed 30,000 or such other statutory limit which may apply from time to time The price per Ordinary Share payable on the exercise of an option will not be less than the nominal value of an Ordinary Share and will (save where if the Board in its discretion determines otherwise) in respect of options granted under the unapproved part of the Share Option Scheme, be granted at, or more than, market value An option will normally be exercisable between three and ten years from grant. On termination of the employment of an option holder by reason of death, an option will 50

51 remain exercisable for 12 months after death. On termination of employment by reason of redundancy, ill health or disability, an option will remain exercisable for six months after termination. Exercise of options following termination of employment in other circumstances will be at the discretion of the Board. Exercise is permitted on a reconstruction, take over or winding-up of the Company The Board intends to impose performance conditions on the exercise of options granted on or after Admission. The Board will have discretion as to whether such performance conditions shall continue to apply in the case of exercise following termination of employment, a reconstruction, take over or winding-up All Ordinary Shares allotted under the Share Option Scheme will rank equally with all other Ordinary Shares for the time being in issue, for all rights arising by reference to a record date after the date of allotment. In the event of any variation of share capital, the Board may make such adjustments to the terms of the options as it so determines so as to retain a similar level of incentive The Board may not alter the Share Option Scheme to the advantage of participants without the prior consent of Shareholders in general meeting (save for minor changes to benefit the administration of the Share Option Scheme to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for a participant or BX Group company). Amendments may be made to options to reflect overseas taxation, securities or exchange control laws, provided that the overall terms of such options are not more favourable as a result than those granted to other employees. Options may only be granted under the approved part of the Share Option Scheme once HM Revenue and Customs approval has been obtained. Prior approval is required to any change to a key feature of the approved part of the Share Option Scheme. 6.2 On 16 December 2005 the Company adopted a long term incentive scheme (the LTIS ). Set out below is a summary of the principal terms of the LTIS The Executive Directors and other executive management (to be determined by the Remuneration Committee) will, conditional upon Admission, be entitled to participate in the LTIS The relevant participants in the LTIS will be entitled to receive payments under the LTIS upon specific events, including a sale or takeover of the Company, or a valuation of the Company prepared at The aggregate payments to which participants in the LTIS will be entitled shall be calculated as follows: (i) in the event of a takeover or merger, the proceeds received by Shareholders, or in the event of a sale or other realisation by the Company the proceeds received by the Company, or if such events have not occurred by 2010, a valuation of the Company; and (ii) by reference to the total sale or realisation proceeds received or valuation as appropriate:- (a) less, in all cases, each of the gross proceeds of the Placing, the gross proceeds of any similar equity fund raisings, all sale costs, client deposits, bank and other interest bearing debt and finance leases of the BX Group and an amount of 1 million; but (b) adding back cash of the BX Group not invested (other than the net proceeds arising from the Placing or any similar equity fund raisings); in each case known as the Net Cash Return or NCR. The aggregate amount of payments due to all participants in the LTIS shall increase in stages proportionate to the level of NCR, from 3 million if the first threshold of NCR of 40 million is achieved, to a maximum of 10 million if the highest threshold of NCR of 80 million is achieved. 51

52 The Directors estimate that the NCR would have to be approximately 30 per cent. higher than the market capitalisation of the Company on Admission before the first threshold under the LTIS would be achieved and at least 100 per cent. higher for the highest threshold under the LTIS to be achieved The Participants shall be entitled to payments under the LTIS in the following proportions: John Spencer: 40 per cent.; Rick Aspland-Robinson: 25 per cent.; Keval Pankhania: 15 per cent.; and other executive management in total (as determined individually by the Remuneration Committee): 20 per cent. Such proportions shall not alter unless a participant is no longer eligible to participate in the LTIS at the sole discretion of the Board A participant will cease to be eligible to participate if he resigns or is in breach of the terms of his service contract prior to the date of realisation. If a participant dies prior to the date of realisation, his estate will be entitled to his share of the LTIS, if any, based on the lower of the value of the Company as at the date of death and the value of the Company on the occurrence of any of the events set out in paragraph above, and only paid as set out in paragraph above. 7 Directors and other interests 7.1 The Directors and their immediate families have direct or indirect interests in the issued share capital of the Company which would be required to be notified to the Company pursuant to sections 324 and 328 of the Act or which would be required to be entered in the register of directors' interests maintained by the Company pursuant to section 325 of the Act, including, so far as the Directors are aware, after making due and careful enquiry, interests of persons connected (within the meaning of section 346 of the Act) with the Directors which interests, if such connected persons were Directors, would be required to be disclosed pursuant to the Act, and the existence of which is known to or could with reasonable diligence be ascertained by the Directors, both as at the date of this document and at Admission, having subscribed such shares in the Placing at the Placing Price as follows: Number of Ordinary Shares prior to Admission Number of Ordinary Shares on Admission Percentage of issued Ordinary Shares on Admission Richard Balfour-Lynn 62, % Jag Singh 62, % John Spencer 41, % Rick Aspland-Robinson 41, % Keval Pankhania 41, % 249, % 7.2 Andrew Blurton, a director of MWB Group, will be subscribing 62,500 Ordinary Shares in the Placing at the Placing Price, amounting to 0.09 per cent. of the issued Ordinary Shares on Admission. Andrew Blurton is at the date of this document and will be at Admission beneficially interested in 627,080 ordinary shares of 50p each in MWB Group (which represents 0.57 per cent. of the current issued share capital of MWB Group) and is the joint finance director of MWB Group. 7.3 Richard Balfour-Lynn is as at the date of this document and will be at Admission beneficially interested in 8,533,655 ordinary shares of 50p each in MWB Group (which represents 7.78 per cent. of the current issued share capital of MWB Group) and is the Chief Executive of MWB Group. Jagtar Singh is as at the date of this document and will be at Admission, beneficially interested in 2,283,803 ordinary shares of 50p each in MWB Group (which represents 2.08 per cent. of the current issued share capital of 52

53 MWB Group) and is the joint finance director of MWB Group. Details of the interest of MWB Group in the issued share capital of the Company are set out in paragraph 7.5 of this Part IV. Mr Balfour-Lynn and Mr Singh together, inter alia, with certain of the other directors of and shareholders in MWB Group, including Andrew Blurton, are deemed to be acting in concert for the purposes of the City Code on Takeovers and Mergers in respect of the share capital of MWB Group. At the date of this document, the concert party owns or controls 52,598,448 ordinary shares of 50p each in MWB Group, which represents per cent. of the current issued share capital of MWB Group. 7.4 Rick Aspland-Robinson is at the date of this document and will be at Admission beneficially interested in 50,000 ordinary shares of 50p each in MWB Group. 7.5 None of the Directors hold any options over Ordinary Shares. 7.6 Save as disclosed in paragraph 7.3 above and in this paragraph 7.6, at 15 December 2005 (being the latest practicable date prior to the publication of this document) and immediately before Admission, so far as the Directors are aware, no person other than those listed below has any interest (within the meaning of Part VI of the Act) in 3 per cent. or more of the issued share capital of the Company or exercises, directly or indirectly, jointly or severally, control over the Company: Number of Ordinary Shares prior to Admission Percentage of issued Ordinary Shares prior to Admission Percentage of issued Ordinary Shares on Admission MWB Group 46,951, % 67.95% Bellerive Limited 2,265, % 3.28% 7.7 Save as set out in paragraphs 7.1 to 7.5 above, none of the Directors or their connected parties has any interest in the share capital of the Company and the Directors are not aware of any persons who following completion of the Placing directly or indirectly, jointly or severally, exercise or could exercise control over the Company. 7.8 There are no outstanding loans granted or guarantees provided by any member of the BX Group to or for the benefit of any of the Directors. 7.9 No Director has any interest, whether direct or indirect, in any transaction which is or was unusual in its nature or conditions or significant to the business of the Company taken as a whole and which was effected by any member of the Company during the current or immediately preceding financial year or during any earlier financial year and which remains in any respect outstanding or unperformed. 8 Directors details 8.1 Save as set out below, there are no existing or proposed service contracts between the Directors and any member of the BX Group other than contracts expiring or determinable by the employing company without payment or compensation (other than statutory compensation) within one year. 8.2 The Company has, conditional on Admission, entered into the following service agreements or letters of appointment with the following Directors: On 16 December 2005, John Spencer entered into a service agreement with the Company under which he agreed to serve as Chief Executive of the Company at a current annual salary of 225,000 to be reviewed annually, the first review to be with effect from 1 January The agreement is terminable by either party giving not less than 12 months written notice. In addition to basic remuneration, Mr Spencer is entitled to private health provision, life assurance cover, a car allowance and contributions into the BX Group s pension plan, all in line with similar benefits provided to other employees of the BX Group. 53

54 John Spencer is entitled to receive a bonus payment of up to 50 per cent. of his basic annual salary, calculated on the basis of performance target levels of EBITDA of the BX Group (as recorded in the annual audited accounts of the BX Group) for each year from 1 January 2006 as set by the remuneration committee On 16 December 2005, Rick Aspland-Robinson entered into a service agreement with the Company under which he agreed to serve as an executive director of the Company at a current annual salary of 190,000 to be reviewed annually, the first review to be with effect from 1 January The agreement is terminable by either party giving not less than 12 months written notice. In addition to basic remuneration, Mr Aspland- Robinson is entitled to private health provision, life assurance, a car allowance and contributions into the BX Group s pension plan, all in line with similar benefits provided to other employees of the BX Group On 16 December 2005, Keval Pankhania entered into a service agreement with the Company under which he agreed to serve as Finance Director of the Company at a current annual salary of 175,000 to be reviewed annually, the first review to be with effect from 1 January The agreement is terminable by either party giving not less than 12 months written notice. In addition to basic remuneration, Mr Pankhania is entitled to private health provision, life assurance, a car allowance and contributions into the BX Group s pension plan, all in line with similar benefits provided to other employees of the BX Group On 16 December 2005, Richard Balfour-Lynn entered into a letter of appointment with the Company in respect of his appointment as non-executive Chairman. This appointment can be terminated at any time on three months written notice for no consideration. The appointment will terminate automatically upon Mr Balfour-Lynn vacating office, being removed from office, not being re-elected to office or material breach. No fee is payable to Mr Balfour-Lynn under this appointment. His duties include attending and participating in board meetings, committee meetings and general meetings of the Company, as well as other general board duties On 16 December 2005, Jagtar Singh entered into a letter of appointment between the Company in respect of his appointment as a non-executive director. This appointment can be terminated at any time on three months written notice for no consideration. The appointment will terminate automatically upon Mr Singh vacating office, being removed from office, not being re-elected to office or material breach. No fee is payable to Jagtar Singh under this appointment. His duties include attending and participating in board meetings, committee meetings and general meetings of the Company, as well as other general board duties. 8.3 The Executive Directors and other executive management (to be determined by the remuneration committee) will, conditional upon Admission, be entitled to participate in the Company s LTIS. Further details of the LTIS are set out in paragraph 6.2 of this Part IV. 8.4 The estimated aggregate remuneration and benefits in kind payable by the BX Group to the Directors for the financial years ending 31 December 2005 and 31 December 2006 are estimated to be 725,000 and 825,000, respectively. 54

55 8.5 Other than their directorships of the Company, the companies of which each Director is at the date of this document and has been a director at any time in the past five years preceding the date of this document, with the date of resignation or dissolution of the company as appropriate shown in brackets, are as follows. All such companies are incorporated in England and Wales unless otherwise stated: Richard Balfour-Lynn Current Directorships 1 Radlett Place Limited 140 Park Lane (No. 2) Limited 140 Park Lane (No. 3) Limited 140 Park Lane Residential No. 1 Limited 140 Park Lane Residential No. 2 Limited 33/34 Onslow Gardens No. 1 Limited 33/34 Onslow Gardens No. 2 Limited Cave du Vin Limited Connaught Management Services Limited E P Holdings Limited English Wines Group PLC Flatford Limited (incorporated in Jersey) Flatford (No.2) Limited (incorporated in Jersey) Health du Vin Limited Hotel 123 Limited Hotel Des Arts Limited Hotel du Vin (Birmingham) Limited Hotel du Vin (Brighton) Limited Hotel du Vin (Bristol) Limited Hotel du vin (Cambridge) Limited Hotel du Vin (Harrogate) Limited Hotel du Vin (Henley) Limited Hotel du Vin (Tunbridge Wells) Limited Hotel du Vin (Winchester) Limited Keypond Properties Limited Leisure Box Limited Liberty (Regent and Tudor) Holdings No. 1 Limited Liberty (Regent and Tudor) No. 1 Limited Liberty (RSPH) No. 4 Limited Liberty Centres Limited Liberty Lasenby Property Limited Liberty Lasenby Property No. 2 Limited Liberty Plc Liberty Properties Link Owner Limited Liberty Properties Link Owner No. 2 Limited Liberty Regent Property Limited Liberty Regent Property No. 2 Limited Liberty Regent Street Limited Liberty Regent Street No. 2 Limited Liberty Retail Plc Liberty Tudor Property Limited Liberty Tudor Property No. 2 Limited Londinium Investments Limited Malmaison (Belfast) Limited Malmaison (Liverpool) Limited Malmaison (Oxford) Limited Malmaison Hotels Limited Malmaison Resources Limited Marylebone Warwick Balfour Finance Limited Marylebone Warwick Balfour Group Plc Marylebone Warwick Balfour Holdings Limited Marylebone Warwick Balfour Management Limited Moorston Capital Limited MWB (Cannon Centre) Limited Past Directorships 140 Park Lane Limited (4 January 2002) Cadbury House Limited (dissolved 28 October 2005) Cannon Street Nominees No. 1 Limited (11 July 2002) Cannon Street Nominees No. 2 Limited (11 July 2002) Cannon Street Nominees No. 3 Limited (11 July 2002) Cannon Street Nominees No. 4 Limited (11 July 2002) Capital & Regional (Leisure GP) Limited (24 January 2003) Capital & Regional (Leisure II GP) Limited (24 January 2003) Cedar Mansions Limited (dissolved 11 May 2004) Centre Heights Limited (dissolved 28 June 2005) Easepride Limited (dissolved 11 September 2001) Fleetplan Limited (dissolved 13 May 2003) Flyacre Limited (dissolved 4 September 2001) Grandrest Projects Limited (in members voluntary liquidation) Gower Street Limited (dissolved 11 September 2001) Grenville Nominees No. 1 Limited (15 June 2004) Grenville Nominees No. 2 Limited (15 June 2004) Hotel Fund (General Partner) Limited (dissolved 2003) Illuminator Plc (7 February 2002) Leisure II (02 LP) Shareholder Limited (24 January 2003) Leisure II (02 Manager) Shareholder Limited (24 January 2003) Leisure Park Management (Bentley Bridge) Limited (14 January 2004) Leisure Park Management (Boldon) Limited (14 January 2004) Leisure Park Management (Maidstone) Limited (14 January 2004) Leisure Park Management (Stockton) Limited (28 July 2003) Leisure Parks (General Partner II) Limited (24 January 2003) Leisure Parks (General Partners) Limited (24 January 2003) Ludgate House Limited (dissolved 28 June 2005) Malmaison (Birmingham II) Limited (dissolved 26 August 2003) Malmaison (Charterhouse II) Limited (dissolved 26 August 2003) Malmaison (Edinburgh II) Limited (dissolved 3 February 2004) Malmaison (ELL) Limited (dissolved 13 June 2003) Malmaison (Glasgow II) Limited (dissolved 26 August 2003) Malmaison (Leeds II) Limited (dissolved 26 August 2003) 55

56 Current Directorships MWB (GMAC Finance) Limited MWB (Industrial) Limited MWB (Kensington Village Pembroke) Limited MWB (Kensington Village Warwick) Limited MWB (Kensington Village) Limited MWB (Leisure II Carried Interest) Limited MWB (Leisure II LP Shareholder) Limited MWB (Maidstone) Limited MWB (Marble Arch Tower No. 1) Limited MWB (Marble Arch Tower) Limited MWB (Old Bailey) Limited MWB (Pall Mall) Limited MWB (Queensway) Limited MWB (Queensway Properties) Limited MWB (Royal Victoria Dock) Limited MWB (Tower Park) Limited MWB (West India Quay) Limited MWB Argyle Street Limited MWB Asset Management Holdings Limited MWB Baker Street Limited MWB Business Exchange (Birmingham) Limited MWB Business Exchange (Canary Wharf) Limited MWB Business Exchange Leadenhall Limited MWB Business Exchange (Spain) Limited MWB Business Exchange UK Limited MWB Cannon Centre Lease Limited MWB Commercial Property Holdings Limited MWB Congleton Limited MWB Friar Street Limited MWB Friar Street Two Limited MWB Fund Management Limited MWB Fund Management Holdings Limited MWB Hayes Gate Limited MWB Hotel Holdings Limited MWB Howard Hotel Limited MWB Howard Hotel No. 1 Limited MWB Howard Hotel No. 2 Limited MWB Howard Hotel No. 3 Limited MWB Howard Hotel No. 4 Limited MWB Investments Limited MWB Kensington Village (Gloucester) Limited MWB Konnect Limited MWB Liberty Investments Limited MWB Malmaison Holdings Limited MWB Management Services Limited MWB Mitcham Limited MWB Park Lane Investments Limited MWB Project Management Holdings Limited MWB Retail Holdings Limited MWB Retail Holdings No. 1 Limited MWB Retail Holdings No. 2 Limited MWB Retail Stores Shareholder Limited MWB Serviced Office Holdings Limited MWB Watford Limited MWB West India Quay (Eastern) Limited MWB West India Quay (Northern) Limited MWB West India Quay (Warehouses) Limited No. 1 West India Quay (Commercial) Limited No. 1 West India Quay (Residential) Limited Phoenix Securities (Bishops Stortford) Limited Phoenix Securities (Harborne) Limited Retail Stores Property Holdings Limited Retail Stores Property Holdings No. 1 Limited Retail Stores Property Holdings No. 2 Limited Past Directorships Malmaison (Manchester II) Limited (dissolved 26 August 2003) Malmaison (Newcastle II) Limited (dissolved 26 August 2003) Malmaison Limited (17 May 2002) Marylebone Warwick Balfour Management Limited (28 October 2003) MWB (Bishopsgate Residential) Limited (dissolved 23 November 2004) MWB (Bishopsgate) Limited (dissolved 8 February 2005) MWB (Chelsea) Limited (dissolved 13 May 2003) MWB (Facilities Management) Limited (dissolved 29 April 2003) MWB (Kennington) Limited (dissolved 11 September 2001) MWB (Kingston) Limited (dissolved 11 September 2001) MWB (Lancaster Gate) Limited (dissolved 14 October 2003) MWB (Mount Vernon Two) Limited (dissolved 28 June 2005) MWB (Mount Vernon) Limited (dissolved 5 July 2005) MWB (Old Bailey Developments) Limited (dissolved 12 August 2003) MWB (Rossetti) Limited (dissolved 10 June 2003) MWB (Royal Victoria Dock Management) Limited (dissolved 29 April 2003) MWB (Warwick Road) Limited (dissolved 1 February 2005) MWB Argyle Street Operations Limited (dissolved 11 May 2004) MWB Business Exchange Europe Limited (in liquidation, see paragraph of Part IV) MWB Business Exchange (France) Limited (in liquidation, see paragraph of Part IV) MWB Business Exchange (Germany) Limited (dissolved 7 April 2005), see paragraph of Part IV) MWB Business Exchange (Holland) Limited (dissolved 28 January 2005), see paragraph of Part IV) MWB Business Exchange (Ireland) Limited (dissolved 8 October 2002) MWB Business Exchange (Italy) Limited (dissolved 8 October 2002) MWB Business Exchange Trustee Limited (dissolved 28 June 2003) MWB Clubhaus Prefs Limited (dissolved 28 June 2005) MWB Friar Street Lease Limited (dissolved 28 June 2005) MWB Leisure (Maidstone) Limited (24 January 2003) MWB Leisure (Maidstone (2)) Limited (24 January 2003) MWB Malmaison Brand Limited (17 May 2002) MWB Oxford Street Limited (dissolved 28 June 2005) MWB Pemberton Limited (dissolved 28 June 2005) MWB Project Management Services Limited (dissolved 11 September 2001) MWB Select Limited (dissolved 27 April 2004) MWB West End Limited (dissolved 1 February 2005) MWB West India Quay Eastern Shareholder Limited (dissolved 10 May 2005) Nemesia Properties Limited (dissolved 11 September 2001) Park Leisure Management (Poole) Limited (14 January 2004) 56

57 Current Directorships Retail Stores Property Holdings No. 3 Limited Rysbridge Estates Limited Superlative Investment Services Limited The Alternative Hotel Group Limited The Alternative Hotel Group Management Services Limited The Malmaison Company (Edinburgh) Limited Warwick Balfour Group Limited Warwick Balfour Investments Limited Warwick Balfour Limited Warwick Balfour Management Limited Warwick Balfour Properties Limited West India Quay Management Company (Museum) Limited West India Quay (Block A) Limited West India Quay Development Company (Eastern No. 2) Limited West India Quay Development Company (Eastern) Limited West India Quay Development Company (Ledger) Limited West India Quay Development Company (Northern) Limited West India Quay Development Company Limited West India Quay Development Company (Warehouses) Limited West India Quay Development Company (Warehouses No. 2) Limited West India Quay Management Company Limited West India Quay Management Company (Car Park) Limited West India Quay Management Company (Northern) Limited WGP (Two) Limited WGP Management Limited Past Directorships Park-Lands (Cheltenham) Limited (dissolved 10 June 2003) Park-Lands (Estates) Ltd (dissolved 28 June 2005) Park-Lands (Holdings) Limited (dissolved 13 May 2003) Park-Lands (Islington) Limited (dissolved 13 May 2003) Park-Lands (London) Limited (dissolved 28 June 2005) Park-Lands (Securities) Limited (dissolved 11 May 2004) Park-Lands (Wood Green) Limited (dissolved 1 February 2005) T P Properties Limited (dissolved 28 June 2005) Teeside Nominees Limited (10 September 2002) The Hospitality Asset Management Company Limited (23 September 2005) The Malmaison Hotel (Birmingham) Limited (17 May 2002) The Malmaison Hotel (Glasgow) Limited (17 May 2002) The Malmaison Hotel (Leeds) Limited (17 May 2002) The Malmaison Hotel (Manchester) Limited (17 May 2002) The Malmaison Hotel (Newcastle) Limited (17 May 2002) The UK Leisure Corporation Limited (dissolved 28 August 2001) Vision Development Company Limited (23 September 2005) Vision Hotel Asset Management Plc (23 September 2005) Warwick House Kensington Limited (dissolved 6 January 2004) West India Quay (Warehouse Property) Limited (30 September 2004) Yankglen Properties Limited X-Leisure (Bentley Bridge) Limited (24 January 2003) X-Leisure (Boldon) Limited (24 January 2003) X-Leisure (Dundee) Limited (24 January 2003) X-Leisure (Edinburgh) Limited (24 January 2003) X-Leisure (Guildford) Limited (24 January 2003) X-Leisure (Poole) Limited (24 January 2003) X-Leisure Management Limited (14 January 2004) John Spencer Current Directorships 175 Limited Business Exchange Centres Limited MWB Business Exchange UK Limited MWB Business Exchange (Birmingham) Limited MWB Business Exchange (Canary Wharf) Limited MWB Executive Centres Limited MWB Executive Centres (Northampton) Limited Past Directorships Allied Safety Co. Limited (31 March 2004) Chubb Fire Limited (31 March 2004) First Fire & Safety Limited (30 December 2002) Fire Extinguishing Trades Association (14 May 2004) Grampian Fire Protection Limited (31 March 2004) Incident Control Ltd (30 December 2001) Interfire Limited (31 March 2004) John Sheffield (Fire Protection) Limited (31 March 2004) L. Bowman & Sons Limited (31 March 2004) Sealclear Limited (31 March 2004) T G Products Limited (31 March 2004) The Pyrene Company Limited (dissolved 10 December 2004) 57

58 Keval Pankhania Current Directorships 175 Limited Business Exchange Centres Limited MWB Business Exchange (Birmingham) Limited MWB Business Exchange UK Limited MWB Executive Centres Limited MWB Executive Centres (Northampton) Limited Servco (General Partner) Limited Past Directorships James Thornton Consulting Limited (7 September 2004) Rick Aspland-Robinson Current Directorships 175 Limited Business Exchange Centres Limited MWB Business Exchange UK Limited MWB Business Exchange (Birmingham) Limited MWB Business Exchange (Canary Wharf) Limited MWB Executive Centres Limited MWB Executive Centres (Northampton) Limited MWB Management Services Limited Vision Hotel Asset Management Plc Past Directorships Jagtar Singh Current Directorships 175 Limted 1 Radlett Place Limited 140 Park Lane Limited 140 Park Lane (No. 2) Limited 140 Park Lane (No. 3) Limited 140 Park Lane (No. 4) Limited 140 Park Lane Residential No. 1 Limited 140 Park Lane Residential No. 2 Limited 33/34 Onslow Gardens No. 1 Limited 33/34 Onslow Gardens No. 2 Limited Arnlink Limited Avanta Business Centres Limited Avanta MWB (Bracknell) Limited Bellsite Limited Budget Offices Limited Business Exchange Centres Limited Cave du Vin Limited Chainrange Limited Flatford Limited (incorporated in Jersey) Flatford (No. 2) Limited (incorporated in Jersey) Flowcart Limited Gableworth Limited Health du Vin Limited Hotel 123 Limited Hotel Des Arts Limited Hotel du Vin Limited Hotel du Vin (Birmingham) Limited Hotel du Vin (Brighton) Limited Hotel du Vin (Bristol) Limited Hotel du vin (Cambridge) Limited Hotel du Vin (Harrogate) Limited Past Directorships Bickville Limited (dissolved 24 May 2005) Bondcrest Investments Limited (dissolved 13 May 2005) Cadbury House Limited (dissolved 28 October 2003) Cannon Street Nominees No. 1 Limited (11 July 2002) Cannon Street Nominees No. 2 Limited (11 July 2002) Cannon Street Nominees No. 3 Limited (11 July 2002) Cannon Street Nominees No. 4 Limited (11 July 2002) Capital & Regional (Leisure GP) Limited (24 January 2003) Capital & Regional (Leisure II GP) Limited (24 January 2003) Cedar Mansions Limited (dissolved 11 May 2004) Centre Heights Limited (dissolved 28 June 2005) Comprehensive Resources Limited (dissolved 28 June 2005) Eagercatch Limited (dissolved 28 June 2005) Easepride Limited (dissolved 11 September 2001) Finlaw 119 Limited (dissolved 11 June 2002) Finlaw 165 Limited (dissolved 1 May 2001) Fleetplan Limited (dissolved 13 May 2003) Flyacre Limited (dissolved 4 September 2001) Gower Street Limited (dissolved 11 September 2001) Grenville Nominees No. 1 Limited (15 June 2004) Hobcan Limited (dissolved 28 June 2005) 58

59 Current Directorships Hotel du Vin (Henley) Limited Hotel du Vin (Tunbridge Wells) Limited Hotel du Vin (Winchester) Limited Langcharm Limited Leisure Box Limited Liberty (Regent and Tudor) Limited Liberty (Regent and Tudor) Holdings Limited Liberty (Regent and Tudor) Holdings No. 1 Limited Liberty (Regent and Tudor) No. 1 Limited Liberty (RSPH) No. 4 Limited Liberty Centres Limited Liberty Investment Limited Liberty of London Prints Limited Liberty Lasenby Property Limited Liberty Lasenby Property No. 2 Limited Liberty Export Services Limited Liberty Properties Link Owner Limited Liberty Properties Link Owner No. 2 Limited Liberty Regent Property Limited Liberty Regent Property No. 2 Limited Liberty Regent Street Limited Liberty Regent Street No. 2 Limited Liberty Retail Plc Liberty Tudor Property Limited Liberty Tudor Property No. 2 Limited Londinium Investments Limited Malmaison Brand Limited Malmaison Limited Malmaison (Belfast) Limited Malmaison (Chart Square) Limited Malmaison (Liverpool) Limited Malmaison (Oxford) Limited Malmaison Hotels Limited Malmaison Resources Limited Manorcall Limited Marylebone Warwick Balfour Finance Limited Marylebone Warwick Balfour Group Plc Marylebone Warwick Balfour Holdings Limited Moorston Capital Limited MWB (Cannon Centre) Limited MWB (GMAC Finance) Limited MWB (Kensington Village Pembroke) Limited MWB (Kensington Village Warwick) Limited MWB (Kensington Village) Limited MWB (Leisure II Carried Interest) Limited MWB (Leisure II LP Shareholder) Limited MWB (Maidstone) Limited MWB (Marble Arch Tower No. 1) Limited MWB (Marble Arch Tower) Limited MWB (Old Bailey) Limited MWB (Pall Mall) Limited MWB (Premier) Limited MWB (Queensway) Limited MWB (Queensway Properties) Limited MWB (Royal Victoria Dock) Limited MWB (Tower Park) Limited MWB (West India Quay) Limited MWB Argyle Street Limited MWB Asset Management Holdings Limited MWB Baker Street Limited MWB Business Exchange (Birmingham) Limited MWB Business Exchange (Belgium) Limited MWB Business Exchange (Canary Wharf) Limited Past Directorships Hotel Fund (General Partner) Limited (dissolved 2003) James Thornton Consulting Limited (7 September 2004) Leisure II (O2 LP) Shareholder Limited (24 January 2003) Leisure II (O2 Manager) Shareholder Limited (24 January 2003) Leisure II (West India Quay LP) Shareholder Limited (14 January 2004) Leisure Park Management (Bentley Bridge) Limited (14 January 2004) Leisure Park Management (Boldon) Limited (14 January 2004) Leisure Park Management (Maidstone) Limited (14 January 2004) Leisure Park Management (Stockton) Limited (28 July 2003) Liberty & Co. (Investment 1946) Limited (dissolved 2003) Liberty of London Dot Com Limited (dissolved 13 May 2003) Liberty Retail Limited (dissolved 13 May 2003) Ludgate House Limited (dissolved 28 June 2005) Malmaison (Birmingham II) Limited (dissolved 26 August 2003) Malmaison (Charterhouse II) Limited (dissolved 26 August 2003) Malmaison (Edinburgh II) Limited (dissolved 3 February 2004) Malmaison (ELL) Limited (dissolved 13 June 2003) Malmaison (Glasgow II) Limited (dissolved 26 August 2003) Malmaison (Leeds II) Limited (dissolved 26 August 2003) Malmaison (Manchester II) Limited (dissolved 26 August 2003) Malmaison (Newcastle II) Limited (dissolved 26 August 2003) Marylebone Warwick Balfour Management Limited (23 September 2005) MWB (Bishopsgate) Limited (dissolved 8 February 2005) MWB (Chelsea) Limited (dissolved 13 May 2003) MWB (Facilities Management) Limited (dissolved 29 April 2003) MWB (Kennington) Limited (dissolved 11 September 2001) MWB (Kingston) Limited (dissolved 11 September 2001) MWB (Lancaster Gate) Limited (dissolved 14 October 2003) MWB (Mount Vernon Two) Limited (dissolved 28 June 2005) MWB (Mount Vernon) Limited (dissolved 5 July 2005) MWB (Old Bailey Developments) Limited (dissolved 12 August 2003) MWB (Rossetti) Limited (dissolved 10 June 2003) MWB (Royal Victoria Dock Management) Limited (dissolved 29 April 2003) MWB (Warwick Road) Limited (dissolved 1 February 2005) MWB Argyle Street Operations Limited (dissolved 1 May 2004) 59

60 Current Directorships MWB Business Exchange (Spain) Limited MWB Business Exchange Leadenhall Limited MWB Business Exchange UK Limited MWB Cannon Centre Lease Limited MWB Commercial Property Holdings Limited MWB Congleton Limited MWB Executive Centres Limited MWB Executive Centres (Northampton) Limited MWB Friar Street Limited MWB Friar Street Two Limited MWB Fund Management Limited MWB Fund Management Holdings Limited MWB Hayes Gate Limited MWB Hotel Holdings Limited MWB Howard Hotel Limited MWB Howard Hotel No. 1 Limited MWB Howard Hotel No. 2 Limited MWB Howard Hotel No. 3 Limited MWB Howard Hotel No. 4 Limited MWB Investments Limited MWB Kensington Village (Gloucester) Limited MWB Konnect Limited MWB Liberty Investments Limited MWB Malmaison Brand Limited MWB Malmaison Holdings Limited MWB Management Services Limited MWB Mitcham Limited MWB Park Lane Hotel Limited MWB Park Lane Hotel No. 2 Limited MWB Park Lane Investments Limited MWB Project Management Holdings Limited MWB Retail Holdings Limited MWB Retail Holdings No. 1 Limited MWB Retail Holdings No. 2 Limited MWB Retail Stores Shareholder Limited MWB Serviced Office Holdings Limited MWB Serviced Offices No. 1 Limited MWB Serviced Offices No. 2 Limited MWB Watford Limited MWB West India Quay (Eastern) Limited MWB West India Quay (Northern) Limited MWB West India Quay (Warehouses) Limited No. 1 West India Quay (Commercial) Limited No. 1 West India Quay (Residential) Limited Phoenix Securities (Bishops Stortford) Limited Phoenix Securities (Harborne) Limited Port East Apartments (Management) Limited Retail Stores Property Holdings Limited Retail Stores Property Holdings No. 1 Limited Retail Stores Property Holdings No. 2 Limited Retail Stores Property Holdings No. 3 Limited Rysbridge Estates Limited Startland Limited Superlative Investment Services Limited Symbol Offices Limited The Alternative Hotel Group Limited The Alternative Hotel Group Management Services Limited The Banbury Collection Limited The Malmaison Hotel (Birmingham) Limited The Malmaison Company (Edinburgh) Limited The Malmaison Hotel (Glasgow) Limited The Malmaison Hotel (Leeds) Limited Past Directorships MWB Business Centres (Premier) Limited (dissolved 18 September 2001) MWB Business Exchange Europe Limited (in liquidation, see paragraph of Part IV) MWB Business Exchange (France) Limited (in liquidation, see paragraph of Part IV) MWB Business Exchange (Germany) Limited (dissolved 7 April 2005, see paragraph of Part IV) MWB Business Exchange (Holland) Limited (dissolved 28 January 2005, see paragraph of Part IV) MWB Business Exchange (Ireland) Limited (dissolved 8 October 2002) MWB Business Exchange (Italy) Limited (dissolved 8 October 2002) MWB Business Exchange Trustee Limited (dissolved 26 August 2003) MWB Clubhaus Prefs Limited (dissolved 28 June 2005) MWB Friar Street Lease Limited (dissolved 28 June 2005) MWB Leisure (Maidstone) Limited (24 January 2003) MWB Leisure (Maidstone (2)) Limited (24 January 2003) MWB Oxford Street Limited (dissolved 28 June 2005) MWB Pemberton Limited (dissolved 28 June 2005) MWB Project Management Services Limited (dissolved 11 September 2001) MWB Select Limited (dissolved 27 April 2004) MWB West End Limited (dissolved 1 February 2005) MWB West India Quay Eastern Shareholder Limited (dissolved 10 May 2005) Nemesia Properties Limited (dissolved 4 September 2001) 02 (General Partner) Limited (24 January 2003) 02 Manager Limited (24 January 2003) Park Leisure Management (Poole) Limited (14 January 2004) Park-Lands (Cheltenham) Limited (dissolved 10 June 2003) Park-Lands (Estates) Ltd (dissolved 28 June 2005) Park-Lands (Holdings) Limited (dissolved 13 May 2003) Park-Lands (Islington) Limited (dissolved 13 May 2003) Park-Lands (London) Limited (dissolved 28 June 2005) Park-Lands (Securities) Limited (dissolved 11 May 2004) Park-Lands (Wood Green) Limited (dissolved 1 February 2005) Phoenix Securities Limited (dissolved 2 July 2002) T P Properties Limited (dissolved 28 June 2005) Teeside Nominees Limited (10 September 2002) The Hospitality Asset Management Company Limited (23 September 2005) The UK Leisure Corporation Limited (dissolved 28 August 2001) Vision Development Company Limited (23 September 2005) Vision Hotel Asset Management Plc (23 September 2005) 60

61 Current Directorships Past Directorships The Malmaison Hotel (Manchester) Limited The Malmaison Hotel (Newcastle) Limited Warwick Balfour Group Limited Warwick Balfour Investments Limited Warwick Balfour Limited Warwick Balfour Management Limited Warwick Balfour Properties Limited West India Quay Development Company (Eastern No. 2) Limited West India Quay Development Company (Warehouses) Limited West India Quay Development Company (Warehouses No. 2) Limited WGP (Two) Limited WGP Management Limited Warwick House Kensington Limited (dissolved 6 January 2004) Wealthcomet Limited (dissolved 10 May 2005) Wealthstar Limited (13 March 2002) X-Leisure (Boldon) Limited (24 January 2003) X-Leisure (Dundee) Limited (24 January 2003) X-Leisure (Edinburgh) Limited (24 January 2003) X-Leisure (Poole) Limited (24 January 2003) X-Leisure Management Limited (14 January 2004) 8.8 Richard Balfour-Lynn, Rick Aspland-Robinson and Jag Singh are partners of Servco Limited Partnership ( Servco ), a partnership established under the laws of England and Wales and registered as a limited partnership. Servco provides head office services to the MWB Group. 8.9 Save as set out in paragraph 8.8 of this Part IV, none of the Directors are partners in a partnership nor have been partners in any partnership in the five years preceding the date of this document Richard Balfour-Lynn, the non-executive Chairman of the Company and Jag Singh, a non-executive director of the Company, are shareholders in and directors of a company (The Alternative Hotel Group Management Services Limited) which has a 50 per cent. shareholding in a company which has acquired a private residential hotel conference business, carried on from rural properties situated outside the M25 and not in city locations. Neither of these Directors are involved in the day to day management of such business and the business has an independent management team. The Directors do not consider that such investment will conflict with the duties of such persons as directors of the Company. The Directors do not consider that such a residential conference business will compete with the Meeting and Conference Rooms business of the BX Group which only operates in City locations and does not offer residential hotel facilities Richard Balfour-Lynn and Jagtar Singh were directors of: MWB Business Exchange Europe Limited (company ) which was put into creditors voluntary liquidation pursuant to directors and shareholder resolutions passed on 23 July 2003; MWB Business Exchange (France) Limited (company number ) which was put into creditors voluntary liquidation pursuant to directors and shareholder resolutions passed on 23 July 2003; MWB Business Exchange (Germany) Limited (company ) which was put into creditors voluntary liquidation pursuant to directors and shareholder resolutions passed on 23 July 2003 and dissolved on 7 April 2005; and MWB Business Exchange (Holland) Limited (company ) which was put into creditors voluntary liquidation pursuant to directors and shareholder resolutions passed on 23 July 2003 and dissolved on 28 January The aggregate net liabilities of these companies on these liquidations amounted to approximately 34 million, of which approximately 21 million was owed to MWB Group. 61

62 8.12 Save as set out in paragraph 8.11 of this Part IV, no Director: has any unspent convictions in relation to indictable offences; or has become bankrupt or has made or been the subject of any individual voluntary arrangement; or has been a director of any company, at the time of or within 12 months preceding the date of its receivership, compulsory liquidation, creditors voluntary liquidation, administration, company voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors and none of the Directors has been a partner of any partnership at the time of or within 12 months preceding the date of its compulsory liquidation, administration or partnership voluntary arrangement or the receivership of any assets of such partnership nor have any of their assets been subject to receivership at the time of or within 12 months following the cessation of such directorship or partnership; or has had any public criticism against him by any statutory or regulatory authority (including recognised professional bodies) or has been disqualified by a Court from acting as a director or acting in the management or conduct of the affairs of any company. 9 Properties The BX Group does not currently hold any freehold properties. The BX Group holds the interests in properties as set out in this paragraph 9 under leases, OMAs and management agreements. So far as the Directors are aware there are no environmental issues of a material nature which affect the utilisation by the BX Group of its fixed assets. The business centres operated by the BX Group have detailed health and safety policies. 9.1 Details of leasehold properties Details of the leasehold interests in properties held by the BX Group are as set out below. Leases that are shown with an asterisk are guaranteed by MWB Group. Address of property Current landlord Date of lease Length of term Annual rent payable Date of pending or next rent review Break rights 1 Berkeley Street, London W1J 8DJ* CGNU Life Assurance Limited 30/8/01 29/9/00 to 24/3/19 1,922,592 29/9/05 None 43 Temple Row, Birmingham B2 5LS (See Note 1) The Crown Estate Commissioners 17/7/00 15/3/99 to 23/3/05 The BX Group is holding over 156,100 N/A None Atrium Court, 100 The Ring, Bracknell RG12 1DF* Harp Investments Limited 8/6/89 26/10/88 to 25/10/13 2,450,000 26/10/08 None Highview House, Charles Square, High Street, Bracknell RG12 1BW* Commission for the New Towns 15/6/98 24/6/98 to 23/6/13 269,750 24/6/08 Tenant 24/6/08, 6 months' prior notice. Wellington House, East Road, Cambridge CB1 1BH* HSBC Bank Pension Trust (UK) Limited 24/12/98 25/12/98 to 24/12/13 285,500 25/12/08 None 4th, 5th, 6th and 7th floors, Canon Centre, 78 Cannon Street, London EC4N 6NQ Cannon Street Nominees No. 3 Limited and Cannon Street Nominees No. 4 Limited 9/4/99 1/4/99 to 31/3/09 1,110,200 1/4/04 Landlord any time, 12 months' prior notice 62

63 Address of property Current landlord Date of lease Length of term Annual rent payable Date of pending or next rent review Break rights 8th floor, Canon Centre, 78 Cannon Street, London EC4N 6NQ Cannon Street Nominees No. 3 Limited and Cannon Street Nominees No. 4 Limited 10/7/02 1/2/02 to 31/3/09 278,600 1/4/04 Landlord any time, 12 months' prior notice 9th floor, Canon Centre, 78 Cannon Street, London EC4N 6NQ Cannon Street Nominees No. 3 Limited and Cannon Street Nominees No. 4 Limited 18/4/00 1/4/99 to 31/3/09 278,600 1/4/04 Landlord any time, 12 months' prior notice 9-10 St Andrew Square, Edinburgh EH2 2AF* Balmoral Limited (incorporated in Jersey) 11/4/00 10/4/00 to 9/4/25 756,388 10/4/05 Tenant 10/4/20, 9 months prior notice West Point, 4 Redheughs Rigg, South Gyle, Edinburgh EH12 9DQ* The Prudential Assurance Company Limited 15/5/01, 16/5/01 and 4/6/01 11/4/01 to 10/4/21 740,544 11/4/06 None Floors 1-4, Premier House, 102/122 (even) Station Road, Edgware, Middlesex HA8 (See note 2) Erinastar Limited 23/8/02 16/8/02 to 16/8/05 236,225 None None Ludgate House, Fleet Street, London EC4A 2AB* Mislex (425) Limited 30/9/99 23/11/98 to 22/11/16 891,800 23/11/06 None 1 Farnham Road, Guildford, Surrey GU2 4RG* Stargas Nominees Limited 1/12/99 29/9/99 to 28/9/19 760,557 29/9/04 None 1a Hammersmith Broadway, London W6 9DL 1 Hammersmith Broadway Limited 21/12/00 1/12/00 to 30/11/15 931,000 1/12/05 Mutual 1/12/10. 6 months prior notice Hammersmith Grove, London W6 7BA* Hammersmith (CI) Limited (incorporated in Jersey) 27/11/01 17/3/01 to 24/12/21 1,487,330 25/3/06 None Basement, Hammersmith Grove, London W6 7BA* Hammersmith (CI) Limited (incorporated in Jersey) 3/1/02 17/3/01 to 24/12/21 12,075 25/3/06 None 88 Kingsway, London WC2B 6AA* (See note 3) RBSI Custody Bank Limited and RBSI Trust Company Limited (both incorporated in Jersey) 14/1/53 29/9/52 to 28/9/05. The BX Group is holding over 126,700 N/A None Lasenby House 9-14 Little Marlborough Street and 32 Kingly Street London W1B 5QQ* Shaftsbury Carnaby Limited 24/4/02 24/4/02 to 23/6/17 806,333 24/4/07 None 5th floor, Leadenhall Street, London, EC3A 6BJ* DB6 Limited (a Guernsey company) 17/8/00 30/6/00 to 28/9/15 590,900 29/9/05 Tenant 29/6/10, 12 months prior notice 63

64 Address of property Current landlord Date of lease Length of term Annual rent payable Date of pending or next rent review Break rights 1 Whitehall, Whitehall Road, Leeds LS1 4HR* (See note 4) Building 1, Leeds City Office Park, Leeds LS11 5BD* Britannia Invest A/S (Incorporated in Denmark) 22/12/99 22/12/99 to 21/12/16 02(UK) Limited 4/10/05 4/10/05 to 24/5/07 580,980 22/12/04 None 446,600 N/A None Sienna Court, The Broadway, Maidenhead M3 2BX* Skandia Life Assurance Company Limited 28/5/99 28/5/99 to 27/5/16 589,875 28/5/04 None John Dalton House, 21 Deansgate, Manchester M3 2BX Co-operative Insurance Society Limited 25/11/97 25/11/97 to 24/11/07 244,750 None None Trident One, Styal Road, Manchester MK 9 2EA* Costain Engineering and Construction Limited 17/1/01 17/1/01 to 31/1/14 410,000 25/3/09 Tenant on 17/1/11. 6 months prior notice. Part 3rd floor, Exchange House, 494 Midsummer Boulevard, Milton Keynes MK9 2EA Shell Pensions Trust Limited 26/6/00 24/6/00 to 23/6/15 112,005 23/6/05 None Part 4th floor, Exchange House, 494 Midsummer Boulevard, Milton Keynes MK9 2EA Shell Pensions Trust Limited 18/9/87 7/8/87 to 6/8/12 117,000 6/8/07 None Part 4th floor Exchange House, 494 Midsummer Boulevard, Milton Keynes MK9 2EA Shell Pensions Trust Limited 30/11/88 11/10/88 to 10/10/23 24,000 10/10/08 Mutual on 10/10/ months prior notice. Landlord restricted to termination only for purpose of redevelopment. Part 4th floor, Exchange House, 494 Midsummer Boulevard, Milton Keynes MK9 2EA Computer Associates UK Limited 20/1/00 1/12/88 to 12/7/13 36,250 14/7/08 Tenant on 4/8/12. 6 months notice. Part of basement, ground floor, 1st floor, 2nd floor, 3rd floor and 4th floor, 15 Wheeler Gate, Nottingham NG1 2NA Canadian and Portland Estates Plc 12/8/87 24/6/87 to 23/6/12 66,825 23/6/07 None 1st and 2nd floors at the rear of Bentinck Buildings, 15 Wheeler Gate, Nottingham NG1 2NA Canadian and Portland Estates Plc 12/8/87 24/6/87 to 23/6/12 6,175 23/6/07 Landlord at any time for redevelopment 6 months prior notice. 64

65 Address of property Current landlord Date of lease Length of term Annual rent payable Date of pending or next rent review Break rights John Eccles House, Robert Robinson Avenue, Oxford Science Park, Oxford OX4 4GP* Beegas Nominees Limited 26/10/99 29/9/99 to 28/9/15 378,125 29/9/04 None Part of sub-basement and ground floors and all of the first to sixth floors, 73/77 Oxford Street, London W1D 2ES 73/77 Oxford Street Limited 12/5/99 29/9/98 to 28/9/12 257,500 29/9/05 None Atlantic House, Imperial Way, Reading RG2 0TD* Lloyds Bank S.F. Nominees Limited 13/3/01 13/3/01 to 12/3/19 1,084,902 13/3/06 None Parkshot House, 5-19 Kew Road and 9-12 Parkshot, Richmond, Surrey TW9 2PR* Clerical Medical Investment Group Limited 15/12/98 15/12/98 to 10/12/15 975,000 25/12/08 None Liberty House, 222 Regent Street, London W1D 3QL* The Great Victoria Partnership (G.P.) (No.2) Limited and Great Victoria Property (No.2) Limited 11/9/02 16/2/01 to 15/2/16 1,359,045 1/2/06 None 18 Soho Square, London W1D 3QL* Coal Pension Properties Limited 2/3/01 2/3/01 to 24/3/16 1,075,837 25/3/06 None Centurion House, London Road, Staines TW18 4AX* CGNU Life Assurance Limited 28/10/98 29/9/98 to 28/9/23 526,020 29/9/03 Tenant on 28/9/ months' prior notice Golden Cross House, 8 Duncannon Street, London WC2N 4JF* Mars Pension Trustees Limited 4/4/03 3/9/99 to 8/10/10 1,154,649 25/3/05 None Premier House, 10 Greycoat Place, London SW1P 1SB* Derwent Valley Central Limited 26/4/99 25/12/98 to 24/12/18 1,600,000 25/12/08 None Beckett House, 14 Billing Road, Northampton NN1 5AW Haryl (1991) Limited 30/4/91 1/5/91 to 30/4/16 24,000 1/5/01 None Vantage House, Wellington Street, Leeds LS1 4DL* Walton Investment Company Limited 27/6/05 27/6/05 to 26/12/20 590,000 (rent free until 27/12/05) 27/12/10 Tenant on 26/12/10 on 6 months prior notice 6 th floor, Marble Arch Tower, 55 Bryanston Street, London W1H 7AJ* Grenville Nominees No. 1 Limited and Grenville Nominees No.2 Limited 10/6/04 15/4/04 to 14/4/14 180,045 15/4/09 Mutual on 15/4/09 on 6 months' prior notice 65

66 Address of property Current landlord Date of lease Length of term Annual rent payable Date of pending or next rent review Break rights 1 st, 2nd and 5th floors, Marble Arch Tower, 55 Bryanston Street, London W1H 7AJ* Grenville Nominees No. 1 Limited and Grenville Nominees No.2 Limited 15/4/04 15/4/04 to 14/4/14 1,061,040 15/4/09 Mutual on 15/4/09 on 6 months' prior notice Notes * These leases are guaranteed by MWB Group or its subsidiaries (shown with an asterisk). Further details relating to the counter indemnity provided by the BX Group to MWB Group are set out in paragraph 10.8 of Part IV. Note 1: At 43 Temple Row, Birmingham, the BX Group has entered into an agreement for lease with The Crown Estate Commissioners for the grant of a new lease for a term of 15 years at a rent of 655,104 per annum based on 24 per sq ft, subject to the rent being revised following re-measurement of the premises after completion of refurbishment works. Note 2: At 102/122 Station Road, Edgware, Middlesex, the lease will expire on 28 February 2006 if no application to court is made by the BX Group for a new lease or an extension is not agreed. The BX Group does not intend to apply for or extend this lease. On or around 26 May 2005 the landlord served a schedule of dilapidations detailing repairs to a value of 365,000. The Group is contesting the schedule. Note 3: At 88 Kingsway, London, the BX Group is holding over at the property under the terms of the lease that expired on 28 September Negotiations have commenced for the BX Group to enter into a new lease for a 15 year term at a rent of 840,000 per annum, with the landlord being entitled to terminate on 6 months notice if any part of the building is required for the purposes of the head landlord s use as a railway station.the new lease has not yet been entered into. Note 4 At 1 Whitehall, Leeds, the rent review with effect from 22 December 2004 has been referred to arbitration. The BX Group has submitted a recommendation that the rent be increased to 669,800 per annum and the landlord has submitted a recommendation that the rent be increased to 746,50 per annum. 9.2 Details of the OMAs and management agreements Details of the interests in properties of the BX Group as held under OMAs or management agreements are as set out below. Address of Property Start Date of Agreement Termination Date Tower Point, 44 North Road, Brighton BN1 1YR 21/1/05 Counter party can terminate on 12 months prior notice Centre Gate, Colston Avenue, Bristol BS1 4TR Europa House, Barcroft Street, Bury BL9 5BT Castle Court, Cathedral Road, Cardiff CF11 9LJ Temple Court, Cathedral Road, Cardiff CF11 9HA 91 Hanover Street, Edinburgh EH2 1DJ 7-9 North Street, David Street, Edinburgh EH2 1AW Level 33, 25 Canada Square, Canary Wharf, London E14 5LB 1 Sekforde Street, Clerkenwell London EC1R OBE 118 Piccadilly, London W1J 7NW 3/6/03 When parties agree to terminate 1/5/04 Counter party can terminate on 3 months prior notice on or after 30/4/07 1/1/01 31/12/07 1/1/97 31/12/07 17/2/04 When parties agree to terminate 17/2/04 When parties agree to terminate 23/11/04 22/5/11 1/7/04 30/6/09 1/10/98 31/12/03 but agreement continues on its previous terms. Counter party can terminate on 3 months prior notice 66

67 Address of Property Start Date of Agreement Termination Date 10 Old Bailey, London EC4M 7NG Cuthbert House, City Road, All Saints, Newcastle-Upon-Tyne NE1 2ET The Royal, 25 Bank Plain, Norwich NR2 4SF Spencer House, Northhampton Provincial House, Solly Street, Sheffield S1 4BA Watson Chamber Business Centre, 5-15 Market Place, Castle Square, Sheffield S1 2GH and Highcourt Chamber Business Centre, Highcourt, Sheffield S1 2EP 29/9/05 9/11/09 1/1/05 1/7/08 1/6/03 31/5/06 New agreement being negotiated 1/12/05 30/9/15 1/12/05 30/9/15 10 Material contracts The following contracts, not being contracts entered into in the ordinary course of business, are contracts which: (i) are or may be material and have been entered into by the Company or any of its subsidiaries within the two years immediately preceding the date of this document; or (ii) have been entered into by the Company or any of its subsidiaries at any time before the date of this document where those contracts contain provisions under which any member of the BX Group has an obligation or entitlement which is or may be material to the BX Group as at the date of this document: On 7 September 2004 the BX Group entered into Business and Asset Sale Agreements with Kingshott Business Centres Limited pursuant to which it sold its three freehold business centres in Kingston, Hayes and Harrow for an aggregate price of 13.5 million On 12 January 2005 (1) MWB Executive Centres Limited ( MWB Executive Centres ) entered into an agreement with (2) City Executive Centres Limited ( CEC ) and (3) Nigel Geoffrey Atkinson and Nicholas Roy Hood ( the administrators ) pursuant to which MWB Executive Centres purchased from CEC acting by the administrators, inter alia, the management contracts, goodwill, intellectual property and all associated assets relating to the management and serviced office business carried on by CEC for 175,000. No warranties or representations were received from CEC or the administrators pursuant to the agreement On 23 August 2005 (1) BXUK entered into a subscription agreement with (2) MWB Management Services Limited ( Management Services ) (3) Bellerive Limited (4) Cavendish Newbrent Limited (5) MWB Serviced Office Holdings Limited (6) MWB Investments Limited (7) Graham Balfour-Lynn (8) Mourant & Co Trustees Limited and (9) MWB Group pursuant to which Management Services agreed to waive and release BXUK from liabilities in the aggregate sum of 9,596,148 pursuant to loans from Management Services to BXUK in consideration for which Management Services subscribed 1 for and BXUK issued and allotted to Management Services one 2005 A Preference Share of 1 having the rights set out in the articles of association of BXUK On 23 August 2005 (1) BXUK entered into an agreement with its shareholders, namely (2) MWB Serviced Office Holdings Limited ( Serviced Office ) (3) MWB Investments Limited ( MWB Investments ) (4) MWB Management Services Limited ( Management Services ) (5) Bellerive Limited ( Bellerive ) (6) Cavendish Newbrent Limited ( Cavendish ) (7) Graham Balfour Lynn and (8) Mourant & Co. Trustees Limited (as amended by a variation agreement dated 3 October 2005) pursuant to which it was agreed that: 67

68 BXUK would purchase from Serviced Office, Management Services, MWB Investments, Bellerive and Cavendish (together the Preference Share Vendors ) 18,312,090 First A Preference Shares, 4,250,000 First B Preference Shares, 12,000,000 First C Preference Shares, 1,250 Third Preference Shares and 9,737,910 Fourth Preference Shares all of 1 each in BXUK (together the Old Preference Shares ) for an aggregate consideration of 50,699,497, being the nominal value of such shares plus accrued interest; and the Preference Share Vendors would subscribe for 18,312,090 New First A Preference Shares, 4,250,000 New First B Preference Shares, 12,000,000 New First C Preference Shares, 1,250 New Third Preference Shares and 9,737,910 New Fourth Preference Shares all of 0.001p each (the New Preference Shares ) for an aggregate consideration of 443. Completion of the purchase of the Old Preference Shares and the allotment and issue to the Preference Share Vendors of the New Preference Shares took place on 10 November The consideration for the purchase of the Old Preference Shares was paid by the set off by BXUK of a corresponding aggregate amount owed by the Preference Share Vendors to BXUK On 30 November 2005, (1) MWB (Premier) Limited and Startland Limited entered into a share purchase agreement with (2) 175 Limited pursuant to which (i) MWB (Premier) Limited sold to 175 Limited the entire issued share capital of Flowcart Limited, Gableworth Limited and Manorcall Limited and (ii) Startland Limited sold to 175 Limited the entire issued share capital of Bellsite Limited. Each of the four companies sold pursuant to this agreement was dormant and had net liabilities at the date of sale. The aggregate consideration paid by 175 Limited was On 30 November 2005, (1) the Company and (2) BXUK entered into a share purchase agreement with (3) MWB Management Services Limited, (4) MWB Serviced Office Holdings Limited, (5) MWB Investments Limited, (6) Bellerive Limited, (7) Cavendish Newbrent Limited (8) Graham Balfour-Lynn and (9) Mourant & Co. Trustees Limited (the BXUK Vendors ) pursuant to which the Company agreed to acquire from the BXUK Vendors the entire issued share capital of BXUK comprising one 2005 A Preference Share of 1, 18,312,090 New First A Preference Shares of 0.001p each, 6,300, Preference Shares of 1 each, 4,250,000 New First B Preference Shares of 0.001p each, 12,000,000 New First C Preference Shares of 0.001p each, 3,000,000 First C Preference Shares of 1 each, 1,250 New Third Preference Shares of 0.001p each, 9,737,910 New Fourth Preference Shares of 0.001p and 1,250 ordinary shares of 1 each in the capital of BXUK ( the Sale Shares ) in exchange for the allotment and issue to the BXUK Vendors (other than Mourant & Co. Trustees Limited) of an aggregate of 350,000 Ordinary Shares ( Consideration Shares ) and the payment by the Company to Mourant & Co. Trustees Limited of 1,000. Completion of the sale and purchase of the Sale Shares and the allotment and issue of the Consideration Shares is conditional on Admission On 30 November 2005, (1) BX Centres entered into a business sale agreement with (2) BXUK for the sale and purchase of the business assets and goodwill of BXUK ( the Business ) for a consideration made up of: (i) an amount to be calculated in accordance with the agreement, including valuations of properties and subsidiaries, together with other assets and certain liabilities as shown in the unaudited accounts of BXUK for the period 1 July 2002 until the transfer date. Such amount shall be left outstanding as an intergroup debt from BX Centres to BXUK with no interest; and (ii) by the assumption of liability by BX Centres for the creditors and liabilities of BXUK. 68 Completion of the sale and purchase of the Business is conditional on the share purchase agreement referred to in paragraph 10.6 becoming unconditional and being completed.

69 10.8 On 30 November 2005, (1) the Company and (2) BX Centres entered into an agreement with (3) MWB Group under which: (i) MWB Group agreed on Admission to lend approximately 2.7 million to the Company; (ii) MWB Group agreed subject to Admission to release the BX Group from any liability to repay that loan of 2.7 million and a further loan of 1.1 million owing from the BX Group to MWB Group; (iii) the Company and BX Centres agreed to pay 3.8 million to Deutsche Postbank AG, London Branch (the Bank ) so as to reduce the amount owing by the BX Group to the Bank on Admission to 5 million; and (iv) the Company and BX Centres agreed to indemnify MWB Group up to an amount of 3.8 million against guarantees given by it to landlords of the lease obligations of members of the BX Group On 16 December 2005 (1) BX Centres and certain subsidiaries of the Company entered into an agreement with (2) MWB Group pursuant to which those companies agreed to assign to MWB Group on Admission certain registered and unregistered trademarks in the name MWB for 1; and a separate agreement whereby (1) MWB Group agreed to license to (2) the Company the rights to use such rights for an indefinite period, subject to certain restrictions (including on a sale, takeover or demerger). No fee is payable by either party pursuant to this licence agreement On 16 December 2005 (1) the Company entered into a services agreement with (2) MWB Group pursuant to which: (1) the Company agreed to provide or procure the provision of certain services to MWB Group and (ii) MWB Group agreed to provide or procure the provision of certain services to the BX Group; in each case with effect from Admission. The costs of such services are charged to the other party as required, proportionate to the relevant service provided on an annualised basis. This agreement also provides for the BX Group to use under licence certain office space at the Kendal Street office of the MWB Group On 16 December 2005 a deed of novation was entered into between (1) BXUK (2) BX Centres (3) certain subsidiaries of the Company as guarantors and (4) Deutsche Postbank AG, London Branch and HSH Nordbank, London Branch as lenders ( Lenders ) pursuant to which the parties to the deed agreed on Admission (i) to novate from BXUK to BX Centres the mezzanine loan agreement dated 2 August 1999 (as amended, assigned, varied and novated from time to time) ( Loan Agreement ) between, inter alia, BXUK and the Lenders and (ii) to release BXUK from all rights and obligations under the Loan Agreement. Pursuant to the Loan Agreement the Lenders agreed to make available to BX Centres a loan in a maximum principal amount of 6 million (to be reduced on Admission to 5 million) for a term expiring on 23 March Interest on the loan is the aggregate of (i) LIBOR (ii) 3.5 per cent. per annum and (iii) certain costs of the Lenders. The loan will as at Admission be secured by a debenture incorporating fixed and floating charges over all assets of BX Centres, upstream guarantees by the subsidiaries of BX Centres supported by debentures in respect of fixed and floating charges, a guarantee by MWB Group and a fixed charge over the share capital in BX Centres. Certain termination and events of default apply The Placing Agreement, which contains the following terms: (i) the Company appointed KBC Peel Hunt as its agent to procure subscribers at the Placing Price of the Placing Shares. KBC Peel Hunt agreed (subject as set out in paragraph (vi) below) to use its reasonable endeavours to procure subscribers at the Placing Price for the Placing Shares; 69

70 (ii) (iii) (iv) (v) (vi) the obligation of KBC Peel Hunt referred to in paragraph (i) above is conditional, inter alia, on Admission occurring on or about 21 December 2005 or such later date (being no later than 6 January 2006) as KBC Peel Hunt and the Company may agree; the Company agreed to pay KBC Peel Hunt a commission at the rate of 3.5 per cent. of the value of the Placing Shares and a corporate finance fee of 200,000; the Company agreed to pay all the costs and expenses of and incidental to the Placing; the Company, MWB Group and each of the Directors have given certain warranties and undertakings to KBC Peel Hunt in relation, inter alia, to the accuracy of the information contained in this document, the financial position of the BX Group and to other matters in relation to the BX Group and its business. In addition KBC Peel Hunt has the benefit of certain indemnities provided by the Company, MWB Group and each of the Directors relating to certain losses and liabilities if they are incurred by KBC Peel Hunt in the performance of its duties, save to the extent that any such losses and liabilities arise from KBC Peel Hunt s wilful default, negligence or breach of its obligations under an express term of the Placing Agreement; KBC Peel Hunt may terminate the Placing Agreement at any time prior to Admission in certain circumstances, including a breach of any of the warranties or undertakings contained in the Placing Agreement or upon the occurrence of certain force majeure events; and (vii) MWB Group and the Directors have agreed with the Company and KBC Peel Hunt not to dispose of any of their Ordinary Shares before the first anniversary of Admission (save in limited circumstances) and subsequently only through KBC Peel Hunt while KBC Peel Hunt is broker to the Company. 11 United Kingdom taxation The following paragraphs are intended as a general guide only for shareholders who are resident and ordinarily resident in the United Kingdom for tax purposes, holding Ordinary Shares as investments and not in the course of a trade, and are based on current legislation and UK Inland Revenue practice. The position for employees subscribing for shares under this offer has not been addressed. Any prospective purchaser of Ordinary Shares who is in any doubt about his tax position or who is subject to taxation in a jurisdiction other than the UK, should consult his own professional adviser immediately Taxation of chargeable gains 70 For the purpose of UK tax on chargeable gains, the issue of the Placing Shares pursuant to the Placing will be regarded as an acquisition of a new holding in the share capital of the Company. The Placing Shares so allotted will, for the purpose of tax on chargeable gains, be treated as acquired on the date of allotment. The amount paid for the Placing Shares will usually constitute the base cost of a shareholder's holding. If a shareholder disposes of all or some of his Placing Shares, a liability to tax on chargeable gains may, depending on their circumstances, arise subject to, in the case of individuals and trustees, a deduction for so called taper relief the amount of which depends on various factors, in particular the length of the period of ownership of the shares. Companies are not entitled to taper relief but are due indexation allowance which may also reduce the chargeable gain.

71 11.2 Stamp Duty and Stamp Duty Reserve Tax No charge to stamp duty or stamp duty reserve tax ( SDRT ) will arise on the issue or registration of applications for Ordinary Shares under the Placing. Transfers of or sales of Ordinary Shares will be subject to ad valorem stamp duty (generally paid by the purchaser and generally at the rate of 0.5 per cent. of the stamp duty consideration given rounded up, if necessary, to nearest 5). An unconditional agreement to transfer such shares is subject to SDRT (payable by the purchaser and generally at the rate of 0.5 per cent.). However, if within six years of the date of the agreement, an instrument of transfer is executed pursuant to the agreement and stamp duty is paid on the instrument any liability to SDRT will be cancelled or repaid. Paperless transfers of Ordinary Shares within CREST will generally be charged to SDRT (generally at the rate of 0.5 per cent.) rather than stamp duty. CREST is obliged to collect SDRT on relevant transactions settled within the system. Special rules apply where Ordinary Shares are transferred or, in certain circumstances, are issued to persons who issue depositary receipts or provide clearance services, or their nominees or agents. Stamp duty at the higher rate (in broad terms) of 1.5 per cent. or SDRT at the higher rate of 1.5 per cent. (as appropriate) will be payable on the amount or value of the consideration paid for the issue or transfer Dividends and other distributions Dividends paid by the Company will carry an associated tax credit of one-ninth of the cash dividend or 10 per cent. of the aggregate of the cash dividend and associated tax credit. Individual shareholders resident in the UK receiving such dividends will be liable to income tax on the aggregate of the dividend and associated tax credit at the dividend ordinary rate (10 per cent.) or the dividend upper rate (32.5 per cent.). The effect will be that taxpayers who are otherwise liable to pay tax at only the lower rate or basic rate of income tax will have no further liability to income tax in respect of such a dividend. Higher rate taxpayers will have an additional tax liability (after taking into account the tax credit) of 25 per cent. of the cash dividend. Individual shareholders whose income tax liability is less than the tax credit will not be entitled to claim a repayment of all or part of the tax credit associated with such dividends. A UK resident corporate shareholder should not be liable to corporation tax or income tax in respect of dividends received from the Company unless that company is carrying on a trade of dealing in shares. Trustees of discretionary trusts are liable to account for income tax at the rate applicable to trusts on the aggregate of the cash dividend and its associated tax credit referred to above at the dividend trust rate, currently 32.5 per cent. The effective income tax rate on the cash dividend is 25 per cent. The tax credit is not available for the purposes of computing any additional tax which the trustees may have to pay on making distributions to beneficiaries out of income which includes such a dividend. Persons who are not resident in the UK should consult their own tax advisers in relation to what relief or credit may be claimed for any such tax credit in the jurisdiction in which they are resident. 71

72 12 Subsidiaries 12.1 The Company will at Admission have the following subsidiaries all of which, save as otherwise indicated, will be directly or indirectly wholly owned by the Company and are incorporated in England and Wales: Subsidiary Name Company Number MWB Business Exchange UK Limited Arnlink Limited Avanta Business Centres Limited Avanta MWB (Bracknell) Limited Budget Offices Limited Business Exchange Centres Limited Chainrange Limited Langcharm Limited MWB Business Exchange (Birmingham) Limited MWB Business Exchange (Canary Wharf) Limited MWB Executive Centres Limited (75% interest) MWB Executive Centres (Northampton) Limited MWB Executive Centres (Castle Square) Limited MWB Executive Centres (Solly Street) Limited MWB Business Exchange Leadenhall Limited MWB (Premier) Limited Startland Limited Symbol Offices Limited The registered address of each of the above companies is 179 Great Portland Street, London W1W 5LS. 13 Working Capital The Directors are of the opinion having made due and careful enquiry, and after taking into account existing cash, bank and other facilities available to the Company and the BX Group and the net proceeds of the Placing receivable by the Company, that the Company and the BX Group have sufficient working capital for their present requirements, that is for the period of twelve months from the date of Admission. 14 Litigation Save as disclosed in the notes to paragraph 9.1 of this Part IV, no member of the BX Group is engaged in any governmental, legal or arbitration proceedings and the Company is not aware of any governmental, legal or arbitration proceedings active, pending or threatened by or against the Company or any member of the BX Group, which are having or may have a significant effect on the BX Group s financial position. 15 Miscellaneous Information 15.1 Neither the Company nor any of its subsidiaries has any dependency on patents or other intellectual property rights or licences which are of fundamental importance to the BX Group s business KBC Peel Hunt has given and not withdrawn its written consent to the issue of this document and to the inclusion in this document of references to its name in the form and context in which they appear KPMG Audit Plc has given and not withdrawn its written consent to the inclusion of its reports on the Company in the form set out in Part II of this document and the references to those reports in the form and context in which they appear and has not become aware, since the date of the reports of any matter affecting the validity of those reports at that date and has authorised and takes responsibility for the contents of those parts of this document for the purposes of the AIM Rules. 72

73 15.4 The overall costs and expenses payable by the Company in connection with the Placing and Admission (including professional fees, commissions, and the costs of printing and fees payable to the registrars) amount to approximately 2.0 million The total proceeds expected to be raised by the Placing amount to 15.0 million and the net proceeds of the Placing (following the deduction of the expenses of Admission and the Placing) amount to approximately 13.0 million The Placing Price represents a premium over the nominal value per Ordinary Share of 79.9 pence Save as disclosed in the sections entitled Business Exchange Centres, Prospects Trading record and Key performance indictors in Part I, there has been no significant change in the trading or financial position of the BX Group since 2005, the date to which the Accountant s Report in Part II has been prepared Save as otherwise disclosed in this Part IV (and save in relation to arrangements with employees and trade suppliers) no person, other than the Company s professional advisers, has received directly or indirectly from the Company within the 12 months preceding the application for Admission, or entered into contractual arrangements to receive, directly or indirectly, on or after Admission: fees totalling 10,000 or more; securities of the Company having a value of 10,000 or more calculated by reference to the Placing Price; or any other benefit with a value of 10,000 or more at the date of Admission Neither the existing Ordinary Shares nor the Placing Shares have been admitted to dealings on a recognised investment exchange and save in relation to the application for Admission, no application for such admission has been made Save as otherwise disclosed in paragraph 9 of this Part IV, there are no significant investments in progress The financial information for the relevant accounting period set out in the Accountant s Report in Part II does not comprise statutory accounts within the meaning of section 240 of the Act Monies received from applicants pursuant to the Placing will be held in accordance with the terms of the placing letters issued by KBC Peel Hunt until such time as the Placing becomes unconditional in all respects. If the Placing does not become unconditional in all respects by 6 January 2006, application monies will be returned to applicants as soon as practicable at their own risk and without interest The Placing has not been underwritten or guaranteed by any person. 16 Document available for collection Copies of this document will be available to the public, free of charge during normal business hours on any weekday (Sundays and public holidays excepted) at the offices of Dechert LLP, 160 Queen Victoria Street, London EC4V 4QQ from the date of this document until one month following Admission. Dated 16 December

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