THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are
in any doubt as to the action you should take, you are recommended to seek immediately
your own advice from your stockbroker, bank manager, solicitor, accountant, fund manager
or other appropriate independent adviser, who is authorised under the Financial Services
and Markets Act 2000 (“FSMA”) if you are in the United Kingdom or, if not, from another
appropriately authorised independent adviser.
If you sell, have sold or otherwise transferred all of your Ordinary Shares, please send this
document, together with the accompanying Form of Proxy, as soon as possible to the purchaser
or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was
effected for onward delivery to the purchaser or the transferee. If you have purchased Ordinary
Shares after the date of this document, you should contact Capita Registrars using the details set
out in Section 12 of the Chairman’s Letter, to request a new Form of Proxy.
Strata Partners, which is authorised and regulated by the Financial Services Authority in the UK,
is acting exclusively for Newbury Racecourse and no one else in connection with the Share Buy-
Back and will not regard any other person (whether or not a recipient of this document) as a client
in relation to the Share Buy-Back and will not be responsible to anyone other than Newbury
Racecourse for providing the protections afforded to its clients or for providing advice in relation to
the Share Buy-Back or any transaction or arrangement referred to in this document.
NEWBURY RACECOURSE PLC(incorporated and registered under the laws of England and Wales with registered No. 00080774)
advised by Strata Partners
Proposed Share Buy-Back of 1,428,174 Ordinary Shares owned by
GPG (UK) Holdings plc at 450 pence per Ordinary Share
Approval of Waiver of Rule 9 of the City Code on Takeovers and Mergers
Notice of General Meeting
The attention of Shareholders is drawn to the notice convening a General Meeting of the Company
which appears at the end of this document. The General Meeting will be held on 15 November
2012 at 10.00 a.m. at The Racecourse, Newbury, Berkshire RG14 7NZ. A Form of Proxy for use
at the General Meeting is enclosed and, to be valid, should be completed, signed and returned
following the procedures described in the Notes to the Notice of General Meeting set out at the
end of this document so as to be received by the Company’s registrars, Capita Registrars, PXS,
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom, as soon as
possible but, in any event, so as to arrive no later than 10.00 a.m. on 13 November 2012.
Completion and return of a Form of Proxy will not prevent members from attending and voting in
person should they wish to do so.
Rule 24.3(d)
TABLE OF CONTENTS
Page
INDICATIVE STATISTICS 3
SUMMARY FINANCIAL EFFECTS OF SHARE BUY-BACK 4
EXPECTED TIMETABLE OF PRINCIPAL EVENTS 5
DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS 6
PART I LETTER FROM THE CHAIRMAN 7
PART II SAVILLS’ VALUATION REPORT ON THE RACECOURSE (EXCLUDING
THE RESIDENTIAL DEVELOPMENT SITES AND THE HOTEL
DEVELOPMENT SITE) 23
PART III MONTAGU EVANS’ VALUATION REPORT ON THE RESIDENTIAL
DEVELOPMENT SITES AND THE HOTEL DEVELOPMENT SITE 47
PART IV ADDITIONAL DISCLOSURES REQUIRED UNDER THE TAKEOVER CODE 63
DEFINITIONS 83
NOTICE OF GENERAL MEETING 89
NEWBURY RACECOURSE FREEHOLD PROPERTY PLAN
(THE RACECOURSE AND THE RESIDENTIAL DEVELOPMENT SITES) 91
2
INDICATIVE STATISTICS
Increase in the effective percentage interest in the Company’s issued share capital
for each Ordinary Share owned immediately following completion of the Share
Buy-Back 42.7%
Increase in Net Asset Value per Ordinary Share immediately following completion
of the Share Buy-Back(Note 1) 16.3%
Number of GPG Shares to be purchased by Company 1,428,174
Price to be paid for each GPG Share 450 pence
Aggregate cash consideration to be paid by the Company to
GPG (UK) Holdings plc on completion of the Share Buy-Back £6,426,783
Number of Ordinary Shares in issue at the date of this document 4,776,500
Number of Ordinary Shares in issue immediately following completion
of the Share Buy-Back 3,348,326
Net Indebtedness as at 30 June 2012 £2,110,000
Net Indebtedness as at 30 June 2012, adjusted for the
Compton Beauchamp Estates Loan and related Transaction Costs,
as if the Share Buy-Back had been completed £9,058,000
Net Asset Value for each Ordinary Share immediately before the
Share Buy-Back(Note 1) 789 pence
Net Asset Value for each Ordinary Share immediately following
completion of the Share Buy-Back(Note 1) 918 pence
Aggregate percentage interest of Erik Penser and Compton Beauchamp Estates
in the Company’s issued share capital at the date of this document 28.7%
Aggregate percentage interest of Erik Penser and Compton Beauchamp Estates in the
Company’s issued share capital immediately following completion of the Share Buy-Back 40.9%
Unanimous recommendation from all Independent Directors to vote in favour of the
Resolutions to effect the Share Buy-Back(Note 2)
Notes:
(1) The calculation of the Net Asset Value of the Company and the Net Asset Value for each Ordinary Share before the
Share Buy-Back and, on a pro forma basis, as if the Share Buy-Back had been completed and the GPG Shares had
been cancelled, is set out in more detail in Section 7(vi) of Part I of this document.
(2) Please see Section 13 of Part I of this document for the full details of the recommendation.
3
SUMMARY FINANCIAL EFFECTS OF SHARE BUY-BACK
Pro Forma Net Asset Value as if the Net Asset Value Share Buy-Back before Share had been Buy-Back completed £ £Independent valuation of the Racecourse on a continuing
use basis(Notes 1 and 2) £14.50m £14.50m
Independent valuation of the Residential Sites to be developed
by DWH(Note 3) £24.10m £24.10m
Independent valuation of the Hotel Development Site(Note 4) £1.20m £1.20m –––––––– ––––––––
Total Asset Value £39.80m £39.80m
Net Indebtedness at 30 June 2012(Note 5) (£2.11m) (£2.11m)
Compton Beauchamp Estates Loan and Transaction Costs(Note 6) n/a (£6.95m) –––––––– ––––––––Total Net Asset Value £37.69m £30.74m
–––––––– ––––––––Total Issued Ordinary Shares(Note 7) 4.78 million 3.35 million
Notes:
For the detailed “Notes” please see Section 7(vi) of Part I of this document.
Total Net Asset Value for each issued Ordinary Share £7.89 £9.18
Increase in Net Asset Value for each issued Ordinary Share 16.3%
as if the Share Buy-Back had been completed and the
GPG Shares had been cancelled
4
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Each of the times and dates in the table below is indicative only and may be subject to change.
Publication of the Circular 29 October 2012
Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 13 November 2012
General Meeting 10.00 a.m. on 15 November 2012
Results of the General Meeting announced by way of a
Regulated Information Service 15 November 2012
Completion of the Share Buy-Back 15 November 2012
Notes:
(1) The times and dates set out in the expected timetable of principal events above and mentioned throughout this
document may be adjusted by Newbury Racecourse (in consultation with Strata Partners), in which event details of
the new times and dates will be notified via a Regulated Information Service and, if appropriate, will be notified to
Shareholders. Notwithstanding the foregoing, Shareholders may not receive any further written communication.
(2) The References to times in this document are to London times unless otherwise stated.
5
DIRECTORS, COMPANY SECRETARY, REGISTERED
OFFICE AND ADVISERS
Directors Dominic Burke Non-Executive ChairmanJohn Dodds Non-Executive DirectorThe Honourable Harry Herbert Non-Executive DirectorStephen Higgins Joint Managing DirectorSarah Hordern Joint Managing DirectorLady Lloyd-Webber Non-Executive DirectorErik Penser Non-Executive DirectorBrian Stewart-Brown Non-Executive DirectorChristopher Spence Non-Executive DirectorLaurie Todd Non-Executive Director
The business address of each of the Directors is the Company’s registered address at The
Racecourse, Newbury, Berkshire RG14 7NZ.
Company Secretary Sarah Hordern
Registered office The Racecourse
Newbury
Berkshire RG14 7NZ
Strata Partners
Kingsbury House
15-17 King Street
London SW1Y 6QU
Burges Salmon LLP
One Glass Wharf
Bristol BS2 OZX
Auditors Deloitte LLP
Abbot’s House
Abbey Street
Reading
Berkshire RG1 3BD
Registrars Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Financial Adviser to Newbury
Racecourse
Legal Advisers to Newbury
Racecourse
Rule 24.3(a)
and (c)(i)
6
PART I
LETTER FROM THE CHAIRMAN
Newbury Racecourse PLC
The Racecourse
Newbury
Berkshire
RG14 7NZ
29 October 2012
Dear Shareholder,
Proposed Share Buy-Back by the Company of all the Ordinary Shares owned by Guinness
Peat Group, Approval for Waiver of Obligations under Rule 9 of the Takeover Code and
Notice of General Meeting
1. INTRODUCTION
Guinness Peat Group plc (“GPG”) is our largest shareholder and owns, via its wholly-owned
subsidiary GPG (UK) Holdings plc, in aggregate, 29.9 per cent. of the issued share capital of the
Company (the “GPG Shares”). Last year GPG stated that it would undertake an orderly disposal,
over time, of its investment portfolio which includes its shareholding in Newbury Racecourse. This
creates a degree of uncertainty for the future of your Company which the Board would like to
resolve.
Your Board has negotiated an opportunity for the Company, with your approval, to purchase the
GPG Shares. If shareholders support the proposed Share Buy-Back then the GPG Shares will be
purchased by the Company and then cancelled, reducing the total number of Ordinary Shares in
issue to 3,348,326 Ordinary Shares. Therefore, the effective equity ownership interest of each
Shareholder remaining after the Share Buy-Back would increase by some 42.7 per cent.
The price at which the Company will, subject to your approval, effect the Share Buy-Back has been
agreed at 450 pence per Ordinary Share which compares very favourably with the current Net
Asset Value of 789 pence per Ordinary Share. The price of the proposed Share Buy-Back of
450 pence per Ordinary Share represents a premium of approximately 16.1 per cent. to the closing
mid-market price of 387.5 pence on 26 October 2012 (being the latest practicable date prior to the
publication of this document). If the Share Buy-Back is completed the underlying Net Asset Value
of your Ordinary Shares will increase by some 16.3 per cent. because the price at which each of
the GPG Shares is to be bought is materially below the Net Asset Value for each Ordinary Share.
The Net Asset Value for each Ordinary Share has been determined on the basis of up-to-date
independent valuation reports set out in Parts II and III of this document. This is explained in more
detail in Section 7(vi) of this Part I.
In accordance with the Companies Act 2006, the Company is not permitted to carry out the Share
Buy-Back without the approval of Shareholders. Shareholders will be asked to approve two
Resolutions at the General Meeting. The first resolution, which will be proposed as a special
resolution, deals with the approval of the Share Buy-Back Agreement between the Company and
GPG (UK) Holdings plc. The second resolution (the “Waiver Resolution”), which will be proposed
Rule 24.3(d)(ii)
7
as an ordinary resolution, seeks Independent Shareholders’ approval of a waiver of the obligation
that would otherwise arise (in accordance with the Takeover Code) on Compton Beauchamp
Estates and Erik Penser to make a general offer for the entire issued share capital of the Company
as a result of completion of the Share Buy-Back. This is explained in more detail in Section 12 of
this Part I.
Please find set out on pages 89 to 90 of this document, a notice convening a General Meeting on
15 November 2012 at 10.00 a.m. at The Racecourse, Newbury.
The Independent Directors have given a unanimous recommendation to Shareholders to
vote in favour of the proposed Share Buy-Back and the Waiver Resolution, as they will be
doing themselves in relation to their own shareholdings.
A Form of Proxy is included with this document and I would be grateful if you could complete and
return the Form of Proxy ahead of the General Meeting even if you are planning to attend in
person.
Please complete the enclosed Form of Proxy voting in favour of both resolutions in order
to approve the Share Buy-Back and the Waiver Resolution.
2. KEY TERMS OF THE SHARE BUY-BACK
The price to be paid by the Company has been agreed at 450 pence for each Ordinary Share to
be purchased from GPG (UK) Holdings plc. The total cash consideration to be paid by the
Company to GPG (UK) Holdings plc on the completion of the Share Buy-Back Agreement will be
approximately £6.4 million. The Share Buy-Back Agreement is conditional upon the passing of
each of the Resolutions at the General Meeting.
In addition, your Board has negotiated certain restrictions with GPG in respect of dealings with the
GPG Shares (such as not selling the GPG Shares, save in certain circumstances) while the
proposed Share Buy-Back is being progressed. These restrictions are set out in the
Implementation Agreement which is described in Section 3.10.1 of Part IV of this document.
Further details about the Share Buy-Back Agreement are set out in Section 3.10.2 of Part IV of this
document.
3. BACKGROUND TO AND REASONS FOR THE PROPOSED SHARE BUY-BACK
GPG publicly announced on 11 February 2011 that it would “undertake an orderly value realisation
of GPG’s investment portfolio over time”. The 1,428,174 Ordinary Shares in the Company owned
by GPG (UK) Holdings plc form part of GPG’s investment portfolio which it is seeking to sell.
This creates a degree of uncertainty for the future of your Company which the Board would like to
resolve. Therefore, the Board is proposing the repurchase of the GPG Shares by the Company.
The principal reasons for the proposed Share Buy-Back are:
• removal of the uncertainty relating to the future ownership of the GPG Shares;
• creation of a more stable shareholder base for the Company to execute its stated strategy
and deliver long term benefits to Shareholders and other key stakeholders; and
• the value which would be created for remaining Shareholders by the Share Buy-Back with
the Net Asset Value for all remaining Shareholders increasing by some 16.3 per cent. This
is explained in further detail in Section 7 of this Part I.
Rule 24.2 (a)
and (b)
8
4. EFFECT OF THE SHARE BUY-BACK
If the Share Buy-Back of GPG (UK) Holdings plc’s 1,428,174 Ordinary Shares is approved, the
Company will, as soon as practicable, cancel these Ordinary Shares. The Company’s total
outstanding shares in issue would therefore reduce from 4,776,500 Ordinary Shares to 3,348,326
Ordinary Shares. Consequently, following completion of the Share Buy-Back and cancellation of
the GPG Shares, the effective percentage interest of each remaining Shareholder will increase by
approximately 42.7 per cent.
Upon completion of the Share Buy-Back, GPG would no longer have any interest in any Ordinary
Shares. Erik Penser, who is a Director of the Company, would, together with his family company
called Compton Beauchamp Estates, in aggregate hold 1,370,400 Ordinary Shares which would
equate to an effective interest of 40.9 per cent. of the Ordinary Shares then in issue. Erik Penser
together with his family company Compton Beauchamp Estates would be the largest Shareholder
of the Company. The second largest Shareholder in the Company would be Lady Lloyd-Webber
with an effective interest in 9.6 per cent. of the Ordinary Shares then in issue. After the Share Buy-
Back the Company and its Shareholders will remain subject to the provisions of the Takeover
Code.
5. FINANCING OF THE SHARE BUY-BACK
The Independent Directors considered various debt arrangements to finance the proposed Share
Buy-Back. The board of Compton Beauchamp Estates (of which Erik Penser is a director) offered
to make available to the Company a sterling committed term loan facility of £6.5 million to finance
the purchase by the Company of the GPG Shares (“Compton Beauchamp Estates Loan”). The
Independent Directors determined, having been so advised by Strata Partners, that the terms of
the Compton Beauchamp Estates Loan are fair and reasonable and in the best interests of the
Independent Shareholders and the Company as a whole. In providing such advice to the
Independent Directors, Strata Partners has taken into account the Independent Directors’
commercial assessments. Accordingly, the Board has today entered into an agreement with
Compton Beauchamp Estates for the Compton Beauchamp Estates Loan.
The principal terms of the Compton Beauchamp Estates Loan Agreement are set out in Section
3.10.3 of Part IV of this document and a copy of the agreement is available for inspection (see
Section 7 of Part IV for details).
For the purposes of the PLUS Rules for Issuers, Compton Beauchamp Estates is treated as a
related party and the Compton Beauchamp Estates Loan is a related party transaction. In
accordance with the requirements of the PLUS Rules for Issuers in respect of related party
transactions, Newbury Racecourse must announce as soon as possible the agreed terms of any
material transaction outside the ordinary course of business between it, or a subsidiary
undertaking, and a related party. Further information on Compton Beauchamp Estates and the
nature of its relationship with Newbury Racecourse is contained in Section 2 of Part IV of this
document.
6. KEY INFORMATION ABOUT THE COMPANY
Company BackgroundThe Company owns and manages Newbury Racecourse, a site of some 291 acres (following the
sale of the Western and Central Sites totalling approximately 23 acres to David Wilson Homes),
which is approximately one mile from the town centre of Newbury. The Company is quoted on
PLUS Stock Exchange and has a market capitalisation of approximately £18.5 million (as at the
Latest Practicable Date) and the indebtedness (net of cash balances) of the Company was
£2.1 million as at 30 June 2012.
The Company’s trading businesses comprise the racing and music business, an in-house catering
business and a conference and events business. In addition, the Company operates a children’s
nursery and a golf course.
Rule 24.3(f)
PLUS
Rule 56
Rule 24.3(f)(i)
Rule 24.3(a)
and (c)(ii)
9
The Company has significant property activities as a result of the Planned Redevelopment of the
Racecourse and the Development Agreement with David Wilson Homes, as well as licensing some
of the non-trading property assets of the Company. These property activities of the Company are
shown separately from the trading businesses in the Company’s published financial reports and
accounts.
Key Financial InformationThe following key financial information about the Company has been extracted from the
Company’s audited consolidated financial statements.
2011 2010 2009 Note £’000 £’000 £’000)RevenueRacecourse Trading 11,514 10,921 9,365 Nursery 767 737 682Golf 218 193 219 ———— ———— ———— Total Trading 12,499 11,851 10,266 ———— ———— ———— Property 57 76 86 ———— ———— ———— Total 12,556 11,927 10,352 (1) ———— ———— ———— Gross profitRacecourse Trading 1,954 2,323 1,879 Nursery 221 213 189Golf 39 – 34 ———— ———— ———— Total Trading 2,214 2,536 2,102 ———— ———— ———— Property (50) 42 55 ———— ———— ———— Total 2,164 2,578 2,157 ———— ———— ———— Operating profit/(loss) before Exceptional ItemsRacecourse Trading (100) (170) (485)Nursery 221 213 189Golf 39 – 34 ———— ———— ———— Total Trading 160 43 (262) ———— ———— ———— Property (270) (390) (101) ———— ———— ———— Total (110) (347) (363) ———— ———— ———— Exceptional ItemsRacecourse Trading – 306 –Nursery – – –Golf – – – ———— ———— ————Total Trading – 306 – ———— ———— ————Property (81) – – ———— ———— ————Total (81) 306 – ———— ———— ————Operating profit/(loss) after Exceptional ItemsRacecourse Trading (100) 136 (485)Nursery 221 213 189Golf 39 – 34 ———— ———— ————Total Trading 160 349 (262) ———— ———— ————Property (351) (390) (101) ———— ———— ————Total (191) (41) (363) ———— ———— ————Notes:
(1) As stated in the Newbury Racecourse Financial Statements for the year ended 31 December 2011, the Directors
have decided, in order to clarify the performance of the underlying trading activity as compared to the property activity
in light of the Planned Redevelopment, to separate the property and racecourse trading segments. Property revenue
includes rental income from residential properties and freehold land. The prior year figures have been restated to
allow for adequate comparison with the Newbury Racecourse Financial Statements for the year ended 31 December
2011.
10
However, this exercise was not undertaken for the Newbury Racecourse Financial Statements for the year ended
31 December 2009. Income from Racecourse Media Services which had previously been classified as interest
receivable and other investment income has been reclassified as media income and included in Racecourse Trading.
The 2009 figures have been restated to reflect the underlying clarification of the substance of this income. The impact
of this is an increase in revenue, gross profit and operating profit of £79,000 and a decrease in other investment income
of £79,000 in 2009. In addition, rental income and depreciation of rental properties have been reclassified as property
activities. The impact of this is an increase in Racecourse Trading gross profit of £31,000 and a decrease in Racecourse
Trading operating profit of £55,000. Property gross profit and property operating profit have increased by £55,000.
Long term StrategyFor a number of years the long term strategy of the Company has had four key elements:
(i) to redevelop the Racecourse and transform it into a racing, entertainment and events
business with the Racecourse as its core asset;
(ii) to enhance the profitability of racing operations including staging major music events with
racing;
(iii) to develop trading activities on non-racing days including the conference and events
business; and
(iv) to release value from the freehold property through, in particular, carefully planned,
appropriate residential redevelopment of the surplus land on the site.
Planned Redevelopment of the RacecourseThe Company has received outline planning permission from West Berkshire Council for the
redevelopment of the Racecourse. The Planned Redevelopment includes:
(i) development of the Residential Development Sites (on which up to 1,500 residential units
are proposed to be constructed) and implementation of the DWH Infrastructure
Enhancements to the Racecourse, to be carried out and funded by David Wilson Homes
(“DWH”) in accordance with the Development Agreement; and
(ii) implementation of the Racecourse Refurbishment Works to be carried out and paid for by
the Company.
The DWH Infrastructure Enhancements include, in particular, construction of a new bridge to
access the Residential Development Sites and provide enhanced access to the Racecourse, new
parking facilities for visitors and enhanced road infrastructure, a new multi-functional
accommodation facility for stable staff, refurbished stables, a new children’s nursery, with all such
works to be carried out, and paid for, by DWH in accordance with the Development Agreement.
The cost of implementing the DWH Infrastructure Enhancements has been estimated by DWH, and
independently reviewed by Capita plc on behalf the Company, at approximately £20.0 million. The
Directors believe that such enhancements will be beneficial to the trading performance and long-term
success of the Company. The cost of the DWH Infrastructure Enhancements will be paid by DWH.
The Racecourse Refurbishment Works includes, in particular, the refurbishment of the Berkshire
stand, a new weighing room, a new paddock, a pre-parade ring and general landscaping around
the grandstands, new administrative offices, enhanced facilities for owners and trainers and new
entrances to the Racecourse. These works are under assessment and review by the Board to
ensure acceptable returns for Shareholders from any such investments that may be made in
support of the Company’s strategy. It is estimated that the cost of all such works, to be paid for by
the Company, would be up to £12.0 million if implemented in their entirety.
In September and November 2011, the Company obtained Reserved Matters Planning approval
for the Western and Central Sites, being two of the three Residential Development Sites as well
as for the 123 bedroom hotel, a new children’s nursery, refurbished stables and a new multi-
functional accommodation facility for stable staff. In March 2012 the Company obtained Reserved
11
Matters Planning approval for the Southern area including a new golf course, estate yard and car
park in the centre of the Racecourse. The Board is exploring options to work with external partners
to deliver the proposed hotel and the development of the golf facilities at the Racecourse.
The Company and DWH have not yet applied for Reserved Matters Planning approval for the
Eastern Site of the Residential Development Sites or the coach parking adjacent to it.
Overview of the Development Agreement with David Wilson HomesThe Development Agreement with David Wilson Homes was completed on 18 September 2012.
On the same day, the Western and Central Sites were sold to DWH and the Company received an
initial payment of £5.1 million. This payment of £5.1 million is included in the valuation of the
Residential Development Sites as set out in Section 1.17 of Part III of this document.
Under the Development Agreement, DWH is committed to pay Newbury Racecourse a minimum of
£42.6 million (the “Minimum Land Value”), backed by a guarantee from parent company, Barratt
Developments PLC, over the course of the 10 year development programme in respect of the land
value attributable to the Residential Development Sites at the Racecourse. In addition, the DWH
Infrastructure Enhancements, at an estimated cost of approximately £20.0 million, will be paid for by
DWH.
The Company has the potential over the duration of the development to receive additional Land
Payments in excess of the Minimum Land Value and up to a threshold of £48.0 million (“Threshold
Land Value”), which will be determined on the basis of the Project Cash Flow Appraisal (“PCFA”)
in accordance with the Development Agreement. The PCFA is described in more detail in Section
3.10.4 of Part IV of this Circular. The Threshold Land Value may increase as a result of the
Reserved Matters Planning approval in respect of the Eastern Site, however, no such potential
uplift has been taken into account by the Company or Montagu Evans in its valuation report set
out in Part III of this document.
In addition to the payments to the Company in respect of the land value attributable to the
Residential Development Sites, DWH may make further payments to Newbury Racecourse
representing the Company’s 50 per cent. share of development profits determined in accordance
with the Development Agreement (while DWH would receive the other 50 per cent. share). The
Company’s share of development profits will arise if:
(i) the Company has been paid the sum equal to the Threshold Land Value; and
(ii) DWH has received for its development services its highest capped level of the DWH
Operating Margin (in each case as set out in the Development Agreement).
Any such share of development profits could be material and will depend, in particular, on the
extent to which the increase in selling prices achieved for housing units exceeds any increase in
development costs.
The Central and Western Sites have been transferred to DWH and work has commenced on the
DWH Infrastructure Enhancements with the construction of the car park in the centre of the
Racecourse. Construction of the residential housing units is expected to commence on the
Western Site during the last quarter of 2012.
The Reserved Matters Planning approval in respect of the Eastern Site will be sought at a later
date. The Eastern Site will be transferred to DWH once the Reserved Matters Planning permission
is obtained in respect of that site. Neither the Minimum Land Value nor the Threshold Land Value
will reduce irrespective of whether or not Reserved Matters Planning approval is successfully
obtained in respect of the Eastern Site and, depending on the terms of the Reserved Matters
Planning approval in respect of the Eastern Site, the Threshold Land Value may increase.
Therefore, the risks associated with obtaining the Reserved Matters Planning approval in respect
of the Eastern Site have been assumed by DWH.
12
The Company expects to make payments for corporation tax due in respect of chargeable gains
relating to the sale of the Residential Development Sites and also payments to Network Rail linked
to the construction of the new bridge and the easement over the railway. It is estimated that these
costs will total approximately £15.0 million over the life of the project.
7. VALUATION OF THE COMPANY
The value of the Company comprises:
(i) the value of the Racecourse itself on a continuing use basis before the Planned
Redevelopment and excluding the Residential Development Sites and Hotel Development
Site; and
(ii) the land value realised by the Company from the disposal of the Residential Development
Sites to DWH pursuant to the terms of the Development Agreement (less expected
payments in respect of taxation liabilities of the Company thereon and to Network Rail in
respect of the easement for the bridge over the railway). The land value attributable to the
Residential Development Sites (up to the maximum amount of the Threshold Land Value of
£48.0 million and not less than the Minimum Land Value of £42.6 million) is expected to be
received over a ten year period; and
(iii) any further value representing development profits to which the Company may become
entitled arising from the development of Residential Development Sites pursuant to the
Development Agreement; and
(iv) the market value established in respect of the proposed site for the 123 room mid-market
hotel (“Hotel Development Site”); and
(v) the liability in respect of net indebtedness of the Company as at 30 June 2012 being the date
of the interim accounts of the Company, prior to the Share Buy-Back and, if the Share Buy-
Back is approved, as adjusted for the value of the Compton Beauchamp Estates Loan used
to finance the Share Buy-Back and the Transaction Costs.
In terms of analysing the value of the Company on a per share basis, the issued ordinary share
capital of the Company as at the date of this document is 4,776,500 Ordinary Shares and, as if the
Share Buy-Back had been completed and the GPG Shares, had been cancelled, will be 3,348,326
Ordinary Shares.
The Company has commissioned independent valuation reports from Savills and Montagu Evans
which are set out in Parts II and III of this document.
(i) RacecourseThe Company commissioned from Savills a valuation report on the Racecourse which is set out in
Part II of this document. On the basis of the assumptions set out in Part II of this document, Savills
has valued the Racecourse (excluding the Residential Development Sites and the Hotel
Development Site) on a restricted, existing use market value basis at £14.5 million. Importantly,
this valuation does not reflect any material premium that might be paid by a prospective purchaser
to reflect the fact that the Racecourse is a rare asset and such assets are not usually available for
purchase. In addition, it does not reflect any of the value which the DWH Infrastructure
Enhancements are expected to deliver for the benefit of the Racecourse. For further commentary
from Savills on this point please see Section 18 of their report set out in Part II of this document.
(ii) Threshold Land Value in respect of the Residential Development SitesThe Company commissioned from Montagu Evans a valuation report on the Residential
Development Sites on which up to 1,500 residential units are to be constructed as part of the
Planned Redevelopment in accordance with the Development Agreement. The Montagu Evans
valuation report is set out in Part III of this document.
13
On the basis of the assumptions set out in Part III of this document, Montagu Evans has estimated
that the aggregate future cash flows arising from the development of the Residential Development
Sites pursuant to the Development Agreement and payable to the Company in respect of the Land
Payments, AFTER DEDUCTIONS for the estimated contractual payments due to Network Rail in
respect of the easement for the bridge over the railway and the estimated taxation liability of the
Company arising from chargeable gains in relation to the disposal of the Residential Development
Sites to DWH, would be £33.2 million over the expected 10 year development time period. This
calculation of the cash flows arising in respect of the Land Value has been determined based on
the expected development costs and expected revenues arising from the sale of housing units to
be built on the Residential Development Sites, the rate of sale of the housing units as well as the
expected costs relating to the DWH Infrastructure Enhancements, in each case determined as at
the date of this document.
Montagu Evans has discounted such estimated future cash flows (at an effective blended discount
rate of approximately 7.5 per cent. per annum) to derive a Net Present Value as at the date of this
document to the Company of £24.1 million (after deduction of the Net Present Value (discounted
at the same discount rate as set out above) of the estimated contractual payments due to Network
Rail and the estimated taxation liability of the Company arising from the disposal of the Residential
Development Sites to DWH).
Such estimated cash flows are dependent, inter alia, on no increase in development costs in
respect of the residential development of the Residential Development Sites nor in respect of the
costs related to the implementation of the DWH Infrastructure Enhancements nor any decline in
the expected revenues arising from the sale of housing units to be built on such sites. Importantly,
the PCFA, on which these calculations are based has been agreed between the Company and
David Wilson Homes as at the date of this document (although it will change as actual costs and
revenues are incurred during the 10 year development period). The PCFA has been reviewed by
Montagu Evans as described in Section 1.22 of their report set out in Part III of this document.
(iii) Share of development profits in respect of the Residential Development SitesAt the current time neither Montagu Evans, nor the Company, has ascribed any value to the
potential share of development profits attributable to the Company from the development of the
Residential Development Sites.
In practice, as set out in the Montagu Evans’ valuation report in Part III of this document, a share
of development profits is likely to become receivable by the Company in the event that revenues
arising from the sale of housing units on the Residential Development Sites increase by around
2.0 per cent over the anticipated 10 year development period (or approximately £7.0 million) over
and above expected revenues as at the date of such valuation report assuming that there is no
change in current estimated costs in relation to the development of the Residential Development
Sites and the DWH Infrastructure Enhancements.
(iv) Hotel Development SiteOn the basis of the assumptions and as set out in Part III of this document, Montagu Evans has
valued the proposed site for a 123 room mid-market hotel at £1.2 million.
(v) Indebtedness (net of cash balances) of the CompanyThe outstanding indebtedness (net of cash balances) of the Company has been determined on the
basis of the balance sheet of the Company as at 30 June 2012 and was £2.1 million. This
calculation is set out in note 5 to the Table on page 15 of this document.
(vi) Net Asset Value of the CompanyThe Net Asset Value of the Company before the Share Buy-Back and the Pro Forma Net Asset
Value as if the Share Buy-Back had been completed and the GPG Shares had been cancelled are
set out in the table below.
14
Pro Forma Net Asset Value as if the Share Net Asset Buy-Back Value before had been Share Buy-Back completed £ £Independent valuation of the Racecourse on a continuing
use basis(Notes 1 and 2) £14.50m £14.50m
Independent valuation of the Residential Sites to be developed
by DWH(Note 3) £24.10m £24.10m
Independent valuation of the Hotel Development Site(Note 4) £1.20m £1.20m ———— ————Total Asset Value £39.80m £39.80m
Net Indebtedness at 30 June 2012(Note 5) (£2.11m) (£2.11m)
Compton Beauchamp Estates Loan and Transaction Costs(Note 6) n/a (£6.95m) ———— ————Total Net Asset Value £37.69m £30.74m
———— ————Total Issued Ordinary Shares(Note 7) 4.78 million 3.35 million
Total Net Asset Value for each issued Ordinary Share £7.89 £9.18
Increase in Net Asset Value for each issued Ordinary Share as if
the Share Buy-Back had been completed and the GPG Shares
had been cancelled 16.3%
Notes:
(1) The Savills’ valuation report in respect of the Racecourse (excluding the Residential Development Sites and the Hotel
Development Site) on a continuing use basis is set out in Part II of this document.
(2) As noted in Section 3.8 of Part IV of this document, no corporation tax is expected to arise on a disposal of the
Racecourse site (excluding the Residential Development Sites and the Hotel Development Site) due to the tax base
cost the Company has in its land assets (excluding the Residential Development Sites and the Hotel Development
Site). Furthermore, it is considered unlikely that a tax liability would occur in practice, since any sale of the
Racecourse would normally be achieved by means of a share sale.
(3) The Montagu Evans’ valuation report in respect of the future receipts arising from the sale of the Residential
Development Sites is set out in Part III of this document. The valuation of £24.1 million has been determined on an
NPV basis using a blended discount rate of approximately 7.5 per cent. per annum and after deduction of the
expected Network Rail Payments and Tax on Disposal relating to the Residential Development Sites (also discounted
at approximately 7.5 per cent. per annum). Tax on Disposal has been determined by the Company’s professional
taxation advisers. The expected Network Rail Payments have been determined by Montagu Evans (as described in
Section 1.25 of Part III of this document).
(4) The Montagu Evans’ valuation report in respect of the Hotel Development Site is set out in Part III of this document.
No corporation tax is expected to arise on a disposal of the Hotel Development Site due to the tax base cost the
Company has in its land assets.
(5) The “Net Indebtedness” has been determined on the basis of the balance sheet of the Company as at 30 June 2012
without taking any account of the financial effects of the Development Agreement having become unconditional with
effect from 18 September 2012. The calculation of the “Net Indebtedness” is as set out below:
Net Indebtedness calculated as 30 June 2012
(Add) Cash at bank and in hand £0.73m
(Subtract) Creditors amount falling due within one year – Short term loans (£0.08m)
(Subtract) Creditors amount falling due after more than one year – Long term loans (£2.35m)
(Subtract) Provisions for liabilities (£0.21m)
(Subtract) Pension deficit (£0.20m) ————Total Net Indebtedness (£2.11m)
————(6) The Compton Beauchamp Estates Loan Agreement is being entered into so that the Company can fund the Share
Buy-Back. Transaction Costs are estimated to be £450,000 (excluding VAT, save for irrecoverable VAT).
(7) The GPG Shares will be cancelled as soon as practicable following completion of the Share Buy-Back. Hence, the
total number of Ordinary Shares in issue following completion of the Share Buy-Back will reduce from 4,776,500 to
3,348,326.
15
8. CURRENT TRADING AND PROSPECTS
Whilst the wider economic climate remains challenging, the Company’s recent investment in
refurbishing facilities at the Racecourse, continued focus on high quality racing and the progress
made with the “Party in the Paddock” live music events has been rewarded with increased
revenues within the underlying racing business. Although the conferencing and events business
performed poorly in the first six months of 2012 due to the on-going market conditions, the
Company remains confident with the long-term strategy of focusing on fewer, though higher
margin, conferences and events.
For the six months ended 30 June 2012, the Company achieved revenues of approximately
£4.6 million. This compares to £5.7 million for the corresponding period in the prior financial year.
In particular:
• revenues relating to racing activities were up 5 per cent. as a result of a strong visitor
response to the refurbishment programme which delivered an underlying increase in
raceday public food and beverage revenues of 20 per cent;
• the Racecourse held one less music event in the first six months of 2012 than it did in 2011,
as it had planned in the second six months of 2012 an additional “Party in the Paddock”
event with Lionel Richie, replacing the Newbury Live event of May 2011. Unfortunately, due
to ill health, Lionel Richie cancelled his performance although racing went ahead and was
enjoyed by a large crowd. The Company does not anticipate any material loss as a result of
the cancellation of that music element; and
• conference and events revenues were lower due to weaker market conditions.
The Company continues to enjoy an on-going relationship with Turf TV, which supplies live
horseracing pictures from the Racecourse to licensed betting shops in the UK and Ireland. The
new media rights agreement with Turf TV is expected to generate revenues of approximately
£9.0 million over the five year term from 1 April 2013. This reflects a significant uplift on the circa
£5.0 million, that will be received over the course of the current five year contract. Media rights will
play an important part in the longer term profitability of the Company.
As noted at the time of publication of the interim financial results on 27 September 2012, the
Company continues to trade in line with the Board’s expectations and the Board looks forward to
the future with optimism.
9. DIVIDENDS AND RETURN OF CAPITAL TO SHAREHOLDERS
The Board is appreciative of the loyal and strong support of Shareholders over many years as well
as the additional capital provided at the time of the 2009 Rights Issue. The Board unanimously
intends to reward this loyalty with two forms of return:
(i) Dividend from Trading ActivitiesThe continued progress made by the core, non-property, trading activities, together with the
enhanced revenues from the 2013 media rights agreement with Turf TV, and the additional
opportunities provided for the trading business by the DWH Infrastructure Enhancements and the
Racecourse Refurbishment Works, are expected to assist the Board in recommencing the
payment of dividends from the Company’s trading activities, and adopting a progressive dividend
policy.
(ii) Return of Capital from Property ActivitiesIt remains the Board’s strategy to return capital to Shareholders in a tax efficient manner, either as
dividends or as capital payments as the development of the Residential Development Sites
generates cash receipts for the Company in excess of its requirements. The Board anticipates that
these returns will be made from 2016, phased in tranches in accordance with the cash flows arising
from the Development Agreement, and that, in aggregate, they will be significant in comparison to
the current share price of the Company.
Rule 24.3(a)
and (c)(ii)
16
10. BACKGROUND AND EXPLANATION ABOUT A WAIVER OF MANDATORY OFFER
PROVISIONS SET OUT IN RULE 9 OF THE TAKEOVER CODE
Compton Beauchamp Estates and Erik Penser are deemed to form a concert party for the
purposes of the Takeover Code (together the “Compton Beauchamp Estates Concert Party”). As
at the Latest Practicable Date, Erik Penser and Compton Beauchamp Estates, which is a company
controlled by Mr Penser’s wife, were interested in 1,370,400 Ordinary Shares representing
28.7 per cent. of the issued ordinary share capital of the Company. Further information about
Compton Beauchamp Estates and Erik Penser is set out in Section 2 of Part IV of this document.
The proposed Share Buy-Back gives rise to certain considerations and consequences under the
Takeover Code in respect of the shareholding of the Compton Beauchamp Estates Concert Party.
Under Rule 9 of the Takeover Code, where:
• any person acquires, whether by a series of transactions over a period of time or not, an
interest in shares which (taken together with shares in which persons acting in concert with
him are interested) carry 30 per cent. or more of the voting rights of a company; or
• any person, together with persons acting in concert with him, is interested in shares which
in aggregate carry not less than 30 per cent. of the voting rights of a company but does not
hold shares carrying more than 50 per cent. of the voting rights of a company and such
person, or any persons acting in concert with him, acquires an interest in any other shares
in the company which increases the percentage of shares carrying voting rights in which he
is interested,
such person would normally have to extend a general offer to all shareholders to acquire their
shares for cash at not less than the highest price paid by him, or parties acting in concert with him,
during the 12 months prior to the announcement of the offer.
However, if a shareholder or group of shareholders acting in concert reduces his or their interest
in shares, but without reducing his or their interest in shares to less than 30 per cent. of the shares
carrying voting rights of the company, such shareholder or shareholders may subsequently acquire
an interest in shares without incurring an obligation to make a general offer, provided that: (i) the
total number of shares in which interests are acquired in the preceding 12 months does not exceed
one per cent. of the voting share capital for the time being; and (ii) the percentage of shares in
which the relevant shareholder or concert party is interested resulting from any such acquisition
does not exceed the highest percentage of shares in which such shareholder or concert party was
interested in the previous 12 months.
Under Rule 37 of the Takeover Code, when a company purchases its own voting shares, any
resulting increase in the percentage of shares carrying voting rights which a person or group of
persons acting in concert is interested in, will be treated as an acquisition for the purposes of Rule
9. This is why in the context of the proposed Share Buy-Back, an obligation would usually arise on
the Compton Beauchamp Estates Concert Party to make a general offer pursuant to Rule 9 of the
Takeover Code.
If the Share Buy-Back was not also conditional on the approval of the Waiver Resolution by the
Independent Shareholders (voting on a poll in a general meeting) of a waiver of Rule 9 of the
Takeover Code, then the Share Buy-Back, when completed, would give rise to an obligation on the
Compton Beauchamp Estates Concert Party to make a general offer for the entire issued share
capital of the Company in accordance with Rule 9 of the Takeover Code.
Key effects of the proposed Share Buy-BackIt should be noted that if the Share Buy-Back and the Waiver Resolution are approved at the
General Meeting then the Independent Directors believe that it is very unlikely that there would be
any successful takeover of the Company without the support of Erik Penser and Compton
Beauchamp Estates.
Rule 24.2(a)
and (b)
17
The interests in Ordinary Shares of the Compton Beauchamp Estates Concert Party as at the
Latest Practicable Date together with the maximum number of Ordinary Shares which will be held
by the Compton Beauchamp Estates Concert Party immediately following completion of the Share
Buy-Back and cancellation of the GPG Shares (and, in each case, the percentages of the voting
rights in the Company attributable to such interests) are set out in the table below:
Percentage Percentage of issued of issued share capital share capital No. of pre Share post Share Ordinary Shares Buy-Back Buy-BackCompton Beauchamp Estates Concert Party(1) 1,370,400 28.7% 40.9%
———— ———— ————Notes
(1) Erik Penser holds 302,327 Ordinary Shares personally. He is a director and a shareholder of Compton Beauchamp
Estates which has a holding of 1,068,073 Ordinary Shares in the Company.
Panel Waiver In accordance with Rule 37 of the Takeover Code, the Panel has agreed to waive any requirement
on the Compton Beauchamp Estates Concert Party to make a general offer to all shareholders of
the Company which would otherwise arise as a result of completion of the Share Buy-Back,
provided that the Independent Shareholders have passed, on a poll, the Waiver Resolution.
Accordingly, Independent Shareholders are being asked to approve the Waiver Resolution at the
General Meeting. Only Independent Shareholders will be entitled to vote on the Waiver Resolution
and this excludes Compton Beauchamp Estates, Erik Penser and GPG (UK) Holdings plc and its
nominees.
The waiver by the Panel will (subject to the discretion of the Panel) be invalidated if any purchases
of Ordinary Shares are made by any member of the Compton Beauchamp Estates Concert Party
in the period between the date of this document and the date of the General Meeting. The waiver
by the Panel will also not apply to the purchase of Ordinary Shares by the Compton Beauchamp
Estates Concert Party itself, which would remain subject to the provisions of Rule 9 of the Takeover
Code as described above, for so long as they continue to be treated as acting in concert.
The effect of the Waiver Resolution, if approved by Independent Shareholders, is that there would
be no requirement on the Compton Beauchamp Estates Concert Party to make the general offer
under Rule 9 of the Takeover Code that would otherwise arise as a result of increases in the
aggregate holding of the Compton Beauchamp Estates Concert Party resulting from a purchase
by the Company of the GPG Shares pursuant to the Share Buy-Back.
11. CURRENT INTENTIONS OF ERIK PENSER AND COMPTON BEAUCHAMP ESTATES
The Compton Beauchamp Estates Concert Party is fully supportive of the management and
strategic direction of the Company.
Erik Penser and Compton Beauchamp Estates have each informed the Board that they intend to
allow the Board to run the Company in line with the Company’s current proposed strategy, as
detailed further in Section 6 of Part I of this document and as generally communicated to
Shareholders up to and including the date of this document.
Neither Erik Penser nor Compton Beauchamp Estates has any intentions regarding Newbury
Racecourse’s business that would affect:
• the current business activities of the Company;
• the current strategic plans of the Company;
• the location of Newbury Racecourse’s business or operating subsidiaries;
Section 4(b)
Section 4(d)
Section 4(e)
Section 2(d)
Rule 24.2(a)
and (b)
Rule 24.2(a)
and (b)(ii)
18
• the maintenance of any trading facilities for the Company’s Ordinary Shares; or
• the employment of the Company’s staff, including the continued employment of, or the
conditions of employment of, any of the Company’s employees, senior management or
Directors or the composition of the Board of the Company.
Neither Erik Penser nor Compton Beauchamp Estates has any intentions to seek to procure the
disposal of or otherwise change the use of any of the fixed assets of Newbury Racecourse save
in connection with the Planned Redevelopment as described in Section 6 of Part I of this
document.
Compton Beauchamp Estates and Erik Penser have each confirmed to the Company that if the
Company acquires all of the Ordinary Shares currently held (directly or indirectly) by GPG, then
each of Compton Beauchamp Estates and Erik Penser (together with certain persons connected
with them and any parties acting in concert with them) will not for a period of 365 days following
completion of the Share Buy-Back announce a firm intention to make an offer for the Company,
seek to make any offer or possible offer for the Company or acquire any interest in Ordinary
Shares of the Company if such acquisition would result in a mandatory offer for the Company. The
confirmations given to the Company by Compton Beauchamp Estates and Erik Penser are subject
to their respective rights to make an offer for the Company if any unrelated third party announces
a firm intention to make an offer for the Company or otherwise in accordance with Note 2 to
Rule 2.8 of the Takeover Code.
12. GENERAL MEETING
You will find set out at the end of this document a notice convening a General Meeting to be held
on 15 November 2012 at 10.00 a.m. at The Racecourse, Newbury, Berkshire RG14 7NZ. The
General Meeting is being held for the purpose of considering and, if thought fit, passing the
Resolutions which are needed to effect the Share Buy-Back. All of the Resolutions must be passed
for the Share Buy-Back to proceed.
A summary and explanation of the Resolutions is set out below. Please note that this is not the full
text of the Resolutions and you should read this Section in conjunction with the Resolutions
contained in the Notice of General Meeting at the end of this document.
Special Resolution 1:
Approval of the Share Buy-BackThat, conditional upon the passing of Resolution 2, the contract entered into between the
Company and GPG (UK) Holdings plc on 29 October 2012 relating to the proposed purchase by
the Company of 1,428,174 Ordinary Shares beneficially owned by GPG (UK) Holdings plc, be and
is hereby authorised and approved in accordance with Section 694 (2) of the Companies Act 2006,
provided that the authority conferred by this Resolution shall expire 12 months after the date on
which this Resolution is passed.
Ordinary Resolution 2:
Approval of Waiver of Rule 9 of the Takeover CodeThat, subject to the passing of Resolution 1, the waiver granted by the Panel on Takeovers and
Mergers of the obligation that would otherwise arise on Compton Beauchamp Estates Limited, Erik
Penser and all parties acting in concert with them (being the “Compton Beauchamp Estates
Concert Party”) to make a general offer to the Shareholders of the Company pursuant to Rule 9 of
the City Code on Takeovers and Mergers as a result of the share buy-back as described in the
Circular to Shareholders dated 29 October 2012, pursuant to which the maximum potential holding
of the Compton Beauchamp Estates Concert Party is 1,370,400 Ordinary Shares (representing
40.9 per cent. of the issued share capital of the Company) be and is hereby approved.
Rule 24.2(a)
and (b)(iv)
Rule 24.2(a)
and (b)(i)
Rule 24.2(a)
and (b)(iii)
19
The purpose of this Ordinary Resolution is to approve the Rule 9 Waiver, which will be taken on a
poll and in respect of which only the Independent Shareholders will be entitled to vote in
accordance with the Takeover Code.
For these purposes, the Independent Shareholders means all Shareholders except for GPG (UK)
Holdings plc (as the vendor of the GPG Shares) and Erik Penser and Compton Beauchamp
Estates (who are acting in concert and in whose favour the Rule 9 Waiver is being sought).
For additional information regarding the Rule 9 Waiver refer to Section 10 of Part I of this
document.
The Share Buy-Back is conditional on the passing of all of the Resolutions.
Voting commitments of Compton Beauchamp Estates and Erik PenserCompton Beauchamp Estates and Erik Penser have given irrevocable commitments in relation to
their aggregate holding of 1,370,400 Ordinary Shares, representing approximately 28.7 per cent.
of the existing issued share capital of the Company) to vote in favour of Resolution 1.
Compton Beauchamp Estates and Erik Penser are not entitled to vote in respect of the Waiver
Resolution as they are not deemed to be Independent Shareholders. Accordingly, Compton
Beauchamp Estates and Erik Penser have separately undertaken to the Company that, in
accordance with the requirements of the Takeover Code, they will not vote on the Waiver
Resolution.
Voting commitments of the Independent DirectorsThe Independent Directors have given irrevocable commitments to the Company in relation to their
respective personal holdings of Ordinary Shares (which, in aggregate, amount to 389,387 Ordinary
Shares, representing approximately 8.2 per cent. of the existing issued share capital of the
Company) to vote in favour of all the Resolutions.
Voting by GPGGPG (UK) Holdings plc is not permitted to vote in respect of either of the Resolutions (in
accordance with the Companies Act and Takeover Code).
Form of ProxyYou will find enclosed a Form of Proxy for use at the General Meeting. Whether or not you intend
to be present at the General Meeting, you are requested to complete the Form of Proxy in
accordance with the instructions printed on it and return it as soon as possible and in any case so
as to be received by the Company’s registrars at Capita Registrars, PXS, The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4TU United Kingdom, no later than 10.00 a.m. on
13 November 2012. The completion and return of a Form of Proxy will not prevent you attending
the General Meeting and voting in person if you wish to do so.
Further informationYour attention is drawn to the further information set out in Parts II, III and IV of this document.
13. RECOMMENDATION
The Independent Directors, who have been so advised by Strata Partners, consider that the Share
Buy-Back, the terms of the Compton Beauchamp Estates Loan, Rule 9 Waiver and the Resolutions
are fair and reasonable and in the best interests of the Independent Shareholders and the
Company as a whole. In providing such advice to the Independent Directors, Strata Partners has
taken into account the Independent Directors’ commercial assessments.
Section 2(d)
Section 2(e)
Rule 25.2
Note 4
Section 4(a)/
Rule 3
20
Accordingly, the Independent Directors unanimously recommend that Independent
Shareholders vote in favour of all of the Resolutions to be proposed at the General Meeting
as they have irrevocably committed to do in respect of their own beneficial holdings.
The beneficial holdings of the Independent Directors amount to, in aggregate, 389,387 Ordinary
Shares representing approximately 8.2 per cent. of the current issued ordinary share capital of the
Company as at the date of this document.
I look forward to seeing those of you who can attend the General Meeting in person at 10.00 a.m.
on 15 November 2012 at The Racecourse.
Yours sincerely,
Dominic Burke
Chairman
Important: The Notice of General Meeting appears at the end of this document. You will also
find enclosed a Form of Proxy for use at the General Meeting on 15 November 2012 at The
Racecourse. Whether or not you intend to be present at the General Meeting, you are requested
to complete the Form of Proxy in accordance with the instructions printed on it and return it as
soon as possible and in any case so as to be received by the Company’s registrars at:
Capita Registrars
PXS
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
by no later than 10.00 a.m. on 13 November 2012.
The completion and return of a Form of Proxy will not prevent you attending the General Meeting
and voting in person if you wish to do so.
Section 2(e)
Rule 25.4(a)
and (c)(v)
21
Intentionally left blank
22
PART II
SAVILLS’ VALUATION REPORT ON THE RACECOURSE
(EXCLUDING THE RESIDENTIAL DEVELOPMENT SITES
AND THE HOTEL DEVELOPMENT SITE)
Wytham Court
11 West Way
Oxford OX2 0QL
DX 96205 – Oxford West
savills.com
The Directors
Newbury Racecourse PLC (the “Company”)
The Racecourse
Newbury
Berkshire
RG14 7NZ
29 October 2012
Dear Sirs,
NEWBURY RACECOURSE, NEWBURY, BERKSHIRE RG14 7NZ
(the “Racecourse” or the “Property”)
1. INSTRUCTIONS AND TERMS OF REFERENCE
1.1 InstructionsIn accordance with the instructions as confirmed in our Terms of Engagement, we have
made all relevant enquiries in order to provide you with our opinion of the current Market
Value of the unencumbered freehold interest of the Property as described in this report.
1.2 Basis of ValuationIn accordance with your instructions, we have provided an assessment of:
The current Market Value of the freehold interest in the Property with full vacant possession.
We understand that this report will form part of a public circular to be dispatched to
shareholders of the Company as at the date of this report.
Market Value is defined by the Royal Institution of Chartered Surveyors (the “RICS”) as:
“The estimated amount for which a property should exchange on the date of valuationbetween a willing buyer and a willing seller in an arm’s-length transaction after propermarketing wherein the parties had each acted knowledgeably, prudently and withoutcompulsion.”
23
In respect of the trading business, once fully established this type of property normally
changes hands in the open market as a fully-equipped operational business unit, and is
therefore valued including:
• all plant, equipment, furniture, furnishings, fixtures and fittings on the assumption that
these are free from lien and encumbrance;
• the market’s perception of the trading potential excluding any personal goodwill;
• all licences, consents, certificates and permits necessary to allow the property to trade
properly on the assumption that these will be received as required; and
• all existing staff, membership and bookings but excluding stock in trade, consumables
and any additional value attributable to works of art, historic artefacts and the like.
1.3 General Assumptions and ConditionsOur valuation has been carried out on the basis of the Standard Conditions and Assumptions
set out in our Terms of Engagement.
1.4 Date of ValuationOur opinion of value is as at 29 October 2012. The importance of the date of valuation must
be stressed as property values can change over a relatively short period.
1.5 Purpose of ValuationYou instruct us that our valuation is required for inclusion within a public circular to be
despatched to the shareholders of the Company.
1.6 Conflicts of InterestYou are aware that we have previously provided valuation advice to you in relation to the
Property in 2007, 2009 and in May 2012.
It should also be noted that Savills Research have provided David Wilson Homes with
housing market research in respect of this site. We do not consider that the above provides
any conflict of interest either in respect of the Property or the Company preventing us from
providing you with an independent valuation of the Property in accordance with the RICS
Red Book. We will value as External Valuers.
1.7 Valuer Details and InspectionThe due diligence enquiries referred to below were undertaken by Alan Plumb FRICS and
Madeleine Uren MRICS. The valuation has also been reviewed by James Higham MRICS
and Tom Lindley MRICS.
The Property was last inspected on 8 May 2012 by Alan Plumb FRICS and Madeleine Uren
MRICS as part of the original instructions dated 27 April 2012. As instructed a full inspection
of the Property was not undertaken. We undertook a limited inspection of the areas of the
Property which had changed since our previous inspection in 2009 as detailed in the report
to the Company dated 18 December 2009 which was published for the purposes of the
Rights Issue (“2009 Report”). A copy of our 2009 Report is set out in Part VIII of the Rights
Issue prospectus dated 18 December 2009 (a copy of which is available on the Company’s
website at www.racecoursenewbury.co.uk/About-Newbury/Investor-Relations/Circular-
Documents.)
The weather on the date of our inspection was dry.
The valuer has the necessary knowledge, expertise, experience and understanding of this
type of property in this location to provide the valuation as set out in this report.
24
1.8 Extent of Due Diligence Enquiries and Information SourcesOur instructions are to prepare a condensed up to date valuation report without further
inspection and with no additional due diligence except in respect of market conditions, the
golf lease and an update of trading projections.
At the date of our inspection an interview was held with Claire Spencer, Group Financial
Controller at the Company, which has provided much of the verbal information forming the
basis of this report.
We have otherwise relied upon the due diligence undertaken for our previous reports.
Please note that, where possible, for our previous reports we have verified and
supplemented the information given to us. However, if further information comes to light of
which we are not presently aware, we reserve the right to amend our valuations accordingly
in the light of such additional information.
Where reports and other information have been provided, we summarise the relevant details
in this report. We do not accept responsibility for any errors or omissions in the information
and documentation provided to us, nor for any consequences that may flow from such errors
and omissions.
The way in which we have approached these matters is set out in the relevant Sections of
our report below.
1.9 RICS ComplianceThis report has been prepared in accordance with Royal Institution of Chartered Surveyors’
(“RICS”) Valuation Standards, 8th Edition (the “RICS Red Book”) published in March 2012,
effective from 30 March 2012 (incorporating the International Valuation Standards (“IVS”)),
in particular in accordance with the requirements of Valuation Standards VS6 entitled
Valuation Reports, Appendix 5 entitled Valuations for Commercial Secured Lending and
VS4.2 entitled Valuations for Secured Lending. Our valuation will comply with IVS
Standards.
Our report in accordance with those requirements is set out below.
2. LOCATION
Newbury is the largest town in the district of West Berkshire and acts as a service centre for its
rural hinterland, with a population of around 30,000. It is strategically located at a mid-point
between Bristol to the West (approximately 65 miles) and London to the East (approximately 61
miles) on the M4 motorway, from which the town centre is about 4.5 miles (7km) from Junction 13.
This junction also provides the link with the major North-South artery provided by the A34 road.
Newbury Racecourse railway station is located adjacent to the Property, which provides a direct
service to both London Paddington and the West Country. Newbury railway station is located to
the South of Newbury town centre and provides a comprehensive rail service.
The site can currently accommodate helicopter landings on a helipad located in the centre of the
Racecourse. Heathrow and Southampton airports are within a one hour drive time in normal traffic
conditions.
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The following table shows the proximity of the Racecourse to major urban conurbations of local
and national interest:
Generator Distance (miles) Drive Time (Minutes)Basingstoke 17.4 25 mins
Reading 23.3 28 mins
Oxford 28.1 34 mins
Southampton 40.6 47 mins
Bristol 65.4 1 hour 15 mins
London 60.7 1 hour 22 mins
Newbury’s economic viability was historically linked with major government research projects, and
in particular the nuclear defence industry. This skill base has attracted high-tech firms, as is typical
of other locations close to the M4 motorway. The town’s economy is now driven by one key
occupier, Vodafone, which dominates employment and office occupation. The town also witnessed
the opening of Parkway Newbury a retail and residential development in October 2011 with over
475,000 sq ft (44,000 m2) of retail and restaurant accommodation.
By way of summary profile, the Acorn classification (an internet based geodemographic tool) of the
postcode is as follows:
“Often, many of the people who live in this sort of postcode will be wealthy working families withmortgages. These are known as type 2 in the ACORN classification and 1.3 per cent. of the UK’spopulation live in this type.
These families are found throughout the UK including towns such as Reading, Milton Keynes,Northampton, Warrington and parts of Northern Ireland.
These are affluent families, with school age children, enjoying a good lifestyle. They are foundthroughout the UK. Employment is largely in senior managerial and professional occupations, andmany of the households in this type have both adults working. Their large detached houses,usually with four or more bedrooms, are mortgaged rather than owned outright. Car ownership ishigh, with two or more cars common. Models are likely to be large, new, company owned andrelatively expensive. These affluent families have high levels of savings, including ISAs, stocksand shares and unit trusts. They will use brokers for making their investments as well as buyingdirect, often using the Internet. They have good pension provision, either company or private, andmost have private medical insurance. The home computer is a key item for these families. Theyuse it for careers and job planning, education and reference (for example, researching cars andholidays), home finance, buying gifts and making leisure bookings online. Popular newspapers arethe Telegraph and The Times, including their Sunday versions, as well as the Financial Times andDaily Mail. Readership of magazines such as Ideal Home and Marie Claire is also high. They leadan active lifestyle, enjoying walking, playing golf and going to the gym. These consumers enjoyingdrinking wine which they often buy by the case through mail order. They also enjoy eating out inrestaurants on a regular basis.”
The Racecourse is well-located in relation to a substantial population catchment and its target
market, with excellent transport links.
3. SITUATION
The Racecourse itself is located approximately half a mile (1km) to the South East of Newbury
town centre, separated by the A339, a dual carriageway running North to South through the town.
The A34 by-pass, which was completed in 1998, has alleviated much of the traffic congestion
which previously affected Newbury and access to the Racecourse.
Current access to the Property is via a secondary road off the A339. Development plans for the
Property include a new vehicular bridge, which would come from Hambridge Road (an industrial
26
area) over the railway line into the Northern side of the Racecourse. This would allow easier
access for traffic to arrive and disperse by means of the A34 and A4.
The Northern boundary of the Racecourse is formed by the main London to Taunton railway line.
Beyond this lies the Hambridge Road industrial estate. To the West of the Property are historic
residential areas, East Fields and Stroud Green, which is open common land understood to be
owned by the Council. To the South is woodland and farm land forming a buffer to Greenham
village and further to the South the former Greenham Common airbase, now restored in part for
conservation. To the East is farmland and a lake forming part of a gravel pit.
4. DESCRIPTION
4.1 OverviewThe Property comprises an existing racecourse and ancillary buildings and facilities.
The Property was developed as a racecourse in 1904 and racing commenced in 1905. We
understand that the site was originally part of a landed estate.
In outline, the Property presently comprises a racecourse with four spectator stands (one
disused), extensive car parking, stabling facilities, offices, three residential properties (three
having been demolished since our last report as part of site clearance for the planned
redevelopment and one sold since our last report) plus flats and hostel accommodation for
racing staff, an 18 hole golf course, driving range, golf clubhouse, children’s day care
nursery, an industrial site and ancillary office and storage facilities.
The buildings are concentrated to the North West and along the Northern side of the
Property. The houses are all of brick construction as are the majority of the stables, stable
staff accommodation and staff restaurant all of which lie towards the North West corner of
the Property. There are four grandstand buildings of varying age alongside the main
concourses, with parade rings, saddling boxes and associated buildings behind, together
with a number of additional buildings including offices and hospitality tents. Further to the
East lies a golf clubhouse and driving range with the golf course lying within and to the North
of the Racecourse itself.
The Racecourse is pear shaped and two miles in length including a straight mile, and
providing jump, flat and hurdle racing.
Binding agreements are in place to develop much of the Northern edge of the Racecourse
to accommodate housing and a site for a hotel. Once developed, the Racecourse itself will
be unchanged but its facilities will have been moved and upgraded in part. The Property will
then cover approximately 266 acres. The Property will then comprise three spectator stands,
new car parks, stabling, new offices, three residential properties, new stable flats, new stable
staff accommodation in 36 room budget hotel style accommodation, new children’s day care
nursery, a smaller commercial site (partly having been used to provide an access bridge)
and ancillary storage facilities.
4.2 Sales HistoryWe have not been made aware of any recent sales history of the property the subject of this
report. We have been advised that Pigeon Farm House, included in our 2009 report, was
sold recently for £620,000.
4.3 SiteThe majority of the site is on one parcel of land, which is irregular in shape and gently
undulating. In addition there are two smaller parcels.
27
The principal access to the Racecourse is from the West although there are a number of
subsidiary access points including from Greenham Road at the South East.
Outlying to the North and split from the main site by the railway is the Opperman industrial
storage site, acquired in preparation for the proposed bridge to provide a new access. This
area extends in all to about 0.89 hectares (2.11 acres).
A further parcel of land to the South, split from the main site by modern (1980s to present
day) housing estates is land known as ‘Church Yard’. This area extends in all to
1.11 hectares (2.75 acres) and appears currently unmanaged.
The overall boundaries of the Racecourse are set out on the Site Plan contained on page 91
of this Circular. We have not seen a copy of the title plans and have not verified all the
boundaries as shown. We have assumed the information provided is correct and have
calculated the areas off the plan.
5. CONSTRUCTION AND SPECIFICATION, ACCOMMODATION, CONDITION AND
OCCUPATION
As instructed, we have not undertaken a full inspection of the Property. We were able to inspect
areas where significant modifications or refurbishment had occurred since our last inspection in
2009 or where such modifications are planned. We have been advised by Claire Spencer, the
Group Financial Controller which buildings will be demolished or refurbished as part of the Planned
Redevelopment (detailed below) at the Property.
We summarise these modifications and/or proposed modifications only below.
Property Current Use Proposed Use after Planned RedevelopmentRound Oak Bungalow Demolished NA
126 Boundary Road Demolished NA
Southmead Demolished NA
Pembury House Residential Property Residential Property but half of garden to be
lost to Planned Redevelopment
1 & 2 Round Oak Cottages Residential Property Residential Property but one garage to be
lost to Planned Redevelopment
On Site Accommodation On Site Accommodation – will be
refurbished as part of Planned
Redevelopment
The Stables Stabling Stabling – will be refurbished as part of the
Planned Redevelopment
Stable Staff Accommodation On Site Accommodation Demolished and replaced with new
accommodation building
Stable Staff Restaurant Restaurant Demolished and replaced with new catering
facilities, with costs to be met by DWH
Estate Office and Yard Maintenance Demolished and replaced with new facilities
Gate House (entrance) Security Demolished
Premier Enclosure Building Visitor Use Conversion to additional food and beverage
retail unit.
Centenary Bar Entertainment/Catering No proposed changes
Portakabin Office Administration Will be removed as part of the Planned
Redevelopment
Racecourse Stable Yard
Accommodation
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Property Current Use Proposed Use after Planned RedevelopmentMain Office Administration Conversion to additional food and beverage
retail unit or staff area
Pavilions Visitor Use Will be removed as part of the Planned
Redevelopment
Saddling Boxes Saddling Area Demolished and replaced with new facilities
Turnstiles Racing Use Will be removed as part of the Planned
Redevelopment
Mower Shed Maintenance Will be removed as part of the Planned
Redevelopment
Pre-Parade Ring Racing Use Will be relocated as part of the Planned
Redevelopment
Parade Ring Racing Use Will be re-orientated as part of the Planned
Redevelopment
Channel 4 Commentary BoxTV Commentary Possibly relocated as part of the Planned
Redevelopment
Tote Building Grandstand Converted to additional food and beverage
retail unit. Tote to be relocated
Hampshire Stand Grandstand Conversion to VIP area
Pall Mall Stand Grandstand No proposed changes
The Berkshire Stand Grandstand To be refurbished as part of the Planned
Redevelopment
Tote Building (2) Entertainment/Catering No proposed changes
Dubai Duty Free Stand Grandstand No proposed changes
Medical Building Racing Use Demolished and replaced with new facilities
Geoffrey Freer Stand Unused Demolished
Dingley Building Unused Demolished
Golf Shed Golf Use Demolished
Turnstiles Racing Use Will be relocated as part of the Planned
Redevelopment
Coach Car Park Parking Will be relocated as part of the Planned
Redevelopment with the costs to be met by
DWH
Transfer Hut Racing Use Demolished
Pump House Bore Hole Will be relocated as part of the Planned
Redevelopment with the costs to be met by
DWH
Rocking Horse Day Childrens Nursery Will be relocated as part of the Planned
Nursery Redevelopment with the costs to be met
by DWH
Copper King Building Fish & Chip Shop and Bar Demolished
Golf clubhouse Golf Use Demolished
Driving Range Golf Use Demolished
Golf course Golf Use Loss of several holes. These holes could be
reconfigured and options for external
funding and operations are currently being
reviewed. We have assumed it will not
continue for the purpose of this report.
Pigeon Farm House Sold NA
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Property Current Use Proposed Use after Planned RedevelopmentChurch Yard Land Pasture Land No proposed changes
Opperman Site Industrial Land Half of this area will be used for the
proposed bridge over the railway line.
Land Inert Material Storage No proposed changes
5.1 Details of the Planned RedevelopmentDavid Wilson Homes are developing the Residential Development Sites and, as part of the
Development Agreement, will be funding the DWH Infrastructure Enhancements on both the
land surrounding the Racecourse and on the Racecourse itself. We are advised that the land
used for the development is to the North of the Property, primarily the North West corner of
the site. We are advised that DWH Infrastructure Enhancements comprise in particular:
• construction of a new bridge: The new bridge will give access to the Residential
Development Sites and provide enhanced access to the Racecourse;
• new parking facilities for visitors: The main current premier car parking area to the
West of the Racecourse will be lost as this will become primarily a residential area. A
new parking area will be created in the centre of the Racecourse towards the Western
end of the course. There will be a new entrance to the grandstands on the North side
of the track. Customers will be provided with car park labels prior to arrival and will
walk across the track to the new ticket entrance. There will also be new parking
facilities to the North and South of the Central residential site for use by customers
arriving over the new bridge;
• a new multi-functional accommodation facility for stable staff: Also within the
Western Gateway, new stable staff accommodation will be constructed. This will
replace the existing accommodation. It is also planned that this accommodation could
be used by the public on non-racing days as budget hotel accommodation to increase
turnover;
• a new children’s nursery: Within the area to the North of the Racecourse (known as
the Western Gateway) will be a new nursery building to which the Rocking Horse
Nursery will move. This will be owned and operated by the Company;
• refurbished stables;
• a new maintenance and estate yard;
• enhanced road infrastructure;
• golf course: The golf course is expected to lose several holes as part of the planned
development. These holes could be reconfigured and options for external funding and
operations are currently being reviewed. For the purposes of this report we have
assumed that the golf course no longer forms part of the Property; and
Residential development will also occur on the site of 126 Boundary Road and the area
behind the existing stable yard.
There is Reserved Matters Planning approval for a 123 bedroom hotel to be included in the
Planned Redevelopment at the Property. Heads of Terms are currently signed with a
bespoke hotel operator. The Board is exploring options to work with external partners to
deliver the proposed hotel.
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5.2 Details of Racecourse Refurbishment WorksIn addition to the Planned Redevelopment, the Board is reviewing a number of options to
refurbish the grandstands and associated visitor areas at the Racecourse. These
Racecourse Refurbishment Works are under assessment and review by the Board and, to
the extent carried out, will be paid for by the Company and will be pursued as part of the
Planned Redevelopment. It is estimated that, in their entirety, the cost of such works to be
paid for by the Company would be up to £12.0 million. In this valuation report no account
has been taken of the Racecourse Refurbishment Works which may be undertaken. These
Racecourse Refurbishment Works include in particular:
• a new weighing room: To the rear (North) of the parade ring will be a newly
constructed building to be used for the weighing room;
• the refurbishment of the Berkshire Stand: As the weighing room will be moved to
its new building, this will create space in the Berkshire Stand. This will be used as an
additional food and beverage retail units. It is also planned that the Northern elevation
will be opened up so that the parade ring and weighing room can be seen from the
stand;
• a new parade ring and pre-parade ring: The parade ring will be re-orientated to the
West and sunk slightly to provide an improved viewing experience. New saddling
boxes and pre-parade ring area will also be created;
• new administrative offices: New administrative offices will be constructed in the top
East corner of the Heart Space Area (the area around the new North entrance, as
indicated in Site Plan contained on page 91 of this circular), approximately where the
current Rocking Horse Nursery building is located;
• enhanced facilities for owners and trainers: The main premier entrance will be
converted to an additional food and beverage retail unit, either for trainers and owners
or as a premier outlet;
• new entrances to the Racecourse: The main public entrance will be relocated from
the North West of the Property to the North East, adjacent to the new offices; and
• general landscaping around the grandstands.
5.3 Timing of Planned Redevelopment and Racecourse Refurbishment WorksThe Planned Redevelopment will begin in the Autumn of 2012. It is expected that the car
park in the centre of the course will be complete for late Spring 2013. Construction of the
bridge started in 2012 and is intended to complete in 2015.
The Eastern Gateway, which is the area for development to the North East of the Property,
is currently projected to be the final stage of the development affecting the Racecourse and
is expected to be completed in mid 2015.
We understand that tenders will be put out on an ad hoc basis rather than for the whole
Planned Redevelopment. Construction work has started on the centre course car park with
the contractor being appointed and the works funded by DWH.
The Heart Space Area is projected to be undertaken in 2014 to mid 2015 (not including the
hotel development).
5.4 Disability Discrimination Act and Equality ActWe understand that the terms of the Disability Discrimination Act and Equality Act have
been, or will be, taken into account and that any alterations required at the Property to take
account of such legislation have been, or will be, fully completed and paid for.
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We are advised that areas and buildings which are open to the public have been adjusted
where necessary and full access is available to all grandstands, bars and main office
buildings.
5.5 No structural survey or building reportAs instructed, we have not undertaken any structural survey/building report and, apart from
any matters specifically referred to in this report, we have assumed that the Property is free
from hidden defects, structural faults, rot, infestation or other defects. This report is prepared
on this assumption.
6. CONDITION
We would comment, without liability, that during the course of our inspection for valuation purposes
we observed that the Property appears to be in reasonable condition throughout.
We have not carried out any investigations to ascertain whether any of the buildings were
constructed or altered using deleterious or hazardous materials or techniques (e.g. high alumina
cement, woodwool as permanent shuttering, calcium chloride or asbestos). We have assumed that
no such materials or techniques have been used.
In accordance with our terms of appointment, we have not carried out investigations on site in
order to determine the suitability of the ground conditions and the services for the Planned
Redevelopment. Our valuation is on the basis that these aspects are satisfactory and that, where
development is proposed, no extraordinary expenses or delays will be incurred during the
construction period.
We have assumed for the purposes of this report that any warranties or guarantees available in
respect of construction works have been gained and would be available to a purchaser of the
Property.
7. FIXTURES, FITTINGS, FURNISHINGS AND EQUIPMENT
We did not inspect any of the fixtures, fittings, furnishings or equipment, but are advised that the
maintenance inventory of tractors, mowers and ancillary equipment together with the trading
inventory of furniture, furnishings, fixtures, fittings and equipment are generally in good condition
and sufficient to maintain and operate the facility to a suitable standard.
Please note that no technical survey of the condition of the plant and machinery has been
undertaken or commissioned. We understand that all of the trading inventory is owned and so have
assumed for the purposes of this report.
8. ENVIRONMENTAL CONSIDERATIONS
8.1 Informal EnquiriesAs instructed, we have not carried out a soil test or an environmental audit nor any
environmental due diligence as instructed. We assume that there are no changes since the
2009 Report.
8.2 Environmental ReportWe have been instructed by you not to commission an environmental report. We assume
that there have been no incidents or changes since the 2009 Report and that there are no
environmental issues that would affect our valuation.
8.3 AssumptionWe have been instructed not to make any investigations, in relation to the presence or
potential presence of contamination or other environmental features in land or buildings or
32
affecting the Property. We have not carried out any investigation into past uses, either of the
properties or any adjacent land, to establish whether there is any potential for contamination
from such uses or sites, and have therefore assumed that none exists.
In practice, purchasers in the property market do require knowledge about contamination
and other environmental factors. A prudent purchaser of the Property would be likely to
require appropriate investigations to be made to assess any risk before completing a
transaction. Should it be established that contamination does exist, or the Property is
affected by other environmental factors, this might reduce the value now reported.
Our valuation takes into regard the environmental observations noted in previous reports
which have not raised any environmental issues or concerns (please see the 2009 Report
in Part VIII of the Rights Issue Prospectus dated 18 December 2009 page 127 paragraphs
2 to 6 and page 138 paragraphs 5 to 7). A copy of the Rights Issue Prospectus is available
at www.racecoursenewbury.co.uk/About-Newbury/Investor-Relations/Circular-Documents.
We have formed an opinion of the market’s perception of the issues involved. We would wish
you clearly to understand the approach we have adopted, and satisfy yourselves that the
approach is reasonable in all the circumstances. Finally, we would add that, should any
contaminative uses be found to exist at the Property, or on any neighbouring land, then we
may wish to review our valuation.
8.4 FloodingWe have made enquiries with regard to potential flooding at the Environment Agency
website, www.environment-agency.gov.uk and note from previous investigations that the
floodplain is mainly restricted to the area North of the railway and does not affect the
Property. It does however impinge onto a small area of the golf driving range and Northern
part of the golf course against the railway. Although the Property is considered to be in an
area that may be potentially affected by flooding due to the lack of flood defences, the
Environment Agency considers that the threat of flooding is ‘low’. The low risk category
states that the location is in an area that is unlikely to flood except in extreme conditions.
The chance of flooding as estimated by the Environment Agency each year is 0.5 per cent.
(1 in 200) or less. Claire Spencer also confirms that the Property has not recently been
affected by flooding.
9. TOWN PLANNING
We have been instructed by you not to undertake further due diligence in terms of planning.
However, we note the following since the 2009 Report:
• In April 2010 the Company and David Wilson Homes Limited (“DWH”) were granted outline
planning permission for the Residential Development Sites and the Hotel Development Site
at the Racecourse (following completion of the related Section 106 Agreement) by the
Western Area Planning Committee of West Berkshire Council.
– 09/00971/OUTMAJ – Redevelopment of Newbury Racecourse to provide new and
enhanced leisure, racing, administrative, and visitors facilities; new hotel and hostel;
replacement children’s nursery; the permanent retention of the Mill Reef Stand;
replacement maintenance buildings, yard and workshops; replacement golf clubhouse
and apartment, floodlit driving range and remodelling of the golf course; up to 1,500
dwellings; local centre; combined heat and power district heating system; new and
improved accesses; parking for visitors, staff and residents; open space and
landscaping, signage, service infrastructure, and associated uses (minor changes to
application 08/02201/OUTMAJ). Approved 6 April 2010
• In September 2011, Reserved Matters Planning approval was obtained for the Western Site
of the three Residential Development Sites for the construction of 421 dwellings with
33
associated access and amenities. The Western site will comprise 294 housing units for
private sale and 127 units of affordable housing.
– 11/00723/RESMAJ – Construction of 421 dwellings with associated access and
amenities (Reserved Matters) for area “C” Western Area. Matters seeking consent
Appearance, Landscaping, Layout, and Scale. Approved 30 September 2011
• In November 2011, Reserved Matters Planning approval was obtained for the Central Site
of the Residential Development Sites as well as for a 123 bedroom hotel, a new children’s
nursery, refurbished stables and a new multi-functional accommodation facility for stable
staff. The development on this site, along the straight mile of the Racecourse, comprises 366
dwellings with associated access and amenities.
– 11/01505/RESMAJ – Demolition and construction of 123 bedroom hotel, offices,
children’s nursery, refurbishment of existing stables, access, parking and amenities
(Reserved matters) for the Central area: Appearance, Landscaping, Layout and Scale
of planning permission 09/00971/OUTMAJ. Approved 17 November 2011.
• In March 2012, Reserved Matters Planning was obtained for remodelling of the golf course
and parking, installation of the centre course car park, replacement of the golf clubhouse and
driving range and Estate maintenance yard.
– 11/02467/RESMAJ – Replacement maintenance buildings; Estate yard; Replacement
golf clubhouse and Apartment; Flood Lit Driving range, Remodelling of golf course and
parking (Reserved matters) for centre of course and South Area of outline planning
permission reference 09/00971/OUTMAJ – Matters to be considered Appearance,
landscaping, layout and Scale. Approved 29 March 2012.
• The Company and DWH have not yet applied for Reserved Matters Planning approval for
the Eastern Site of the Residential Development Sites or the coach parking adjacent to it.
The Development Agreement as amended by the Deed of Variation, requires DWH to apply
for Reserved Matters Planning approval for the Eastern Site by no later than 1 September
2014.
Other than this, we assume that there has been no change to the planning situation and that there
are no planning issues which would cause us to alter our valuation.
We understand that there are no grants or allowances taken in respect of the Property with
conditions with which a purchaser would have to comply which may cause us to alter our opinion
of value.
In valuing the Property we have assumed that the present lawful use is as a racecourse with
ancillary facilities.
10. TAXATION
10.1 Business RatesWe have made enquiries of the Valuation Office Agency website and can confirm that the
Property is listed as follows:
Property Description Rateable Value Rates PayableNewbury Racecourse, Greenham, Horse racecourse, golf £415,000 £190,070
Thatcham, Berks, RG14 7NZ course and premises
Totalisator, Newbury Racecourse, Totalisator at horse racecourse £55,000 £25,190
Greenham, Thatcham,
Berks, RG14 7NZ
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The Uniform Business Rate multiplier for 2012/2013 is 45.8 (45 for small businesses). We
have not taken into account any phasing or transition relief which may be available in
calculating the rates payable above.
10.2 Council TaxThe Council Tax banding for the residential element of the Property and charge for 2012/13
is set out below.
Property Council Tax Band1 Round Oak cottages, Newbury racecourse, Greenham, D
Thatcham, Berks. RG14 7NY
2 Round Oak cottages, Newbury racecourse, Greenham, D
Thatcham, Berks. RG14 7NY
Pembury house NOT LISTED
11. INFRASTRUCTURE AND SERVICES
We have been previously advised that mains gas, water, electricity, drainage and
telecommunications are all available to the Property. No tests have been undertaken on any of the
services. We are advised that the electrical supply problems under the parade ring which were
reported in the media in February 2011 have been rectified.
Sewage disposal is to the main sewer facilities.
A private water supply for irrigation is sourced from a bore hole, which we understand has the
necessary Environment Agency licence. We are also advised that there is a cesspit on site which
is used as an overflow to the mains sewer.
Under Environmental Performance of Buildings (Certificates and Inspections) (England and
Wales) Regulations 2007 air conditioning units over 250 kw, installed before 1 January 2008
should have been inspected by an accredited air conditioning assessor. Air conditioning systems
installed before 1 January 2008 with a rated output between 12 kw and 250 kw must be inspected
by 4 January 2011. For all systems put into service after 1 January 2008, the first inspection must
take place within five years of installation. For the purpose of this report we have assumed that any
installation has been inspected as required by law and that there are no requirements following the
inspection which would require significant capital expenditure and may affect value.
Please note that we have been unable to test or verify the capacity of the services and for the
purpose of this report we assume that they are all adequate for their use.
We understand that the services will be upgraded where required as part of the Planned
Redevelopment and that this will be the responsibility of DWH. We assumed that there will be no
cost to the Company.
12. HIGHWAY AND ACCESS
In reporting our opinions, we have assumed that there are no third party interests between the
boundary of the Property and the adopted highways, and accordingly the site enjoys unfettered
vehicular and pedestrian access.
We note the planning permission to construct a new access to the Racecourse from Hambridge
Road and the Industrial area. This should alleviate traffic congestion on race days, especially from
the North and East.
35
13. TENURE
We have not had the opportunity of inspecting a Report on Title and have not seen a copy of the
title deeds and our comments below are subject to review if these are subsequently made
available to us.
We were previously instructed by Sarah Hordern, the Joint Managing Director of the Company, that
good freehold title to the Property can be shown and assume that full rights of access are enjoyed
and that there are no onerous or unusual encumbrances, easements, covenants, restrictions or
unusual outgoings which are likely to affect the valuations herein provided. We so assume for the
purposes of this report.
We were advised by Sarah Hordern that there is a lease on part of the Opperman Site (“Opperman
Lease”) at present. We have not seen a copy of the Opperman Lease but we are advised that the
key financial terms are as follows:
• Year 1 – £23,500 exclusive of VAT if chargeable;
• Year 2 – £24,500 exclusive of VAT if chargeable;
• Year 3 – the higher of £25,500 exclusive of VAT if chargeable or the previous year’s rent
increased in line with any increase in the Retail Prices Index from 1 January 2013 to
1 January 2014;
• Year 4 – the rent for the previous year increased in line with any increase in the Retail Prices
Index from 1 January 2014 to 1 January 2015; and
• Year 5 – the rent for the previous year increased in line with any increase in the Retail Prices
Index from 1 January 2015 to 1 January 2016.
We were advised by Sarah Hordern that either the Landlord or the Tenant may determine the
Opperman Lease at any time on or after 30 September 2012 by giving to the other at least three
months’ written notice.
We have seen a copy of the lease over the golf clubhouse to Wessex Club. We understand that
options are being reviewed for the golf club, which may be removed from the property and for the
purposes of this report we have assumed this to be the case. The lease terms provide that vacant
possession of the club house can be obtained without significant cost or delay.
There are stated to be no other commercial leases in existence. We confirm that no one was in
occupation (with the exception of the Opperman Site and the golf clubhouse) at the time of our
inspection, and have valued the Property otherwise with vacant possession.
At the date of the 2009 Report, there were three assured shorthold tenancies in place on
126 Boundary Road, Pigeon Farm House West and Round Oak Bungalow. Pigeon Farm House
has since been sold and no longer forms part of the subject Property. 126 Boundary Road and
Round Oak Bungalow have been demolished as part of the Planned Redevelopment.
We were previously advised and continue to assume that:
• some of the agricultural land is understood to be grazed by local farmers on grazing licences
and we assume these are terminable without cost or delay; and
• some of the residential accommodation is occupied by staff. We have seen no
documentation but understand that vacant possession can be gained without cost or delay
if required.
We were previously advised that the Rocking Horse Nursery was occupied under licence.
However, we are advised by Claire Spencer that this is operated in-house and that there is
therefore no operating agreement. Please note that we have not seen any documentation relating
to the occupation by the Rocking Horse Nursery.
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We would strongly advise that your solicitors confirm our understanding to be correct and to ensure
that there are no further elements, restrictions or charges contained which are likely to have a
detrimental effect upon the valuations as herein reported.
13.1 Third Party Rights
13.1.1 Public Rights of WayWe are informed that there is a footpath across the Western edge of the site.
13.1.2 Private Rights of WayWe understand that a right of way for all purposes is existing for access in favour of
the occupant of the Nuffield Health Fitness and Wellbeing site, (formerly, the Canons
building).
13.1.3 Easements/WayleavesA high voltage electricity line passes over the Western portion of the Property, and
we have assumed that this is covered by an appropriate wayleave agreement.
We are informed that there is a public sewer under the Western edge of the site.
13.1.4 Membership RightsWhile it is anticipated that a prospective purchaser would regard any current
memberships as valuable and beneficial, it is assumed that all are terminable without
compensation within 12 months if so required.
Apart from the above we have assumed that there are no other third party rights
whatsoever.
We recommend the above matters should be verified by your solicitors. Any material
discrepancies revealed during verification should if necessary be referred back to
enable us to review the valuation.
14. LICENCES AND CERTIFICATES
We have seen copies of the following licences:
• Premises Licence – Dated 21 October 2010
• Water Abstraction Licence for up to 200,000 gallons of water per day
• Media Rights Licence dated 31 August 2009, amended 29 September 2011 and extended
to 28 February 2019
• LBO Licence Agreement for the period 1 April 2013 to 31 March 2018. This agreement is
confidential but we can confirm it provides payment to Newbury Racecourse in respect of
standard and new fixtures and that this income is reflected in the accounts provided to us.
In accordance with our instructions, we have not been provided with any additional or updated
licences or certificates and we assume that all licences and certificates required are held and valid
with no onerous or unusual restrictions.
14.1 Fire PrecautionsThe Fire Safety Order, under the Regulatory Reform Act 2001, replaced all fire legislation
with effect from 1 October 2006. The Fire Safety Order requires employers and property
owners or other relevant persons to carry out a fire risk assessment that considers:
• Safety of employees and visitors to a site from fire;
37
• Protection of property from fire and job security of employees;
• Fire fighter safety should fire fighters have to enter a property; and
• Environmental impact of fire.
Please note that we have not seen a copy of the fire risk assessment, but assume for the
purpose of this report that the necessary works to secure the building from fire have been
implemented and that insurance for the building could be readily obtained.
14.2 Environmental HealthNew EU food hygiene legislation was introduced on 1 January 2006 (known as, Regulation
852/2004 (EC) of the European Parliament and Council on the Hygiene of Food Stuffs).
Food Hygiene (England) Regulations 2006 now requires all food businesses to be registered
with the competent authority, such as the Meat Hygiene Service or the Local Authority’s
Environmental Health Department, depending on the type of business. Food business
operators are required to document their food safety management systems, put in place,
implement and maintain a permanent procedure, or procedures to prevent food safety
hazards.
We are advised by Claire Spencer that the Environmental Health Officer is satisfied with the
Property and that there are no outstanding issues. We have assumed for the purpose of the
valuation that the Property will continue to trade with the benefit of all existing and required
licences, consents, certificates and permits. However, it should be noted that the value could
be reduced if this assumption is invalid or if such licences, consents, certificates or permits
are lost or in jeopardy.
15. THE BUSINESS
15.1 Memberships and TariffsNewbury Racecourse gains the majority of turnover from its 29 – 30 scheduled race days.
Additional income is gained from the supply of pictures and data to licensed betting offices
in the UK and Ireland (LBO) and non-racing income from the Rocking Horse Nursery,
Conferences and Events and associated catering and the golf course.
Membership of the Racecourse includes entry to Newbury race days and a number of
reciprocal race days at other racecourses, visits to training yards and studs, “early bird”
restaurant promotions, a quarterly newsletter, discounted golf rates and a dedicated
membership co-ordinator. Current membership rates are as follows:
Annual – Single (28 fixtures) £305
Annual – Dual £580
Student (18-25) £105
Flat – Single (11 fixtures) £220
Jump – Dual £280
Weekender (15 fixtures) £200
15.2 The Trading BusinessWe have reviewed the consolidated audited profit and loss accounts for the overall business
for the financial years ended 2009, 2010 and 2011 and the interim six month financial results
for the period to 30 June 2012. We have taken into account within our valuation the
projections for the trading business provided to us on the assumption that the Racecourse
Refurbishment (as described above) are not carried out.
The business benefits from excellent access by motorway and rail, both locally and from the
main Southern conurbations, an all year round race calendar, the ability to entertain and
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cater for capacity and over capacity crowds (utilising temporary buildings), and a first class
reputation. In common with similar businesses, unforeseeable issues such as weather
resulting in lost race days can have a significant effect upon turnover and profit and there
are consistent repairs, maintenance and improvement costs in providing a continually
improving experience for race goers. The dependency on the race day income streams is
mitigated to some extent by non-racing income and the income from media rights.
We have taken into account within our valuation the projections for the trading business
provided to us on the assumption that the Racecourse Refurbishment and Development
Works are not carried out.
16. MACRO ECONOMIC AND PROPERTY MARKET OVERVIEW
16.1 Economic Background (Savills Economic Brief)• Latest official figures show that the double-dip recession in the UK has deepened.
Initial estimates suggested that, during the second quarter of the year, the output of
the economy shrank by 0.7 per cent.. This decline was much bigger than expected
and shocked many economists. However, the recent revision to GDP shows that the
UK economy contracted by 0.5 per cent. in Q2. The reason was that the construction
sector fell by 3.9 per cent. compared to the previous estimate of -5.2 per cent.
• The driver of a near 4 per cent. fall includes the facts that the housing market is still in
the doldrums and there has been a big drop-off in government spending on social
housing and infrastructure.
• UK manufacturers reported deterioration in both their total and export order books in
August, while expectations for output growth have flattened.
• The Eurozone is still expected to see a contraction this year.
• The UK rate of inflation fell to a two-and-a-half year low. This means that inflation has
fallen from 5.2 per cent. last September due to the waning impact of the VAT rise in
2011 and falling energy, food and commodity prices.
• UK house prices declined for the fourth time in five months in July, with prices falling
by 0.7 per cent.
• According to Nationwide, the weaker price trend observed in recent quarters is
unsurprising, given the disappointing performance of the wider economy.
• A partial recovery from global market turmoil, through the second quarter of this year,
has resulted in the equity market now showing a positive total return so far this year,
at 4.7 per cent.. In comparison, the property market has shown a 1.4 per cent. total
return and gilts a 5.2 per cent. return.
16.2 Commercial Property Market (RICS UK Commercial Market Survey Q2 2012)Occupier demand dipped alongside a modest rise in available space, resulting in the rental
expectations remaining negative.
Net balance readings for occupier demand and available space broadly stabilised in the first
quarter of 2012, resulting in slightly tighter market conditions compared to the previous
quarter and a small improvement in the rental outlook.
In the industrial sector, rents are stabilising following several consecutive decreases. Rents
are still expected to decline for office and retail units.
On the investment side, the number of purchasing enquiries was broadly flat over the
quarter. Meanwhile, surveyors expect activity to slip back a little over the coming quarter.
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Economic uncertainty and the lack of available finance is expected to continue impacting on
capital values away from the London market. New commercial development declined for the
fifth successive year.
Significantly, after stabilising over the previous six months, demand has begun to pick up
again for central London office space.
Away from the capital, demand for office space continued to dwindle, resulting in a negative
rental outlook. Activity in the industrial sector was largely unchanged.
17. MARKET COMMENTARY
17.1 RacecoursesThere is no mature market in racecourses, largely arising from the fact that there are only
60 racecourses in the UK in total. Of these, 18 stage flat racing and 24 stage jump (National
Hunt) racing. The remaining 18 stage both, (including Southwell which stages jumps on turf
and flat on all-weather surfaces). Five of the courses run on all-weather surfaces.
The great majority of racecourses are located in England, with three located in Wales and
five located in Scotland.
Horseracing is an extremely popular sport with some 6 million people attending in 2011
making it the second most attended sport in Britain. Horseracing supports some 100,000
jobs within the UK. In addition, there are the bookmakers who profit from horseracing. The
Tote betting service, which was sold to Betfred in 2011 for circa £265 million, reports annual
revenues of some £3 billion.
Whilst there is no recent data, many commentators note that the racing industry is being
directly affected by the current recession, with a downturn in both attendance and betting.
There are significant numbers of trainers having to sell horses and businesses as they can
no longer afford to run them.
By far the majority of racecourses in the UK are privately owned by individual companies,
landowners or entrepreneurs.
There are a number of groups owning multiple racecourses, in particular Jockey Club
Racecourses and Northern Racing which recently acquired Arena Leisure (and has
subsequently been renamed as Arena Racing Company (ARC)).
Jockey Club Racecourses owns 14 racecourses including some of the largest racecourses
being Aintree, Cheltenham, Epsom, Newmarket, Haydock Park, Kempton and Sandown. In
early 2007 Exeter Racecourse was sold at a reported £2.6 million to Jockey Club
Racecourses. This sale reflected an initial yield of 11.5 per cent. on net operating profit
achieved.
The second largest group in terms of racecourse numbers was Northern Racing (now Arena
Racing Company). David and Simon Reuben were reported to have bought Northern Racing
in 2007. It is reported that they paid approaching 200 pence per share which valued the
racecourses at some £88.6 million (on an enterprise value basis). The vendors included the
Clarke family and the property company St Modwen, which between them owned 86.2 per
cent. of the issued share capital.
Arena Leisure was acquired by Northern Racing in January 2012 for a reported equity value
of approximately £167 million to create Arena Racing Company (“ARC”). Arena Leisure was
the third largest group owning seven racecourses, including three all-weather tracks, and
also has the management of Doncaster racecourse. Arena Leisure had been amongst the
most active reported buyer of racecourses in recent years including Folkestone Race
Course in 1998 purchased at a value of £3.25 million, Wolverhampton and Southwell
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Racecourses in 1999 at a value of £16 million and Windsor Racecourse in 1999 at a value
of £13.3 million. ARC now owns 16 of the UK’s racecourses and also manages Ffos Las
racecourse. Accordingly, ARC controls circa 40 per cent of racecourse fixtures each year as
stated in ARC’s press release dated 20 August 2012.
In general, racecourse sales have involved the sale of companies rather than individual
property assets and much of the attendant value arises from potential property development.
The growth of Northern Racing, put together by Stanley Clark (deceased) was an example.
The 2003 sale of Ayr racecourse followed a similar route with retail, residential and leisure
development potential outweighing the value of the 24 race day fixtures in the reported
£9.3 million sale price. The Ayr racecourse was offered to the market following significant
further investment in a hotel, restaurant and conference centre at £14 million in 2008 but this
failed to sell.
Many racecourses are experiencing a reduction in grants and sponsorship from companies
and racing authorities which they have come to expect in previous years. For example,
contributions to prize money from the Horserace Betting Levy Board (HBLB) reduced from
circa £52 million in 2010 to circa £33 million in 2011. The reduction in, or loss of, these
income streams and sometimes the loss of racing fixtures has resulted in financial difficulties
for a number of racecourses. Many have diversified to provide conference and banqueting
facilities, become licensed as wedding venues and stage live concerts and other events. In
line with this industry trend, the Company has introduced evening concerts on some race
days as well as concerts on non-race days to develop new income streams, attract a wider
audience and raise the profile of the Racecourse.
The attraction of a racecourse to a prospective purchaser relies to a large extent on its profits
and potential for profits improvement through racing and ancillary activities, together with the
status attaching to ownership of a facility attracting the rich and famous. Newbury
Racecourse clearly offers potential in all areas with the promise of significant investment and
development in the Racecourse and surrounding land in the near future as a result of the
Planned Redevelopment at the Racecourse by DWH.
It is important to note that Newbury Racecourse is internationally renowned for its flat and
jump racing. Located close to the Lambourn, the heart of racing, we consider that if Newbury
Racecourse were to be offered for sale, there would be significant interest from wealthy
entrepreneurs and foreign investors. Taking into consideration the scarcity of such a property
in the market place and the quality of the Property, we believe that the market would
command a material premium over and above the trading value.
Premiums, although unusual in the current market, are being paid for rarely available leisure
assets with strong property backing and/or development potential. Examples include:
• The Belfry Golf Club – a prestigious property with three golf courses including a PGA
branded course, circa 300 bed hotel, spa, leisure club and nightclub. It has hosted
more Ryder Cups than any other golf venue. The property is currently on the market
and reporting offers at circa £90 million. This indicates a premium above the trading
value of the property of at least 20 per cent.
• Gatton Manor – Golf Course and Hotel, sold by Savills last year to a foreign
purchaser at a purchase price of circa 25 per cent. above the guide price, which was
based upon trading value.
• Airport in Southern Ireland – recently marketed with Savills and under offer at a level
circa 25 per cent. above the guide price, set on a trading value basis, having received
strong interest from the market. This interest reflects the rarity of such a property
coming to the market and the interest generated by such a sale.
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As an analogous example, we also note that premiums are being paid by foreign investors
to acquire clubs in the Football Premier League, based on investing in the UK property
market as well as the status of owning a well-known football club.
As discussed, Newbury Racecourse is an internationally recognised racecourse which, if
offered for sale, would be likely to command a material premium to the underlying cashflows
generated from its trading activities. During the peak of the property market, premiums could
in our opinion reach around 25 per cent. for this type of racecourse asset. In the current
economic climate, we would consider that a premium between 10 per cent. and 15 per cent.
would be more likely to be achieved. However, it is difficult to determine the level of premium
that a rarely available racecourse property such as Newbury Racecourse would command,
without testing the market and therefore the premium achieved could be higher than 10 to
15 per cent.
17.2 Industrial LandThere is little evidence available for industrial land without buildings in the area. The
Opperman Site is well located for the industrial market, being within a well occupied
industrial estate not far from the A34. Evidence suggests that industrial land with buildings
lets for around £6 per square foot at between 9 per cent. and 11 per cent. yields.
We believe that the market would consider this site prime for industrial development.
Comparables for such land are scarce but having consulted with our commercial colleagues
we believe that the value lies between £350,000 and £400,000 per acre.
We are aware of one comparable industrial site being marketed in Newbury. This
comparable property is a freehold industrial site and extends to 2.2 acres. There were
previously 18,880 sq ft of buildings on the site which have been cleared. The site does fall
within an area of protected employment use. We understand interest has been mainly from
commercial developers and owner/occupier businesses looking at B1, B2 and B8 uses.
Despite the property in question not having planning consent for such uses, several offers
have been received for this property ranging from £600,000 to just over £800,000 reflecting
a value range of around £275,000 to £375,000 per acre.
We assume that the Opperman Site does not have planning permission for industrial
development but due to its location and previous uses, we have assumed that permission
could be obtained without undue cost or delay and that there would be no onerous or
restrictive conditions associated with any such permission. The current valuation of the
Property takes into account that the current acreage of the Opperman Site extends to 2.1
acres. We have valued such site at £350,000 per acre with planning permission. However,
with the construction of the bridge over the railway this acreage will reduce to approximately
1.1 acres for use or sale by the Company.
17.3 Residential MarketWe have not looked at the residential market in depth. We have spoken to our Newbury
residential department who confirm that prices are similar to those achieved in 2009 and that
there has not been a lot of price change in the market in and around Newbury since that
time. Both the Nationwide and Lloyds housing indicators also show very little price change
during this time period. We have therefore adopted the values attributed in the 2009 Report.
17.4 Pasture Land and WoodlandTo the South of the Racecourse is land not utilised directly in the trading business, some of
which comprises pastureland suitable for grazing animals and some comprises woodland.
We have consulted with our colleagues in our Newbury office who confirm that they consider
such land to achieve in the region of £10,000 – £15,000 per acre for pasture land
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(sometimes fetching a higher price for smaller parcels of land) and circa £8,000 per acre for
woodland.
We have assessed comparable transactions for the purposes of valuing the pasture land
and woodland.
Research into the market has shown that demand remains strong for this type of land,
keeping values high and at this level.
17.5 Principal Valuation ConsiderationsThe principal matters that impact on the value of the Property are as follows:
• Location and Situation – the Property is well located to transport links which is
important for race days;
• Building Quality, Standard of facility and extent of facilities – the buildings are of
varying age, design and quality. Generally the Property is in a reasonable condition;
• Business track record/potential – the Property is trading satisfactorily;
• Competitive position in market – Newbury Racecourse is competitive in the racing
market, providing 28 race days as well as other events including evening concerts;
• Anticipated effect of future competition – there are very few, if any, new racecourses
planned for the near future. Competition is likely to come from other events such as
concerts. However, Newbury Racecourse is ideally located within highly populated
counties to provide a good base from which to draw attendance; and
• Rarity and Status – a racecourse, particularly of this calibre and renown, rarely
becomes available for sale.
18. APPROACH TO VALUATION
18.1 Current Market ValueWe have reviewed the consolidated audited profit and loss accounts for the overall business
for the financial years ended 2009, 2010 and 2011 and the interim six month financial results
for the period to 30 June 2012. We have taken into account within our valuation the
projections for the trading business provided to us on the assumption that the Racecourse
Refurbishment Works (as described above) are not carried out.
The Property has been principally valued on the basis of the profitability set out in the
Company’s financial statements for the financial years ended 2009, 2010 and 2011.
In addition to the trading element of the Property, the ancillary properties, being principally
dwellings, woodland, pastures and paddocks and the Opperman Site, have been valued by
the comparables method.
We consider that the scarcity of such an asset and the “trophy element” of the Property
would be likely to attract a material premium over the value attributable.
Please note that the value of this type of property is closely related to its trading potential
and achieved results. In view of the importance which the market for such properties
attaches to trade results actually achieved and future potential it should be noted that in the
event of a future change in trading potential or actual level of trade the market value for
existing use may vary.
It should be noted that the market for properties of this type is extremely restricted with only
a small number of open market transactions taking place at any one time. This has the effect
43
of limiting up to date evidence of comparable transactions which can act as a guide to the
value that may be achieved on a sale of the Property.
19. VALUATION
19.1 Market ValueHaving carefully considered the Property as described above, we are of the opinion that the
current value, on the basis specified below, of the Freehold interest with the benefit of full
vacant possession is
£14,500,000
(FOURTEEN MILLION AND FIVE HUNDRED THOUSAND POUNDS)
on the basis of the various specific and general assumptions referred to in the text of this
report:
• That the Property will be maintained in good condition with all necessary furniture,
furnishings, fittings, fixtures and equipment.
• That the Property will trade and continue to trade with all relevant and required
permissions, licences, consents and permits.
We consider that a period of up to nine months is a reasonable period within which to
negotiate completion of a sale by private treaty of the Property at the level of our valuation,
taking into account the nature of the Property and the state of the market.
19.2 Capital AllowancesIn undertaking our valuation we have not taken into account the value (if any) of any Capital
Allowances.
20. STANDARD CONDITIONS AND ASSUMPTIONS
20.1 Standard ConditionsOur valuation has been carried out on the basis of the following standard conditions:
20.1.1 We have made no allowance for any Capital Gains Tax or other taxation liability that
might arise upon a sale of the Property.
20.1.2 Our valuation is exclusive of VAT (if applicable).
20.1.3 No allowance has been made for any expenses of realisation.
20.1.4 That inspection of those parts which have not been inspected, or a survey
inspection, would not reveal material defects or cause the valuer to alter the
valuation materially.
20.1.5 Excluded from our valuation is any additional value attributable to goodwill, or to
fixtures and fittings which are only of value in situ to the present occupier.
20.1.6 No allowance has been made for rights, obligations or liabilities arising under the
Defective Premises Act 1972, and it has been assumed that all fixed plant and
machinery and the installation thereof complies with the relevant UK and EU
legislation.
20.1.7 Energy Performance Certificates (“EPC”s) are required for the sale, letting,
construction or alteration of all residential buildings, on non-domestic residential
buildings over 538 sq ft (50 sq m) in England and Wales and on all buildings in
Scotland. The effect of EPCs on value is, as yet, unknown, given that the market
44
has yet to respond to their introduction. Therefore, we have not considered the
Property’s EPC rating in forming our opinion of value. However, should this position
alter, we reserve the right to reconsider our opinion of value.
20.1.8 Our valuations are based on market evidence which has come into our possession
from numerous sources. That from other agents and valuers is given in good faith
but without liability. It is often provided in verbal form. Some comes from databases
such as the Land Registry or computer databases to which Savills subscribes. In all
cases, other than where we have had a direct involvement with the transactions, we
are unable to warrant that the information on which we have relied is correct
although we believe it to be so.
20.2 General AssumptionsOur valuation has been carried out on the basis of the following assumptions set out below.
Unless it is made apparent by our express statement to the contrary, in this report, we will
have been under no duty to have verified these assumptions. If any of them are
subsequently found not to be valid, we may wish to review our valuation, as there may be
an impact on it.
20.2.1 That the Freehold interest is not subject to any unusual or especially onerous
restrictions, encumbrances or outgoings and good title to be shown. Should there
be any mortgages or charges, we have assumed that the Property would be sold
free of them. We have not inspected the Title Deeds or Land Registry Certificate.
20.2.2 That we have been supplied with all information likely to have an effect on the value
of the Property, and that the information supplied to us and summarised in this
report is both complete and correct.
20.2.3 That the buildings, including extensions or alterations, have been constructed and
are used in accordance with valid planning permissions, all statutory and bye-law
requirements, and that there are no breaches of planning control. Likewise, that any
future construction or use will be lawful (other than those points referred to above).
20.2.4 That the Property is not adversely affected, nor is/are likely to become adversely
affected, by any highway, town planning or other schemes or proposals, and that
there are no matters adversely affecting value that might be revealed by a local
search, replies to usual enquiries, or by any statutory notice (other than those points
referred to above) and that its condition, its use or intended use is not, or will not
be, unlawful.
20.2.5 That the building is structurally sound, and that the services operate efficiently. That
there are no structural, latent or other material defects, including rot and inherently
dangerous or unsuitable materials or techniques, whether in parts of the building we
have inspected or not, that would cause us to make allowance by way of capital
repair (other than those points referred to above) or materially alter our valuation.
Our inspection of the Property and this report do not constitute a building survey.
20.2.6 That the Property is connected, or capable of being connected without undue
expense, to the public services of gas, electricity, water, telephones and sewerage
except where expressly stated otherwise within this report.
20.2.7 That in the construction or alteration of the building no use was made of any
deleterious or hazardous materials or techniques, such as high alumina cement,
calcium chloride additives, woodwool slabs used as permanent shuttering and the
like (other than those points referred to above) and that it is not on landfilled ground.
We have not carried out any investigations into these matters.
45
46
20.2.8 That in the case of a new property, the construction of which has not been
completed, the construction will be satisfactorily completed.
20.2.9 That sewers, main services and roads giving access to the Property have been
adopted.
20.2.10 That in the case of a newly constructed property, it has been built under the NHBC
Buildmark Scheme, Zurich Municipal Newbuild and Rebuild Schemes, Housing
Association Property Mutual Scheme, Premier Guarantee for Private and
Completed Housing or equivalent, or by a professional consultants acceptable to
the lender.
20.2.11 In cases where properties lie within or close to a flood plain or have a history of
flooding our valuation assumes that building insurance is available without payment
of an excessive premium or excess.
20.2.12 That vacant possession is provided.
20.2.13 Our enquiries undertaken for the 2009 Report did not reveal any contamination
affecting the Property or neighbouring property which would affect our valuation.
However, should it be established subsequently that contamination exists at the
Property or any neighbouring land, or that the premises have been or are being put
to any contaminative use, this might reduce the values now reported.
20.2.14 That there are no adverse site or soil conditions, that the Property is not adversely
affected by the Town and Country Planning (Assessment of Environmental Effects)
Regulations 1988, that the ground does not contain any archaeological remains, nor
that there is any other matter that would cause us to make any allowance for
exceptional delay or site or construction costs in our valuation.
21. CONFIDENTIALITY
21.1 This report is provided for the purposes of inclusion in the Circular to be despatched to the
Company’s shareholders as at the date of this report. The basis of valuation might be
inappropriate for other purposes and may not be otherwise used without our prior written
consent.
21.2 Neither the whole nor any part of this report nor any reference thereto may be included in
any published document, circular or statement nor published in any way without our written
approval of the form and context in which it is to appear.
21.3 We confirm that we have given and have not withdrawn our written consent to the publication
of this report in the Circular and certain references to our name in the form and context in
which they appear in such document.
21.4 We confirm 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.
Yours faithfully,
For and on behalf of Savills Commercial Limited
Alan Plumb FRICS Madeleine Uren MRICS
RICS Registered Valuer RICS Registered Valuer
Savills Commercial Limited Savills Commercial Limited
PART III
MONTAGU EVANS’ VALUATION REPORT ON THE
RESIDENTIAL DEVELOPMENT SITES
AND THE HOTEL DEVELOPMENT SITE
5 Bolton Street
London
England
W1J 8BA
The Directors
Newbury Racecourse PLC
The Racecourse
Newbury
Berkshire
RG14 7NZ
29 October 2012
Dear Sirs,
Newbury Racecourse PLC (the “Company”)
Valuation of (1) the Residential Development Sites subject to the terms of the Development
Agreement with David Wilson Homes Limited and (2) the site of a Proposed 123 bedroom
hotel at the Racecourse
Background to Development Agreement1.1 In accordance with the instructions of the Company and our Terms of Business, we, Montagu
Evans LLP (“Montagu Evans”), set out in this report our opinion of (1) the Market Value of
the Net Present Value of the anticipated consideration receivable by the Company in respect
of three areas of proposed residential development at the Racecourse known as the
Western, Central and Eastern Sites (the “Residential Development Sites”) and (2) the
Market Value of a site at the Racecourse for the proposed development of a 123 bedroom
mid market hotel (the “Hotel Development Site”). We understand our valuation is required for
inclusion in the Circular to be published by the Company and dated 29 October 2012
(“Circular”). The Residential Development Sites and the Hotel Development Site have been
valued having regard to the Basis of Valuation described within Section 3 of this report, and
our standard Terms of Business which we have provided to you separately.
1.2 On 1 May 2008 the Company entered into a conditional agreement between the Company,
Newbury Racecourse Enterprises Limited, David Wilson Homes Limited (“DWH”) and
Barratt Developments PLC (“Barratt Developments”) (as guarantor) relating to (i) the
purchase of the Residential Development Sites on the Racecourse site by DWH; and (ii) the
residential development of the Residential Development Sites by DWH and the
implementation of the DWH Infrastructure Enhancements as defined below. This contract is
referred to within this report as the “Development Agreement”. The Hotel Development Site
is excluded from the Development Agreement and is, we understand, to be retained by the
Company.
1.3 The proposed development (“Planned Redevelopment”) includes (1) the development of the
Residential Development Sites and implementation of the DWH Infrastructure
Enhancements to the Racecourse to be carried out in accordance with the Development
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Agreement by DWH; and (2) implementation of the Racecourse Refurbishment Works (as
defined below) to be carried out and paid for by the Company and pursued as part of the
Planned Redevelopment.
1.4 The Residential Development Sites and the Hotel Development Site which are the subject
of this report originally comprised land within the freehold ownership of the Company
situated in and around Newbury Racecourse, Berkshire. The Residential Development Sites
were identified by the Directors as being surplus to the operational requirements of the
Racecourse business.
1.5 The DWH Infrastructure Enhancements means infrastructure improvements to the
Racecourse, including, in particular, construction of a new bridge to access the Residential
Development Sites and provide enhanced access to the Racecourse, new parking facilities
for visitors and enhanced road infrastructure, a new multi-functional accommodation facility
for stable staff, refurbished stables and a new children’s nursery, with all such works to be
carried out, and paid for, by DWH in accordance with the Development Agreement in
addition to any land value payments.
1.6 The Racecourse Refurbishment Works mean, in particular, the refurbishment of the
Berkshire stand, a new weighing room, a new paddock, pre-parade ring and general
landscaping around the grandstands, new administrative offices, enhanced facilities for
owners and trainers and new entrances to the Racecourse all of which are under
assessment and review by the Board and, to the extent carried out, will be paid for by the
Company and will be pursued as part of the Planned Redevelopment.
1.7 The Company, Newbury Racecourses Enterprises Limited, DWH and Barratt Developments
entered into a deed of variation on 18 September 2012 (“Deed of Variation”) amending the
Development Agreement and rendering it unconditional so that the Central and Western
Sites could be transferred to DWH.
Planning Approvals1.8 We have not made our own enquiries of the local planning authority, West Berkshire Council,
and in preparing our report have relied upon information provided to us by the Company in
relation to the planning status of each site which is summarised below.
1.9 In April 2010, the Company and David Wilson Homes Limited were granted outline planning
permission for the Residential Development Sites and the Hotel Development Site at the
Racecourse (following completion of the related Section 106 Agreement) by the Western
Area Planning Committee of West Berkshire Council.
1.10 In September and November 2011, the Company obtained Reserved Matters Planning
approval for the Western and Central Sites, being two of the three Residential Development
Sites as well as for the 123 bedroom hotel, a new children’s nursery, refurbished stables and
a new multi-functional accommodation facility for stable staff. According to the planning
approval, the Western Site will comprise 294 housing units for private sale and 127 units of
affordable housing, whilst the Central Site will comprise 256 units for private sale and 110
units of affordable housing.
1.11 In March 2012, the Company obtained Reserved Matters Planning approval for the Southern
area including a new golf facility, estate yard and car park in the centre of the Racecourse.
1.12 The Company and DWH have not yet applied for Reserved Matters Planning approval for
the Eastern Site of the Residential Development Sites or the coach parking adjacent to it.
The Development Agreement as amended by the Deed of Variation, requires DWH to apply
for Reserved Matters Planning approval for the Eastern Site (in a form to be approved by the
Company) by no later than 1 September 2014.
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1.13 We understand that it is envisaged that the Eastern Site will be planned to accommodate
approximately 690 units (private and affordable). Accordingly, the Planned Redevelopment
will deliver a total of approximately 1,500 units.
1.14 A plan showing the location of the Western, Central and Eastern Sites is included on page 91
of the Circular.
Financial Matters arising from the Development Agreement1.15 The Development Agreement, as amended by the Deed of Variation became unconditional
on 18 September 2012.
1.16 The Development Agreement as amended by the Deed of Variation confirmed, in particular:
1.16.1 the Minimum Land Value (“Minimum Land Value”) under the Development
Agreement at £42.6 million;
1.16.2 the Threshold Land Value (“Threshold Land Value”) under the Development
Agreement at £48.0 million. The Reserved Matters Planning approval in respect of
the Eastern Site of the Residential Development Sites will be sought at a later date,
but the Minimum Land Value will remain fixed irrespective of whether or not Reserved
Matters Planning approval is successfully obtained in respect of that site. If a
Reserved Matters Planning Approval in respect of the Eastern Site is obtained in a
form that would result in an increase in the Threshold Land Value, then the Threshold
Land Value will be revised upwards at that time. However, in the event that the
Threshold Land Value would otherwise have reduced, the Threshold Land Value for
the purposes of the Development Agreement will remain unchanged at £48.0 million.
Therefore, the risks associated with obtaining the Reserved Matters Planning
approval in respect of the Eastern Site have been assumed by DWH; and
1.16.3 A right to a 50 per cent. share in development profits in circumstances where the
Threshold Land Value has been paid and DWH has earned the maximum level of the
DWH Operating Margin it is entitled to receive under the terms of the Development
Agreement.
1.17 In respect of the Central and Western Sites, a full land title transfer to DWH occurred on
18 September 2012 and an initial payment from DWH to the Company of £5.1 million was
made as a partial payment towards the Minimum Land Value. This payment of £5.1 million
has been included in determining our valuation of the Residential Development Sites as set
out in Section 6 of this report. The full land title transfer in respect of the Eastern Site from
the Company to DWH is conditional on the exercise of a put or call option; the put option
allows the Company to require DWH to purchase the land relating to Eastern Site at any
stage after the sale of the Central and Western Sites has been completed.
1.18 The Development Agreement provides for the Company to receive payment for the land
value attributable to the Residential Development Sites as the development progresses
(“Land Payments”). Land Payments under the Development Agreement must amount to at
least the Minimum Land Value of £42.6 million. The Land Payments due to the Company
under the Development Agreement are guaranteed by Barratt Developments and the
Company has a legal charge over the Residential Development Sites, which will be released
in respect of housing units as and when sold.
1.19 The development of up to 1,500 houses is a large, long term undertaking and it is envisaged
that, subject to stable market conditions, the development of the Residential Development
Sites and the sale of residential housing units on such sites would be carried out over some
10 years.
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1.20 The Company has the potential over the duration of the Planned Redevelopment to receive
Land Payments in excess of the Minimum Land Value. The Development Agreement firstly
provides for the Company to receive up to the Threshold Land Value of £48.0 million which,
if all paid, would represent an additional receipt of £5.4 million above Minimum Land Value,
and secondly a 50 per cent. share of any excess development profit on the basis noted in
Section 1.16.3 of this report. In both cases the amount of these payments will be determined
on the basis of the Project Cash Flow Appraisal (“PCFA”) undertaken in accordance with the
Development Agreement. The PCFA is described in more detail in Section 3.10.4 of Part IV
of the Circular.
1.21 The PCFA is an iterative appraisal which the Company has agreed with DWH on
18 September 2012 and used to determine the Threshold Land Value. Going forward, the
PCFA will be used to determine the amount of the Land Payments due to the Company in
respect of the Residential Development Sites which are then paid out over time as housing
units are sold. The actual total consideration to be received by the Company in respect of
the land value of the Residential Development Sites will not be capable of final reconciliation
until all of the Planned Redevelopment has been carried out and all of the residential units
have been built and sold, albeit the total consideration to be paid to the Company in respect
of the land value of the sites cannot be less than the Minimum Land Value and should be
received by the Company over a 9.5 year period from September 2012 in accordance with
the timescales described in Sections 1.30 to 1.32 of this report.
1.22 Our review of the PCFA for the purposes of this report and our valuation of the Land
Payments is based, as at the date of this report, on current estimated revenues and costs in
relation to the development of the Residential Development Sites and the DWH
Infrastructure Enhancements. In particular, our valuation of the Land Payments is based on
the assumption that:
(i) the development of the Residential Development Sites generates average sales
revenues in aggregate, in the order of £350 million; and
(ii) the costs related to the development of the Residential Development Sites and the
DWH Infrastructure Enhancements which have been independently reviewed by
Capita plc as quantity surveyors, acting for the Company, are in the order of
£250 million.
1.23 In overall terms, the estimated revenues arising from the sale of housing units in respect of
the Residential Development Sites are, in aggregate, in the order of £350 million while the
costs of the development of the Residential Development Sites and the DWH Infrastructure
Enhancements (the cost of which would otherwise accrue to land value) are in the order of
£250 million (excluding financing costs which are not included in the PCFA and are the
responsibility of DWH) but including all other fees and incidental expenses. In general terms,
the difference between these two figures represents the value of the land contributed by the
Company and the development profit achieved.
1.24 The estimated Land Payments receivable by the Company under the Development
Agreement are broadly split 55:45 between the first and second halves of the estimated 10
year development period for the Residential Development Sites, albeit that the majority of
the payments to the Company anticipated in the first five years of the development period
are likely to be received in the third to fifth years after commencement of construction on site,
being 2016 to 2018, assuming that construction commences in earnest from January 2013.
This reflects the lead-in time required to develop residential units on the Residential
Development Sites for sale. Thereafter, the Land Payments are reasonably evenly
distributed save in the year that the sale of the Eastern Site is completed.
1.25 The Board expects that the Company will be required to make payments for corporation tax
due in respect of chargeable gains relating to the sale of Residential Development Sites
(“Tax on Disposal”) and also payments to Network Rail linked to the construction of the new
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bridge and the grant of an easement over the railway (“Network Rail Payments”). It is
estimated by the Board, having taken external valuation and tax advice, that the Tax on
Disposal and the Network Rail Payments will, in aggregate, be approximately £15 million
payable during the estimated 10 year period of the Planned Redevelopment. Montagu
Evans expresses no professional opinion in terms of the calculation and determination of
such Tax on Disposal (in respect of which we understand the Company has received
external professional tax advice). Montagu Evans has provided professional advice in
relation to the expected Network Rail Payments.
Share of Development Profit1.26 If the Company has been paid the sum equal to the Threshold Land Value in respect of the
land value attributable to the Residential Development Sites, and DWH shall have received
for its development services its maximum capped level of the DWH Operating Margin (in each
case as set out in the Development Agreement and determined in accordance with the PCFA),
then the Company shall be entitled to receive a 50 per cent. share of further undistributed
development profits (with DWH being entitled to receive the other 50 per cent. share).
1.27 Any such share of undistributed development profits could be material but will be dependent,
in particular, on (i) the selling prices of the housing units sold being higher than expected at
the time when the Threshold Land Value was determined and/or (ii) the development costs
actually incurred being as expected or lower than expected when the Threshold Land Value
was determined. In this report, no value has been attributed to the Company’s share of
potential development profits arising from the development of the Residential Development
Sites.
1.28 In practice a share of development profits is likely to become receivable by the Company in
the event that revenues arising from the sale of housing units on the Residential
Development Sites increase by around 2.0 per cent. (or approximately £7.0 million) over and
above expected revenues as at the date of this report and assuming that there is no change
in current estimated costs in relation to the development of the Residential Development
Sites and the DWH Infrastructure Enhancements.
1.29 Any such share of development profits could be material and will depend, in particular, on
the extent to which any increase in selling prices achieved for housing units exceeds any
increase in development costs. The prospects of the Company sharing in development
profits will, however, only become clear once the development is in its latter stages.
Timescales for the payment of the Minimum Land Value1.30 The Development Agreement provides for the Minimum Land Value to be paid out by
reference to certain dates. The Development Agreement provides for payments relating to
the Minimum Land Value to be made to the Company as follows:
(i) Initial Land Payments:(a) On the completion of the sale of the Central and Western Sites, DWH paid the
Company a sum of £5.1 million; and
(b) On the completion of the sale of the Eastern Site, DWH will pay the Company
£8.5 million. The sale of the Eastern site can be triggered at any time by the
Company by virtue of its put option. DWH has a call option that allows it to
acquire the site once the new bridge over the railway giving access to the
Racecourse and the Residential Development Sites has been completed.
However, this payment will only become payable on the later of (i) the
completion of the sale of the Eastern Site to DWH or (ii) four years after the
completion of the sale of the Central and Western Sites (or commencement of
development on the Eastern Site if earlier);
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(ii) Minimum Land Value:(c) By the earlier of the sale of the last residential unit on the Central and Western
Sites, or 6 years after completion of the sale of these two sites to DWH, DWH
must have paid £16,511,760 (taking account of any initial Land Payments made)
representing 38.8 per cent. of the Minimum Land Value; and
(d) DWH must have paid all of the Minimum Land Value by the earlier of (i) the sale
of the last residential unit on all three Residential Development Sites and (ii)
either 9.5 years from the completion of the sale of the Central and Western Sites
to DWH, or 4.5 years after the completion of the sale of the Eastern Site to
DWH, whichever is the later.
1.31 Although it is estimated by DWH that the overall development period of all three sites will be
of the order of 10 years, the overall development period could be longer. However, in
practice, even if the development period is longer, the receipt of the Minimum Land Value
can be managed by the Company through the put and call option arrangements set out in
the Development Agreement that have been agreed in respect of the Eastern Site.
In that regard the Company is able to exercise its put option in respect of the sale of the
Eastern site, and to receive the initial consideration for that site no later than four years after
the completion of the sale of the Central and Western sites. The balance of the Minimum
Land Value then falls to be paid by the later of (i) 9.5 years from the date of completion of
sale of the Central and Western sites and (ii) 4.5 years after the completion of the sale of the
Eastern site.
Subject to the put option in respect of the Eastern site being exercised at any time prior to
the fifth anniversary of completion of the sale of the Central and Western sites, then the
Minimum Land Value would be received within 9.5 years from the date of completion of the
sale of such sites. If the option is exercised after the fifth anniversary of the date of
completion of the sale of the Central and Western sites (which is at the Company’s
discretion), the Company will receive the full Minimum Land Value 4.5 years thereafter.
1.32 For the reasons set out in Section 6.5.3 of this report, in our opinion the actual payments in
respect of the land value attributable to the Residential Development Sites due to the
Company under the Development Agreement are likely to exceed the Minimum Land Value.
However, the Minimum Land Value and the timing associated with payments thereunder
provide a “downside” position which is guaranteed by Barratt Developments and is also
secured by way of legal charge in favour of the Company over the Residential Development
Sites, with such legal charge only being released in respect of housing units as and when
sold, and the Company has received the relevant Land Payments.
2. THE RESIDENTIAL DEVELOPMENT SITES AND THE HOTEL DEVELOPMENT SITE
Residential Development Sites2.1 The Residential Development Sites comprise the three areas of residential development at
the Racecourse known as the Western, Central and Eastern Sites as shown on the plan set
out on page 91 of the Circular.
2.2 The Residential Development Sites comprise the following:
Eastern Site – Previously developed site lying to the East of the existing Nuffield Health
Club, having a net area of some 25.0 acres (10.1 hectares). It is envisaged that this site will
be primarily developed as a mix of traditional housing and apartments (mainly two bedroom
apartments). The site will form the third phase of the residential development and it is
anticipated that it will be developed to provide some 690 housing units;
52
Central Site – Situated between the main Racecourse stands and the existing Nuffield
Health Club, having a net area of some 4.2 acres (1.7 hectares). It is envisaged that this site
will be developed as residential apartments in a number of linked blocks laid out over ground
and, generally, 7 to 10 upper floors. The Central Site is anticipated to be developed to
provide some 366 housing units; and
Western Site – Situated to the West of both the existing access to the Racecourse and the
stands and stables area, having a net area of some 15.8 acres (6.4 hectares). It is envisaged
that this site will be developed as a mix of traditional housing and apartments (mainly two
bedroom apartments) to provide a total of 421 housing units.
Hotel Development Site2.3 In addition, the Directors have identified a site at the Racecourse for the proposed
development of a 123 bedroom mid-market hotel (the “Hotel Development Site”) situated
within the main Racecourse buildings. Reserved Matters Planning approval was obtained in
November 2011 in respect of the Hotel Development Site.
3. BASIS OF VALUATION
3.1 Our valuations have been prepared in accordance with the RICS Valuation – Professional
Standards (Eighth Edition) published by the Royal Institution of Chartered Surveyors in
March 2012 (“the RICS Valuation Standards”).
3.2 Properties that are surplus to requirements and are held pending disposal or development
are generally valued at Market Value which is defined in the RICS Valuation Standards as:
“The estimated amount for which a property should exchange on the date of valuationbetween a willing buyer and a willing seller in an arms length transaction after propermarketing wherein the parties have each acted knowledgably, prudently and withoutcompulsion.”
3.3 The definition of Market Value assumes a disposal of the Residential Development Sites at
the date of valuation and, as such, does not reflect the terms of the Development Agreement
since the benefit of such contract is personal to the Company, is not capable of being
assigned to a third party and makes provision for the Land Payments to be made over time.
3.4 As such, and in accordance with paragraphs 3.28 to 3.33 of UK Appendix 2 of the RICS
Valuation Standards (Property Categorisation for Company Accounts), the Residential
Development Sites have been valued for the purposes of this report on the basis of the
Market Value of the contractual right of the Company to receive income pursuant to the
terms of the Development Agreement.
3.5 The Hotel Development Site has been valued on the basis of Market Value as defined in
Section 3.2 of this report.
3.6 Our valuation of the Residential Development Sites has had regard to the actual terms of the
Development Agreement and the factors set out within it that could impact upon the timing
and the amount of the Land Payments that the Company expects to receive under its terms
over the life of the development. Our valuation is based on the Market Value of the right to
receive the anticipated income arising out of the Development Agreement. In preparing our
valuation we have had regard to paragraph 3.32 of UK Appendix 2 of the RICS Valuation
Standards which, in relation to Joint Venture Development Contracts, states the following:
“The valuation of a joint development contract will therefore involve an assessment of thevalue of the right to receive a financial benefit [in these circumstances the Land
Payments attributable to the Residential Development Sites and potentially also a
share of development profit in each case payable to the Company pursuant to the
Development Agreement] at a future date or dates, contingent upon performance. The
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developer [in this instance the Company] as the recipient of potential future benefit underthe contract, must fulfill the obligation to perform all the terms of the contract. The valuershould consider and interpret all relevant factors including political, financial, fiscal,legislative, social, economic, market trends and so on, in assessing the developer’s probablereward” [in this instance the payments which may be made to the Company pursuant
to the Development Agreement]
3.7 This guidance reflects the fact that the Company has now entered into an unconditional
Development Agreement with DWH and cannot at the date of valuation (which is the date of
this report) sell the freehold Residential Development Sites to a third party with vacant
possession, or assign or transfer its rights under the Development Agreement. As such, our
opinion of the value of the Residential Development Sites as set out in this report reflects
our opinion of the Market Value of the Company’s contractual rights to receive, over time,
payments related to the land value attributable to the Residential Development Sites (after
deduction of anticipated payments in respect to Tax on Disposal and the Network Rail
Payments) under the Development Agreement.
3.8 In other words, our valuation reflects our opinion of the Market Value, as at the date of this
report, of the future payments due to the Company in respect of the land value attributable
to the Residential Development Sites over the expected life of such development but in any
event, subject to the Minimum Land Value and the timing of payments related to the
Minimum Land Value as detailed in Section 1.30 of this Part III.
3.9 Our valuation opinion in this report assumes that the Central and Western Sites have been
(or in the case of the Eastern Site will be) sold to DWH with full vacant possession in
accordance with the terms of the Development Agreement. This assumption is consistent
with the explanation that we have received from the Company that the Residential
Development Sites are subject to no tenancies whether of part or whole that would have an
adverse impact on performance of the Development Agreement or the receipts due to the
Company by virtue of it.
3.10 Other than estimated amounts in respect of the Tax on Disposal and the Network Rail
Payments (see Section 3.12 of this Part III below), no deductions have been made for costs
that would be incurred by the Company on disposal of the Residential Development Sites.
3.11 Our analysis of the expected Network Rail Payments is based on the terms of a Deed made
between the Company and Network Rail dated 30 April 2004 and varied on 21 November
2007 (“the Network Rail Deeds”). The Network Rail Payments will fall to be calculated
pursuant to a formula set out within the Network Rail Deeds. The Network Rail Payments
are based on a percentage of the increase in the net market value of the Central and Eastern
sites arising as a result of the construction of the new bridge, having allowed for certain
costs. As such the basis upon which the Network Rail Payments fall to be calculated is
different to the PCFA approach that will apply under the terms of the Development
Agreement.
3.12 In accordance with your instructions and based on the figures supplied by your professional
tax advisers, we have made deductions for the estimated Tax on Disposal that may be
payable on a disposal of the Residential Development Sites pursuant to the Development
Agreement. We accept no responsibility for the determination of such Tax on Disposal.
3.13 Both the Residential Development Sites and the Hotel Development Site were re-inspected
on 8 October 2012. Our valuations have been prepared by valuers qualified for such
purposes, co-ordinated by Mark Whitfield BSc MRCIS, partner of this Firm, who has relevant
experience and knowledge of valuing property of the subject type.
3.14 Montagu Evans has acted as External Valuers and the fees received in connection with this
instruction amount to less than 1 per cent. of Montagu Evans’ annual turnover.
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4. VALUATION ASSUMPTIONS
4.1 Sources of information4.1.1 We have effected no official searches and have assumed for the purposes of this
report that all necessary consents and permissions have been obtained and are
extant for their current use. To the extent that it is relevant, we have assumed that
the Residential Development Sites comply in every material respect with all locally
and statutorily imposed regulations, and that there are no outstanding notices against
any such property. We have set out within Sections 1.8 to 1.13 of this report a
summary of the planning position in relation to the Residential Development Sites as
advised to us by the Company.
4.1.2 We have not been supplied with any title documents relating to the freehold interests
in the Residential Development Sites. Our valuation opinions in this report are given
on the assumption that good and marketable title can be shown and that the title is
not subject to any adverse easements, wayleaves or restrictive covenants nor to any
tenancies, mortgages, charges or other adverse encumbrances which may have an
adverse effect on payments (including the level of such payments) to be made to the
Company pursuant to the terms of the Development Agreement. Such assumptions
are consistent with information provided to us by the Company.
4.2 Condition4.2.1 No structural or other surveys have been carried out, nor have we investigated the
possibility that deleterious materials are incorporated within any existing structures.
To the extent that it is relevant, we have assumed that each and every property and
all services, fixtures and fittings are without defect material to value and that no
deleterious materials are present.
4.2.2 Although we have had regard to the general condition of the Residential
Development Sites as observed in the course of our inspection for valuation
purposes, this report should not be taken as making any implied representations or
statements as to the condition of the Residential Development Sites.
4.2.3 We are similarly unable to express an opinion regarding the inclusion of deleterious
materials including (but not limited to) high alumina cement, calcium chloride additive
and woodwool slab. We are therefore unable to report that the Residential
Development Sites are free from risk in this respect.
4.2.4 We are similarly unable to express an opinion upon the condition of any building
services.
4.3 Ground Conditions4.3.1 We have not been provided with copies of any environmental audit, site survey or
other investigations that have been carried out in relation to the Residential
Development Sites. We are, however, aware that the Eastern Site was used as
railway sidings during the Second World War and that a pit, known as Borrow Pit No.
1 is situated within this site.
4.3.2 The Company’s environmental consultants Peter Brett Associates Limited have, we
are advised, produced a “worst case” specification of the remediation works which
would be required if the entire Borrow Pit area were to be excavated and refilled with
inert material. The estimated cost of implementing such remediation works has been
allowed for within the PCFA and as such is reflected in our valuation of the
Residential Development Sites. We have assumed that the Central and Western
Sites are entirely free from contamination, and have been put to no contaminative
use.
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4.3.3 We have carried out neither soil nor load-bearing tests and offer no opinion as to the
suitability of any of the subject sites for their proposed development but, for the
purpose of valuation, have assumed each site sufficient in this regard.
4.4 PCFA4.4.1 We have been provided with a copy of the PCFA that the Company has agreed with
DWH under the terms of the Development Agreement. Montagu Evans has
undertaken a review of the revenue estimated within the PCFA (in essence the
estimated value of the private and affordable housing units to be developed on the
Residential Development Sites). The costs included within the PCFA (in essence the
estimated cost of developing the private and affordable housing (including the
provision of infrastructure and servicing) and the DWH Infrastructure Enhancements)
have been independently reviewed by Capita plc, as quantity surveyors, on behalf of
the Company.
4.4.2 In preparing our opinion of the Market Value of the Residential Developments Sites,
we have had regard to the agreed PCFA. We have not reviewed the costs included
within it and, in accordance with our instructions, have assumed that they are
representative of reasonable professional estimates of the likely outturn costs based
on the information available as at the date of this report. Having undertaken a
comprehensive review of the costs included within the PCFA, we understand that the
Company is satisfied that this assumption is reasonable. We accept no responsibility
for the accuracy of the costs included within the PCFA.
5. VALUATION COMMENTARY
5.1 DWH were selected by the Company as their preferred development partner in 2006 with
the Development Agreement being negotiated throughout 2007.
5.2 In the period since the third quarter of 2007, the UK, in common with all major global
economies, has been adversely affected by the tightening of the international credit markets
and the subsequent near collapse of the UK investment and clearing bank system in
September 2008. These events have served to reduce significantly the availability of
mortgage finance and precipitated a decline in consumer confidence.
5.3 In order to stimulate the economy in the UK, the Bank of England Monetary Policy
Committee lowered the base lending rate to 0.5 per cent. in March 2009, and has held rates
at this level since that time. In addition, the Bank of England has injected capital into the UK
economy through the purchase of assets (generally UK Government Gilts) through its
“Quantitative Easing” programme.
5.4 Recently released figures show that the UK’s GDP shrank 0.7 per cent. between April and
June 2012. This is a much bigger fall than expected and follows a 0.3 per cent. drop in the
first three months of the year. This announcement confirms a third consecutive quarter of
negative economic growth figures, meaning the UK has entered into its first “double-dip”
recession since the 1970s.
5.5 However, it is important to note that these negative economic growth figures are on a very
different scale from those seen at the start of 2008, when output shrank by 3.2 per cent. over
the first two quarters to put the UK in to a deep recessionary economic environment. The
most recent decline in output figures are a result of a UK economy that has been
increasingly strained under the weight of government austerity measures and the developing
eurozone crisis.
5.6 Underlying UK economic drivers remain fairly weak, with latest unemployment at 8.0 per
cent. (albeit this is a slight decrease from the Q1 2012 rate of 8.3 per cent.) and continuing
concerns over further redundancies in the public and private sectors.
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5.7 We believe the economic outlook will remain weak in the short term, although an
improvement is expected in the early part of 2013, with a further improvement thereafter but
only time will tell if this turns out to be correct with more Government spending cuts still to
come, and with the Eurozone problems a long way from being solved, the UK economy is
bound to continue to face contractionary forces in the short to medium term.
5.8 The prevailing economic environment has had a significant effect upon house prices and the
rate of sale of houses throughout the UK, and Newbury has been no exception to this. Since
late 2007, the reduced availability of mortgage finance and more restrictive lending criteria
adopted by lenders (notably in respect of the amount of equity required to obtain a mortgage
which increased from between 5 per cent. to 10 per cent. of the total value of the property
to up to 20 per cent. or more in respect of new build property), has had a significant decline
in the demand for, and value of, UK residential property. In addition to the reduced availability
of debt financing, the lack of consumer confidence and concerns over job security have
further impacted demand for UK residential property. As noted, these concerns continue to
prevail and are likely to be a feature of the market for the foreseeable future.
5.9 According to the Nationwide House Price Index, the average UK house price fell from a high
of £184,131 in the third quarter of 2007 to a low (recorded in the first quarter of 2009) of
£149,709, representing a peak to trough decline of approximately 18.7 per cent. The market
has recovered from this low point but average prices remain below peak of market levels.
According to the Nationwide, since the first quarter of 2009 the average UK house price has
shown an increase to stand, as at September 2012, at £163,694 representing a decrease of
some 1.2 per cent. over the previous 12 months but an increase of some 9.4 per cent. from
the market low experienced in the first quarter of 2009. In practice, the recently published
data indicates a broadly flat trend for average prices albeit that the Nationwide’s expectation
is marginally negative in that it expects prices will remain flat or drop slightly over the course
of the next 12 months.
5.10 As a result of the fall in values and difficult economic conditions generally, volume house
builders have significantly curtailed their construction activity. The effect of this is that the
supply of available housing is likely to remain constrained within the short to medium term
which, in stable economic conditions, would suggest that there is the prospect of a return to
modest positive house price growth. However, as noted above, at the present time, the
general outlook for house prices is uncertain.
5.11 Turning more specifically to the market within Newbury, there are, at present, only a limited
number of new build properties available on the market. There remains a strong demand for
family housing, albeit that the market for apartments is less robust given the lack of investor
purchasers who, previously, had made up a significant proportion of buyers, particularly in
respect of apartments. Discussions with local selling and on-site agents indicate that the
market for high quality, premium apartments is now dominated by older people seeking to
downsize from larger family housing and release equity through the sale of their existing
home.
5.12 In determining our valuation opinion in this report in respect of the land value attributable to
the Residential Development Sites pursuant to the Development Agreement, we have had
the opportunity of reviewing the Development Agreement which went unconditional on
18 September 2012, and indicates that the agreed Threshold Land Value of £48.0 million
exceeds the Minimum Land Value of £42.6 million.
5.13 We have, as noted, had regard to the advice provided to the Company by its retained
quantity surveyors, Capita plc, who have advised in relation to the likely cost of providing
infrastructure to the Residential Development Sites and making them available for
development, the DWH Infrastructure Enhancements and the likely cost of development of
the Residential Development Sites. Capita’s advice has, we understand, been incorporated
into the PCFA which, in turn, the Company has agreed with DWH.
57
6. MARKET VALUES
6.1 Having regard to the terms of the Development Agreement, we have given consideration as
to the Market Value of the Residential Development Sites on the basis that the Company will
receive Land Payments over time. In arriving at our opinion of the Market Value we have had
regard to the demand for, and value of, new residential units in Newbury and, based on the
rates of sale currently prevailing within the local market, the likely timeframe over which the
development will proceed which, in turn, will influence the timescale over which Land
Payments will be received by the Company.
6.2 In preparing our opinion of the Market Value of the Land Payments in respect of the
Residential Development Sites we have sought to calculate the Net Present Value (“NPV”)
of the anticipated Land Payments due to the Company under the terms of the Development
Agreement. The NPV of these sums is discounted at a rate that reflects the relevant risks
attaching to their receipt notably (i) market risk (attaching to the value of the housing units
to be built), (ii) cost risk (attaching to the overall cost of the development including the DWH
Infrastructure Enhancements), (iii) covenant risk (attaching to the financial standing of DWH
and Barratt Developments (as guarantor)) and (iv) the level of net receipts to the Company
(which will be influenced by the outcome of future negotiations with Network Rail and HMRC,
and could be impacted by any adverse change in rates of taxation).
6.3 We have prepared our opinion of the Market Value of the Land Payments in respect of the
Residential Development Sites having regard to the NPV of the Minimum Land Value and
the NPV of the Threshold Land Value as detailed below. As noted, no explicit allowance has
been made for the value of any future share of potential development profits that may be
received by the Company in due course. The discounts rates adopted do, however, reflect
the potential for the Company to receive sums in excess of both the Minimum Land Value
and the Threshold Land Value, nor has any allowance been made for the value to the
Racecourse trading business of the DWH Infrastructure Enhancements.
6.4 NPV of Minimum Land Value6.4.1 With the Development Agreement having become unconditional, the receipts by the
Company and the timing of such receipts in respect of the Minimum Land Value
attributable to the Residential Development Sites have been fixed and are due to be
paid at set long stop dates as specified in the Development Agreement. Having taken
account of these fixed payment receipts and corresponding dates, the anticipated
Network Rail Payments and, as calculated by the Company and its professional tax
advisers, the Tax on Disposal (and the timing of all such payments), we have
discounted all such receipts and payments to derive the NPV of such cashflows as
at the date of this report, of £19.0 million. We have applied a discount rate of
5.75 per cent. per annum to the cashflow receipts and payments to calculate the NPV
of the Minimum Land Value.
6.4.2 As the value and timing of the receipts, amounting to the Minimum Land Value are
fixed under the Development Agreement, as a gross receipt they are broadly
equivalent to a secured debt obligation held by the Company and guaranteed by
Barratt Developments. In arriving at the appropriate discount rate we have had
regard to the level of interest rate swaps that Barratt Developments has entered into,
as detailed in their Annual Report and Accounts 2012, which fluctuate between
5.6 per cent. and 6.2 per cent. with 10 and 5 year maturities respectively.
6.4.3 The receipt of the Minimum Land Value is guaranteed by Barratt Developments. We
have separately commented on the financial strength of this company in Section 6.7
of this report. The financial strength of Barratt Developments underpins the certainty
of the receipt of the Minimum Land Value and means that, in the absence of
corporate failure, the receipt of £42.6 million is guaranteed. The interest rates at
58
which Barratt Developments is able to borrow and its market capitalization suggest
that the market perception is that the risk of corporate failure is low.
6.4.4 As noted in Section 6.2 of this report, the NPV of the Minimum Land Value has been
determined on the basis of the likely payments of approximately £15.0 million in
respect of Tax on Disposal and the Network Rail Payments. The actual amount in
respect of the Network Rail Payments is still subject to the outcome of negotiations
with Network Rail and the estimated Tax on Disposal is always subject to legislative
changes to taxation.
6.4.5 The timing of the receipt of the Minimum Land Value can be assessed with certainty
in accordance with the Development Agreement on the basis detailed in Section 1.30
of this report, and subject to the Company not waiving its entitlement to require DWH
to acquire the Eastern Site, will have been received in full by no later that the end of
the first quarter of 2022, being 9.5 years from the unconditional date of 18 September
2012.
6.4.6 Were the Minimum Land Value to be paid purely in accordance with the terms of the
Development Agreement, the profile of receipts would become skewed towards the
second half of the development period (being years 5 to 9.5) with only 5 per cent. of
net receipts to the Company being received in the first 5 years and the balance in the
following 4.5 year period, and a significant payment being made in the final year. In
practice this payment profile is unrealistic as it does not take account of the fact that
having acquired the Central and Western Sites, DWH will commence the
development of housing units and current market conditions are such that on
completion of such units they will sell at a reasonable rate. As noted in Section 1.21
of this report, the sale of completed units will give rise to Land Payments being made
to the Company in accordance with the PCFA.
6.4.7 For this reason, although the Minimum Land Value provides a theoretical “downside”
position for the Company, we consider that the NPV assessed on this basis
understates the value of the Company’s right to receive Land Payments under the
terms of the Development Agreement and is not representative of Market Value.
6.5 NPV of Threshold Land Value6.5.1 With the Development Agreement having become unconditional, we have
determined an estimate of the likely receipts by the Company, and timing of such
receipts, under the Development Agreement in respect of the Threshold Land Value
attributable to the Residential Development Sites, taken account of the anticipated
Network Rail Payments and, as calculated by the Company and its professional tax
advisers, the Tax on Disposal (and the timing of all such payments), and discounted
all such receipts and payments to derive the NPV of such cashflows as at the date
of this report for the Threshold Land Value of £24.1 million which is equivalent to a
blended discount rate of approximately 7.5 per cent.
6.5.2 We have applied differential discount rates to the anticipated receipts to the
Company under the Development Agreement to reflect the differing risk profile of the
Minimum Land Value and the next £5.4 million (being the difference between the
Minimum Land Value and the Threshold Land Value of £48.0 million) (“the Differential
Amount”) to the cashflow receipts and payments to calculate the NPV of the
Threshold Land Value.
6.5.3 As the first £42.6 million of anticipated receipts are guaranteed by Barratt
Developments with a long stop date for receipt of no later than the end of the first
quarter of 2022, the risks associated with the receipt of this income (which represents
88.8 per cent. of the Threshold Land Value) are no different to those identified in
Section 6.4.4 of this report in relation to the receipt of the Minimum Land Value.
59
6.5.4 The receipt of the Differential Amount to reach the Threshold Land Value is
dependent on various factors including, in general terms, (i) the cost of developing
the Residential Building Sites; (ii) the sale price achieved for each residential unit
sold; (iii) the rate of sale of residential units; and (iv) the costs incurred in
implementing the DWH Infrastructure Enhancements.
6.5.5 As we have noted there is no guarantee that the Differential Amount will be received
by the Company either in part or whole. To reflect this uncertainty we have applied a
higher discount rate to the Differential Amount to reflect the greater uncertainty to the
Company of it receiving any additional Land Payments in excess of the Minimum
Land Value. The higher return reflects the fact that unlike the Minimum Land Value,
the return required by a purchaser would reflect an equity rather than debt rate of
return, and that the Differential Amount may not be received.
6.5.6 Although there is a risk that the Differential Amount of £5.4 million will not be
received; we consider this to be an unlikely outcome. The Differential Amount
represents the last 11.2 per cent. of the Threshold Land Value and, if received, would
accrue towards the end of the anticipated development period.
6.5.7 Given that (i) there is no end date by which the Company’s right to receive Land
Payments terminates, (ii) improvements in revenue over and above changes in costs
are reflected in the PCFA and (iii) DWH is motivated to achieve the Threshold Land
Value (as once the Threshold Land Value is achieved DWH is able to earn an
improved DWH Operating Margin), we consider that, on balance, there is a
reasonable prospect that the Differential Amount will be received by the Company,
albeit this is not guaranteed.
6.6 Residential Development Profits6.6.1 In addition to the Threshold Land Value, as described in Section 1.16.3 of this report,
there is also the potential for the Company to receive a share of development profits
under the Development Agreement. No NPV calculation has been performed on this
additional potential share of development profits as the timing and potential value of
these receipts (if any) can only be ascertained in the future once the sale of individual
residential units commences.
6.6.2 As noted, the Company would be likely to receive a share of the development profits
in the event that revenues from the sale of housing units constructed on the
Residential Development Sites increase by £7 million, (a 2.0 per cent. increase)
above that set out in the PCFA, assuming no increase in cost.
6.7 Guarantee and Security6.7.1 In arriving at the discount rates which we have applied for the purposes of
determining the NPV in this report, we have had regard to the fact that (i) Barratt
Developments is guarantor of the Minimum and Threshold Land Value, has a Dunn
& Bradstreet rating of 5A1 and a market capitalisation in the order of £1.8 billion, and
(ii) the land value attributable to the Residential Development Sites to be received by
the Company is secured by a legal charge over the Land (released as and when
each individual unit is sold).
6.8 The Hotel Development Site6.8.1 The Hotel Development Site falls outside the terms of the Development Agreement
and has been retained by the Company. The Hotel Development Site has the benefit
of detailed planning consent for the development of a 123 bedroom hotel. The Hotel
Development Site has been valued on the basis of Market Value having regard to our
60
experience of the underlying value of sites with the benefit of planning consent for
hotel use.
6.8.2 At the present time, development outside the budget sector of the hotel market is
limited as a consequence of reduced bank lending on speculative development
projects. We understand that the Company is currently considering the options for
the Hotel Development Site or the funding of its development from external funding
providers. If interest from external funding providers to develop the Hotel
Development Site is not forthcoming then the Company could consider making a
further planning application for consent to develop an alternative use for the Hotel
Development Site.
6.8.3 The potential to achieve alternative forms of planning consent that would be
compatible with the Company’s wider redevelopment objectives underpins the
Market Value of the Hotel Development Site.
7. VALUATION UNCERTAINTY
7.1 Having regard to the terms of the Development Agreement, the Land Payments that are to
be received by the Company are underpinned by the Minimum Land Value. The net amount
of the Minimum Land Value that will be retained by the Company is subject to timing risk
(albeit with a series of contractual longstop dates) and are based on professional estimates
of the Network Rail Payments and in respect of Tax on Disposal.
7.2 The receipt of the Threshold Land Value is largely subject to the same risk profile as the
Minimum Land Value on the basis that the Minimum Land Value is just under 89.0 per cent.
of the Threshold Land Value. The Minimum Land Value is guaranteed by Barratt
Developments, a FTSE 250 listed company with a market capitalization in the order of £1.8
billion, net debt of less than £168.0 million as at 30 June 2012 (as reported in their 2012
Report and Accounts) and a 5A1 credit rating.
7.3 The receipt of the Differential Amount is dependent upon the success of the Planned
Redevelopment, is not guaranteed and as such may not be received. For the reasons set
out in this report we consider that it is likely that the Differential Amount will be received by
the Company.
7.4 The receipt of value from the Hotel Development Site is contingent upon the Company or a
potential purchaser of such site either obtaining a pre-letting of the hotel or being able to fund
the development of the hotel on the basis of such a pre-letting or a management contract.
At the present time, it is difficult to fund such opportunities and as such a “willing purchaser”
may take some time to identify.
8. OPINION OF VALUE
Residential Development Sites8.1 In accordance with the facts and assumptions set out in this report, we are of the opinion
that the total aggregate Market Value of the NPV of the Company’s right to receive income
under the Development Agreement in respect of the Residential Development Sites less the
NPV of estimated Network Rail Payments as set out in the Network Rail Deeds and the NPV
of the Tax on Disposal, as at the date of this report is, using a blended discount rate of
approximately 7.5 per cent per annum, fairly represented in the sum of:
Freehold £24,100,000 (Twenty Four Million One Hundred Thousand Pounds)
Hotel Development Site8.2 In accordance with the facts and assumptions set out in this report, we are of the opinion
that the Market Value of the Hotel Development Site (but without any allowance for the
61
expenses of realising the disposal of such site or the tax implications of any such disposal
or any allowance for the time to obtain outline planning permission in respect of the Hotel
Development Site) as at the date of this report is:
Freehold £1,200,000 (One Million Two Hundred Thousand Pounds)
9. CONFIDENTIALITY
9.1 This report is provided for the purpose of inclusion in the Circular published by the Company
on 29 October 2012. The basis of valuation might be inappropriate for other purposes and
may not be otherwise used without our prior written consent.
9.2 Neither the whole nor any part of this report nor any reference thereto may be included in
any published document, circular or statement nor published in any way without our written
approval of the form and context in which it is to appear.
9.3 We confirm that we have given and have not withdrawn our written consent to the publication
of this report in the Circular and certain references to our name in the form and context in
which they appear in such document.
9.4 We confirm 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.
Yours faithfully,
MJ Whitfield BSc MRICS
PartnerFor and on behalf of Montagu Evans LLP
62
PART IV
ADDITIONAL DISCLOSURES REQUIRED UNDER
THE TAKEOVER CODE
1. RESPONSIBILITY STATEMENTS
1.1 The Directors, whose names are set out on page 6 of this document, accept responsibility
for all the information contained in this document, save for the information for which
responsibility is taken by Compton Beauchamp Estates and Erik Penser (the “Compton
Beauchamp Estates Concert Party”) in Section 1.2 below and save that Erik Penser and
Laurie Todd do not accept responsibility for the recommendation relating to the Proposals.
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 for which they
accept responsibility is in accordance with the facts and does not omit anything likely to
affect the import of such information.
1.2 For the purposes of Rule 19.2 of the Takeover Code only, the directors of Compton
Beauchamp Estates whose names are set out in Section 2.5 of Part IV of this document,
accept responsibility for the information relating to Compton Beauchamp Estates contained
in Section 2 of Part IV of this document. To the best of their knowledge and belief, having
taken all reasonable care to ensure that such is the case, the information for which they are
responsible is in accordance with the facts and does not omit anything likely to affect the
import of such information.
2. INFORMATION RELATING TO COMPTON BEAUCHAMP ESTATES AND ERIK PENSER
(TOGETHER THE “COMPTON BEAUCHAMP ESTATES CONCERT PARTY”)
The information set out in Section 2 of Part IV of this document relates to Compton Beauchamp
Estates and Erik Penser who for the purposes of the Takeover Code are treated as acting in
concert. Erik Penser is a director of Compton Beauchamp Estates and holds shares in Compton
Beauchamp Estates.
2.1 Compton Beauchamp Estates Concert Party’s intentions regarding NewburyRacecourse, its business and employeesThe Compton Beauchamp Estates Concert Party is fully supportive of the management and
strategic direction of the Company. Erik Penser and Compton Beauchamp Estates have
each informed the Board that they intend to allow the Board to run the Company in line with
the Company’s current proposed strategy, as detailed further in Section 6 of Part I of this
document and as generally communicated to Shareholders up to and including the date of
this document.
Neither Erik Penser nor Compton Beauchamp Estates has any intentions regarding
Newbury Racecourse’s business that would affect:
• the current business activities of the Company;
• the current strategic plans of the Company;
• the location of Newbury Racecourse’s business or operating subsidiaries;
• the maintenance of any trading facilities for the Company’s Ordinary Shares; or
• the employment of the Company’s staff, including the continued employment of, or the
conditions of employment of, any of the Company’s employees, senior management
or Directors or the composition of the Board of the Company.
Rules: 4(g)/
Rule 19.2
(re: EE)
Rule 24.3d(iii)
Rule 24.2(a) and
(b)
Rules: 4(g)/
Rule 19.2
(re: OR)
63
Neither Erik Penser nor Compton Beauchamp Estates has any intentions to seek to procure
the disposal of or otherwise change the use of any of the fixed assets of Newbury
Racecourse save in connection with the Planned Redevelopment as described in Section 6
of Part I of this document.
Compton Beauchamp Estates and Erik Penser have each confirmed to the Company that if
the Company acquires all of the Ordinary Shares currently held (directly or indirectly) by
GPG, then each of Compton Beauchamp Estates and Erik Penser (together with certain
persons connected with them and any parties acting in concert with them) will not for a
period of 365 days following completion of the Share Buy-Back announce a firm intention to
make an offer for the Company, seek to make any offer or possible offer for the Company or
acquire any interest in Ordinary Shares of the Company if such acquisition would result in a
mandatory offer for the Company. The confirmations given to the Company by Compton
Beauchamp Estates and Erik Penser are subject to their respective rights to make an offer
for the Company if any unrelated third party announces a firm intention to make an offer for
the Company or otherwise in accordance with Note 2 to Rule 2.8 of the Takeover Code.
2.2 Information relating to Compton Beauchamp Estates Compton Beauchamp Estates is a private limited company. Its principal activities are
farming, estate management and racehorse training. The great majority of the Company’s
revenues are derived from the sale of agricultural commodities, with the remainder
comprised of subsidies from the European Union and income from property rentals. The
registered office of Compton Beauchamp Estates is Upper Farm, Woolstone, Faringdon,
Oxfordshire SN7 7QL.
Compton Beauchamp Estates is financing its commitment under the Compton Beauchamp
Estates Loan Agreement from its existing cash resources and from certain committed
facilities which have been made available to Compton Beauchamp Estates by LGT Bank
(Ireland) Limited. Compton Beauchamp Estates has provided LGT Bank (Ireland) Limited
with a fixed and floating charge over its assets and the Ordinary Shares held by Compton
Beauchamp are subject to that charge. In addition, the Ordinary Shares held by Compton
Beauchamp Estates have been pledged in favour of LGT Bank (Ireland) Limited. Compton
Beauchamp Estates remains the registered holder of those Ordinary Shares and is entitled
to exercise the voting rights attached to them.
2.3 Information relating to Erik Penser Erik Penser is the owner of a bank in Stockholm. He has owned racehorses in Sweden since
1964 and in England since 1972. He has also been a breeder since 1985. He is a member
of the Jockey Club and lives and farms at Compton Beauchamp, near Lambourn. Erik
Penser has provided a guarantee to LGT Bank (Ireland) Limited in respect of the facility
referred to in Section 2.2 of Part IV and in addition the Ordinary Shares held by Erik Penser
have been pledged in favour of LGT Bank (Ireland) Limited. Erik Penser remains the
registered holder of those Ordinary Shares and is entitled to exercise the voting rights
attached to them.
2.4 Financial and Trading Prospects for Compton Beauchamp EstatesThe trading performance of Compton Beauchamp Estates remains satisfactory. Although
Compton Beauchamp Estates witnessed a slight decrease in the harvest yield in 2012, this
has been, and is expected to be, compensated for by the increase in agricultural commodity
prices. Compton Beauchamp Estates does not have any expensive on-going capital
investment projects.
Rule 24.3(d) (ii)
Rule 24.3(a) and
(c)(ii)
Section 4(d)
Section 4(d)
Rule 24.3(a) and
(c) (ii)
64
2.5 Compton Beauchamp Estates: DirectorsThe Directors of Compton Beauchamp Estates are as follows:
DirectorsNils Wilhelm Erik Penser*
Lillemor Penser
Notes: *Nils Wilhelm Erik Penser is also a Director of Newbury Racecourse
2.6 Compton Beauchamp Estates: Ownership As at the Latest Practicable Date, Mrs Lillemor Penser who is a director of Compton
Beauchamp Estates and whose name is set out in Section 2.5 of Part IV of this document,
is the controlling party of Compton Beauchamp Estates by virtue of her holding 75.5 per
cent. of the issued ordinary share capital of Compton Beauchamp Estates.
As at the Latest Practicable Date, the shareholders in Compton Beauchamp Estates are:
Percentage of issued ordinary share capitalShareholder of Compton Beauchamp EstatesLillemor Penser 75.509%
HNS Holdings 24.490%
Nils Wilhelm Erik Penser* 0.001% ––––––––Notes: *Nils Wilhelm Erik Penser is also a Director of Newbury Racecourse
2.7 Irrevocable undertakings Compton Beauchamp Estates and Erik Penser have given irrevocable undertakings to
Newbury Racecourse in relation to their aggregate holding of 1,370,400 Ordinary Shares,
representing approximately 28.7 per cent. of the existing issued share capital of the
Company, to vote in favour of Resolution 1.
Compton Beauchamp Estates and Erik Penser have separately undertaken that, in
accordance with the requirements of the Takeover Code, they will not vote on Resolution 2.
Compton Beauchamp Estates has also given an irrevocable undertaking to Newbury
Racecourse not to dispose of or otherwise deal in any of the Ordinary Shares held by
Compton Beauchamp Estates from 29 October 2012 until the earliest to occur of (i) the date
on which completion of the Share Buy-Back occurs, (ii) either or both of the Resolutions not
being approved at the General Meeting or the Share Buy-Back failing for any other reason
and (iii) 12 midnight on 30 November 2012. The undertakings given by Compton
Beauchamp will cease to apply if an announcement of a firm intention to make an offer for
the Company (pursuant to Rule 2.7 of the Takeover Code) is published.
Erik Penser has also given an irrevocable undertaking to Newbury Racecourse not to
dispose of or otherwise deal in any of the Ordinary Shares which he holds from 29 October
2012 until the earliest to occur of (i) the date on which completion of the Share Buy-Back
occurs, (ii) either or both of the Resolutions not being approved at the General Meeting or
the Share Buy-Back failing for any other reason and (iii) 12 midnight on 30 November 2012.
The undertakings given by Erik Penser will cease to apply if:
(a) an announcement of a firm intention to make an offer for the Company (pursuant to
Rule 2.7 of the Takeover Code) is published; or
(b) the Company receives, prior to completion of the Share Buy-Back, any formal written
approach from any bona fide third party seeking to make an offer or possible offer for
the share capital of the Company,
Section 2(e)
Rule 24.3(d)
(section 4(m)/
Rules 25.7(b)
Section 4(d)
Rule 24.3(b) (iii)
Rule 25.2 Note 4
Rule 24.3(a) and
(c) (i)
Section 2(e)
Definition of
acting in concert
(“AIC”) Note 5
65
and the provisions of paragraph 26 of the Implementation Agreement apply in relation to
such announcement and/or formal written approach.
2.8 Financial information relating to Compton Beauchamp Estates The financial information listed below relating to Compton Beauchamp Estates is hereby
incorporated by reference into this document in accordance with Rule 24.15 of the Takeover
Code.
No Source of Information1. Compton Beauchamp Estates: Abbreviated Accounts for the year ended 31 December
2011.
2. Compton Beauchamp Estates: Abbreviated Accounts for the year ended 31 December
2010
These accounts are available at www.racecoursenewbury.co.uk/
About-Newbury/Investor-Relations/Circular-Documents.
Newbury Racecourse will provide within two business days, without charge, to each person
to whom a copy of this document has been delivered, upon their written or verbal request,
copies of any documents incorporated by reference in this document. Copies of any
documents incorporated by reference in this document will not be provided unless such a
request is made. Requests for copies of any such documents should be directed to: the
Company Secretary, The Racecourse, Newbury, Berkshire RG14 7NZ or by telephoning:
01635 40015 or, when dialing from outside the UK, +44 1635 40015.
2.9 Compton Beauchamp Estates Material ContractsExcept for the Compton Beauchamp Estates Loan (details of which are set out in Section
3.10.3 of this Part IV, Compton Beauchamp has no material contracts dated within a two-
year period prior to the date of this document.
3. INFORMATION RELATING TO NEWBURY RACECOURSE
3.1 Mid Market QuotationsThe following table shows the Closing Price for an Ordinary Share, as derived from PLUS,
on the first business day of each of the six months prior to the publication of this document
and on 26 October 2012, being the last practicable business day prior to the publication of
this document.
Closing Price for anDate Ordinary Share (pence)26 October 2012 387.5
1 October 2012 387.5
3 September 2012 387.5
1 August 2012 387.5
2 July 2012 347.5
1 June 2012 347.5
1 May 2012 327.5
3.2 Directors of the CompanyThe names of the Directors and the positions which they hold are as follows:
Directors PositionDominic Burke (Non-Executive Chairman)John Dodds (Non-Executive Director)The Honourable Harry Herbert (Non-Executive Director)
Rule 24.3d (viii)
Rule 24.15(d) and
Note (iii)
Rule 24.3(a) and
(c)
Rule 24.15 (d)
and Note (i), (ii)
Rule 24.3 (a) and
(c) (vii)
(Section 4(m)/
Rule 25.7(a))
Rule 24.3 (d) (xvI)
(Rule 25.7(c))
66
Directors PositionStephen Higgins (Joint Managing Director)Sarah Hordern (Joint Managing Director)Lady Lloyd-Webber (Non-Executive Director)Erik Penser (Non-Executive Director)Brian Stewart-Brown (Non-Executive Director)Christopher Spence (Non-Executive Director)Laurie Todd (Non-Executive Director)
3.3 Service Contracts of DirectorsExecutive DirectorsEach Executive Director has a service agreement with Newbury Racecourse. The terms are
set below:
Stephen HigginsStephen Higgins entered into a service agreement with Newbury Racecourse on 29 October
2012 to act as Joint Managing Director (the “New SAH Contract”). Mr. Higgins is paid a
salary of £135,000 per annum with a car allowance of £6,500 per annum. Mr. Higgins is
entitled to be a member of the Newbury Racecourse PLC Stakeholder Scheme (with
employer contributions of 8 per cent. (or such higher employer contribution rate as may be
determined by the Company in accordance with the director’s age at the start of each tax
year)) and receives the following benefits in kind: life assurance cover, permanent health
insurance and medical expenses insurance. The New SAH Contract may be terminated by
either party on 12 months’ written notice and there are no provisions for compensation in the
event of early termination.
Sarah HordernSarah Hordern entered into a service agreement with Newbury Racecourse on 29 October
2012 to act as Joint Managing Director (the “New SH Contract”). Mrs. Hordern works a four
day week and is paid a pro-rata salary of £108,000 per annum (based on a full time
equivalent of £135,000 per annum) with a car allowance of £6,500 per annum. Mrs. Hordern
is entitled to be a member of the Newbury Racecourse PLC Stakeholder Scheme (with
employer contributions of 8 per cent. (or such higher employer contribution rate as may be
determined by the Company in accordance with the director’s age at the start of each tax
year)) and receives the following benefits in kind: life assurance cover, permanent health
insurance and medical expenses insurance. The New SH Contract may be terminated by
either party on 12 months’ written notice and there are no provisions for compensation in the
event of early termination.
2012 Cash BonusEach of Mr. Higgins and Mrs. Hordern were awarded a cash bonus of £75,000 following
completion of the Development Agreement in September 2012.
2012 Discretionary Bonus SchemeEach of Sarah Hordern and Stephen Higgins is a participant in the Company’s 2012
discretionary bonus scheme (the “2012 Scheme”). Under the terms of the 2012 Scheme,
each of them is entitled to receive a maximum discretionary bonus of 20 per cent. of their
basic annual salary (as at 1 January 2012).
75 per cent. of the maximum bonus award under the 2012 Scheme will be paid if the
Company’s trading PBIT target for 2012 (as defined in the 2012 Scheme) is achieved.
25 per cent. of the maximum bonus award under the 2012 Scheme will be paid subject to
the Remuneration Committee, at its absolute discretion, being satisfied that the three
personal performance objectives set for each of Mr. Higgins and Mrs. Hordern and the three
Section 4(I)/ Rule
25.5(a)
67
joint performance objectives set for both of them have been met during the 2012 Financial
Year.
Determination of the actual trading PBIT for the 2012 Financial Year will be made by the
Remuneration Committee at its absolute discretion following review of the Company’s
audited accounts for the 2012 Financial Year.
For the purposes of the 2012 Scheme only, Mrs. Hordern’s basic annual salary will be
treated as the full-time equivalent salary applicable to her role – i.e. £135,000 per annum.
Save as mentioned in this Section 3.3 there are no entitlements to commissions, profit
sharing arrangements or any other specific compensation payments under the Executive
Directors’ service agreements.
Earlier Service Contracts
Stephen HigginsThe New SAH Contract has replaced the earlier service agreement between Stephen
Higgins and Newbury Racecourse dated 26 July 2007 (the “Old SAH Contract”). The Old
SAH Contract was capable of being terminated by Mr. Higgins or Newbury Racecourse on
not less than 12 months’ written notice. Mr. Higgins was paid a salary of £120,000 per annum
and a car allowance of £6,500 per annum. Mr. Higgins was entitled to be a member of the
Newbury Racecourse PLC Stakeholder Scheme (with employer contributions of 8 per cent.
(or such higher employer contribution rate as may be determined by the Company in
accordance with the director’s age at the start of each tax year)) and received the following
benefits in kind: life assurance cover, permanent health insurance and medical expenses
insurance. With effect from 1 May 2012, the annual salary payable to Mr. Higgins was
increased to £135,000 per annum.
Sarah HordernThe New SH Contract has replaced the earlier service agreement which Sarah Hordern
entered into with Newbury Racecourse on 4 August 2005 (the “Old SH Contract”). The Old
SH Contract was capable of being terminated by Mrs. Hordern or Newbury on not less than
12 months’ written notice. Mrs. Hordern was paid a salary of £120,000 per annum and a car
allowance of £6,500 per annum. Mrs. Hordern was entitled to be a member of the Newbury
Racecourse PLC Stakeholder Scheme (with employer contributions of 8 per cent. (or such
higher employer contribution rate as may be determined by the Company in accordance with
the director’s age at the start of each tax year)) and received the following benefits in kind:
life assurance cover, permanent health insurance and medical expenses insurance and
telephone expenses.With effect from 1 May 2012, the annual fulltime equivalent salary
payable to Mrs. Hordern was increased to £135,000 per annum.
From January 2012, Mrs. Hordern has worked four days a week for the Company and the
pro-rated salary payable to Mrs. Hordern was £96,000 per annum until 1 May 2012 which
was then increased to £108,000 per annum (based on a fulltime equivalent salary rate of
£135,000 per annum).
LTIP arrangements
As part of the Company’s plans to ensure that effective remuneration arrangements are in
place for the Executive Directors, the Company has implemented the Newbury Racecourse
PLC Trading Long Term Incentive Plan (the “Trading LTIP”) and the Newbury Racecourse
PLC Property Long Term Incentive Plan (the “Property LTIP”).
These arrangements do not have any connection with or dependence upon the Share Buy-
Back and have been implemented as part of the Company’s remuneration policy.
Section 4(I)/
Rule 25.5(b)
68
Trading LTIP
Each of the Executive Directors has been granted an award of notional shares under the
Trading LTIP. The award is intended to provide each of them with a cash payment
representing the value in three years’ time of a specified number of shares (including an
amount representing the dividends which would have been paid on the same number of real
shares). The award is conditional on the Company achieving a financial target and is subject
to the specific terms and conditions of the award and the rules of the Trading LTIP.
The award granted to Mrs Hordern is over 20,903 notional shares in the Company. The
award granted to Mr. Higgins is over 20,903 notional shares in the Company.
Awards, vested or unvested, will immediately lapse upon an Executive Director ceasing (or
giving or been given notice of ceasing) to hold an office of or to be employed by the
Company or its corporate group. In certain circumstances, specified in the rules, and in its
absolute discretion the Board may decide that an award will nevertheless be payable or a
proportion will be payable in such circumstances.
If an award vests, and has not lapsed in the meantime, each Executive Director will be paid
an amount representing the value of the notional shares at the next payroll date. The
payment will be made net of deductions for income tax and National Insurance contributions.
Property LTIP
Each of the Executive Directors has been granted an award under the Property LTIP. Each
award will provide an Executive Director with cash payments representing a fixed
percentage (5 per cent.) of the amount of certain payments received or receivable by the
Company under the terms of the Property LTIP.
The aggregate amount of each award is capped at £500,000. The right to receive payments
under the award is conditional upon the Executive Directors holding office or being employed
by the Company or its corporate group on the payment date applicable to that payment.
The key features of the Property LTIP are:
• the award under the Property LTIP is the entitlement to a fixed percentage (5 per cent.)
of all Land Payments received by the Company that represent an excess above
Minimum Land Value – this is an ongoing, long-term entitlement that will subsist until
the participants leave employment or until the performance condition relating to the
award can no longer be met;
• the award will be broken down into cash payments, to be made on specified payment
dates, payable to the participants on the Company’s receipt of Land Payments after
Minimum Land Value has been exceeded; and
• the right to receive a payment will lapse if the participant is not in employment (which
includes having given or received notice of termination) with the Company or its wider
corporate group on the relevant payment date.
The awards under the Property LTIP will immediately lapse upon the later of the final
reckoning date and the date on which all Land Payments that became payable up to the final
reckoning date have been received by the Company (or deemed by the Board (which shall
provide written confirmation of the same) to be receivable). For the purposes of the Trading
LTIP, the final reckoning date is linked into the Development Agreement and the timing of
payments under the Development Agreement over the course of the 10 year development
programme.
No payments under the Property LTIP awards will be made to the Executive Directors unless
or until the performance condition set out in the Property LTIP has been met. The Board’s
decision as to whether or not the performance condition has been met will be final and
69
binding on the Company and the Executive Directors. The performance condition set out in
the Property LTIP is: receipt by the Company of Land Payments under the terms of the
Development Agreement that represent an excess above the Minimum Land Value, or
receipt of written confirmation from the Board that such Land Payments are anticipated or
deemed to be receivable. Under the Property LTIP, the Board may make any adjustments to
the performance condition as it considers appropriate to take account of any factors
considered by the Board to be relevant.
For the purposes of the Property LTIP, the Minimum Land Value is the sum of forty-two
million six hundred thousand pounds (£42,600,000), as calculated net of monitoring costs,
received under the terms of the Development Agreement (or such other sum as shall be
determined by the Board for the purposes of the Trading LTIP). Under the Property LTIP, the
monitoring costs are the costs of monitoring the receipt of Land Payments under the
Development Agreement as determined by the Board in its absolute discretion.
Non-Executive Directors
The Chairman and the Non-Executive Directors do not have service contracts, but are
appointed under letters of appointment that provide for termination without compensation.
The appointment of each Non-Executive Director is for a period of three years, unless the
relevant Non-Executive Director is not re-elected by Shareholders at the next annual general
meeting at which he is required to stand for re-election or either party serves one months’
written notice on the other. The appointment of the Chairman is for a period three years (with
an extension to five years if re-elected when required to stand for re-election), unless he is
not re-elected by Shareholders at the next annual general meeting at which he is required
to stand for re-election or either party serves one months’ written notice on the other.
The Chairman and two of the Non-Executive Directors receive the fees as set out below,
which include fees payable in relation to membership of Board committees, where relevant.
The remaining Non-Executive Directors receive no fee unless they are called on to perform
duties outside of their ordinary duties, in which case the fee payable shall be as determined
by the Board.
Name Chairman’s or Non-Executive Director’s fee (£)Dominic Burke 20,000
Christopher Spence 10,000
John Dodds 10,000
————GeneralNeither the Chairman nor any Non-Executive Director is eligible to participate in any
incentive or pension arrangements.
Save as disclosed above, there are no service contracts in force between any Director or
proposed director of Newbury Racecourse and Newbury Racecourse or any of its
subsidiaries and no such contract, save as disclosed above, has been entered into or
amended during the last six months preceding the date of this document.
Each of the Directors has the benefit, under article 157 of the Company’s articles of
association, of an indemnity, to the extent permitted by the Act, against any liability incurred
by him for negligence, default, breach of duty or breach of trust in relation to the affairs of
the Company.
3.4 Interest in any relevant Newbury Racecourse securities by the Directors of theCompanyAs at the date of this document, the Directors and their related parties including Erik Penser
and Compton Beauchamp Estates collectively held 1,759,787 Ordinary Shares in the
Rule 25.4 (a) and
(c) (ii) (a)
70
Company. The interests (all of which are beneficial unless otherwise stated) of the Directors
and their related parties in relevant Newbury Racecourse securities as at the date of this
document, together with such interests as are expected to be held immediately following
completion of the Share Buy-Back are as follows:
Percentage Percentage of issued of issued share capital share capital immediately immediately Number of before after Ordinary the Share the Share Shares Buy-Back Buy-BackDominic Burke 23,000 0.48% 0.69%
John Dodds – – –
The Honourable Harry Herbert 12,924 0.27% 0.39%
Stephen Higgins 1,500 0.03% 0.04%
Sarah Hordern(Note 1) 16,725 0.35% 0.50%
Lady Lloyd-Webber 319,656 6.69% 9.55%
Christopher Spence 2,250 0.05% 0.07%
Erik Penser & Compton Beauchamp Estates(Note 2) 1,370,400 28.69% 40.93%
Brian Stewart-Brown 13,332 0.28% 0.40%
Laurie Todd(Note 3) – – –
Total Ordinary Shares held by All Board
Directors/Representatives (excluding GPG) 1,759,787 36.84% 52.56%
Total Ordinary Shares outstanding 4,776,500 3,348,326
Notes:
(1) The shareholding of Sarah Hordern includes 1,725 Ordinary Shares held by Mr. CAE Hordern (Mrs. Hordern’s
spouse).
(2) Erik Penser holds 302,327 Ordinary Shares. He is also a director and a shareholder of Compton Beauchamp
Estates Limited, which has a holding of 1,068,073 Ordinary Shares in the Company. Erik Penser is also a
Director of the Company.
(3) Laurie Todd is a director of GPG (UK) Holdings plc, a subsidiary of GPG.
(4) Percentages shown have been rounded to two decimal places.
(5) No directors hold any non-beneficial interests in the Ordinary Shares of the Company.
3.5 Irrevocable Undertakings given by the Directors holding Ordinary SharesEach Director (other than Erik Penser) holding Ordinary Shares has irrevocably undertaken
to the Company to exercise or procure the exercise of (as applicable) all voting rights in
respect of all the Ordinary Shares held by him at the General Meeting in favour of the
Resolutions. Details of the undertaking given by Erik Penser are contained in Section 2.7 of
this Part IV.
In addition, each Director holding Ordinary Shares has irrevocably undertaken to the
Company not to dispose of or otherwise deal in any of the Ordinary Shares which he holds
from 29 October 2012 until the earliest to occur of (i) the date on which completion of the
Share Buy-Back occurs, (ii) either or both of the Resolutions not being approved at the
General Meeting or the Share Buy-Back failing for any other reason and (iii) 12 midnight on
30 November 2012.
Those undertakings will cease to apply if: (a) an announcement of a firm intention to make
an offer for the Company (pursuant to Rule 2.7 of the Takeover Code) is published; or (b)
the Company receives, prior to completion of the Share Buy-Back, any formal written
approach from any bona fide third party seeking to make an offer or possible offer for the
Definition of
acting in concert
(“AIC”)
Note 5
Rule 24.3 (d)
(Section 4(m)/
Rule s 25.7(b)))
71
share capital of the Company, and the provisions of paragraph 26 of the Implementation
Agreement apply in relation to such announcement and/or formal written approach.
3.6 Financial information relating to Newbury RacecourseThe financial information listed below relating to Newbury Racecourse is hereby
incorporated by reference into this document in accordance with Rule 24.15 of the Takeover
Code.
No. Source of Information1. Newbury Racecourse Interim Results for the six months to June 2012
2. Newbury Racecourse Annual consolidated accounts for the year ended 31 December
2011
3. Newbury Racecourse Annual consolidated accounts for the year ended 31 December
2010
The Annual consolidated accounts and the interim results referred to above are available in
“read only” format and free of charge on the Newbury Racecourse website at
www.racecoursenewbury.co.uk/About-Newbury/Investor-Relations/Circular-Documents.
Newbury Racecourse will provide within two business days, without charge, to each person
to whom a copy of this document has been delivered, upon their written or verbal request,
copies of any documents incorporated by reference in this document. Copies of any
documents incorporated by reference in this document will not be provided unless such a
request is made. Requests for copies of any such documents should be directed to: the
Company Secretary, The Racecourse, Newbury, Berkshire RG14 7NZ or by telephoning:
01635 40015 or, when dialing from outside the UK, +44 1635 40015.
3.7 Material changes in the financial or trading position of the Company subsequent tothe last published interim financial informationThere has been no significant change in the financial or trading position of the Company
since 30 June 2012, the date to which the latest interim unaudited consolidated financial
information on the Company and its subsidiary was prepared.
3.8 Rule 29.3 – in respect of the Savills’ Valuation of the RacecourseThe Company confirms that it has been advised by its taxation advisers that no corporation
tax is expected to arise on a disposal of the Racecourse site (excluding the Residential
Development Sites and the Hotel Development Site) due to the tax base cost the Company
has in its land assets (excluding the Residential Development Sites and the Hotel
Development Site). Furthermore, it is considered unlikely that a tax liability would occur in
practice, since any sale of the Racecourse would normally be achieved by means of a share
sale.
3.9 Rule 29.3 – in respect of the Montagu Evans’ ValuationThe Company confirms that it has been advised by its professional taxation advisers that no
corporation tax is expected to arise on a disposal of the Hotel Development Site due to the
tax base cost the Company has in its land assets
Corporation tax expected to be payable and as determined by the Company’s professional
taxation advisers in respect of chargeable gains due on a disposal of the Residential
Development Sites pursuant to the Development Agreement has been taken into account in
the calculation of Net Present Value of the Threshold Land Value as indicated in Section 6.5
of Part III of this document.
Rule 29.3
Rule 25.3
Rule 24.3 (a) and
(c) (iii), (iv)
Rule 24.3(a)
and (c) (iii) (iv)
Rule 30.2(e)
Rule 24.15(d) and
Note (i), (ii), (iii)
Rule 29.3
72
3.10 Material ContractsThe following contracts (not being contracts entered into in the ordinary course of business)
which are, or may be material, have been entered into by the Company within the two years
immediately preceding the date of this document:
3.10.1 Implementation AgreementThe Company and GPG have entered into the Implementation Agreement which
contains certain assurances in relation to the preparation for, and implementation of,
the Share Buy-Back as more particularly described in this document.
In the Implementation Agreement the Company has agreed that it will use all
reasonable endeavours to agree the form of the Compton Beauchamp Estates Loan
Agreement. If the Compton Beauchamp Estates Loan should not be available for any
reason the Company shall pay £200,000 to GPG and the Implementation Agreement
shall terminate immediately.
The Company has also agreed that it shall procure that all members of the Board
who hold, or are beneficially entitled to, Ordinary Shares will irrevocably undertake to
vote in favour of the Resolutions and retain their interests in Ordinary Shares until the
earliest to occur of (i) completion of the Share Buy-Back, (ii) the Resolutions (or
either of them) not being approved at the General Meeting; and (iii) 30 November
2012. These undertakings are referred to in Section 3.5 of Part IV of this document.
The obligation referred to above will fall away if, prior to completion of the Share Buy-
Back, the Company receives a “Third Party Offer” (as defined in the Implementation
Agreement) and/or if a firm intention to make an offer is announced and the Directors
conclude that compliance with such obligation would be unlawful, contrary to the
Takeover Code or would constitute a breach of their duties as directors.
GPG has agreed that it shall not and shall procure that its Associates (as defined in
the Implementation Agreement) shall not directly or indirectly, from the date of the
Implementation Agreement until the earliest to occur of (i) completion of the Share
Buy-Back, (ii) the Resolutions (or either of them) not being approved at the Annual
General Meeting; and (iii) 30 November 2012, be involved in any Prohibited Activity.
For the purposes of the Implementation Agreement, each of the following is a
“Prohibited Activity”:
(a) selling or charging (or agreeing to sell or charge) any shares in the capital of
the Company, including any interest in them, by way of option or otherwise
(conditionally or unconditionally);
(b) soliciting any buyers other than the Company for shares in the capital of the
Company, or any of them; and/or
(c) dealing with any party other than the Company in relation to the sale or
potential sale of shares in the capital of the Company (or any of them) including
for the avoidance of doubt giving any irrevocable undertaking in relation to
shares in the capital of the Company.
GPG will be immediately released from its obligations in respect of Prohibited
Activities and may decide not to proceed with the Share Buy-Back if a Third Party
Offer is received or an announcement of a firm intention to make an offer for the
Company (pursuant to Rule 2.7 of the Takeover Code) is published.
If GPG is released from its obligations pursuant to the provision referred to above it
will, in certain circumstances, be required to pay the Company the sum of £300,000
on completion of the sale of its shares in the capital of the Company regardless of
Rule 24.3 (a) and
(c) (vii)
(Section 4(m)/
Rule 25.7(a))
Definition of
acting in concert
(“AIC”) Note 5
Section 4(h)/
Rule 21.2
73
whether such shares are sold to the offeror that made the Third Party Offer or any
other party (other than the Company).
For the purposes of the Implementation Agreement, a “Third Party Offer” is any
formal written approach from any bona fide third party seeking to make an offer or
possible offer (whether in cash or by way of a securities exchange offer and, if in
cash, such offeror must be able, in the reasonable opinion of the Board, to satisfy the
cash confirmation requirements of the Takeover Code) for the entire issued share
capital of the Company other than any shares in the Company then held by such third
party at a price per Ordinary Share of at least 600 pence.
3.10.2 Share Buy-Back AgreementThe Company has entered into the Share Buy-Back Agreement with GPG (UK)
Holdings plc pursuant to which GPG (UK) Holdings plc shall sell or procure to be sold
and the Company shall purchase the 1,428,174 Ordinary Shares in the capital of the
Company that are beneficially owned by GPG (UK) Holdings plc (the “GPG Shares”).
The Company shall, on completion of the Share Buy-Back Agreement, pay GPG
(UK) Holdings plc an aggregate amount of £6,426,783 for the GPG Shares (being
450 pence per Ordinary Share).
The sale and purchase of the GPG Shares is in all respects conditional on the
Resolutions being passed at the General Meeting and if the Resolutions are not
passed before midnight on 30 November 2012 the Share Buy-Back Agreement shall
automatically terminate.
GPG (UK) Holdings plc has undertaken that it shall not, and it shall procure that any
nominee shall not exercise any voting rights in respect of the GPG Shares at the
General Meeting, or any adjournment thereof, in respect of the Resolutions.
On completion of the Share Buy-Back, the Ordinary Shares which are acquired by
the Company will be cancelled as the treasury share regime does not extend to those
companies whose securities are admitted to trading on PLUS.
3.10.3 Compton Beauchamp Estates Loan AgreementThe Company has entered into the Compton Beauchamp Estates Loan Agreement
with Compton Beauchamp Estates under which it has been granted the Compton
Beauchamp Estates Loan. The maximum amount which may be drawn-down by the
Company under such loan is £6.5 million. Interest, payable at the rate of 2.0 per cent.
per annum over cost of funds (which is defined as the percentage rate per annum at
which deposits in pounds sterling for an amount similar to the Compton Beauchamp
Estates Loan and corresponding with the relevant interest period are offered to LGT
Bank (Ireland) Limited in the international interbank market) is calculated six monthly
and rolled up and added to the principal loan amount. Interest shall accrue day-to-
day on overdue payments from the Company at a rate of 5.0 per cent. above the
standard interest rate payable. There are no financial covenants under the Compton
Beauchamp Estates Loan Agreement.
On drawdown of the Compton Beauchamp Estates Loan, the Company shall pay
Compton Beauchamp Estates the sum of £44,000 plus VAT in connection with
arranging the facility.
The Company can pre-pay the Compton Beauchamp Estates Loan at any time but
must repay any amount outstanding in full on the date which is 72 calendar months
from the date of completion of the Share Buy-Back. If during this period the Company
should make a distribution to its shareholders, it must make a pre-payment of the
Compton Beauchamp Estates Loan in an amount equal to the declared distribution.
Rule 24.3 (f)
Ii, iii, iv, v
Section 2(e)
Rule 24.9
Rule 24.3 (f)
(vii)
74
As security for the Compton Beauchamp Estates Loan, the Company has granted
Compton Beauchamp Estates a legal mortgage over the Racecourse. The Company
has also entered into a deed of priority in respect of such security with AIB Group
(UK) p.l.c (“AIB”) and the Trustees of the Newbury Racecourse PLC Pension and Life
Assurance Plan (the “Trustees”). The ranking under such deed of priority is: 1st AIB;
2nd the Trustees; 3rd AIB; 4th Compton Beauchamp Estates; and 5th AIB, the
Trustees and Compton Beauchamp Estates pari passu as against each other.
The Company has undertaken to Compton Beauchamp Estates that it shall not, and
shall procure that no subsidiary shall, (amongst other things):
(a) create or permit to subsist any security over any of its assets other than the
Permitted Security (which for these purposes is defined as all security
registered against the Company at Companies House at the date of the
Compton Beauchamp Estates Loan Agreement in favour of each of AIB and
Newbury Racecourse PLC Pension and Life Assurance Plan; and any security
created after the date of this letter in order to secure debt from bank lenders in
an amount not exceeding £9,500,000);
(b) dispose of (i) any assets which may be leased or re-acquired by a related entity
or (ii) any receivables on recourse terms (other than in the ordinary course of
business) in circumstances where the primary reason for such disposal is to
finance the acquisition of an asset;
(c) enter into any transaction to dispose of any part of its assets over which
Compton Beauchamp Estates holds security save where such disposal is (i) to
DWH under the Development Agreement, (ii) by way of the letting of land in the
ordinary course of business (which includes, without limitation, letting of the
hotel to be constructed at the Property for which the Company currently holds
planning permission, or leasing of the hotel site to a third party to construct the
hotel), (iii) is in respect of any asset with a value of less than £500,000
provided that in a financial year the aggregate of such disposals does not
exceed £500,000, or (iv) made with the consent of Compton Beauchamp
Estates; or
(d) make any loans, grant any credit or give any indemnity/guarantee (other than
in the ordinary course of business) or allow to remain outstanding any
borrowings other than the Compton Beauchamp Estates Loan or borrowing in
favour of AIB (or which replaces borrowing with AIB) or the Trustees unless
such borrowing is consented to by Compton Beauchamp Estates in writing.
Such undertakings shall not, however, prevent or restrict any distributions and/or
dividends or restrict any action by the Company which is required by the terms of the
Development Agreement.
3.10.4 Development AgreementThe Company is pursuing a significant part of the Planned Redevelopment jointly
with DWH, a 100 per cent. owned subsidiary of Barratt Developments. The
Development Agreement was exchanged on 1 May 2008 and completed on
18 September 2012. DWH’s obligations under the Development Agreement are
guaranteed by Barratt Developments.
The Development Agreement enables the Company to benefit from DWH’s expertise
in promoting land for residential development and in carrying out high quality
residential development projects, whilst still allowing the Company to exercise a high
degree of control over the development.
75
The Development Agreement comprises:
(i) a contract for DWH to purchase, for not less than a Minimum Land Value of
£42.6 million, three areas of land at the Racecourse known as the Western,
Central and Eastern sites on which, in aggregate, up to 1,500 residential units
are proposed to be constructed as part of the Planned Redevelopment (the
“Residential Development Sites”); and
(ii) a development agreement requiring DWH to carry out the development of the
Residential Development Sites and to undertake certain infrastructure
enhancements (the “DWH Infrastructure Enhancements”). The costs of the
DWH Infrastructure Enhancements will be paid by DWH.
The development of the Residential Development Sites and implementation of the
DWH Infrastructure Enhancements for the Racecourse (together the “DWH
Development Works”) will be carried out by DWH in accordance with the
Development Agreement.
The PMCThe planning and development process relating to the DWH Development Works is
managed by a Project Management Committee (the “PMC”) allowing the Company
to participate fully in such development. The PMC comprises three representatives
from each of the Company and DWH and is chaired by one of the Company
representatives. This is intended to ensure that the Company retains a high degree
of control over the construction programme and the quality of the Planned
Redevelopment. Each member of the PMC has one vote and any decision is made
by a simple majority with deadlocks referred to an appropriate independent third
party. However, where a decision affects the operation of the Racecourse, the
Company has an additional, and therefore potentially casting, vote.
Planning PermissionsDWH has funded the costs associated with seeking the planning permissions
required for the Planned Redevelopment. The Development Agreement sets out
parameters to determine whether the planning permissions in respect of the Planned
Redevelopment are satisfactory for the purposes of the Development Agreement. To
date, a satisfactory outline planning permission has been granted, and satisfactory
reserved matters approvals have been granted for the Western and Central Sites,
and a significant proportion of the DWH Infrastructure Enhancements. Reserved
matters approval for the Eastern Site and the remaining DWH Infrastructure
Enhancements, in each case pursuant to the satisfactory outline planning permission
already obtained must be sought by 1 September 2014.
Sale of Western and Central SitesThe Development Agreement became unconditional on 18 September 2012, and on
the same day the Western and Central Sites were sold to DWH.
DWH made an upfront payment of £5.1 million to the Company which will be used,
in part, to settle taxation liabilities arising on the transfer of the Western and Central
Sites to DWH and the expected Network Rail Payments in connection with the
construction of the new bridge. A payment of £8.5 million will be made to the
Company on the transfer of the Eastern Site to DWH. These Land Payments form
part of the Minimum Land Value.
Before exchange of the Development Agreement in 2008, DWH paid the Company
£1.5 million as a contribution towards costs incurred by the Company in connection
with the Planned Redevelopment.
76
PCFAThe Project Cash Flow Appraisal (“PCFA”), is a development appraisal which will be
used throughout the development of the Residential Development Sites, the
calculation methodology for which is set out in the Development Agreement. The
PCFA identifies the expected development costs and the expected revenues arising
from the sale of housing units to be built on the Residential Development Sites, as
well as the expected costs relating to the DWH Infrastructure Enhancements.
Financing costs for all works under the Development Agreement are the
responsibility of DWH and are excluded from the PCFA.
The PCFA establishes a DWH Operating Margin related to the revenues from the
Residential Development Sites. The DWH Operating Margin has a cap and collar
mechanism set out in the Development Agreement. In general terms, this determines
the proportion of development revenues which DWH is permitted to receive for its
services in carrying out the DWH Development Works, which, when applied to the
development revenues, determines the DWH Operating Profit (the “DWH Operating
Profit”).
In general terms, the difference between revenues arising from the development of
the Residential Development Sites, and the costs of the DWH Development Works
and the DWH Operating Profit (all as determined in accordance with the PCFA)
reflects the value of the land contributed by the Company and its share of the
development profit achieved.
As the DWH Development Works progress, the PCFA will be updated to reflect actual
costs incurred and revenues received in respect of such works. The land value
attributable to the Residential Development Sites is not fixed in value and may
reduce as the DWH Development Works are undertaken, but not below the Minimum
Land Value of £42.6 million.
Financial arrangements under the Development AgreementThere are two principal types of payment which may be made to the Company by
DWH in accordance with the Development Agreement once the development has
commenced:
(i) Land Payments in respect of the land value attributable to the Residential
Development Sites; and
(ii) a 50 per cent. share of development profits.
The land value attributable to the Residential Development Sites is expected to be
received over a ten year period as the Residential Development Sites are developed.
Payments of consideration from DWH to the Company throughout the duration of the
development will be protected by a legal charge over the Residential Development
Sites, which will be released in respect of housing units as and when sold. If the
Development Agreement is terminated or DWH fails to perform its obligations under
the Development Agreement, then the Company has rights to replace DWH with an
alternative developer or to continue development of the Residential Development
Sites itself.
(i) Land PaymentsLand Payments in respect of the land value attributable to the Residential
Development Sites will be made to Newbury Racecourse during the course of
the development by reference to the PCFA. Land Payments will be made up to
a maximum amount of the Threshold Land Value of £48.0 million, including
77
upfront payments already made. Land Payments cannot be less than the
Minimum Land Value of £42.6 million.
There is a mechanism for the Threshold Land Value to be increased upon the
grant of reserved matters approval for the Eastern Site, if the assumptions upon
which the Threshold Land Value has been calculated are different at the time the
reserved matters approval is obtained. These assumptions may differ due to,
but not limited to, a change in the design and layout of the Eastern Site, changes
in the market value of the houses, or changes in the development costs arising
solely from the development of the Eastern Site However, the Threshold Land
Value cannot be decreased below its current level.
(ii) Share of development profitsIn addition to the payments to the Company in respect of the land value
attributable to the Residential Development Sites (up to the Threshold Land
Value), DWH may make further payments to the Company representing the
Company’s 50 per cent. share of development profits determined in accordance
with the Development Agreement (while DWH would receive the remaining
50 per cent. share). The Company’s share of development profits will arise if:
(i) the Company has been paid the sum equal to the Threshold Land Value;
and
(ii) DWH has received for its development services its highest capped level
of the DWH Operating Margin,
(in each case as set out in the Development Agreement and determined in
accordance with the PCFA).
Any such share of development profits could be material and will depend, in
particular, on the extent to which the increase in selling prices achieved for
housing units exceeds any increase in development costs.
It is this potential for DWH to receive a 50 per cent. share of development profits
which should incentivise DWH to increase revenues and reduce costs
throughout the development of the Residential Development Sites. Accordingly,
this aspect of the Development Agreement is expected to create an alignment
of interests between the Company and DWH.
4. Interests and dealings
4.1 Definitions and referencesFor the purposes of this Section:
(a) “acting in concert” has the meaning given to it in the Takeover Code;
(b) “arrangement” includes arrangements of the kind referred to in Note 11 (a) to the
definition of “acting in concert” given in the Takeover Code;
(c) “associate” has the meaning given to it in Section 988 of the Act;
(d) “control” means a holding, or aggregate holdings, of shares carrying 30 per cent. or
more of the voting rights attributable to the share capital of a company which are
currently exercisable at a general meeting, irrespective of whether the holding or
aggregate holding gives de facto control;
(e) “dealing” has the meaning given to it in the Takeover Code;
(f) “derivative” has the meaning given to it in the Takeover Code;
78
(g) “disclosure period” means the period commencing on 28 October 2011 being the
date 12 months prior to the date of the announcement of the Share Buy-Back and
ending on the Latest Practicable Date;
(h) “interest” or “interested in relevant securities” has the meaning given in the
Takeover Code;
(i) “related parties” means in relation to a director those persons whose interests in
shares the director would be required to disclose pursuant to Part 22 of the Act and
related regulations;
(j) “relevant Compton Beauchamp Estates securities” means shares in Compton
Beauchamp Estates (or derivatives referenced thereto) and securities convertible into,
rights to subscribe for and options (including traded options) in respect thereof;
(k) “relevant Newbury Racecourse securities” means shares in Newbury Racecourse
(or derivatives referenced thereto) and securities convertible into, rights to subscribe
for and options (including traded options) in respect thereof;
(l) “relevant securities” means relevant Compton Beauchamp Estates securities or
relevant Newbury Racecourse securities (as the case may be); and
(m) “short position” means any short position (whether conditional or absolute and
whether in the money or otherwise) including any short position under a derivative,
agreement to sell or any delivery obligation or right to require any other person to
purchase or take delivery.
4.2 Compton Beauchamp Estates Concert Party’s interests in Newbury RacecourseThe interests in Ordinary Shares of the Compton Beauchamp Estates Concert Party as at
the date of this document together with the maximum percentage of the Company’s issued
share capital which will be held by the Compton Beauchamp Estates Concert Party
immediately following completion of the Share Buy-Back and cancellation of the GPG
Shares are set out in the table below:
Percentage Percentage of issued of issued No. of share capital share capital Ordinary pre Share post Share Shares Buy-Back Buy-Back Compton Beauchamp Estates 1,068,073 22.4% 31.9%
Erik Penser 302,327 6.3% 9.0% –––––––– –––––––– ––––––––Compton Beauchamp Estates Concert Party 1,370,400 28.7% 40.9% ––––––––– ––––––––– –––––––––If the Share Buy-Back is approved and the GPG Shares are cancelled then, the Compton
Beauchamp Estates Concert Party will hold 40.9 per cent. of the Ordinary Shares
representing more than 30 per cent. of the issued share capital of the Company.
4.3 Market dealings in relevant Newbury Racecourse securities by Compton BeauchampEstates Concert PartyNo dealings have taken place during the disclosure period in the relevant Newbury
Racecourse securities by Compton Beauchamp Estates, Erik Penser or any other person
acting in concert with Compton Beauchamp Estates or Erik Penser.
Rule 24.4 (a)
and (c) (i)
Rule 24.4 (a)
and (c) (ii) (a)
79
4.4 Negative statements required by the Takeover Code made by the ComptonBeauchamp Estates Concert PartyAs at the close of business on the disclosure date, save as disclosed in Section 4.2 of this
Part IV:
(a) Erik Penser and Compton Beauchamp Estates had no interest in or right to subscribe
for, nor had any short position in relation to any relevant Newbury Racecourse
securities, nor had they dealt in any relevant Newbury Racecourse securities during
the disclosure period;
(b) none of the directors of Compton Beauchamp Estates or their respective related
parties had an interest in or a right to subscribe for, or had any short position in relation
to, any relevant Newbury Racecourse securities, nor had any such person dealt in any
relevant Newbury Racecourse securities during the disclosure period;
(c) no person acting in concert with Erik Penser or Compton Beauchamp Estates had an
interest in or a right to subscribe for, or had any short position in relation to, any
relevant Newbury Racecourse securities, nor had any such person dealt in any
relevant Newbury Racecourse securities during the disclosure period;
(d) neither Erik Penser nor Compton Beauchamp Estates nor any person acting in
concert with Compton Beauchamp Estates or Erik Penser had borrowed or lent
(including for these purposes any financial collateral agreements of the kind referred
to in Note 4 to Rule 4.6 of the Takeover Code) any relevant Newbury Racecourse
securities, save for any borrowed shares which have either been on-lent or sold; and
(e) Neither Erik Penser nor Compton Beauchamp Estates has entered into any
agreement, arrangement or understanding pursuant to which its interests in relevant
Newbury Racecourse securities will be transferred to any other persons.
4.5 Negative statements required by the Takeover Code made by the Company and theDirectorsAs at the close of business on the disclosure date, save as disclosed in Section 3.4 of this
Part IV:
(a) none of Newbury Racecourse, the Directors or their respective related parties had an
interest in or a right to subscribe for, or had any short position in relation to, any
relevant Compton Beauchamp Estates securities;
(b) none of the Directors, their respective related parties or persons acting in concert with
Newbury Racecourse had any interest in, or right to subscribe for, or had any short
position in relation to, any relevant Newbury Racecourse securities;
(c) neither Newbury Racecourse nor any person acting in concert with Newbury
Racecourse had borrowed or lent (including for these purposes any financial collateral
agreements of the kind referred to in Note 4 to Rule 4.6 of the Takeover Code) any
relevant Newbury Racecourse securities, save for any borrowed shares which have
either been on-lent or sold;
(d) no agreement, arrangement or understanding (including any compensation
arrangement) exists between the Compton Beauchamp Estates Concert Party and
any of the directors, recent directors, shareholders or recent shareholders of the
Company, or any person interested or recently interested in shares of the Company
having any connection with or dependence on, or which is conditional on, the
implementation of the Share Buy-Back; and
Rule 25.4 (a) and
(c) (i)
Rule 25.4 (a) and
(c) (ii) (b)
Rule 25.4 (a) and
(c) (iv)
Rule 24.4 (a) and
(c) (i)
Rule 24.4 (a) and
(c) (ii) (a)
Rule 24.4 (a) and
(c) (ii) (b))
Rule 24.9
Rule 24.4 (a)(iv)
Section 4(k) /
Rule 24.6
80
(e) no securities, interests or shares acquired by the Company through the Share Buy-
Back will be held by any third party(ies) and will be cancelled as soon as practicable
following completion of the Share Buy-Back.
5. Unaudited Interim Accounts for the Nine Months ended 30 September 2012
In accordance with the requirements of the Companies Act 2006, Newbury Racecourse PLC has
prepared interim accounts for the nine months ended 30 September 2012. These interim accounts
are unaudited. The interim accounts for the nine months ended 30 September 2012 are not
consolidated accounts and only include the results, cash flows and assets and liabilities of
Newbury Racecourse PLC. These interim accounts do not include the results, cash flows, assets
and liabilities of its subsidiaries. These interim accounts have been prepared to demonstrate that,
subject to approval by Shareholders and compliance with certain other legal requirements,
Newbury Racecourse PLC can purchase the GPG Shares out of the distributable profits of
Newbury Racecourse PLC as required by the Companies Act 2006.
In accordance with the requirements of Section 838 (6) Companies Act 2006, Newbury
Racecourse PLC will deliver a copy of such interim accounts to the Registrar of Companies.
6. Consents
(a) Montagu Evans LLP has given and not withdrawn its written consent to the issue of this
document with the inclusion of references to its name in the form and context in which it
appears and to the inclusion of its report in this document.
(b) Savills Advisory Services Limited has given and not withdrawn its written consent to the
issue of this document with the inclusion of references to its name in the form and context
in which it appears and to the inclusion of its report in this document.
(c) Strata Partners has given and not withdrawn its written consent to the issue of this document
with the inclusion of references to its name in the form and context in which it appears.
(d) Compton Beauchamp Estates has given and not withdrawn its written consent to the issue
of this document with the inclusion of references to its name in the form and context in which
it appears.
(e) David Wilson Homes Limited has given and not withdrawn its written consent to the issue of
this document with the inclusion of references to its name and Barratt Developments in the
form and context in which they appear.
7. Documents available for Inspection
Copies of the following documents will be available for inspection at the offices of Strata Partners
at Kingsbury House, 15-17 King Street, London SW1Y 6QU, and at the registered office of the
Company during normal business hours on any weekday (Saturdays and Sundays excepted) up
to and including 15 November 2012 and at the General Meeting to be held on that day and also
on the Company’s website at www.racecoursenewbury.co.uk/About-Newbury/Investor-
Relations/Circular-Documents:
(a) the articles of association of the Company;
(b) the articles of association of Compton Beauchamp Estates;
(c) the consent letters referred to in Section 6 of Part IV of this document;
(d) the financial statements for the Company referred to in Section 3.6 of Part IV of this
document;
(e) the financial statements for Compton Beauchamp Estates referred to in Section 2.8 of
Part IV of this document;
Rule 24.3 (d)
(Rule 25.7(c))
Rule 29.5 (b)
Rule 23.3
Rule 26.2 (a)
Rule 26.2 (a)
Rule 26.2 (c)
Rule 26.2 (f) (ii)
Rule 29.5 (c)
81
(f) the Savills valuation report on the Racecourse (excluding the Residential Development Sites
and the Hotel Development Site) referred to in Part II of this document;
(g) the Montagu Evans valuation report on the Residential Development Sites and Hotel
Development Site referred to in Part III of this document;
(h) the Share Buy-Back Agreement:
(i) the Implementation Agreement;
(j) the Compton Beauchamp Estates Loan Agreement;
(k) the irrevocable undertakings from Compton Beauchamp Estates referred to in Section 2.7 of
Part IV of this document and from the Directors referred to in Section 3.5 of Part IV of this
document; and
(l) this document.
In accordance with Section 696 of the Act, a copy of the Share Buy-Back Agreement:
• is (with effect from the date of this document) available for inspection by members of the
Company at the Company’s registered office; and
• will be available for inspection at the General Meeting.
In accordance with the PLUS Rules for Issuers a copy of this document will also be available for
inspection as set out above for a period of one month from the date of this document free of
charge.
Date: 29 October 2012
Rule 26.2 (d)
Section 4(n) /
Rule 26.1 (a)
Rule 26.2 (f) (i)
Rule 26.2 (f) (i)
82
DEFINITIONS
In this document the following expressions have the following meaning unless the context
otherwise requires:
2009 Rights Issue the rights issue by the Company of 1,592,167 additional
Ordinary Shares announced on 18 December 2009
Act the Companies Act 2006
AIB AIB Group (UK) PLC, a company registered in Northern
Ireland with number NI 018800 and whose registered office is
at PO Box 4, 4 Queen’s Square, Belfast, Co Antrim, BT1 3DJ
Barratt Developments Barratt Developments PLC, a company registered in England
and Wales with number 00604574 and whose registered
office is at Barratt House, Cartwright Way, Forest Business
Park, Bardon Hill, Coalville, Leicestershire LE67 1UF
Board or Newbury Board the board of Directors of Newbury Racecourse
Business day a day (excluding Saturdays and Sundays or public holidays in
England and Wales) on which banks generally are open in
London for the transaction of normal business
Capita Registrars Capita Registrars Limited, a company registered in England
and Wales with number 02605568 and whose registered
office is at The Registry, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU
Circular this document being the circular to be sent by the Company
to Shareholders convening the General Meeting
Closing Price the closing middle market quotation of a Newbury
Racecourse Share as derived from PLUS on a particular day
Newbury Racecourse PLC, a company registered in England
and Wales with number 00080774 and whose registered
office is at The Racecourse, Newbury, Berkshire RG14 7NZ
Compton Beauchamp Estates Compton Beauchamp Estates Limited, a company registered
in England and Wales with number 03856029 and whose
registered office is at Upper Farm, Woolstone, Faringdon,
Oxfordshire SN7 7QL
The loan of £6.5 million to be made by Compton Beauchamp
Estates to the Company pursuant to the Compton
Beauchamp Estates Loan Agreement
the agreement relating to the Compton Beauchamp Estates
Loan to be entered into between the Company and Compton
Beauchamp Estates on the date of this document
means Compton Beauchamp Estates and Erik Penser (being
that group of Ordinary Shareholders which the Panel has
confirmed is deemed to act in concert) details of which are set
out in section 2 of Part IV of this document
Compton Beauchamp Estates
Loan Agreement
Compton Beauchamp Estates
Concert Party
Company or Newbury
Racecourse
Compton Beauchamp Estates
Loan
83
David Wilson Homes or DWH David Wilson Homes Limited, a company registered in
England and Wales with number 00830271 and whose
registered office is at Barratt House, Cartwright Way, Forest
Business Park, Bardon Hill, Coalville, Leicestershire
LE67 1UF
Deed of Variation the agreement dated 18 September 2012 between the
Company, Newbury Racecourse Enterprises Limited, David
Wilson Homes and Barratt Developments (as guarantor) by
which the Development Agreement has been varied,
principally so that Reserved Matters Planning approval in
respect of the Eastern Site of the Residential Development
Sites may be obtained by DWH after completion of the
Development Agreement
Development Agreement means the agreement between DWH, the Company,
Newbury Racecourse Enterprises Limited and Barratt
Developments PLC (as guarantor) exchanged on 1 May 2008
comprising (i) the agreement for DWH to purchase certain
residential development sites at the Company’s racecourse;
and (ii) the agreement to carry out the residential
development in respect of such residential development sites
and certain infrastructure enhancement works as amended
by the Deed of Variation;
Differential Amount the difference between the Minimum Land Value and the
Threshold Land Value
Directors the Executive Directors and Non-Executive Directors of
Newbury Racecourse
DWH Development Works the development of the Residential Development Sites and
implementation of the DWH Infrastructure Enhancements to
be carried out in accordance with the Development
Agreement
infrastructure improvements to the Racecourse, including, in
particular, construction of a new bridge to access the
Residential Development Sites and provide enhanced access
to the Racecourse, new parking facilities for visitors and
enhanced road infrastructure, a new multi-functional
accommodation facility for stable staff, refurbished stables
and a new children’s nursery, with all such works to be carried
out, and paid for, by DWH in accordance with the
Development Agreement
DWH Operating Margin the operating profit margin of DWH determined in accordance
with the Development Agreement expressed as a percentage
of revenues generated from the sale of housing units
constructed on the Residential Development Sites. Such
DWH Operating Margin has a cap and collar mechanism as
set out in the Development Agreement
DWH Operating Profit in general terms the DWH Operating Margin to be applied to
the development revenues arising from the sale of housing
units constructed on the Residential Development Sites in
accordance with the Development Agreement
DWH Infrastructure
Enhancements
84
EBITDA earnings before interest tax, depreciation and amortisation
Erik Penser Erik Penser is a director and a shareholder of Compton
Beauchamp Estates. He is also a Director of the Company
Executive Directors Sarah Hordern and Stephen Higgins
the Financial Services Authority of the UK
Form of Proxy the form of proxy accompanying this document
FSMA the Financial Services and Markets Act 2000, as amended
General Meeting the general meeting of the Company to be held at 10.00 a.m.
on 15 November 2012 at The Racecourse, Newbury,
Berkshire RG14 7NZ for the purpose of considering and, if
thought fit, approving the Resolutions
GPG or Guinness Peat Group Guinness Peat Group plc, a company registered in England
and Wales with number 00103548 and whose registered
office is at First Floor, Times Place, 45 Pall Mall, London
SW1Y 5GP
GPG Shares the 1,428,174 Ordinary Shares currently beneficially owned
by GPG (UK) Holdings plc, a subsidiary of Guinness Peat
Group
Group the Company and its wholly-owned subsidiary, Newbury
Racecourse Enterprises Limited
Heart Space Area the central “heart” of the Racecourse comprising, in
particular, the grandstands, visitor areas, parade ring,
facilities for owners, trainers and jockeys and the Company’s
administrative offices
HMRC HM Revenue & Customs
Hotel Development Site the site for the proposed development of a 123 bedroom mid-
market hotel, as described in the valuation report of Montagu
Evans set out in Part III of this document
Implementation Agreement the agreement between the Company and GPG relating to
the preparation for, and implementation of, the Share Buy-
Back as described in Section 3.10.1 of Part IV of this
document
Independent Directors the Directors excluding Erik Penser and Laurie Todd who are
representatives of Compton Beauchamp Estates and GPG
respectively and, accordingly, are not independent for the
purposes of the Share Buy-Back
Independent Shareholders all Shareholders other than members of the Compton
Beauchamp Estates Concert Party, GPG (UK) Holdings plc
and its nominees
Latest Practicable Date the close of business on 26 October 2012, being the latest
practicable date prior to the publication of this document
Financial Services Authority or
FSA
85
Land Payments the payments to be received by the Company under the terms
of the Development Agreement, guaranteed by Barratt
Developments, for the Land Value attributable to the
Residential Development Sites as the development
progresses, and amounting to at least the Minimum Land
Value
Land Value the value of land attributable to the Residential Developments
Sites pursuant to the Development Agreement
Minimum Land Value the minimum amount to be paid by DWH to Newbury
Racecourse pursuant to the Development Agreement for the
purchase of the Residential Development Sites
Montagu Evans Montagu Evans LLP, valuers to Newbury Racecourse
Net Asset Value the net asset value of the Company or for each Ordinary
Share (as the case may be) determined on the basis set out
in Section 7(vi) of Part I of this document
Network Rail Deeds the agreement dated 30 April 2004 and varied on
21 November 2007, between the Company and Network Rail
that sets out the estimated payments to be made by the
Company to Network Rail linked to the construction of the
new bridge and the grant of easement over the railway
Network Rail Payments payments to Network Rail linked to the construction of the
new bridge and the grant of an easement over the railway
Non-Executive Directors the non-executive directors of the Company
Notice of General Meeting the notice convening the General Meeting set out at the end
of this document
NPV or Net Present Value net present value, being a valuation methodology to
determine the present value of net cashflows to be received
in the future, discounted at a determined discount rate
Ordinary Shares the ordinary shares of 10 pence each in the share capital of
the Company
Panel the Panel on Takeovers and Mergers
Planned Redevelopment includes (1) the development of the Residential Development
Sites and implementation of the DWH Infrastructure
Enhancements to the Racecourse to be carried out in
accordance with the Development Agreement by DWH; and
(2) implementation of the Racecourse Refurbishment Works
to be carried out and paid for by the Company
PLUS the PLUS-quoted Market operated by PLUS Markets
PLUS Rules for Issuers the PLUS Rules for Issuers made by PLUS Markets as
amended or extended from time to time
PMC the project management committee formed to manage the
Planned Redevelopment and which comprises three
representatives from each of Newbury Racecourse and DWH
and is chaired by the PMC Chairman
86
a financial development appraisal which records the actual
costs incurred and revenues received (excluding costs of
financing) relating the development of the Residential
Development Sites and the costs relating to the DWH
Infrastructure Enhancements. The calculation methodology
for the PCFA is set out in the Development Agreement.
Proposals together the Share Buy-Back, the terms of the Compton
Beauchamp Estates Loan, the Rule 9 Waiver and the
Resolutions
Pro Forma Net Asset Value the Net Asset Value determined on a pro forma basis as if the
Share Buy-Back had been completed. The adjustments made
are set out in Section 7(vi) of Part I of this document and
reflect the Compton Beauchamp Estates Loan to effect the
Share Buy-Back, Transaction Costs and the cancellation of
the GPG Shares
Racecourse the racecourse operated by the Company
include the refurbishment of the Berkshire stand, a new
weighing room, a new paddock, a pre-parade ring and
general landscaping around the grandstands, new
administrative offices, enhanced facilities for owners and
trainers and new entrances to the Racecourse all of which are
under assessment and review by the Board and, to the extent
carried out, will be paid for by the Company and will be
pursued as part of the Planned Redevelopment
Regulated Information Service a Primary Information Provider that is approved by the FSA to
disseminate regulatory information to the market and is on
the list of Regulated Information Services maintained by the
FSA
Reserved Matters Planning in relation to an outline planning permission or an application
for such permission, ‘reserved matters’ means any of the
following in respect of which details have not been given in
the application – (a) access; (b) appearance; (c) landscaping;
(d) layout; and (e) scale
Residential Development Sites three areas of land at the Racecourse known as the Western,
Central and Eastern sites on which, in aggregate, up to 1,500
residential units are proposed to be constructed as part of the
Planned Redevelopment and which are set out in the
“Newbury Racecourse Freehold Property Plan” contained in
page 91 of this document
Resolutions the resolutions to be proposed at the General Meeting, as set
out in the Notice of General Meeting
Rule 9 Rule 9 of the Takeover Code
Rule 9 Waiver the waiver granted by the Panel subject to the approval of the
Independent Shareholders, of the obligations that would
otherwise fall upon the Compton Beauchamp Estates
Concert Party pursuant to Rule 9 if, as a result of the
completion of the Share Buy-Back, the Compton Beauchamp
Estates Concert Party became interested in 30 per cent. or
more of the voting rights of the Company
Racecourse Refurbishment
Works
PCFA or Project Cash Flow
Appraisal
87
Savills Savills Advisory Services Limited, valuers to Newbury
Racecourse
Section 106 Agreement Section 106 (S106) of the Town and Country Planning Act
1990 allowing a local planning authority to enter into a legally
binding agreement or planning obligation with a landowner in
association with the granting of planning permission
Share Buy-Back the proposed acquisition of the GPG Shares by the Company
Share Buy-Back Agreement the Share Buy-Back agreement entered into between the
Company and GPG (UK) Holdings plc relating to the Share
Buy-Back on the date of this document
Share Buy-Back Resolution the special resolution approving the Share Buy-Back in
accordance with section 694 of the Act proposed to be
passed at the General Meeting
holders of Ordinary Shares
Strata Partners Strata Technology Partners LLP, financial adviser to Newbury
Racecourse
subsidiary have the meanings given to them by the Act
Takeover Code the City Code on Takeovers and Mergers (as amended from
time to time)
Tax on Disposal estimated corporation tax due from the Company in respect
of chargeable gains that may be payable on a disposal of the
Residential Development Sites pursuant to the Development
Agreement. Such estimates have been independently
reviewed by the Company’s professional tax advisers
Threshold Land Value the actual land value of the Residential Development Sites to
be determined pursuant to the Development Agreement and
in accordance with the PCFA at the time when satisfactory
planning permissions in respect of the Residential
Development Sites have been granted and the Development
Agreement has become wholly unconditional. The Threshold
Land Value may increase as a result of the Reserved Matters
Planning approval in respect of the Eastern Site
Transaction Costs the professional fees, stamp duty and financing arrangement
fees (together with irrecoverable value added tax thereon)
which are expected to be incurred by the Company to effect
the Share Buy-Back. In aggregate these are expected to be
approximately £450,000, excluding value added tax
Waiver Resolution the ordinary resolution required to be passed by Independent
Shareholders to approve the waiver of the mandatory offer
provisions set out in Rules 9 and 37 of the Takeover Code
Website Notification A website notification is a document sent in either hard copy
form or electronic form to a person to whom a document, an
announcement or any information is required to be sent,
giving such person notice of the publication of the document,
announcement or information on a website and providing
details of the relevant website.
Shareholders or Newbury
Racecourse Shareholders
88
NOTICE OF GENERAL MEETING
NOTICE IS HEREBY GIVEN that a GENERAL MEETING of Newbury Racecourse PLC (the
“Company”) will be held on Thursday 15 November 2012 at 10.00 a.m. at The Racecourse,
Newbury, Berkshire RG14 7NZ, for the purposes of considering and, if thought fit, passing the
following resolutions:
Special resolution
1. THAT, subject to the passing of Resolution 2, the contract entered into between the
Company and GPG (UK) Holdings plc on 29 October 2012 relating to the proposed
purchase by the Company of 1,428,174 Ordinary Shares of 10 pence each in the capital of
the Company currently beneficially owned by GPG (UK) Holdings plc, a copy of which is
produced to the meeting, be and is hereby authorised and approved for the purposes of the
Companies Act 2006, provided that the authority conferred by this resolution shall expire
12 months after the date on which this resolution is passed.
Ordinary resolution
2. THAT, subject to the passing of Resolution 1, the waiver granted by the Panel on Takeovers
and Mergers of the obligation that would otherwise arise on Compton Beauchamp Estates
Limited, Erik Penser and all parties acting in concert with them (being the “Compton
Beauchamp Estates Concert Party” as defined in the shareholder circular of the Company
dated 29 October 2012, of which this Notice forms part (the “Circular”)) to make a general
offer to the shareholders of the Company pursuant to Rule 9 of the City Code on Takeovers
and Mergers as a result of the share buy-back described in the Circular pursuant to which
the maximum potential holding of the Compton Beauchamp Estates Concert Party is
1,370,400 Ordinary Shares (representing 40.9 per cent. of the issued share capital of the
Company) be and is hereby approved.
By Order of the Board
Sarah Hordern
Secretary
Date: 29 October 2012
Newbury Racecourse PLC
The Racecourse
Newbury
Berkshire
RG14 7NZ
Registered in England No. 00080774
Section 4(b)
Section 4(b)
89
NOTES TO THE NOTICE OF GENERAL MEETING
(1) Voting on Resolution 2 will take place on a poll. Erik Penser, Compton Beauchamp Estates Limited and GPG (UK)
Holdings plc will not be entitled to vote on Resolution 2 in accordance with the City Code on Takeovers and Mergers.
(2) A member of the Company is entitled to appoint a proxy to exercise all or any of his rights to attend, speak and vote
at a general meeting of the Company. A member may appoint more than one proxy, provided that each proxy is
appointed to exercise the rights attaching to different shares. A proxy need not be a member.
(3) To appoint more than one proxy, (an) additional proxy form(s) may be obtained by contacting the Registrars or you
may photocopy the form. Please indicate in the box next to the proxy holder’s name the number of shares in relation
to which they are authorised to act as your proxy. Please also indicate by ticking the box provided if the proxy
instruction is one of multiple instructions being given. All forms must be signed and should be returned together in
the same envelope.
(4) To be effective, the instrument appointing a proxy and any authority under which it is signed (or a notarially certified
copy of such authority) for the General Meeting to be held at The Racecourse, Newbury, Berkshire RG14 7NZ at
10.00 a.m. on 15 November 2012 and any adjournment(s) thereof must be returned to Capita Registrars, PXS, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, by 10.00 a.m. on 13 November 2012.
(5) The proxy appointments must be received by the Company not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof.
(6) A form of proxy is enclosed with this notice. The appointment of a proxy does not preclude a member from attending
the meeting and voting in person, in which case any votes of the proxy will be superseded.
(7) Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, only those members entered on the
register of members of the Company as at 6.00 p.m. on Tuesday 13 November 2012 shall be entitled to attend or
vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries on
the register of members after that time shall be disregarded in determining the rights of any person to attend or vote
at the meeting.
(8) At 26 October 2012 (being the latest practicable date before publication of this notice) the issued share capital of the
Company consists of 4,776,500 Ordinary Shares, carrying one vote each. Therefore, the total voting rights in the
Company as at 26 October 2012 was 4,776,500.
(9) In accordance with Section 696 of the Companies Act 2006, a copy of the Share Buy-Back Agreement, to be
approved by Resolution 1, is available for inspection by members of the Company at the Company’s registered office
and will be available for inspection at the General Meeting.
90
NEWBURY RACECOURSE FREEHOLD PROPERTY PLAN (THE
RACECOURSE AND THE RESIDENTIAL DEVELOPMENT SITES)
91
sterling 159803
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