Acquisition and Related Party Transaction

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM A PART OF ANY OFFER TO SELL OR SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN, JERSEY OR ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO.

17 November 2014

GLI Finance Limited

Proposed acquisition of Sancus Limited and Sancus (Guernsey) Limited, proposed adoption of new Articles of Incorporation, Notice of Extraordinary General Meeting and Related Party Transaction

GLI Finance Limited ("GLI Finance" and the "Company") announces on 14 November 2014, it entered into a conditional sale and purchase agreement with Sancus Holdings Limited ("SHL") (the "SPA"), under which the Company has conditionally agreed to acquire the respective entire issued share capitals of Sancus Limited ("SL") and Sancus (Guernsey) Limited ("SGL") from SHL and the intragroup loans (the "Intragroup Loans") made by SHL to SL (the "Acquisition") for a total consideration of £37.75 million.

The payment of the consideration relating to the Acquisition would involve the Company issuing to SHL new Ordinary Shares (the "New Ordinary Shares") and new redeemable zero dividend preference shares in the Company (the "ZDP Shares"). Therefore, in connection with the Acquisition, the Board is seeking the approval of Shareholders for the New Articles to be adopted in order to reflect the creation of such a new class of ZDP Shares and to provide for the rights attached to the ZDP Shares (altogether, the "Proposals"). The Board believes that the ZDP Shares will diversify the funding of the Company's capital structure and better align the structure with the Board's expectation of the future returns from the Company's business. The issue of ZDP Shares is also expected to reduce the Company's overall cost of capital.

The total consideration for £37.75 million will be satisfied by the issue to SHL of:

· 31,415,930 New Ordinary Shares at a fixed price of 56.5 pence per New Ordinary Share, representing a 3.4 per cent discount to the closing mid-market price of 58.5 pence per Ordinary Share on 14 November 2014 (being the last trading day prior to announcement of the Acquisition); and

· 20,000,000 ZDP Shares at a fixed price of £1 each.

Application will be made to admit the New Ordinary Shares to trading on AIM as soon as practicable following their issue. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on 18 December 2014. At Admission, SHL will be interested in 31,415,930 Ordinary Shares, representing 18.2 per cent of the Company's enlarged issued share capital.

Completion of the Acquisition is conditional upon, amongst other things approval by Shareholders of the proposed adoption of the New Articles by way of a special resolution (the "Resolution").

An Extraordinary General Meeting of the Company will therefore be held at 11.00 a.m. on 12 December 2014 for Shareholders to approve the Resolution. The notice of the EGM will be posted today to Shareholders along with a circular (the "Circular"). The Circular will shortly be made available on the Company's website, www.glifinance.com.

The Board of GLI Finance considers that the Proposals are in the best interests of the Company and Shareholders as a whole. The Board also believes that the Acquisition will represent a key event in the Company's development and that it will provide the Company with the opportunity to achieve an immediate step-change in the scale and breadth of its activities in the alternative finance arena for the following reasons:

· The Acquisition will provide the GLI Finance with an existing loan book and an income stream from SL's current loan book. SL also has a pipeline of future loan origination opportunities in the Channel Islands, supported by its established network of contacts, expanding presence in the market and growing market recognition. The Board also intends to research the potential for SL to expand its operations into other offshore jurisdictions, such as the Isle of Man and Malta, as the Board believes this represents another area of opportunity in the medium-term.

· The SL network of contacts and market presence also provides the enlarged Group with potential access to a wide pool of capital from Channel Islands-based high net worth individuals and family offices. These sources could provide future lenders and co-lenders, not only to SL, but to other platforms within the group of alternative finance platforms in which the Company holds equity interests.

· The Acquisition also brings additional experienced management with loan origination and underwriting capabilities to develop and drive growth in the Company's proprietary loan book. It is the Board's intention to expand the Enlarged Group's loan origination business following the Acquisition, and in light of this, to reorganise the Company's investment activities into two divisions, Lending and Platforms. Mr Andrew Whelan, SL's Chief Executive Officer will be appointed to a newly created post, Director of Lending, with responsibility for loan origination and management. Mr Whelan's appointment will become effective immediately following the Acquisition and it is intended that he will join the Board as an executive director.

In summary, the Board believes that there is a good strategic fit between SL and the Company and that the Acquisition will not only bring the entirety of SL's current and future lending business within the Enlarged Group but will provide the management skills and potential access to the capital required to facilitate a broader expansion of the Enlarged Group's loan origination activities.

GLI Finance Chief Executive Officer, Geoff Miller, said:

"This acquisition represents a key event in the Company's development; not only immediately delivering an existing loan book and income stream but also an exciting platform from which to expand into other offshore jurisdictions. Alongside this, we will benefit from the experience of a hugely talented management team with loan origination capabilities that will drive the growth of our proprietary loan book."

Sancus Holdings Limited Chief Executive Officer, Andrew Whelan, said:

"Having GLI Finance as an investor for nearly a year has made clear the synergies that are possible between Sancus and GLI Finance's other investments, to the benefit of all involved. I look forward to being a part of this exciting stage of growth for GLI Finance, which has already built an impressive and diverse portfolio of alternative finance platforms."

Related Party Transaction

Mr Geoffrey Miller, the Company's Chief Executive Officer and a Director of the Company, is a non-executive director of SHL. The aggregate interests of Mr Miller and his fellow SHL directors in SHL's issued and to be issued voting share capital exceed 30 per cent. As such, SHL is classified as a related party of the Company under Rule 13 of the AIM Rules and the Acquisition is therefore treated as a related party transaction. It is also subject to the requirements of Rule 3.01 of the Authorised Closed-Ended Scheme Rules, 2008.

The Independent Directors consider, having consulted with the Company's nominated adviser, Panmure Gordon, that the terms of the Acquisition are fair and reasonable insofar as Shareholders are concerned.

Expected Timetable

Publication of the Circular

2014

17 November

Latest time and date for receipt of

Forms of Proxy for EGM

11.00 a.m. on 10 December

Extraordinary General Meeting

11.00 a.m. on 12 December

Effective date of adoption of New Articles and expected date of completion of the Acquisition

12 December

References to times in this document are to times in London, England unless otherwise stated. The above times and/or dates may be subject to change and, in the event of such change, the revised times and/or dates will be notified to Shareholders by an announcement through a regulatory information service.

This preceding summary should be read in conjunction with the full text of the following announcement and its appendices, together with the Circular.

Capitalised terms in this announcement have the same meanings as defined in the Circular, unless otherwise stated,

About GLI Finance

GLI Finance is a specialist provider of finance to small and medium sized enterprises and is quoted on the AIM market of the London Stock Exchange (ticker GLIF). GLI Finance both invests in loans to SMEs and originates finance for SMEs through a variety of finance platforms.

The platforms in which GLI Finance is invested vary by geography, industry, size of lending and by type of lending. They include global trade finance, UK and US SME lending, offshore lending, UK invoice discounting, European invoice discounting, global multi-asset crowd funding and UK property-backed lending.

About SL

SL is an offshore alternative secured lending business, which makes loans to Channel Islands-based entrepreneurs, SMEs, high net worth individuals and professionals. SL's Channel Islands focus reflects its management team's network of contacts in this area.

Since its incorporation in July 2013 and commencing to trade in January 2014, SL has grown rapidly and written approximately £47.6 million of loans across 20 transactions, of which two loans totalling approximately £4.5 million have been repaid. Of the £43.1 million loan book currently outstanding, £17.3 million has been lent by SL, with a further £25.8 million co-lent by third parties that have been introduced to the opportunity to lend alongside SL. Co-lenders tend to be Channel Islands-based family office investors and high net worth individuals.

Analyst and Investor Meeting and Conference Call

A meeting for analysts and investors will take place today, 17 November 2014, at 08.15am GMT at:

Room Bishopsgate 1

LendIt

155 Bishopsgate

London

EC2M 3YX

Analysts and investors can also access this meeting via conference call by dialling +44 (0)20 3139 4830 and the security code is14056694#

Enquiries

GLI Finance Limited

Geoffrey Miller

+1 203 916 0003

+44 7408 830719

Sancus Holding Limted

Andrew Whelan

+44 (0)1534 708 900

+44 (0) 7797 722 654

Panmure Gordon (Nominated Advisor and Corporate Broker)

Dominic Morley

+44 (0)20 7886 2500

Joanne Lake

+44 (0)113 357 1151

Camarco (PR Advisor)

Ed Gascoigne-Pees

+44 (0)203 757 4984

+44 (0)788 400 1949

Hazel Stevenson

+44 (0)203 757 4989

+44 (0)798 600 9720

Panmure Gordon (UK) Limited ("Panmure Gordon"), which is authorised and regulated by the Financial Conduct Authority, is acting for the Company and for no-one else in connection with the matters set out in this document and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Panmure Gordon or for affording advice in relation to the contents of this document or any matters referred to herein.

GLI Finance Limited

Proposed acquisition of Sancus Limited and Sancus (Guernsey) Limited, proposed adoption of new Articles of Incorporation and Notice of Extraordinary General Meeting

1. Introduction

The Board announced today that on 14 November 2014, the Company entered into a conditional sale and purchase agreement with Sancus Holdings Limited ("SHL") (the "SPA"), under which the Company has conditionally agreed to acquire the respective entire issued share capitals of Sancus Limited ("SL") and Sancus (Guernsey) Limited ("SGL") from SHL and the intragroup loans (the "Intragroup Loans") made by SHL to SL (the "Acquisition") for a total consideration of £37.75 million. The payment of the consideration relating to the Acquisition would involve the Company issuing to SHL new Ordinary Shares (the "New Ordinary Shares") and new redeemable zero dividend preference shares in the Company (the "ZDP Shares") (as further described below). Therefore, in connection with the Acquisition, the Board is seeking the approval of Shareholders for the New Articles to be adopted in order to reflect the creation of such a new class of ZDP Shares and to provide for the rights attached to the ZDP Shares (altogether, the "Proposals").

The Board believes that the ZDP Shares will diversify the funding of the Company's capital structure and better align the structure with the Board's expectation of the future returns from the Company's business. The issue of ZDP Shares is also expected to reduce the Company's overall cost of capital.

The following information provides details of and background to the Proposals and the reasons why the Board considers that the Proposals are in the best interests of the Company and Shareholders as a whole. The Board unanimously recommends that you vote in favour of the Resolution to be proposed at the Extraordinary General Meeting to be held at 11.00 a.m. on 12 December 2014, as the Directors intend to do in respect of their own holdings of Ordinary Shares. The Notice convening this meeting is set out in Part 4 of the Circular.

Shareholder approval by way of a special resolution (the "Resolution") is required in order to approve the proposed adoption of the New Articles which are necessary as a result of the Acquisition.

2. Background to the Proposals

Background to the Acquisition

Since the Company's incorporation in 2005, its primary objective has been to achieve a return on equity of 10 to 15 per cent per annum through the provision of finance to SMEs and this remains the case. The Company's strategy for achieving this objective has evolved over time and the Company's focus in recent years has been on establishing itself as a leading player in the rapidly growing alternative finance sector.

This shift in focus began in 2012 with the acquisition of BMS Finance AB Limited, a senior lending business focused on SMEs, for total consideration of £11.6 million. The Company has since made equity and debt investments in a further 15 alternative lending platforms totalling £21.1 million spanning a variety of asset classes. This includes the Company's £3.025 million investment (£0.3 million of ordinary shares and £2.725 million of preference shares) in December 2013 in SHL, the parent company of SL, a Channel Islands-based alternative lender.

A key aspect of this transition has also been the divestment of the Company's CLO portfolio, a process which concluded with the sale, in June 2014, of the Company's remaining CLO assets to Fair Oaks Income Fund Limited ("FOIF") for total consideration of $54.7 million ($20.4m of cash and the remainder in shares in FOIF).

The Company holds 7.4 per cent of SHL's ordinary shares in issue immediately following its investment. Mr Geoffrey Miller, the Company's Chief Executive Officer, was appointed to the board of SHL as a non-executive director on 9 December 2013. The Company's interest in SHL's preference shares is to increase by £1.0 million to £3.725 million prior to completion of the Acquisition and as part of this investment, the Company's holding of ordinary shares in SHL will increase to 8.4 per cent. Further information on SL is provided below. The Board has, subject to the satisfaction of certain conditions, now agreed that the Company will acquire the respective entire issued share capitals of SL and SGL as well as the Intragroup Loans for total consideration of £37.75 million as detailed below.

Reasons for the Acquisition

The Board believes that the Acquisition will provide the Company with the opportunity to achieve an immediate step-change in the scale and breadth of its activities in the alternative finance arena. The Acquisition therefore will represent a key event in the Company's development.

The Acquisition will provide the Company with an existing loan book and an income stream from SL's current loan book. SL also has a pipeline of future loan origination opportunities in the Channel Islands, supported by its established network of contacts, expanding presence in the market and growing market recognition. The Board also intends to research the potential for SL to expand its operations into other offshore jurisdictions, such as the Isle of Man and Malta, as the Board believes this represents another area of opportunity in the medium-term.

In addition, the SL network of contacts and market presence also provides the Enlarged Group with potential access to a wide pool of capital from Channel Islands-based high net worth individuals and family offices. These sources could provide future lenders and co-lenders, not only to SL, but to other platforms within the group of alternative finance platforms in which the Company holds equity interests.

The Acquisition also brings additional experienced management with loan origination and underwriting capabilities to develop and drive growth in the Company's proprietary loan book. It is the Board's intention to expand the Enlarged Group's loan origination business following the Acquisition, and in light of this, to reorganise the Company's investment activities into two divisions, Lending and Platforms. Mr Andrew Whelan, SL's Chief Executive Officer, will be appointed to a newly created post, Director of Lending, with responsibility for loan origination and management. Mr Whelan's appointment will become effective immediately following the Acquisition and it is intended that he will join the Board as an executive director. Further details of the intended reorganisation are provided below.

Information on SL

Loans advanced to date range from £0.25 million to a £30 million facility provided to the Company, of which approximately £23.0 million has been drawn at the date of this document. The length of the loans made to date averages 11 months. All loans are secured over certain assets of the borrower, with loan to value ratios averaging 49 per cent. The average annual interest rate charged on the loans advanced to date is approximately 10.4 per cent.

SL has, to date, received £17.8 million of funding from SHL via intercompany loans. SHL, incorporated under Guernsey law in June 2013, has in turn received funding from its ordinary and preference shareholders totalling £23.2 million, of which £7.3 million has been provided by its directors and their connected parties, with the remainder by Channel Islands-based family office investors and high net worth individuals. SHL intends, between the date of this announcement and completion of the Acquisition, to make a further £5.0 million of funding available to SL, such that the aggregated intragroup loan due from SL to SHL at completion is expected to be £22.8 million.

SL's head office is based in St Helier Jersey and it also has a satellite office in St Peter Port Guernsey. SL's business is currently unregulated for the purposes of the Financial Services (Jersey) law 1998.

The Board believes that SL has the following key strengths, making the Acquisition an attractive opportunity for the Company:

· SL is recognised as a leading player in Jersey's growing alternative lending market with little competition in its chosen area of operation. The Board believes that SL has established this niche partly as a result of its innovative approach taken to lending, for example by offering flexible terms to borrowers reflecting the specific and, in some cases, complex circumstances of each loan. SL can also customise its approach to loan collateral, for example, by adopting a more flexible approach than traditional lenders to taking security over unusual assets. This is reflected in the interest rate that SL charges, reflecting in turn complexity of circumstances rather than pure credit risk. SL also, on occasions, takes warrants over the borrower's underlying equity to boost its targeted return, again demonstrating the flexible approach taken.

· SL already has a proven ability to react quickly and decisively to new opportunities and arrange for loans to be advanced often within weeks of initial enquiry. The Board believes that the speed with which SL acts, whilst not compromising its internal procedures or due diligence standards, is a competitive advantage compared with traditional finance providers, particularly given borrowers' often urgent need for capital.

· SL has a proven revenue model and is already generating monthly profits in its first year of trading. All of SL's costs associated with loan origination are met by the borrower; a commitment fee is charged on issue of the offer letter to the borrower with arrangement fees charged at completion. SL also differentiates itself from many peer to peer lenders primarily dependent on fee income, as a significant proportion of revenues are generated by interest received on funds lent.

· Another differentiator is SL's investment of proprietary capital on the loans where co-lenders are involved. This is an important source of comfort to co-lenders, reducing their risk profile accordingly.

· SL has established robust policies, processes, controls and procedures governing areas such as client take-on, credit committee approval, due diligence, security and loan documentation. These policies are rigidly adhered to and help to ensure that significant risks are identified at an early stage of assessment of a new opportunity.

· SL has a pipeline of opportunities to grow its loan book further through lending to Channel Islands-based borrowers. SL's expanding presence and growing recognition in this market will, the Board believes, open up access to capital from other potential co-lenders, for example funds held in trust and under management in Jersey.

· The Board believes that SL has attractive prospects in the longer-term, for example there could be opportunities to develop SL's presence in alternative lending markets in other offshore jurisdictions such as the Isle of Man and Malta or through other capital distribution channels.

Financial information

Set out below are selected profit and loss account extracts from SL's unaudited management accounts for the 10 months ended 31 October 2014:

	£'000
Net operating income	1,373
EBITDA	858
PBT	501

Source: SL's unaudited management accounts

Integration of the Acquisition and further development of the Enlarged Group

Following completion of the Acquisition, the Board intends to support the ongoing development of SL's lending business, which will continue to be led by Mr Andrew Whelan, SL's Chief Executive Officer and a founder shareholder of SHL. A key objective of the Board will be to increase the scale of its lending activities in SL's current markets as well as penetrate other new markets. In the short-term, the Board plans to leverage the Company's Guernsey location to accelerate SL's presence in this market.

Mr John Davey and Mr Richard Harrop, both of whom are SHL founder shareholders and have been integral to SL's growth since establishment, will remain on SL's board as non-executive directors following completion of the Acquisition. The Board believes that SL will continue to benefit from Mr Davey's, Mr Harrop's and Mr Whelan's network of contacts across the Channel Islands as a source of new opportunities for both SL and the Enlarged Group.

As discussed above, the Board is also, following the Acquisition, intending to reorganise the Enlarged Group's investment activities into two divisions, Lending and Platforms. The purpose of the Lending division will be to manage all loans originated via the Company's platforms or made directly by the Company. The Platforms division will be responsible for the strategic development of, and realising synergies and cross-selling opportunities between the various platforms.

The Board believes that segmenting the Enlarged Group's activities into these two areas will provide clearer accountability, greater transparency and better performance evaluation. Mr Andrew Whelan will become the Company's Director of Lending, with Platforms being led by Mr Geoffrey Miller and Mr Marc Krombach, the Company's Managing Director. The Board is currently in the planning stages of the reorganisation and a detailed update will be provided once this process has been completed.

The Board believes that the platforms in which the Company has invested to date all have a clearly defined niche in their chosen markets and fit with the Company's objective of originating finance for SMEs through the platforms in which it has an equity interest. In a global environment where traditional lending sources for SMEs are significantly constrained, alternative finance providers are becoming increasingly accepted and, given the breadth of the Company's presence in this rapidly growing market through its alternative lending investments, the Board is optimistic as to the Company's future prospects.

Principal terms and conditions of the Acquisition

Under the terms of the SPA, the Company has conditionally agreed to acquire the respective entire issued share capitals of SL and SGL (SGL being a dormant company that has never traded since its incorporation in June 2014) from SHL, as well as the Intragroup Loans (with an approximate outstanding value of £22.8 million that SL would otherwise need to repay to SHL in the future), for a total consideration of £37.75 million, to be satisfied by the issue to SHL of:

· 20,000,000 ZDP Shares at a fixed price of £1 each.

The Intragroup Loans that SL would otherwise need to repay to SHL in the future will be transferred by SHL to the Company by way of novation.

Immediately following completion of the Acquisition, SHL's only assets will be the New Ordinary Shares, the ZDPs and approximately £0.2 million of cash to provide working capital to meet ongoing administrative costs prior to its anticipated liquidation in due course.

The SPA contains warranties in favour of the Company which will apply for a period which is the longer of either: (a) the period commencing on the date of completion of the Acquisition and expiring six months thereafter; or (b) the period commencing on the date of completion of the Acquisition and expiring on the earlier of (i) the date on which an unqualified audit opinion on SL is given by the auditor of SL in its audit report on SL for the period ending 31 December 2014 or (ii) the first anniversary of completion of the Acquisition (the "Cover Period"). A claim under the SPA will be satisfied by the transfer back to the Company by SHL of the relevant number of New Ordinary Shares issued to it pursuant to the Acquisition as is equal to the value of such claim.

Separately, certain restrictive covenants are given by Mr John Davey, a director of SHL, which will apply for 2 years from completion of the Acquisition.

Completion of the Acquisition is conditional upon, amongst other things:

· approval by Shareholders of the proposed adoption of the New Articles covered by the Resolution (please see paragraph 5 below for further details);

· approval by SHL's ordinary shareholders of the sale of SL and SGL to the Company;

· the Board not having decided to terminate the SPA as a result of a Material Adverse Change having occurred between the date of the SPA and Completion;

· confirmation having been given (and not withdrawn, amended or lapsed) in writing by the Jersey Financial Services Commission that it consents to the proposed change of control of SL pursuant to the consent issued to SL under the Control of Borrowing (Jersey) Order 1958;

· confirmation having been given (and not withdrawn, amended or lapsed) in writing by the Population Office in Jersey that it consents to the proposed change of control of SL pursuant to Article 25(3) of the Control of Housing and Work (Jersey) Law 2012;

· the Board, acting reasonably, is able to certify that the Acquisition is fair and reasonable to the Company and its existing shareholders for the purposes of sections 295 and 296 of the Guernsey (Companies) Law 2008; and

· the Company and Mr Andrew Whelan having entered into or agreed to enter into a service agreement in such form as agreed between the Company and Mr Whelan relating to the provision of services by him to the Company from Completion, and the Company and Ms Nicola de Veulle, SL's Chief Operations Officer, having entered into or agreed to enter into a service agreement in such form as agreed between the Company and Ms de Veulle relating to the provision of services by her to the Company from Completion.

New Ordinary Shares to be issued as part of the consideration relating to the Acquisition

The New Ordinary Shares, when issued, will be credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid on the Ordinary Shares and otherwise pari passu in all respects with the existing Ordinary Shares other than that they will not be entitled to the dividend otherwise payable on the Ordinary Shares in respect of the period ending 31 December 2014.

Under a lock-in deed between the Company, SHL and Panmure Gordon which is to be executed upon the completion of the Acquisition, SHL is to agree that, except in certain limited circumstances, it will not dispose of the New Ordinary Shares during the Cover Period, as well as (if applicable) such extended period where a claim has been notified by the Company to SHL during the Cover Period but where the claim has not yet been settled, withdrawn or finally judicially determined by a court of competent jurisdiction.

SHL's current intention is to transfer the New Ordinary Shares to SHL's ordinary shareholders pro rata to their existing holdings following the end of the lock-in period. Mr Geoffrey Miller is a non-executive director of SHL and has, under the SHL Employee Benefit Trust, an effective interest in two per cent. of SHL's issued and to be issued ordinary share capital. In respect of Mr Miller's interest in ordinary shares in the capital of SHL this will result in the transfer of 628,318 New Ordinary Shares to Mr Miller. As for Mr Miller's current interests in the Company's issued share capital, Mr Miller will not be able to sell his New Ordinary Shares whilst he is a Director of the Company. In respect of the Company's holding of ordinary shares in the capital of SHL, this will result in the transfer of 2,642,865 New Ordinary Shares to the Company. The Company intends to hold the New Ordinary Shares in treasury following the transfer.

Following the end of the lock-in period, there will be an orderly marketing period of six months, during which time SHL can only effect a disposal of the New Ordinary Shares through Panmure Gordon (subject to certain exceptions considered normal for an arrangement of this nature). If SHL disposes of any New Ordinary Shares to any of its ordinary shareholders, SHL is obliged to use its best endeavours to ensure that its ordinary shareholders will also effect any further disposals of such New Ordinary Shares transferred to them during the orderly marketing period through Panmure Gordon (again, subject to certain exceptions considered normal for an arrangement of this nature).

Furthermore, each of Mr John Davey, Mr Andrew Whelan, Mr Richard Harrop and Ms Nicola de Veulle will enter into a lock-in deed with the Company and Panmure Gordon upon completion of the Acquisition, whereby each of them will agree not to dispose of any New Ordinary Shares which each of them will receive from SHL in the future, except in certain limited circumstances, for a period of 18 months from the date of completion of the Acquisition. In relation to Mr Davey, Mr Whelan and Mr Harrop, at the end of the lock-in period, there will be an orderly marketing period of six months, during which time each of them can only effect a disposal of his New Ordinary Shares through Panmure Gordon (subject to certain exceptions considered normal for an arrangement of this nature).

ZDP Shares to be issued as part of the consideration relating to the Acquisition

The ZDP Shares have a redemption value of 130.696p per share on their maturity date of 5 December 2019, compared with an initial right to capital of 100p per share at issue. The return over the period is expected to be equivalent to an annual return of 5.5%, over their five year life. The rights, which include class consents, attached to the ZDP Shares are set out in Part 2 of the Circular.

The ZDP Shares will not be admitted to trading on AIM or any other regulated or similar market immediately following Completion. The Board intends to use all reasonable endeavours to procure that the ZDP Shares are admitted to trading on AIM or another stock exchange in the first half of 2015. We will write to you regarding such proposals in due course.

SHL has undertaken to redeem, upon the allotment and issue to it by the Company of the ZDP Shares, the preference shares outstanding, by transferring the ZDPs to SHL's preference shareholders pro rata to their existing holdings as soon as reasonably practicable following Completion. In respect of the Company's holding of preference shares in the capital of SHL, this will result in the transfer of 3,725,000 ZDP Shares to the Company. The Company intends to hold the ZDP Shares in treasury following the transfer.

3. Board changes

It is intended that, following completion of the Acquisition, Mr Andrew Whelan will be appointed to the Board as an executive director. Mr Whelan has over 25 years of experience of the financial services industry. He started his career with Morgan Grenfell in 1987 and also worked for Kleinwort Benson within the Dresdner Private Banking Group before joining Liberty Ermitage in 2001, where he became Group Executive Director and Managing Director of Ermitage Global Wealth Management Jersey Limited. Mr Whelan was a founding partner of Ermitage Group in 2006 following a management buy-out of the business from Liberty Life. Mr Whelan left Ermitage Group in 2011 following its sale to Nexar Capital Group. Between April 2012 and August 2013, Mr Whelan was with International Asset Monitor as Managing Director of its newly established Jersey office, before founding SHL on 1 September 2013 and joining as Chief Executive Officer. Mr Whelan has an effective interest in 11.7 per cent. of SHL's ordinary issued and to be issued share capital.

Mr Whelan is a Fellow of the Chartered Institute for Securities & Investment.

4. Related party transaction

5. Adoption of the New Articles

As the Acquisition will involve the issuing of ZDP Shares to SHL, New Articles will need to be adopted to the new articles in order to reflect the creation of such a new class of ZDP Shares and to provide for the rights attached to such shares. Part 2 of the Circular contains a summary of the provisions proposed to be adopted in the New Articles.

6. Extraordinary General Meeting

Resolution

Any proposed adoption of the New Articles requires Shareholder approval in accordance with the Articles. Under The Companies (Guernsey) Law, 2008 a resolution to adopt new articles of incorporation can only be passed by way of a special resolution. Accordingly, the Resolution, to approve the proposed adoption of the New Articles, will be proposed as a special resolution. The Resolution requires not less than seventy five per cent. (75%) of those members present (whether in person or by proxy) and voting, to vote in favour of it in order for it to be passed.

Action to be taken

A notice convening an Extraordinary General Meeting of the Company, which is to be held at 11.00 a.m. on 12 December 2014, is set out at the end of the Circular. Whether or not you intend to be present at the Extraordinary General Meeting, Shareholders are requested to complete and return the Form of Proxy accompanying the Circular in accordance with the instructions printed thereon, so as to be received as soon as possible and, in any event, no later than 11.00 a.m. on 10 December 2014. The completion and return of the Form of Proxy will not preclude you from attending the meeting and voting in person should you so wish.

7. Recommendation

The Board believes that the Proposals are in the best interests of the Company and the Shareholders as a whole and unanimously recommends that Shareholders vote in favour of the Resolution to be proposed at the Extraordinary General Meeting to be held at 11.00 a.m. on 12 December 2014.

The Directors intend to vote in favour, or procure the vote in favour, of the Resolution at the General Meeting in respect of their beneficial holdings of Shares which, in aggregate, amount to 2,136,202 Ordinary Shares representing approximately 1.51 per cent of the Company's issued Ordinary Share capital.

ENDS