Update

Tawa plc

4 November 2011

As reported in the announcement of our interim results, Tawa plc is a member of the consortium whose members own the share capital of its associate, CX Reinsurance Company Limited ("CX Re") and has the benefit of deferred consideration arising from the sale of CX Re in March 2006. The economic value of CX Re depends primarily on the value of receivables from the consortium members related to tax losses surrendered for the 2006 tax year. Of the $47.1 million net asset value of CX Re at the half year, $33.9 million was held in cash escrow accounts representing the present net worth to CX Re of the losses surrendered and is not available for paying claims.

As envisaged in the announcement of our interim results, HMRC has denied the relief claimed by the consortium beneficiaries and the beneficiaries have now appealed HMRC's decision. The matter is therefore expected to be litigated. As already reported it is expected that the process may take upwards of 3 years to reach a conclusion. The litigation is likely to have a substantial adverse effect on the costs of the CX Re run-off and continue to restrict its liquidity. The consortium has the benefit of positive advice from leading counsel.

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