8th Oct 2007 07:01
Friends Provident PLC08 October 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO ORFROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION For immediate release8 October 2007 FRIENDS PROVIDENT PLC AND RESOLUTION PLC: PUBLICATION OF SHAREHOLDERDOCUMENTATION Friends Provident plc ("Friends Provident") and Resolution plc ("Resolution")are pleased to announce the publication later today of shareholder documentationrelating to the creation of Friends Financial Group plc ("Friends Financial")originally announced on 25 July 2007. Timetable Friends Provident's Extraordinary General Meeting ("EGM") and Scheme Meeting andResolution's EGM will be held on Monday 5 November 2007. The expected effectivedate of the merger is Thursday 29 November 2007. Progress on merger implementation Friends Provident and Resolution are continuing to prepare for implementation ofthe merger and discussions have been held with rating agencies. The Boards of Friends Provident and Resolution remain committed to the merger,which they believe to be in the best interests of the shareholders of eachcompany, and continue to recommend that their respective shareholders vote infavour of the resolutions relating to the merger to be proposed at theirrespective shareholder meetings. Commenting, Mike Biggs, Group Chief Executive of Resolution, said: "Today's publication of the shareholder documents marks the closing stages ofour merger, as we move towards the EGM and then completion. We are lookingforward to having further meetings with our shareholders. The work we have donein recent months, combined with our track record of delivery, reinforces ourconfidence in the strong growth and value we expect to create from FriendsFinancial." Philip Moore, Chief Executive of Friends Provident, said: "We are looking forward to the successful completion of the merger withResolution. All the work we have done on the merger over the last couple ofmonths gives us every confidence that the combination of these two businesses isthe right thing to do, because we expect the merger to create significant valueopportunities for shareholders and customers from the combination of FriendsProvident's product and service expertise, Resolution's cash flow and our broad,combined distribution capabilities." Clarification In order to ensure that Resolution Shareholders have sufficient time to considerany alternative offers (should any be forthcoming) prior to the EGM vote,Resolution has requested the Takeover Panel to set a timetable by whichpotential offerors must clarify their intentions. The publication of our updatedmerger timetable will enable the Takeover Panel to set the clarificationtimetable. Friends Provident trading update Trading in the third quarter of 2007 remains in line with expectations. Totallife and pensions sales are expected to exceed those in the second quarter withparticularly strong performances from both international businesses and fromgroup pensions. Sales in protection and investment continue to perform in linewith the trend seen in the first half of the year. Total life and pensions salesin the nine months to 30 September 2007 are expected to exceed £5.4 billion ofPVNBP, up over 16 per cent. on the same period last year (£4,629 million).Within this total the UK is expected to exceed £3.4 billion, up over 11 percent. on 2006 (£3,039 million) and international is expected to exceed £2.0billion, up over 25 per cent. on 2006 (£1,590 million). 1. Posting Friends Provident and Resolution are pleased to announce the publication latertoday of: i) the Scheme Document to Friends Provident Shareholders convening the SchemeMeeting and the Friends Provident EGM for 11.00 a.m. and 11.15 a.m. on 5November 2007(1) at The Queen Elizabeth II Conference Centre, Broad Sanctuary,Westminster, London SW1P 3EE; ii) the Class 1 Circular to Resolution Shareholders convening the Resolution EGMfor 11.00 a.m. on 5 November 2007 at the Crowne Plaza London - The City, 19 NewBridge Street, London EC4V 6DB; and iii) the Resolution Prospectus regarding the proposed issue of up to 726,287,808New Friends Financial Shares in connection with the merger. It is expected that Admission will become effective, and that dealings in theNew Friends Financial Shares will commence, on 29 November 2007, subject to thesatisfaction of certain conditions, including the sanction of the Scheme by theCourt. The Prospectus and Scheme Document will be available at www.friendsprovident.com/merger and the Prospectus and Class 1 Circular will be available atwww.resolutionplc.com as soon as practicable after this announcement. The SchemeDocument will be posted to Friends Provident Shareholders and the Class 1Circular will be posted to Resolution Shareholders as soon as practicable afterthis announcement in light of the current strike action by Royal Mail staff. Copies of the Scheme Document, Class 1 Circular and Prospectus will be availablefor inspection during normal business hours on Monday to Friday each week(public holidays excepted) from and including the time of publication of thedocumentation until the effective date of the Scheme, which is expected to be 29November 2007, at the registered office of Resolution plc at Juxon House, 100 StPaul's Churchyard, London EC4M 8BU and at the offices of Herbert Smith LLP,Exchange House, Primrose Street, London EC2A 2HS. Copies of the Scheme Documentand Prospectus will be available for inspection during normal business hours onMonday to Friday each week (public holidays excepted) from and including thetime of publication of the documentation until the effective date of the Scheme,which is expected to be 29 November 2007, at the offices of Linklaters LLP, OneSilk Street, London EC2Y 8HQ. Copies of the Scheme Document, Class 1 Circular and Prospectus will be madeavailable free of charge upon request. In addition, the Scheme Document, Class 1 Circular and Prospectus will, frompublication, be available for inspection at the UK Listing Authority's DocumentViewing Facility at the Financial Services Authority, 25 North Colonnade, CanaryWharf, London E14 5HS. 2. Timetable The expected timetable of principal events is as follows: Resolution Extraordinary General Meeting 11.00 a.m. on 5 November 2007 Scheme Meeting 11.00 a.m. on 5 November 2007 Friends Provident Extraordinary General Meeting 11.15 a.m. on 5 November 2007(1) Scheme Court Hearing 26 November 2007 Last day of dealings in Friends Provident Shares 26 November 2007 Scheme Record Time 6.00 p.m. on 27 November 2007 Reduction Court Hearing 28 November 2007 Effective Date of the Scheme 29 November 2007(2) De-listing of Friends Provident Shares 8.00 a.m. on 29 November 2007(2) Issue of New Friends Financial Shares 8.00 a.m. on 29 November 2007(2) Commencement of dealings on the London Stock Exchange of New Friends Financial Shares 8.00 a.m. on 29 November 2007(2) Crediting of New Friends Financial Shares to CREST Accounts 29 November 2007(2) Latest date for dispatch of share certificates in respect of New Friends Financial Shares 13 December 2007(2) 3. Status of potential competing bidder clarification In the light of recent speculation in relation to potential offers forResolution, Resolution confirmed on 28 September 2007 that it is providingcontinued due diligence and management meetings to potential offerors, as it hasdone under Rule 20.2 of the Takeover Code since shortly after the announcementof the merger. Resolution reiterates that it is not in receipt of any offersfrom any such potential offerors. In order to ensure that Resolution Shareholders have sufficient time to considerany alternative offers (should any be forthcoming) prior to the EGM vote,Resolution has requested the Takeover Panel to set a timetable by whichpotential offerors must clarify their intentions. The publication of our updatedmerger timetable will enable the Takeover Panel to set the clarificationtimetable. 4. Value creation The Boards of Resolution and Friends Provident believe that the agreed merger ofResolution and Friends Provident to form Friends Financial will createsignificant value for their shareholders through the combination of: • the pro forma embedded values as adjusted, of Resolution and Friends Provident, including the market value of Friends Provident's interest in F&C Asset Management plc ("F&C"), which, in aggregate, amount to £8,399 million (5) (equivalent to 623p per Resolution share and 192p per Friends Provident share on the terms of the merger) as at 30 June 2007; plus • the value of their combined new business franchise, which in 2006 would have produced in aggregate approximately £250 million of new business profit before tax(6) (equivalent to 13.0p per Resolution share and 4.0p per Friends Provident share, on the terms of the merger, assuming a 30 per cent. tax rate). This combined new business franchise has continued to show strong momentum in 2007, as demonstrated by the performance of both Friends Provident and Resolution in the first half of 2007; plus • the additional goodwill value attributable to Resolution Asset Management in excess of the goodwill of £134 million (equivalent to 10p per Resolution share and 3.1p per Friends Provident share, on the terms of the merger) already included in Resolution's embedded value as at 30 June 2007. Resolution Asset Management produced operating profit before tax of £24 million in the first half of 2007 and £42 million (equivalent to 2.2p per Resolution share and 0.7p per Friends Provident share, on the terms of the merger, assuming a 30 per cent. tax rate) in the 12 months to 30 June 2007; plus • the value of cost and financial synergies of £100 million(7) per annum before taxes (equivalent to 5.2p per Resolution share and 1.6p per Friends Provident share, on the terms of the merger, assuming a 30 per cent. tax rate), as announced with the Friends Financial merger on 25 July 2007, less £120 million one-off implementation costs before taxes (equivalent to 6.2p per Resolution share and 1.9p per Friends Provident share, on the terms of the merger, assuming a 30 per cent. tax rate); plus • the additional value from the recent acquisition of the 65 strong Scottish Provident broker consultant business from Abbey; plus • the value ascribed to elements not included above, such as Resolution's service company (which in the year to 31 December 2006 produced an operating profit before tax of £15 million), less corporate costs; plus • the expectation that significant revenue benefits will be captured in the longer term, through taking advantage of increased scale and financial strength, cross-selling to the existing Friends Provident and Resolution customer bases and exploiting their complementary product and distribution capabilities, including: - Friends Provident's existing annuity product being made available to capture a share of the approximately £900 million per annum of future vesting pensions on Resolution's books; - greater penetration of the Abbey bancassurance relationship, with Friends Provident's broader product suite, national sales and training network, and experience of servicing other bank distribution partners; and - developing new business products under the Friends Provident brand for Resolution's approximately 7 million customers. The combined business will have a leading position in the UK in group pensionsand protection will remain a core area, with a market share of approximately 14per cent. Friends Provident's international new business has been growingstrongly and achieved an IRR of 25.7 per cent. in 2006. Asset management will remain central to Friends Financial's strategy with acombined total of £158 billion of funds under management as at 30 June 2007. Itis proposed that Resolution Asset Management ("RAM") will be combined with F&Con terms to be agreed with the Board of F&C. F&C will continue to be separatelylisted and majority owned by the Combined Group. The merger is expected to be earnings per share accretive on an EEV EPS basis(3)and accretive to embedded value per share by 2009 for both Friends Provident andResolution shareholders.(4) 5. Track record of delivery Friends Provident has a strong track record of creating value both organicallyand through acquisitions. It has transformed its business since itsdemutualisation and IPO in 2001, building a significant presence in the UKpensions and protection markets and developing its international operationswhich now account for almost 50 per cent. of total new business profits. Inparticular: • in the UK, it has increased its market share from 3.0 per cent. to 5.4 per cent. since IPO and at the same time increased margins. It has consolidated all its business units onto a single administration platform delivering significant efficiencies; • in International, Friends Provident has grown its business organically and by acquisition. In 2005, it acquired Lombard for £394 million (including earn-out payments). This business produced £70 million of new business profit before tax in the year ending 31 December 2006. PVNBP compound annual sales growth has been 27 per cent. under Friends Provident's ownership. Friends Provident acquired the Isle of Man based international business of Royal & Sun Alliance in 2002. Through integrating this business with the UK life and pensions platform, Friends Provident has delivered PVNBP sales growth of 17 per cent. per annum since acquisition; • across its businesses, Friends Provident has applied technology to enhance distribution, improve service and reduce costs. Its administrative efficiency and service excellence are evident through its straight-through processing capabilities and its innovative e-select protection platform; and • the combination of technology and service has won Friends Provident numerous awards, including Life Insurer of the Year at the 2006 British Insurance Awards. Resolution also has a strong track record of value creation throughconsolidation. In its latest transaction, the acquisition of the UK and offshorelife insurance businesses of Abbey National plc, Resolution has delivered, orexceeded expectations, on all of its targets and in the twelve months sincecompletion has: • achieved strong cash generation. At the time of the acquisition of the Abbey life companies, Resolution raised bridging finance of £1,680 million, which it originally expected to repay through the release of £1,150 million capital from the Abbey life companies and a subordinated bond issue of £530 million. By the end of 2006, cash of £1,800 million had been released from the Abbey life companies, of which £1,300 million was used to part-repay the bridging facility. The receipt of a further £690 million from the Abbey life companies in the first half of 2007 resulted in the remainder of the bridging finance being repaid and removed the need for the planned bond issue; • improved the enlarged group's dividend paying capacity - with dividend growth of 15 per cent. in 2006, proposing growth of 38 per cent. for 2007 and targeting at least 5 per cent. p.a. thereafter; • confirmed that it is fully on track to deliver £17 million p.a. synergies (comprising £10 million cost savings in its Life business and £7 million Asset Management savings); • more than doubled expected financial synergies arising in 2008 from the transaction to £250 million(7), compared to the original estimate of £114 million; • delivered new business profits of £30 million in the first half of 2007 (up 20 per cent. from the second half of 2006); and • stabilised the existing long term distribution agreement platform and acquired the 65 strong Scottish Provident broker consultant business from Abbey. Friends Financial is well placed to benefit from the consolidation expertise andexperience of its management and the Boards of Resolution and Friends Providentbelieve that shareholders can be confident of delivery upon its targets. 6. Friends Provident current trading On 8 August 2007, Friends Provident released its interim results for the sixmonths to 30 June 2007. The Scheme Document and Class 1 Circular contain anupdate on current trading, which is set out below. Trading in the third quarter of 2007 remains in line with expectations. Totallife and pensions sales are expected to exceed those in the second quarter withparticularly strong performances from both international businesses and fromgroup pensions. Sales in protection and investment continue to perform in linewith the trend seen in the first half of the year. Total life and pensions salesin the nine months to 30 September 2007 are expected to exceed £5.4 billion ofPVNBP, up over 16 per cent. on the same period last year (£4,629 million).Within this total the UK is expected to exceed £3.4 billion, up over 11 percent. on 2006 (£3,039 million) and international is expected to exceed £2.0billion, up over 25 per cent. on 2006 (£1,590 million). The full third quarter life and pensions new business results will be publishedon the Regulatory News Service on 24 October 2007 and will also be available onthe Friends Provident website on that date. 7. Policyholder benefits Both Friends Provident and Resolution share a commitment to managing life fundsin a way that treats customers fairly and delivers leading standards of service.Friends Financial will maintain a continued focus on its customers, developingand promoting products and services that meet the needs of customers, providingclear information and quality of service. Friends Financial's complementarystrengths will create a customer-led organisation, seeking to add value throughclear differentiation in operational excellence and financial management. Thesestrengths are expected to enhance Friends Financial's returns from both new andin-force business. The positive disclosure and information initiativesintroduced by Friends Provident and Resolution will continue. These are designedto help policyholders make informed decisions about their policies. Following the merger, Resolution's customers will benefit from a broader productoffering, enhanced service capabilities and the financial security that FriendsFinancial's capital position and cash flow generation will provide. 8. Progress on merger implementation a) Regulatory approvals The principal regulatory consent required is from the Financial ServicesAuthority in the UK ("FSA"). The FSA can take up to three months from receipt ofthe change of control application to grant consent. Resolution has submitted itschange of control application in respect of the Friends Provident ownedregulated companies. Additionally, change of control applications have been orwill shortly be submitted to the relevant overseas regulatory authorities. Approval is anticipated within the timetable of the merger, as detailed above. b) Competition authority approvals A competition authority approval application has been submitted to the OFT. Asubmission will be made to the Irish Competition authority shortly after thisannouncement. c) Rating agency update The merger has been discussed with the major rating agencies and Standard &Poor's, Fitch and Moody's have issued updates. • Standard & Poor's has confirmed that when the merger becomes effective it is "likely to equalize the holding company ratings on Resolution and Friends Provident at either 'BBB+' or 'A-'" and that it would expect the "operating companies to be rated in the 'A' range." • Fitch has confirmed that when the merger becomes effective it "would envisage upgrading the IFS ratings of the Resolution group by one notch, bringing them into line with the IFS rating of Friends Provident." • Moody's has noted that the proposed transaction has a number of positive aspects, notably the benefits for Friends Provident of being part of a larger group with substantially positive operating cashflows to ensure funding of new business growth, as well as the increased pro-forma market share in protection business. However, since Resolution has in Moody's opinion historically operated with relatively higher usage of external borrowing, Moody's has committed to review the rating of Friends Provident. d) Position of the Resolution Group pension scheme trustees Resolution has discussed the merger with the trustees of the Resolution GroupPension Scheme ("Scheme"). The trustees have indicated that in its current formand based on the information Resolution has provided to them, it is notcurrently expected that the merger will result in any material adverse impactupon the covenant provided by the group. However, the trustees have advisedResolution that they will review the covenant of the Group from time to time. Inthis regard it should be noted that under the rules of the Scheme, employercontributions are currently at the sole determination of the Scheme actuary. As the merger does not result in any company within the Resolution Group ceasingto employ scheme members, Resolution confirms that no section 75 debts areexpected to arise(8). The trustees of the Scheme are understood to being taking advice from Penfida inrelation to any changes, or other offers that might be made for Resolution. e) Views of the non-executive directors of the life companies As at 3 October 2007, certain of the life companies in the Resolution Group hadprovided intra-group loans to Resolution Life Limited amounting in aggregate to£2.58 billion. The loans are interest bearing and may be repaid by ResolutionLife Limited at any time. £2.48 billion of the loans are also repayable ondemand by the life companies. Although the relevant life companies are allwholly-owned subsidiaries of Resolution, they are regulated individually by theFSA and have independent non-executive directors. Accordingly, the lifecompanies may choose to demand repayment of some or all of the loans withrepayment on demand clauses if their boards, in complying with their regulatoryand fiduciary duties and acting in the interests of policyholders, determine todo so. With regard to the proposed transaction, the independent non-executive directorsof the life companies have confirmed that, since they do not believe that themerger with Friends Provident will result in any reduction in thecreditworthiness of group holding companies or any other changes which wouldhave a detrimental impact on policyholders, they do not intend to ask the lifecompany boards upon which they sit to call for repayment of the £2.48 billion ofloans made to group holding companies. f) Scottish Provident broker consultants The transaction with Abbey National plc ("Abbey") announced on Monday 10September 2007 for Resolution to take on the Scottish Provident brokerconsultants completed on Friday 28 September 2007. The broker consultants arenow employees of Resolution Management Services Limited ("RMS") and a newdistribution agreement has been put in place between Scottish Mutual AssuranceLimited and RMS. Following completion of the merger, it is expected that the RMSbroker consultants will come under the management control of the FriendsProvident Life & Pensions business. g) Abbey distribution agreement Resolution has a ten year retail distribution agreement ("RDA") in place withAbbey under which products manufactured by Phoenix Life Assurance Limited("PLAL") are distributed through the Abbey retail branch network. Under theterms of the RDA, Abbey has the right to terminate the RDA immediately in thecase of the credit rating of PLAL "falling below BBB- as measured by Standard &Poor's". The merger will not result in the leverage ratio of Resolution exceeding itstarget range and Standard & Poor's has noted that it expects strategicallyimportant operating companies, such as PLAL, which is currently rated BBB+, to"be rated in the 'A' range" following implementation of the merger. h) Friends Financial integration planning A joint integration project has been launched, under which considerable progresshas been made in planning the integration of the two businesses. Organisationaldesign, organisation structure and selection processes have been agreed and newgovernance and reporting processes established. Brand strategy and internal andexternal communications plans have been formulated, and teams are advancing onthe harmonisation of financial reporting, planning and management information. Notes (1) Or as soon thereafter as the Scheme Meeting shall have concluded. (2) These dates are indicative only and will depend, among other things, on thedate upon which the Court sanctions the Scheme. All references in this documentto times are to UK time unless otherwise stated. 3) Based on underlying EEV EPS for Friends Provident and operating EEV EPS forResolution. 4) This should not be interpreted as meaning that the EEV EPS or embedded valueper share of the Combined Group for the current or future financial years willnecessarily match or exceed the historical published EEV EPS or embedded valueper share of Resolution. 5) £8,399 million is derived on the basis of: •Resolution's published 30 June 2007 embedded value of £4,340 million; plus •Friends Provident's published 30 June 2007 embedded value of £3,808 million; less £€55m merger transaction costs to give a proforma embedded value figure of £8,093m; plus •the estimated increase in embedded value of approximately £250 million after tax and implementation costs arising from Resolution's proposed fund merger in 2008, as announced on 10 September 2007; plus •the outsourcing transaction with Capita of £56 million. Per share information for Friends Financial is based upon 686,329,060 Resolutionshares in issue, 2,148,068,823 Friends Provident shares subject to the merger,and an exchange ratio of 4 Resolution shares for every 13 Friends Providentshares held as at the record date. 6) Based on Friends Provident's published 2006 pre-tax value of new business of£204 million and Resolution's pre-tax value of new business for the six monthsended 31 December 2006 of £23 million, annualised (Resolution did not own thenew business operations in the first half of 2006). 7) The cost and financial synergies have been reported on by E&Y, Lazard andCiti for Resolution and by KPMG, JPMorgan Cazenove and Goldman Sachs for FriendsProvident. The basis of preparation of the cost and financial synergies is setout in Appendix 2 (Merger Benefits Statement - Explanation of Sources of Costand Savings and Basis of Preparation) of the Resolution Prospectus and in PartSix (Merger Benefit Statements) of the Friends Provident Scheme Document. Thereports of E&Y, Lazard and Citi are included in Appendix 3 (Advisers' Reports onMerger Benefits Statement) of the Resolution Prospectus and, together with thereports of KPMG, JPMorgan Cazenove and Goldman Sachs in Part Six (Merger BenefitStatements) of the Friends Provident Scheme Document. 8) Under section 75 of the Pensions Act 2004, a debt can arise when a companywithdraws from a pension scheme which has assets that are insufficient to meetits liabilities. It differs from IFRS pension deficit due to its calculation ona buy-out basis. Enquiries: Friends Provident Resolution+44 (0)845 641 7832 +44 (0)20 7489 4880Philip Moore Clive CowderyNick Boakes Mike Biggs Steve Riley JPMorgan Cazenove Lazard+44 (0)20 7588 2828 +44 (0)20 7187 2000Tim Wise Jon HackConor Hillery Edmund Dilger Goldman Sachs Citi+44 (0)20 7774 1000 +44 (0)20 7986 4000Simon Dingemans Chris Jillings Andrew Thompson Finsbury Temple Bar Advisory+44 (0)20 7251 3801 +44 (0)20 7002 1080James Murgatroyd Alex Child-VilliersAlex Simmons Tom Allison Defined terms used in this announcement are the same as those used in the RNSannouncement of 10 September 2007 unless otherwise stated. JPMorgan Cazenove Limited ("JPMorgan Cazenove") is acting as financial adviserto Friends Provident and no one else in connection with the merger and will notbe responsible to any other person for providing the protections afforded to theclients of JPMorgan Cazenove nor for providing advice in relation to the mergeror any other matter referred to in this announcement. Goldman Sachs International ("Goldman Sachs") is acting as financial adviser toFriends Provident and no one else in connection with the merger and will not beresponsible to any other person for providing the protections afforded to theclients of Goldman Sachs nor for providing advice in relation to the merger orany other matter referred to in this announcement. Lazard & Co., Limited (''Lazard'') is acting as financial adviser to Resolutionand no one else in connection with the merger and will not be responsible to anyother person for providing the protections afforded to the clients of Lazard norfor providing advice in relation to the merger or any other matter referred toin this announcement. Citigroup Global Markets Limited (''Citi'') is acting as financial adviser toResolution and no one else in connection with the merger and will not beresponsible to any other person for providing the protections afforded to theclients of Citi nor for providing advice in relation to the merger or any othermatter referred to in this announcement. Overseas jurisdictions The release, publication or distribution of this announcement in jurisdictionsother than the United Kingdom may be restricted by law and therefore any personswho are subject to the laws of any jurisdiction other than the United Kingdomshould inform themselves about, and observe, any applicable requirements. Thisannouncement has been prepared for the purposes of complying with English law,the City Code and the Listing Rules and the information disclosed may not be thesame as that which would have been disclosed if this announcement had beenprepared in accordance with the laws and regulations of any jurisdiction outsideof England. This announcement is not intended to, and does not constitute, or form part of,an offer to sell, purchase or exchange or the solicitation of an offer to sell,purchase or exchange any securities or the solicitation of any vote or approvalin any jurisdiction. This announcement does not constitute a prospectus or aprospectus equivalent document. Shareholders of Friends Provident and Resolutionare advised to read carefully the formal documentation in relation to the mergeronce it has been despatched. The proposals relating to the merger will be madesolely through the Scheme Document, which will contain the full terms andconditions of the merger, including details of how to vote with respect to theScheme. Any acceptance or other response to the proposals should be made only onthe basis of the information in the Scheme Document. In particular, this announcement is not an offer of securities for sale in theUnited States and the New Friends Financial Shares, which will be issued inconnection with the merger, have not been, and will not be, registered under theUS Securities Act of 1933 as amended (the "US Securities Act") or under thesecurities law of any state, district or other jurisdiction of the UnitedStates, Australia, Canada or Japan and no regulatory clearance in respect of theNew Friends Financial Shares has been, or will be, applied for in anyjurisdiction other than the UK. The New Friends Financial Shares may not beoffered, sold, or, delivered, directly or indirectly, in, into or from theUnited States absent registration under the US Securities Act or an exemptionfrom registration. The New Friends Financial Shares may not be offered, sold,resold, delivered or distributed, directly or indirectly, in, into or fromCanada, Australia or Japan or to, or for the account or benefit of, any residentof Australia, Canada or Japan absent an exemption from registration or anexemption under relevant securities law. It is expected that the New FriendsFinancial Shares will be issued in reliance upon the exemption from theregistration requirements of the US Securities Act provided by Section 3(a)(10)thereof. Under applicable US securities laws, persons (whether or not USpersons) who are or will be "affiliates" within the meaning of the US SecuritiesAct of Friends Provident or Resolution prior to, or of Friends Financial after,the Effective Date will be subject to certain transfer restrictions relating tothe New Friends Financial Shares received in connection with the Scheme. Notice to US Investors: The merger relates to the shares of a UK company and isproposed to be made by means of a scheme of arrangement provided for under thelaws of England and Wales. The merger is subject to the disclosure requirementsand practices applicable in the United Kingdom to schemes of arrangement, whichdiffer from the disclosure and other requirements of US securities laws.Financial information included in the relevant documentation will have beenprepared in accordance with accounting standards applicable in the UnitedKingdom that may not be comparable to the financial statements of US companies. If the merger is implemented by way of an offer, it will be made in accordancewith the procedural and filing requirements of the US securities laws, to theextent applicable. If the merger is implemented by way of an offer, the NewFriends Financial Shares to be issued in connection with such offer will not beregistered under the US Securities Act or under the securities laws of anystate, district or other jurisdiction of the United States and may not beoffered, sold or delivered, directly or indirectly, in the United States exceptpursuant to an applicable exemption from, or in a transaction not subject to,the registration requirements of the US Securities Act or such other securitieslaws. Resolution does not intend to register any such New Friends FinancialShares or part thereof in the United States or to conduct a public offering ofthe New Friends Financial Shares in the United States. Dealing disclosure requirements Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevantsecurities" of Resolution by Friends Provident or of Friends Provident byResolution, or by any of their respective "associates", must be disclosed by nolater than 12.00 noon (London time) on the London business day following thedate of the relevant transaction. A disclosure table, giving details of thecompanies in whose "relevant securities" "dealings" should be disclosed, and thenumber of such securities in issue, can be found on the Takeover Panel's websiteat www.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when a person has long economicexposure, whether conditional or absolute, to changes in the price ofsecurities. In particular, a person will be treated as having an "interest" byvirtue of the ownership or control of securities, or by virtue of any option inrespect of, or derivative referenced to, securities. Terms in quotation marks are defined in the City Code, which can also be foundon the Takeover Panel's website. If you are in any doubt as to whether or notyou are required to disclose a "dealing" under Rule 8, you should consult theTakeover Panel. Forward looking statements This announcement may contain forward looking statements that are based oncurrent expectations or beliefs, as well as assumptions about future events.Generally, the words "will", "may", "should", "continue", "believes", "expects","intends", "anticipates" or similar expressions identify forward-lookingstatements. These statements are based on the current expectations of managementand are naturally subject to risks, uncertainties and changes in circumstances.Undue reliance should not be placed on any such statements because, by theirvery nature, they are subject to known and unknown risks and uncertainties andcan be affected by other factors that could cause actual results, andmanagement's plans and objectives, to differ materially from those expressed orimplied in the forward looking statements. There are several factors which couldcause actual results to differ materially from those expressed or implied inforward looking statements. Among the factors that could cause actual results todiffer materially from those described in the forward looking statements are theability to combine successfully the businesses of Friends Provident andResolution and to realise expected synergies from that combination, changes inthe global, political, economic, business, competitive, market and regulatoryforces, future exchange and interest rates, changes in tax rates and futurebusiness combinations or dispositions. Neither Friends Provident nor Resolutionundertakes any obligation (except as required by the Listing Rules and theDisclosure and Transparency Rules and the rules of the London Stock Exchange) torevise or update any forward looking statement contained in this announcement,regardless of whether that statement is affected as a result of new information,future events or otherwise. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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