Comptoir Grp Regulatory News (COM)

7 Sep 2007 10:21

Comland Commercial PLC07 September 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ORFROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION 7 September 2007 RECOMMENDED TERMS OF A PROPOSAL FOR THE ACQUISITION BY MCF COMMERCIAL LIMITED OFTHE ENTIRE ISSUED SHARE CAPITAL OF COMLAND COMMERCIAL PLC BY MEANS OF A SCHEMEOF ARRANGEMENT UNDER SECTION 425 OF THE COMPANIES ACT 1985 Summary The boards of Comland Commercial Plc and MCF Commercial Limited announce thatthey have reached agreement on the terms of a proposal for the issued sharecapital of Comland to be acquired by MCF Commercial. MCF Commercial is owned byStuart Crossley, the Chief Executive of Comland. Subject to approval by Comland Shareholders and sanction by the Court, ComlandShareholders will receive either: either: for each Comland Share 9 pounds 50 pence in cash ("the Cash Alternative"); or: for each Comland Share 95 pence in cash and 85.5 MCF Holdings Shares issued atpar ("the Cash Plus Shares Alternative"). The Cash Alternative values the fully diluted share capital of Comland atapproximately £43.3 million. The Cash Plus Shares Alternative values the fullydiluted share capital of Comland at approximately £41.3 million. The Independent Comland Director, John Derek Collinson, having been so advisedby Grant Thornton, believes that the terms of the Cash Alternative are fair andreasonable and recommends that Comland Shareholders vote in favour of theresolutions to be put to the Court Meeting and the Extraordinary General Meetingand to accept the Cash Alternative. The Independent Comland Director does notexpress an opinion on the merits of the Cash Plus Shares Alternative. A circular (the "Scheme Document") containing details of the Proposal will beshortly posted to Comland Shareholders, convening a court meeting and anextraordinary general meeting on 3 October 2007 at the offices of Grant Thorntonat Grant Thornton House, Melton Street, London NW1 2EP, in order that ComlandShareholders can vote upon the proposed Scheme. Copies of the Scheme Document will be available on the Company's website,www.comland.co.uk Contacts Comland Commercial PLCChris Martin, Finance Director, 01628 535997 Grant Thornton Corporate FinancePhilip Secrett/Colin Aaronson, 020 7383 5100 This Announcement does not, and is not intended to, constitute or form part ofany offer to sell, or an invitation to purchase, any securities or thesolicitation of any vote or approval in any jurisdiction. The Acquisition willbe made solely by means of the Scheme Document, which will contain the fullterms and conditions of the Scheme. Comland Shareholders are advised to readcarefully the formal documentation in relation to the Proposal once it has beendespatched. Distribution of the Scheme Document and the release, publication or distributionof this Announcement to persons who are not resident in the United Kingdom maybe affected by the laws of the relevant jurisdictions in which they are located.Persons who are not resident in the United Kingdom should inform themselves of,and observe, any applicable requirements. Any failure to comply with suchapplicable requirements may constitute a violation of the securities laws of anysuch jurisdictions. This Announcement has been prepared for the purposes ofcomplying with English law and the City Code and the information disclosed maynot be the same as that which would have been disclosed if this Announcement hadbeen prepared in accordance with the laws of jurisdictions outside the UnitedKingdom. The Scheme Document will not be sent in or into any jurisdiction where to do sowould constitute a violation of the relevant laws of such jurisdiction.Custodians, nominees and trustees should observe these restrictions and shouldnot send or distribute the Scheme Document in or into any jurisdiction where todo so would constitute a violation of the relevant laws of such jurisdiction. The statements contained herein are made as at the date of this Announcement,unless some other time is specified in relation to them, and release of thisAnnouncement shall not give rise to any implication that there has been nochange in the facts set forth herein since such date. Nothing contained hereinshall be deemed to be a forecast, projection or estimate of the futurefinancial performance of Comland, MCF Commercial or MCF Holdings except whereotherwise stated. Forward looking statements This Announcement contains statements about Comland, MCF Commercial and MCFHoldings that are or may be forward looking statements. All statements otherthan statements of historical facts included in this Announcement may be forwardlooking statements. Without limitation, any statements preceded or followed byor that include the words ''targets'', ''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''will'', ''may'', ''anticipates'', ''estimates'', ''projects'' or words or terms of similar substance or the negative thereof areforward looking statements. Forward looking statements include statementsrelating to the following: (i) future capital expenditures, expenses, revenues,earnings, synergies, economic performance, indebtedness, financial condition,dividend policy, losses and future prospects; (ii) business and managementstrategies and the expansion and growth of Comland's, MCF Commercial's and MCFHoldings operations and potential synergies resulting from the Proposal; and(iii) the effects of government regulation on Comland's, MCF Commercial's or MCFHoldings business. Such forward looking statements involve risks and uncertainties that couldsignificantly affect expected results and are based on certain key assumptions.Many factors could cause actual results to differ materially from thoseprojected or implied in any forward looking statements. Due to suchuncertainties and risks, readers are cautioned not to place undue reliance onsuch forward looking statements, which speak only as of the date hereof.Comland, MCF Commercial and MCF Holdings disclaim any obligation to update anyforward looking or other statements contained herein, except as required byapplicable law. Dealing disclosure requirements Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if anyperson, whether or not an associate, is, or becomes, "interested" (directly orindirectly) in 1% or more of any class of "relevant securities" of MCFCommercial or Comland, or as a result of any transaction will be interested in1% or more, all "dealings" in any "relevant securities" (including by means ofan option in respect of, or a derivative referenced to, any such "relevantsecurities") of that company by such person (or any person through whom thatinterest is derived) must be publicly disclosed by no later than 3.30 pm (Londontime) on the London business day following the date of the relevant transaction.This requirement will continue until the date on which the Scheme becomeseffective or lapses or is otherwise withdrawn. If two or more persons acttogether pursuant to an agreement or understanding, whether formal or informal,to acquire an "interest" in "relevant securities" of MCF Commercial or Comland,will be deemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Comland by Comland or MCF Group, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on theLondon business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website atwww.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel. Advisers Grant Thornton which is authorised and regulated in the United Kingdom by theFinancial Services Authority, is acting exclusively for Comland and no-one elsein connection with the Proposal and this Announcement and will not beresponsible to anyone other than Comland for providing the protections affordedto clients of Grant Thornton or for providing advice in relation to the Proposalor the content of, or any matter or arrangement referred to in, thisAnnouncement. Information required to be provided pursuant to Rule 2.10 of the City Code Comland currently has 4,556,520 ordinary shares of 10 pence each in issue underthe International Securities Identification Number GB 0001859072. Additional information is contained in the following Appendices Appendix I sets out the sources of information from which the financialcalculations used in this Announcement have been derived Appendix II contains definitions of terms used in this Announcement and theScheme Document 7 September 2007 RECOMMENDED PROPOSAL FOR THE ACQUISITION OF COMLAND COMMERCIAL PLC BY MCFCOMMERCIAL LIMITED BY MEANS OF A SCHEME OF ARRANGEMENT UNDER SECTION 425 OF THECOMPANIES ACT 1985 1 Introduction Comland Commercial Plc ("Comland") and MCF Commercial Limited ("MCF Comercial")Directors announce in accordance with Rule 2.5 of the City Code that they havereached agreement on the terms of a recommended proposal for the acquisition ofComland for cash, with Comland Shareholders being offered the opportunity toelect alternatively to receive a mixture of cash and shares, under whichproposal MCF Commercial will acquire the entire issued share capital of Comland. The acquisition is to be effected by means of a court-approved Scheme ofArrangement under section 425 of the Companies Act. The Independent Comland Director is John Derek Collinson. Stuart Crossley, ChiefExecutve of Comland is the sole shareholder in MCF Holdings (which is the parentof MCF Commercial) and Stuart Crossley, together with fellow Comland DirectorsChristopher Martin and Simon Funnell, are all directors of MCF Commercial andMCF Holdings. It has been determined that it is not appropriate that they joinin recommending the Proposal. They therefore do not accept responsibility forthe views of Mr Collinson on the Proposal. 2 Summary of the Proposal The acquisition will be effected by means of a court sanctioned Scheme ofArrangement between the Company and the Scheme Shareholders under section 425of the Companies Act. The Scheme is subject to the Conditions. Full details ofthe Scheme are set out in Part VI of the Scheme Document. 2.1 Consideration If the Scheme becomes effective, all the Scheme Shares will be transferred toMCF Commercial, a wholly owned subsidiary of MCF Holdings, and, in exchange, allComland Shareholders (whether Independent Comland Shareholders or FamilyShareholders) will be entitled to receive: either: for each Comland Share 9 pounds 50 pence in cash (the "Cash Alternative"); or: for each Comland share 95 pence in cash plus 85.5 MCF Holdings Shares issued atpar (the "Cash Plus Shares Alternative") If the Scheme becomes effective Comland will become a wholly owned directsubsidiary of MCF Commercial on the Effective Date and Comland Shareholders willreceive the relevant consideration referred to above. It should be emphasised that the MCF Holdings Directors do not intend to applyfor the MCF Holdings Shares to be admitted to trading on AIM or any other stockexchange. Accordingly Shareholders electing to take shares in MCF Holdings willobtain shares in an unlisted company in which liquidity is likely to berestricted. The Cash Alternative represents a premium of approximately 138 per cent. to theclosing middle market price of 400 pence per Comland Share on 6 September 2007,being the last dealing day prior to this Announcement. The Cash Alternative values the fully diluted share capital of Comland atapproximately £43,286,940. The Cash Plus Shares Alternative represents a premium of approximately 127 percent. to the closing middle market price of 400 pence per Comland Share on 6September 2007, being the last practicable date prior to this Announcement. The Cash Plus Shares Alternative values the fully diluted share capital ofComland at approximately £41.3 million. As required for Rule 24.10 of the City Code, Grant Thornton has provided to theIndependent Comland Director an estimate of the value of the MCF Holdings Sharesand, as at the date of the estimate and based on the matters set out in theestimate so provided and the information reviewed, considers that the value ofeach MCF Holdings Share is approximately 9.5p. The estimate by Grant Thornton isset out in Part X of the Scheme Document. The value of shares can go down as well as up and there will be no market forthe MCF Holdings Shares. The valuation set out in Part X of the Scheme Documenthas been prepared solely for the use and benefit of the Independent ComlandDirector for the purposes of Rule 24.10 of the City Code. It is not addressed toand may not be used or relied upon by any other parties for any purposewhatsoever and Grant Thornton expressly disclaims any liability with respect toits contents. In particular, it does not constitute the provision of advice or arecommendation by Grant Thornton to any Comland Shareholder or any other personas to the fairness of the Cash Plus Shares Alternative. Comland Shareholders arestrongly recommended to take their own independent financial advice. 2.2 Risks of investing in unquoted securities Scheme Shareholders should be aware of the risks associated with an investmentin MCF Holdings Shares. An investment in MCF Holdings Shares involves a highdegree of risk. Accordingly prospective investors should carefully consider thespecific risk factors set out below in addition to the other informationcontained in the Scheme Document before electing to accept the Cash Plus SharesAlternative. The risks listed do not necessarily comprise all those associatedwith an investment in the Company and are not set out in any particular order ofpriority. An investment in MCF Holdings Shares described in the Scheme Document isspeculative and should only be undertaken by investors capable of evaluating therisks and merits of such investment and who have sufficient resources to bearany loss that might result from such an investment. Potential investors areaccordingly advised to consult an independent professional adviser authorisedfor the purposes of FSMA who specialises in advising on investments of this kindbefore making an investment decision. A prospective investor should consider carefully whether an investment in theCompany is suitable in the light of his, her or its personal circumstances andthe financial resources available to him, her or it. If you are in any doubtabout the action you should take, you should consult your independentprofessional adviser authorised under FSMA. An investor in MCF Holdings could face the loss of his or her entire investment. In addition to the business risks associated with Comland or any other businessowned and/or operated by MCF Holdings, an investment in MCF Holdings will carrythe following additional risks: MCF Holdings shares will not be listed or traded on a regulated exchange ormarket MCF Holdings Shares are unlisted and it is not intended to apply for the listingof MCF Holdings on any stock exchange. It will be considerably more difficultfor investors to sell their shares than it would be if MCF Holdings Shares werepublicly quoted. The value of unlisted securities will be uncertain Since the MCF Holdings Shares will not be listed or traded on a regulatedexchange or market, their value is and may remain uncertain. There is noassurance that investors will be able to sell their shares at or above the valueat which they are being offered to Scheme Shareholders. MCF Holdings shareholders will not be afforded the protections available toshareholders in publicly quoted companies MCF Holdings will not be subject to the Listing Rules of the UK ListingAuthority, the AIM Rules, the City Code, the Combined Code nor any other similarrules or regulations applying to companies with securities admitted to ortraded on a regulated market or exchange. Accordingly, shareholders in MCFHoldings will have neither the rights nor protections available to shareholdersin publicly quoted companies. MCF Holdings will be controlled by one shareholder group. Stuart Crossley and entities associated with him will control in excess of 90per cent. of the issued share capital of MCF Holdings. Accordingly, the majorityshareholders will be able to determine the composition of the board of directorsof MCF Holdings, management and dividend policy and to pass special resolutionsat general meetings of the company. There can be no assurance that MCF Holdingswill be managed in a way which is in he best interests of independentshareholders. MCF Holdings shareholders may suffer dilutive effects of future share issues MCF Holdings may choose to issue new shares which could have a dilutive effecton shareholders. There can be no assurance that shareholders will have the rightto participate in future offerings of MCF Holdings Shares on a pre-emptivebasis. The value of MCF Holdings is dependent on the value of its underlying business The value of MCF Holdings will depend on the value of its principal underlyingbusiness which is anticipated to be that of Comland for the foreseeable future.Comland's business is subject to general economic conditions, the state of theproperty market, interest rates and the availability of finance, the ability toattract and retain suitably qualified and experienced management, theavailability and demand for commercial properties, competition and relevantlegislation and regulations. There can be no assurance that changes in respectof any of the above will not impact deleteriously on the performance andunderlying value of Comland. There can be no assurance that MCF Holdings will continue to have Comland as itsunderlying business or that any other business acquired by MCF Holdings will bein accordance with Scheme Shareholders' personal investment objectives. Gearing The acquisition of Comland will result in MCF Holdings and its subsidiarieshaving a higher level of debt than Comland. Such additional gearing may not beacceptable to Scheme Shareholders. 2.3 Scheme becoming effective It is expected that (subject to the satisfaction of the Conditions) the CourtHearing will be held on 12 October 2007 and that the Effective Date will be 16October 2007. The Proposal is conditional upon the Scheme becoming effective bynot later than 31 January 2008, or such later date as Comland and MCF Commercialmay agree (with, where applicable, the consent of the Panel) and (if required)the Court may approve, failing which it will lapse. If the Scheme becomeseffective, it will be binding on all Comland Shareholders, irrespective ofwhether or not they attend or vote at the Court Meeting or the ExtraordinaryGeneral Meeting. Further details of the Scheme are set out in the ExplanatoryStatement in Part II of the Scheme Document. The last day of dealing in, and for registration of transfers of, Comland Shareswill be 15 October 2007. Cancellation of the admission to AIM of Comland Shareswill take place on the Effective Date. Prior to the Scheme becoming effective, an application will be made to theLondon Stock Exchange for the cancellation of the Comland Shares from admissionto and trading on AIM. 3 Background to and reasons for recommending the Proposal Comland is a property development and trading company holding mainly commercialproperty assets. Comland demerged from the housebuilding business Banner HomesGroup PLC in 1997. Each Banner Homes Group PLC shareholder received 1 share inComland for each 4 shares in Banner Homes Group PLC. 3,890,696 shares wereissued and admitted to trading on AIM in December 1997. Comland currently has4,556,520 Shares in issue, traded on under the International SecuritiesIdentification Number GB 0001859072.. Since incorporation, Comland has followed the strategy of acquiring commercialproperty opportunities for trading, development and resale. Having regard to thegrowth of the business to its current value, the Independent Comland Directorbelieves the cash consideration under the Proposal represents an appropriateprice for the current business given the risk of exploiting future additionalvalue from the redevelopment and trading of assets within its portfolio. For the year ended 31 March 2007, Comland reported a profit on ordinaryactivities before taxation of £9.415 million and a profit on ordinary activitiesafter taxation of £6.599 million for that period. Comland benefited during theperiod from a gross profit of £6.609 million on the sale of assets and £1.392million from the sale of discontinued operations. Net assets at 31 March 2007were £21.621 million. The properties owned by Comland were valued on 5 September2007 by Savills at £72,590,000, representing a premium to book value of £25.01m.This premium to book value would be subject to UK corporation tax (currently ata rate of 30%) when realised. Adjusting the net assets at 31 March 2007 for thispremium would give a value of £39.13m. A copy of Savills report is set out inpart IV of the Scheme Document. The annual reports and accounts for Comland forthe financial years ended 31 March 2007 are enclosed with the Scheme Document. The cash consideration under the Proposal represents a premium of £4.16 m to theadjusted net asset value. The Comland Independent Director believes that Comland is capable of continuingto trade successfully and profitably. However, in considering the merits of theCash Alternative on behalf of all Independent Comland Shareholders, he has takeninto account the following important considerations: • the immediate and certain benefits of the CashAlternative compared to the potential future return from remaining a ComlandShareholder, having regard for the ongoing cost of being quoted on AIM; • the fact that MCF Commercial has irrevocable undertakingsto vote in favour of the Proposal in respect of over 90 per cent. of the issuedComland Shares • the limited liquidity of Comland's shares generally, andthe opportunity afforded by the Cash Alternative for all Comland Shareholders torealise their entire investment in Comland for cash; • the Cash Alternative represents a certain cash value perComland Share at a premium of 138 per cent. to the closing middle market priceof 400 pence per Comland Share on 6 September 2007, being the last dealing dayprior to this Announcement; • Comland Shareholders accepting the Cash Alternative wouldbe able to dispose of their Comland Shares free of dealing costs. In light of the above, he believes that the terms of the Cash Alternative are inthe best interests of Independent Comland shareholders and have concluded thatthe Proposal is fair and reasonable. He has not been able to form an opinion onthe Cash Plus Shares Alternative and accordingly does not make anyrecommendations in relation thereto. 4 Effect of the Proposal on Directors, management, employees and locations MCF Commercial attaches great importance to the skills and experience of theexisting management and employees of Comland. Accordingly, the MCF CommercialDirectors have confirmed that, they have no current plans to make any materialchange in the conditions of employment of Comland's management and employeesfollowing the Scheme becoming effective. It is the intention of MCF Commercialthat key members of the management team should remain with Comland. MCF Commercial has no current plans to change the current strategy of Comland,its fixed assets or the location of Comland's operational places of business. The Independent Comland Director welcomes the assurances received from MCFCommercial above as they are, in his view, in the best interests of Comland andits employees. 5 Share option schemes The Company does not have any share option schemes nor are there any ComlandShares under option. 6 The Comland Directors and the effect of the Proposal on their interests Details of the interests of the Comland Directors in the share capital ofComland, are set out below and in paragraph 6 of Part V of the Scheme Document.Comland Shares held by the Comland Directors will be subject to the Scheme. Particulars of the service contracts and arrangements (including terminationprovisions) and letters of appointment of the Comland Directors are set out inparagraph 11 of Part V of the Scheme Document. John Derek Collinson shall resignfrom the Board on Completion of the Proposal. Save as set out above, the effect of the Scheme on the interests of the ComlandDirectors does not differ from its effect on the interests of any other person. 7 Taxation A summary of the tax consequences of the Scheme is set out in Part XI of theScheme Document. This summary is intended as a general guide only and if you arein any doubt as to your tax position you should consult an appropriateindependent professional adviser. 8 Meetings and action to be taken The Scheme and the Proposal is subject to the satisfaction or, where permitted,waiver of the Conditions set out in Part III of the Scheme Document. In order tobecome effective, the Scheme must be approved by a majority in number of thoseIndependent Comland Shareholders present and voting, either in person or byproxy, at the Court Meeting, representing 75 per cent. or more in value of allComland Shares held by such Independent Comland Shareholders. In addition, theSpecial Resolution to approve the application for Comland Shares to be removedfrom trading on AIM must be passed by the Comland Shareholders at theExtraordinary General Meeting. Neither MCF Commercial nor MCF Holdings currently owns any Comland Shares eitheras registered holder or through a nominee. Any Comland Shares which areregistered in the name of or beneficially owned by the MCF Group at the VotingRecord Time will be excluded from the definition of Scheme Shares and the MCFGroup will be precluded from voting at the Court Meeting. The MCF Group wouldnot be precluded from voting at the Extraordinary General Meeting. The MCF Grouphas, however, undertaken to be bound by the Scheme. In addition, the MCF Grouphas agreed to procure that any holder (other than the MCF Group) of ComlandShares which may be beneficially owned by a member of the MCF Group at theVoting Record Time will not vote at the Court Meeting, and that such holder willundertake in respect of such Comland Shares to be bound by the Scheme. Inaddition, the Family Shareholders will consent to the Scheme and to be boundthereby. Under the Companies Act, the Scheme is also subject to the sanction of the Courtat the Court Hearing which is expected to be held on 12 October 2007. If theScheme becomes effective, it will be binding on all Comland Shareholders,(whether Independent Comland Shareholders or Family Shareholders), includingthose who do not vote to approve the Scheme or who vote against it in the CourtMeeting. 9 Financing MCF Holdings, the parent company of MCF Commercial, will initially be financedprincipally via debt. An £11 million debt facility has been arranged by MCFHoldings with HSBC Bank plc, which it has confirmed will be available in full toMCF Commercial to satisfy the cash consideration payable under the Scheme. Certain Comland shareholders, the S J Crossley Trusts, holding in aggregate3,813,777 Comland shares, have signed irrevocable undertakings to elect toreceive the Cash Plus Shares Alternative, meaning that the maximum cashconsideration required to be paid to the S J Crossley Trusts if the Schemebecomes effective totals £3,623,088.15. Should all other Comland Shareholderselect to receive the Cash Alternative, a further maximum cash consideration of£7,056,058.50 would be required to be paid to Comland Shareholders. Therefore, Smith & Williamson Corporate Finance Limited confirms that it issatisfied that the resources available to MCF Commercial are sufficient tosatisfy the cash consideration due to Comland Shareholders under the Scheme. 10 Current trading and prospects of the Comland Group In its preliminary results statement issued on 17 August 2007, Comland made thefollowing statements: "In the year to 31 March 2007 the turnover of the group was £20.08 million(2006: £6.35 million). This figure includes the revenue from property disposals.Gross profit was £6.61million (2006: £0.68 million). Other operating income,which is primarily rental income, has decreased to £6.05 million (2006: £6.33million). Operating profit has increased to £10.84million (2006: £5.06 million).Pre-tax profit was £9.41 million (2006: £1.95 million) after finance costs of£2.93 million (2006: £3.11 million)." "The above results included the following amounts relating to discontinuedoperations: turnover of £366,000 (2006: £731,000), gross profit of £138,000(2006: £302,000), operating profit of £47,000 (2006: £79,000) and pre-tax profitof £1,367,000 (2006: loss £79,000)." "Rising interest rates are starting to have an effect on the commercial propertymarket. Having significantly reduced our gearing in the last year we arecautious about the future and have reduced our exposure to risk and will remaincautious about opportunities until we are confident that interest rates havepeaked." Since 31 March 2007 Comland has sold two properties (1) Red Lion House; and (2)62 High Street, Marlow for a combined profit of £1,660,000 and has continued togenerate rental income on other properties. 11 Information on MCF Commercial MCF Commercial was formed to effect the acquisition of Comland. MCF Commercialis a limited liability company that was incorporated on 13 June 2007 and has nottraded since incorporation and is a wholly owned subsidiary of MCF HoldingsLimited. The current directors of MCF Commercial are Stuart James Crossley, ChristopherGiles Martin and Simon Kennedy Funnell. Further particulars as regards to the rights attaching to MCF Holdings Sharesare set out in paragraph 12 of Part V of the Scheme Document. Stuart Crossley Mr Crossley has over 25 years experience in the building industry. He acquiredBanner Homes Limited by way of management buy-out in 1981. Banner Homes Limitedwas floated in 1987 and admitted to the Official List in 1993. Comland wasdemerged from Banner Homes Group PLC in 1997 and admitted to the AlternativeInvestment Market. In 1999, Mr Crossley sold his controlling interest in BannerHomes Group PLC to concentrate on commercial property development throughComland and the completion of a major residential development in Marbella. Christopher Martin Mr Martin is a chartered accountant. He spent six years with Deloitte & Toucheand three years working in corporate finance at Pricewaterhouse Coopers. Hejoined Comland in April 1999 and was appointed to the Board in May 1999. Simon Funnell Mr Funnell is a chartered surveyor with 25 years of commercial propertyexperience in private practice. In 1990 he established his own commercialpractice based in High Wycombe and in 1994 merged this with another localpractice where he remained a partner responsible for property investment,development and funding until he joined Comland in February 2002. 12 Information on MCF Holdings MCF Holdings is a limited liability company that was incorporated on 13 June2007 and has not traded since incorporation. The current directors of MCF Holdings are Stuart James Crossley, ChristopherGiles Martin and Simon Kennedy Funnell. MCF Holdings is 100% owned by StuartCrossley. Further particulars as regards the rights attaching to MCF Holdings Shares areset out in paragraph 12 of Part V of the Scheme Document. 13 Current trading and prospects of MCF Commercial MCF Commercial has informed Comland that it has no current plans to change thecurrent strategy of Comland. 14 Background to and reasons for making the Proposal MCF Commercial was established for the purpose of making the acquisition ofComland. The directors of MCF Commercial believe that while they remain cautiousabout the future of the commercial property market in the short term, theybelieve that in the longer term there will be opportunities to create value inthis sector. They believe, however, that this would be best achieved through anunquoted company. 15 Financial information MCF Commercial was incorporated on 13 June 2007 with an authorised share capitalof £1,000 divided into 1,000 ordinary shares of £1 each of which 1 is currentlyin issue. It has not traded and its assets and liabilities have not changedsince incorporation. MCF Holdings was incorporated on 13 June 2007 with an authorised share capitalof £1,000 divided into £1,000 ordinary shares of £1 each of which 10 wereissued. On 3 September 2007 the share capital of MCF Holdings was increased to£100,000 and subdivided into 1,000,000 shares of £0.10 each (100 of which arenow in issue). On 5 September 2007 the authorised share capital of MCF Holdingswas further increased to £39,000,000 divided into 390,000,000 ordinary shares of£0.10 each. It has not traded and its assets have not changed sinceincorporation. Financial information for Comland covering the three financial years ended 31March 2007 are being enclosed with the Scheme Document in the form of theaudited accounts for Comland for the two financial years ended 31 March 2006 and31 March 2007. 16 Pensions Comland has a Standard Life stakeholder pension scheme which is open to all ofits employees. The only contributions made by Comland on behalf of the Directorsinto this scheme are on behalf of Christopher Martin and Simon Funnell who areboth entitled to receive an amount equivalent to 10% of their salary into thepension. Accordingly for financial year ended 31 March 2007 Comland made a totalpayment into the pension scheme of £23,000. For the financial year ending 31March 2008 the payment made by Comland will be £25,000. 17 Comland Share Option Schemes Comland does not currently operate any share option schemes. 18 Structure of the Acquisition (a) Introduction The Acquisition is to be effected by means of a Scheme of Arrangement betweenComland and its Shareholders under section 425 of the Companies Act. The Schemeis set out in full in Part VI of the Scheme Document. If the Scheme becomeseffective, it will result in Comland becoming a wholly-owned direct subsidiaryof MCF Commercial (which is a wholly owned subsidiary of MCF Holdings). This isto be achieved by transferring the Scheme Shares held by Comland Shareholders toMCF Commercial. MCF Holdings will pay the Cash Alternative sum or Cash PlusShares Alternative sum (as applicable) to the Comland Shareholders on theregister at the Scheme Record Time. MCF Holdings will also issue and allot therelevant number of MCF Holdings shares to the Comland Shareholders who opted forthe Cash Plus Shares Alternative on the register at the Scheme Record Time. To become effective, the Scheme requires, among other things, the approval by amajority in number of the Scheme Shareholders who vote, representing at least 75per cent. in value of the Scheme Shares voted, either in person or by proxy, atthe Court Meeting. The Scheme also requires the sanction of the Court. Upon the Scheme becomingeffective, it will be binding on all Comland Shareholders, irrespective ofwhether or not they attended or voted at the Court Meeting or the ExtraordinaryGeneral Meeting and whether they voted for or against, or abstained from votingon, the resolutions. Upon the Scheme becoming effective it will be binding onall Comland Shareholders, irrespective of whether or not they attended or votedat the Court Meeting. The last day of dealing in, and for registration of transfers of, Comland Shareswill be 15 October 2007. Cancellation of the admission to AIM of Comland shareswill take place on the Effective Date, which is expected to be 16 October 2007. Subject to the passing of the special resolution to be proposed at the EGM priorto the Scheme becoming effective, an application will be made to the LondonStock Exchange for the Comland shares to cease to be admitted to trading on AIM. With effect from and including the Effective Date, each existing certificaterepresenting a holding of Scheme Shares shall cease to be valid in respect ofsuch holding and each holder of Scheme Shares shall be bound to destroy suchcertificate. With effect from and including the Effective Date, each Scheme Share credited toany stock account in CREST shall be disabled and all Scheme Shares will beremoved from CREST in due course. (b) The Meetings Before the Court's sanction can be sought for the Scheme, the Scheme willrequire approval by Independent Comland Shareholders at the Court Meeting.Notices of the Court Meeting and the Extraordinary General Meeting are set outin Part VIII and Part IX of the Scheme Document respectively. Save as set outbelow, all Independent Comland Shareholders whose names appear on the registerof members of Comland at the Voting Record Time, including any adjournmentthereto, will be entitled to attend and vote at the Court Meeting in respect ofthe number of Comland Shares registered in their name at the relevant time. AllComland Shareholders (including Family Shareholders) will be entitled to vote atthe Extraordinary General Meeting. The Court Meeting The Court Meeting, which has been convened for 10.00 a.m. on 3 October 2007, isbeing held at the direction of the Court to seek the approval of IndependentComland Shareholders for the Scheme. At the Court Meeting, voting will be by way of poll and each Independent ComlandShareholder present in person or by proxy will be entitled to one vote for eachScheme Share held. The approval required at the Court Meeting is a majority innumber of those who vote, representing at least 75 per cent. in value of theScheme Shares voted, either in person or by proxy, at the Court Meeting.Neither MCF Commercial nor MCF Holdings currently own any Comland Shares eitheras registered holder or through a nominee. Any Comland Shares which areregistered in the name of or beneficially owned by the MCF Group would beexcluded from the definition of ''Scheme Shares'' and therefore neither MCFCommercial nor MCF Holdings would be entitled to attend or vote at the CourtMeeting in respect of those Comland Shares. In addition, it is important that,for the Court Meeting in particular, as many votes as possible are cast sothat the Court may be satisfied that there is a fair and reasonablerepresentation of opinion of the Independent Comland Shareholders. FamilyShareholders will not be entitled to participate in the Court Meeting but willconsent separately to the Scheme. The Extraordinary General Meeting In addition, the Extraordinary General Meeting has been convened for 10.15 a.m.on 3 October 2007, or as soon thereafter as the Court Meeting has beenconcluded or adjourned, to consider and, if thought fit, pass, the SpecialResolution (which requires votes in favour representing at least 75 per cent. ofthe votes cast) to approve the Comland Directors being authorised to cease thetrading of Comland Shares on AIM. (c) Conditions to the Proposal The Conditions to the Proposal are set out in full in Part III of the SchemeDocument. In summary, the implementation of the Scheme is conditional upon: • the Scheme becoming effective by not later than 31 January 2007 or such laterdate as Comland and MCF Commercial may agree (with, where applicable, theconsent of the Panel) and (if required) the Court may approve, failing which theScheme will lapse; • the approval by a majority in number of the Independent Comland Shareholderswho vote, representing at least 75 per cent. in value of the Scheme Sharesvoted, either in person or by proxy, at the Court Meeting; and • the sanction of the Scheme, (with or without modification on terms agreed byComland and MCF Commercial) by the Court and the delivery of office copies ofthe Court Order to the Registrar of Companies and the registration of such CourtOrder. (d) Sanction of the Scheme by the Court Under the Companies Act, the Scheme requires the sanction of the Court. Thehearing by the Court to sanction the Scheme is expected to be held on 12October 2007, subject to the prior satisfaction or waiver of the otherConditions set out in Part III of the Scheme Document. MCF Commercial hasconfirmed that it will be represented by counsel at such hearing so as toconsent to the Scheme and to undertake to the Court to be bound thereby. The Scheme will become effective in accordance with its terms upon delivery ofoffice copies of the Court Order to the Registrar of Companies, and uponregistration of such Court Order. If the Scheme becomes effective, it will be binding on all Comland Shareholdersirrespective of whether or not they attended or voted in favour of the Scheme atthe Court Meeting or in favour of the Special Resolution at the Extraordinary General Meeting. If the Scheme does not become effective by 31January 2008 (or such later date (if any) as Comland and MCF Commercial mayagree and (if required) the Court may allow) the Scheme will not becomeeffective and the Proposal will not proceed. (e) Alternative means of implementing the Proposal MCF Commercial has reserved the right to implement the Proposal by way of aTakeover Offer, in which case additional documents will be despatched to ComlandShareholders. In such event, such a Takeover Offer will (unless otherwiseagreed) be implemented on the same terms so far as applicable as those whichwould apply to the Scheme (subject to appropriate amendments including (withoutlimitation) an acceptance condition set at 75 per cent. (or such lesserpercentage, being more than 50 per cent., as MCF Commercial may decide) of theshares to which such offer relates), 19 Cancellation of admission to AIM of Comland Shares Prior to the Scheme becoming effective, the London Stock Exchange will berequested to cancel admission of Comland to AIM with effect from 8.00am on theEffective Date and it is for this purpose that the Special Resolution will beproposed at the EGM. The last day of dealings in, and for registration of transfers of, ComlandShares will be the business day after the Court Hearing which is expected to beon 12 October 2007. Accordingly, the last day of dealing in Comland Shares isexpected to be 15 October 2007 and no transfers of Comland Shares will beregistered after 4:30pm on this date. 20 Settlement Subject to the Scheme becoming effective, settlement of the cash considerationto which any holder of Scheme Shares is entitled thereunder will be effectedwithin 14 days of the Effective Date in the manner set out below. Except with the consent of the Panel, settlement of the cashconsideration to which any Comland Shareholder is entitled under the Schemewill be implemented in full in accordance with the terms of the Scheme free ofany lien, right of set-off, counterclaim or other analogous right to which MCFCommercial may otherwise be, or claim to be, entitled against such shareholder. If the Scheme becomes effective Comland will become a wholly owned directsubsidiary of MCF Commercial on the Effective Date and Comland Shareholders willreceive the relevant consideration referred to above. Shareholders electing to receive the consideration due by way of the Cash PlusShares Alternative and whose entitlement includes a half of one MCF Holdingsshare, will have their entitlement rounded down to the nearest whole number ofMCF Holdings Shares and will receive their entitlement to the half of one MCFHoldings Share as cash. An additional £0.05 will be added to their cash payment, 21 Overseas Shareholders The implications of the Scheme and the Proposal for Overseas Shareholders may beaffected by the laws of the relevant jurisdictions. Overseas Shareholders shouldinform themselves about and observe any applicable legal requirements. It is theresponsibility of each Overseas Shareholder to satisfy himself/ herself as tothe full observance of the laws of the relevant jurisdiction, including theobtaining of any governmental, exchange control or other consents which may berequired, or the compliance with other necessary formalities which are requiredto be observed and the payment of any issue, transfer or other taxes due in suchjurisdiction. 22 Conditions to the implementation of the Scheme and further terms of theProposal The Proposal and the Scheme will be governed by English law and will be subjectto the jurisdiction of the courts of England. Part A: Conditions of the Proposal The Proposal will be conditional upon the Scheme becoming unconditional andbecoming effective, subject to the City Code, by not later than 31 January 2008or such later date (if any) as Comland and MCF Commercial may agree (with, whereapplicable, the consent of the Panel) and (if required) as the Court may allow.The Scheme will comply with the applicable rules and regulations of theFinancial Services Authority and the City Code. The Scheme will be conditional upon: 1 the approval of the Scheme by a majority in number representing 75 percent. or more in value of the Comland Shareholders present and voting, eitherin person or by proxy, at the Court Meeting, or at any adjournment thereof; and 2 the sanction (with or without modification, on terms agreed by Comlandand MCF Commercial) of the Scheme by the Court and office copies of the CourtOrder being delivered for registration to the Registrar of Companies. Comland and MCF Commercial have agreed that, subject as stated in Part B below,application to the Court to sanction the Scheme will not be made unlessconditions 1 above has been fulfilled. Part B: Further terms of the Proposal MCF Commercial reserves the right to elect to implement the Proposal by way of aTakeover Offer. In such event, such an offer will be implemented on the sameterms so far as applicable, as those which would apply to the Scheme (subject toappropriate amendments, including (without limitation) an acceptance conditionset at 75 per cent. (or such less percentage (being more than 50 per cent.) asMCF Commercial may decide)) of the shares to which such offer relates). The Proposal will lapse and the Scheme will not proceed (unless otherwise agreedwith the Panel) if before the date of the Court Meeting the Office ofFair Trading has referred the Proposal to the Competition Commissionprovided that if the merger is allowed then, with the consent of the Panel, theProposal will be reinstated on the same terms and at not less than the sameprice as soon as practicable. 23 Directors and registered office (a) The Comland Directors and their respective functions are as follows: Stuart James Crossley Chief ExecutiveSimon Kennedy Funnell Investment and Development Director Christopher Giles Martin Financial Director John Derek Collinson Non-executive Director Comland's registered office is at Lunar House, Mercury Park, Wooburn Green, HighWycombe, Buckinghamshire HP10 0HH and the telephone number is 01628 535 777. (b) The MCF Commercial Directors and their respective functions are asfollows: Stuart James Crossley Chief Executive Christopher Giles Martin Financial Director Simon Kennedy Funnell Investment and Development Director MCF Commercial's registered office is at c/o Shoosmiths, 1st Floor, Witan GateHouse, 500-600 Witan Gate, Milton Keynes, Buckinghamshire MK9 1SH. (c) The MCF Holdings Directors and their respective functions are as follows: Stuart James Crossley Chief Executive Christopher Giles Martin Financial Director Simon Kennedy Funnell Investment and DevelopmentDirector MCF Holdings' registered office is at c/o Shoosmiths, 1st Floor, Witan GateHouse, 500-600 Witan Gate, Milton Keynes, Buckinghamshire MK9 1SH. 24 Holdings and dealings As at 6 September 2007 (the latest practicable date prior to the release of thisAnnouncement) the interests of the Comland Directors in the share capital ofComland within the meaning of section 820 of the 2006 Act (including family andcorporate interests as defined, respectively, in sections 822 and 823 of the2006 Act) are as follows:Director Number of Comland SharesStuart James Crossley 4,125,903Christopher Giles Martin 251Simon Kennedy Funnell 251 No dealings for value in Comland Shares by Directors have taken place during theDisclosure Period. None of MCF Holdings nor MCF Commercial, any of the MCFHoldings Directors or MCF Commercial Directors, any member of their immediatefamilies or any related trusts or companies, any other person acting in concertwith MCF Commercial, owns, controls or is interested (directly or indirectly)in, or has any rights to subscribe or has any short positions in respect of anyrelevant securities nor has any such person dealt in any relevant securitiesduring the Disclosure Period. Save as disclosed above, neither Comland nor any of its subsidiaries nor any ofthe Comland Directors nor any member of their immediate families or any relatedtrusts or companies, owns, controls or is interested (directly or indirectly)in, or has any rights to subscribe or has any short positions in respect of anyrelevant securities nor has any such person dealt in any relevant securitiesduring the Disclosure Period and no bank, stockbroker, financial or otherprofessional adviser of Comland (other than one which is independently managed)of Comland or any of its subsidiaries nor any person whose investments aremanaged on a discretionary basis by fund managers (other than exempt fundmanagers) connected with Comland owns, controls or is interested (directly orindirectly) in, or has any rights to subscribe or has any short positions inrespect of, any relevant securities nor has any such person dealt therein duringthe Disclosure Period. As at 6 September 2007 (the latest practicable date prior to the posting of theScheme Document) no person falling within the categories specified in paragraphs(a) and (d) of the definition of "associate" below in relation to Comland (butexcluding exempt principal traders and pension funds which are independentlymanaged) owned, controlled, or was interested (directly or indirectly) in, orhad any right to subscribe or had any short positions in respect of, anyrelevant securities nor has any such person dealt therein during the DisclosurePeriod. There is no agreement, arrangement or understanding whereby the beneficialownership of any Comland Shares to be acquired by MCF Commercial pursuant to theScheme will be transferred to any other person. None of (i) MCF Commercial or any person acting in concert with MCF Commercial;or (ii) Comland or any associate (as defined in the City Code) of Comland hasany arrangement of the kind referred to in Note 6(b) on Rule 8 of the City Codein relation to relevant securities. For the purposes of this part of thedocument, "arrangement" includes an indemnity or option arrangement and anyagreement or understanding, formal or informal, of whatever nature which may bean inducement to deal or refrain from dealing. Neither Comland nor MCF Commercial nor any person acting in concert with themhave borrowed nor lent any relevant securities of Comland during the DisclosurePeriod, save for any borrowed shares which have been on-lent or sold. Neither Comland nor MCF Commercial nor any person acting in concert with themhas borrowed or lent any relevant securities of MCF Commercial during theDisclosure Period, save for any borrowed shares which have been on-lent or sold. No relevant securities of Comland have been redeemed or purchased by Comlandduring the period commencing on 7 September 2006 (being the date 12 months priorto the commencement date of the Offer Period) and ending on 6 September 2007(being the latest practicable date prior to the release of this Announcement).No relevant securities of MCF Holdings or MCF Commercial have been redeemed orpurchased by MCF Holdings or MCF Commercial during the Disclosure Period. References in this paragraph to: an "associate" are to: a) subsidiaries and associated companies of Comland and companies ofwhich any such subsidiaries or associated companies are associated companies; b) banks, financial and other professional advisers (includingstockbrokers) to Comland or a company covered in (a) above, including personscontrolling, controlled by or under the same control as such banks or financialor other professional advisers; c) the Comland Directors and the directors of any company covered in(a) above (together in each case with their close relatives and related trusts); d) the pension funds and employee benefit trusts of Comland or anycompany covered in (a) above; a "bank", do not apply to a bank whose sole relationship with Comland, or a companycovered in 8.11.1(a) above, is the provision of normal commercial bankingservices or such activities in connection with the proposed acquisition ofComland to be effected by the Scheme; ownership or control of 20 per cent. or more of the equity share capital of acompany is regarded as the test of associated company status and "control" meansa holding or aggregate holdings of shares carrying 30 per cent. or more of thevoting rights attributable to the share capital of the company which arecurrently exercisable at a general meeting, irrespective of whether the holdinggives de facto control; and "relevant securities" means MCF Holdings Shares and Comland Shares and securities convertible into orexchangeable for rights to subscribe for and options in respect of any of theforegoing 25 Irrevocable undertakings The following Comland Shareholders have given undertakings to vote in favour ofthe resolutions to be put to the Comland Shareholders at the EGM: Name Number of Comland Shares % of current issued share capitalStuart James Crossley 25,700 0.56%Christopher Giles Martin 251 0.01%Simon Kennedy Funnell 251 0.01%Neville Bailey Esq 641,381 14.08%GPM (Nominees) Limited 988,712 21.7%IPM Personal Pension Trustees 276,187 6.06%LimitedChristopher Giles Martin 2,180,184 47.85%Recallgrade Limited 8,105 0.18%Thomas Grant and Company Nominees 2,134 0.05%Thomas William George Clarke 167,500 3.68%Elaine Barbour 26,833 0.59%William Barbour 1,144 0.03%Michael Gatenby 3,500 0.08%Total. 4,321,882 94.88% The first nine listed, with the exception of the 251 shares held each byChristopher Martin and Simon Funnell, are held by Comland's Chief Executive,Stuart Crossley or trusts established by him These undertakings will cease to be binding if: (i) the requisite majoritiesfail to approve the resolution(s) at the Court Meeting or the ExtraordinaryGeneral Meeting; (ii) the Scheme otherwise lapses or is withdrawn in accordancewith its terms and MCF Commercial does not publicly confirm that it intends toimplement the Proposal by way of a Takeover Offer or otherwise within 10business days of such lapse or withdrawal; (iii) the Scheme otherwise lapses orfails to complete before 31 January 2008; or (iv) in respect of Thomas WilliamGeorge Clarke, Elaine Barbour and William Barbour upon the announcement of acompeting proposal at a price at least 20% above the value of the Proposal. 26 Implementation Agreement On 7 September 2007, MCF Commercial and Comland entered into an ImplementationAgreement, which sets out the terms on which they will implement the Scheme. Conduct of business Under the Implementation Agreement Comland has undertaken that, unless requiredby law, pursuant to an ongoing contractual commitment, or with MCF HoldingLimited 's prior written approval, it will not (and will procure that ComlandGroup members do not), prior to the effective date of the Scheme or (if earlier)the date on which the Implementation Agreement is terminated: (i) carry on business other than in the ordinary and usual course; (ii) make (or agree to make) any payment outside the ordinary course oftrading, without in each case first consulting with, and having regard to, MCFCommercial's recommendations. Under the Implementation Agreement, other than contemplated by theterms of the Proposal or Implementation Agreement, Comland has alsoundertaken that it will not (and will procure that Comland Group members donot), prior to the effective date of the Scheme or (if earlier) the date onwhich the Implementation Agreement is terminated: (i) amend the memorandum or articles of association of any Comland Groupmember; (ii) propose, recommend or pay any bonus issue, dividend or other distribution(cash or otherwise) other than dividends paid by a wholly-owned subsidiary ofComland to Comland or any of its other wholly-owned subsidiaries; (iv) subject to the Comland Directors' fiduciary duties, take any step which isreasonably likely to prevent or delay satisfaction of the Scheme conditions; (v) alter the share capital of any Comland Group member or grant any optionsor rights over any Comland share capital, except for existing share options andshare awards obligations; (vi) subject to the Comland Directors' fiduciary duties, do anything requiringshareholder approval in general meeting or Panel consent under Rule 21 of theCity Code (other than in respect of the Scheme); (vii) amend or (except for serious misconduct) terminate the employmentarrangements with any non-executive director of Comland or any of Stuart JamesCrossley, Christopher Giles Martin or Simon Funnell, or any of their successorsin their respective roles. Termination The obligations of MCF Commercial and Comland to implement the Scheme andcomplete the Proposal may be terminated at any time prior to 11.59 p.m. on thedate on which the Court holds a hearing to approve the Scheme: (i) by mutual written consent of MCF Commercial and Comland; (ii) by either MCF Commercial or Comland if the requisite Comland Shareholderapprovals are not obtained at the Court Meeting and at the Extraordinary GeneralMeeting; (iii) by MCF Commercial: (A) in the event of failure of any of the Conditions to the Scheme or if theCourt does not sanction the Scheme; (B) if Comland enters into any agreement with respect to, or makes any publicstatement approving or endorsing, any Alternative Acquisition Proposal (asdefined in the Implementation Agreement); or (C) if Comland is in material breach of the Implementation Agreement; (iv) by Comland: (A) if MCF Commercial is in material breach of the Implementation Agreement;or (B) if it is announced by, or on behalf of, Comland that the board of directorsof Comland has determined not to give, or withdraw or modify, its recommendationof the Proposal and the Scheme, provided that neither MCF Commercial nor Comland may terminate if they arerequired by the Panel to proceed with the Proposal. The obligations of the parties to implement the Scheme and complete the Proposalwill also terminate if the Scheme does not become effective prior to 31 January2008 (or such later date as MCF Commercial and Comland, with the consent of thePanel, agree in writing). Waivers and indemnities MCF Commercial has agreed that it will waive any claim that it has or may haveagainst any Comland Director in connection with: (i) any negligence, default, breach of duty or breach of trust by thedirector in relation to Comland; or (ii) the exercise or purported exercise of the director's duties or powers orotherwise in connection with the director's duties, powers or office with theComland Group in any period prior to the earlier of the Effective Date or thedate on which the Implementation Agreement is terminated. in each case, provided that the existence of each such indemnity or undertakinghas been disclosed to MCF Commercial prior to the date of the ImplementationAgreement. The waivers and indemnities set out above do not apply: (i) to the extent that they are not permitted by, or are inconsistent with,any law or statute, or the rules and regulations of any regulatory body; (ii) where there has been gross negligence, fraud or wilful default by therelevant Comland Director; or (iii) where the relevant Comland Director has improperly derived a personalbenefit or profit. APPENDIX I SOURCES OF INFORMATION AND BASES OF CALCULATION ((a) The value of approximately £43.3 million attributed to the fully dilutedshare capital of Comland, is based upon the fully diluted number ofComland Shares being 4,556,520 shares. (b) The financial information relating to Comland is extracted from theaudited consolidated financial statements of Comland for the year ended 31 March2007, prepared in accordance with UK GAAP. (c) No financial information relating to MCF Commercial or MCF Holdings hasbeen extracted. (d) All prices quoted for Comland Shares and premia implied by the Offer priceper Comland Share are calculated based on closing middle market prices and arederived the daily official list of closing prices for companies listed on theLondon Stock Exchange. APPENDIX II DEFINITIONS 2006 Act the Companies Act 2006 Acquisition The proposed acquisition of all of the issued ordinary share capital of Comland by MCF Commercial by means of the Scheme Act or Companies Act the Companies Act 1985 (as amended from time to time) AIM the market of that name operated by the London Stock Exchange Announcement the press release announcing the Proposal by MCF Commercial for Comland dated 7 September 2007 made pursuant to Rule 2.5 of the City Code Annual Report the annual report and accounts of Comland for the year ended 31 March 2007associated undertaking to be construed in accordance with the Companies Act 1985 (but for this purpose ignoring paragraph 20(1)(b) of Schedule 4A thereto Authorisations authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions and approvals Board the board of directors of Comland Business Day a day on which the London Stock Exchange is open for normal business Cash Alternative the proposal by MCF Commercial for MCF Holdings to pay £9.50 in cash to Comland Shareholders for each Comland ShareCash Plus Shares the proposal by MCF Commercial for MCF Holdings to pay £0.95 in cash to Comland ShareholdersAlternative and 85.5 MCF Holdings Shares issued at par for each Comland Sharecertificated or in a share or other security which is not in uncertificated form (that is, not in CREST)certificated formCity Code the City Code on Takeovers and Mergers (as amended from time to time)Comland or Company Comland Commercial Plc, a company registered in England and Wales with company number 03463248 and whose registered office is at Lunar House, Mercury Park, Wooburn Green, High Wycombe, Buckinghamshire HP10 0HHComland Directors the directors of Comland, being Stuart James Crossley, Christopher Giles Martin, Simon Kennedy Funnell and John Derek Collinson as at the date of this document Comland Group Comland and any and all of its subsidiaries and associated companies Comland Shareholder or the holders of Comland SharesShareholder Comland Shares ordinary shares of £0.10 each in the capital of Comland (company number 03463248) Company's Registrars Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU Conditions the conditions to the implementation of the Scheme and further terms of the Proposal set out in Part III of this document connected person has the meaning given to it in section 346 of the Companies Act 1985 Court the High Court of Justice in England and Wales Court Hearing the hearing by the Court of the petition to sanction the Scheme Court Meeting the meeting of Scheme Shareholders (and any adjournment thereof) to be convened pursuant to an order of the Court under section 425 of the Companies Act for the purposes of considering and, if thought fit, approving the Scheme (with or without amendment) Court Order the order of the Court sanctioning the Scheme under section 425 of the Companies Act CREST the relevant system (as defined in the Regulations) to facilitate the transfer of title to shares in uncertificated form (as defined in the Regulations) Daily Official List The daily official list of closing prices of companies listed on the London Stock Exchange Disclosure Period the period commencing on 7 September 2006 (the date 12 months prior to the commencement of the Offer Period) and ending on 6 September 2007 (being the last practicable date prior to publication of this document) Effective Date the date on which the Court Order is registered by the Registrar of Companies EGM or Extraordinary the extraordinary general meeting of Comland Shareholders (and an adjournment thereof) to be General Meeting convened in connection with the Proposal by the notice set out in Part IX of this document Family Shares Scheme Shares registered in the names of Stuart Crossely, Chris Martin, Simon Funnell, Neville Bailey, GPM (Nominees) Limited; IPM Personal Pension Trustees Limited; and Recallgrade Limited at the Scheme Record Time or Voting Record Time (where appropriate) Family Shareholders holders of Family Shares Form of Acceptance a form for use by Comland Shareholders to elect whether they were to accept the Cash Alternative or the Cash Plus Shares Alternative Forms of Proxy the forms of proxy for use at the Court Meeting and the Extraordinary General Meeting FSA or Financial the Financial Services Authority in its capacity as the competent authority for the Services Authority purposes of Part VI of the Financial Services and Markets Act 2000 FSMA Financial Services and Markets Act 200 (as amended) Grant Thornton Grant Thornton Corporate Finance, the corporate finance division of Grant Thornton UK LLP of Grant Thornton House, Melton Street, London NW1 2EP Implementation the implementation agreement entered into between Comland and MCF Commercial on 7 SeptemberAgreement 2007 Independent Comland John Derek CollinsonDirector Independent Scheme Scheme Shares other than Family Shares at the Scheme Record Time or the Voting Record TimeShares (where appropriate)Independent Comland holders of Independent Scheme SharesShareholdersLondon Stock Exchange London Stock Exchange PlcMCF Commercial MCF Commercial Limited a company incorporated in England and Wales with registered number 6278487 the members of the management board of MCF Commercial whose names are set out in paragraph 2(b) of Part VI of this documentMCF CommercialDirectors the ordinary shares of £1 each in capital of MCF Commercial MCF Holdings Limited, a company incorporated in England and Wales with registered number 6278449 MCF Commercial Shares MCF HoldingsMCF Holdings Directors the members of the management board of MCF Holdings whose names are set out in paragraph 2(c) of Part V of this document MCF Holdings and MCF Commercial the £0.10 ordinary shares in the capital of MCF HoldingsMCF Group MCF Holdings SharesMeeting(s) the Court Meeting and/or the Extraordinary General Meeting, as the case may beNew Debt Facility the £11,000,000 (eleven million pound) loan facility in favour of MCF Holdings which has been arranged and underwritten by HSBC Bank plc Offer Period the period from 7 September 2007 until the court hearing Overseas Shareholders Comland Shareholders who are resident in or nationals or citizens of jurisdictions outside the United Kingdom or who are nominees of, or custodians or trustees for, citizens or nationals of countries other than the United Kingdom Panel the Panel on Takeovers and Mergers Preliminary Results the announcement of Comland's audited preliminary results for the year ended 31 March 2007 Proposal the proposed acquisition of all of the issued ordinary share capital of Comland by MCF Commercial by means of the Scheme Registrar of Companies the Registrar of Companies in England and Wales Regulations the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) Scheme or Scheme of the scheme of arrangement proposed to be made under section 425 of the Companies Act 1985Arrangement between Comland and the Scheme Shareholders, as set out in Part VI of this document, to effect the acquisition of Comland by MCF Commercial Scheme Document the document expected to be sent to Comland Shareholders in due course Scheme Record Time 6.00 p.m. on the Business Day following the First Court Hearing Scheme Shareholders holders of Scheme Shares Scheme Shares (i) the Comland Shares in issue at the date of this document; (ii) any Comland Shares issued after the date of this document and before the Voting Record Time; and (iii) any Comland Shares issued at or after the Voting Record Time and before the Scheme Record Time in respect of which the original or any subsequent holders thereof are, or shall have agreed in writing to be, bound by the Scheme, in each case other than any Comland Shares beneficially owned/registered in the name of MCF Commercial Shares the existing unconditionally allotted or issued and fully paid ordinary shares of 10 pence each in the capital of Comland and any further such ordinary shares which are unconditionally allotted or issuedS J Crossley Trusts together the SJC Guernsey Discretionary Settlement, beneficial owner of 988,712 shares, (held by GPM Nominees Limited on behalf of Draic Limited, wholly owned by Spread Trustee Company Limited as trustees for SJC Guernsey Discretionary Settlement), the SJC Crossley Children Settlement 2002, beneficial owner of 2,183,684 shares (2,180,184 shares held by Christopher Giles Martin and 3,500 shares held by Michael Gatenby, both on trust) and the S J Crossley number one settlement, beneficial owner of 641,381 shares, (held on trust by Neville Bailey)Smith & Williamson Smith and Williamson Corporate Finance Limited of 25 Moorgate, London EC2R 6AYCorporate FinanceLimitedSpecial Resolution the special resolution to be proposed at the Extraordinary General Meeting in connection with, inter alia, the Schemesubsidiary undertaking have the meaning given by the Companies Act 1985 (but for these associated undertaking andand associated purposes ignoring paragraph 20(1)(b) of schedule 4A to the Companies Act)undertakingsubstantial interest in relation to an undertaking, an interest, direct or indirect, in 20 per cent. or more of the voting rights exercisable in relation to the undertaking or in the capital or any class of the capital of such undertakingTakeover Offer a takeover offer as such term is defined in section 974 of the Companies Act 2006 recorded on the relevant register as being held in uncertificated form in CREST and title to which may be transferred by means of CRESTUncertificated or inuncertificated form UK or United Kingdom the United Kingdom of Great Britain and Northern IrelandVoting Record Time 6.00 p.m. on the day which is two days before the date of the Court Meeting or, if such Court Meeting is adjourned, 6.00 p.m. on the day which is two days before the date of such adjourned meeting Unless otherwise indicated, all references to times are to London times. 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