Cross Oak Inns plc - The Tax Shelter Report

Cross Oak Inns plc
Offer for subscription
A Tax Efficient Investment under
the Enterprise Investment Scheme

This document is important and requires your immediate attention. If you are in any doubt about the contents of this document,
you should consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the
acquisition of shares and other securities.
This document has been drawn up in accordance with The Public Offers of Securities Regulations 1995 (as amended). A copy
of this document has been delivered for registration to the Registrar of Companies in England and Wales in accordance with
Paragraph 4(2) of those Regulations. It is not intended that this Document be issued otherwise than in the United Kingdom.
The Directors of Cross Oak Inns plc, whose names are set out on page 7 of this document, accept responsibility for the
information contained in this document. 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 is in accordance with the facts and does not
omit anything likely to affect the import of such information. All of the Directors accept responsibility accordingly.
The share capital of Cross Oak Inns plc is not presently listed, quoted or dealt in on any recognised investment exchange and
no application for admission of the share capital to listing or dealing has been made or is currently intended to be made. It is
intended that a facility will be made available for the shares to be traded on a matched bargain basis by J P Jenkins Limited.
Cross Oak Inns plc
(Incorporated in England and Wales under the Companies Act 1985 with registered number 5144171)
Offer for subscription of up to 3,000,000 New Ordinary Shares of 50p each at £1 per share
Financial adviser
Vantis Corporate Finance Limited
There is no sponsor of the Offer and all advisers to Cross Oak Inns plc named in this Document are acting exclusively as advisers
to Cross Oak Inns plc in connection with the Offer and such advisers owe no responsibility to any person other than the Company
and do not provide the protection afforded to clients for providing advice in connection with the arrangements described in this
Document or any investment in the Company unless by virtue of a separate arrangement. The Directors are the only persons
responsible for this Document including the information or opinions contained in it.
The Offer is conditional upon a minimum subscription of £500,000 being raised.
Share capital immediately following the Offer
Authorised
Issued and to be issued fully paid
Nominal Value Number Ordinary shares of 50p each Nominal Value Number
£ £
10,000,000 20,000,000 Currently in issue 312,897 625,794
10,000,000 20,000,000 Assuming subscription of 3,000,000 1,812,897 3,625,794
Ordinary Shares
The Shares which are the subject of this Offer will rank pari passu in all respects with all other shares in the Company, which
will be in issue on completion of the Offer.
The subscription list for the Shares, all of which are being offered to the public under the Offer, will open at 10 am on 5 October
2004 and will be closed either on 12 November 2004 if the minimum subscription has not been achieved or on 31 December
2004 if the minimum subscription is achieved by 12 November 2004. The Directors may at their discretion extend the closing
date for the Offer, but in any event will not do so beyond 28 February 2005. The Directors may also at their discretion increase
the number of shares offered. Allotment of the Shares to applicants in respect of the Offer will be as soon as practicable after
the Minimum Subscription is exceeded and monthly thereafter. The terms and conditions of the Offer and procedure for
application are set out in Parts VIII and IX of this document, which is followed by an Application Form for use in connection with
the Offer.
The whole of this Document should be read. An investment in Cross Oak Inns plc, which had not commenced trading
as at the date of this Document, is speculative and involves a higher degree of risk than an investment in an established
and/or quoted company and your attention is in particular drawn to the “Risk Factors” set out in Part IV of this
Document.
2

Contents
Page No.
Statistics of the Offer and Expected timetable of principal events 4
Definitions 5
Directors, Secretary and Advisers 7
Part I Executive summary 8
Part II Information on the Company 9
Part III Information about the Offer 16
Part IV Risk factors 18
Part V Financial information on the Company 19
Part VI Information on EIS taxation reliefs 22
Part VII Statutory and general information 24
Part VIII General terms and conditions of the Offer 35
Part IX Application procedure 39
Application Form 40
3

Statistics of the Offer
Assuming subscription of 3,000,000 shares
Offer price per New Ordinary share £1
Number of Ordinary Shares of 50p being offered 3,000,000
Ordinary shares in issue immediately following the Offer 3,625,794
Estimated gross proceeds of the Offer £3,000,000
Estimated net proceeds of the Offer £2,760,000
Minimum individual investment £5,000
(5,000 shares)
Expected timetable of principal events
Offer opens 5 October 2004
Closing date for the Offer
Allotment and issue of new shares
Expected date of despatch of share
certificates
EIS 3 certificates dispatched to new
investors
31 December 2004 (assuming Minimum Subscription of
£500,000 is achieved by 12 November 2004)
As soon as practicable after the Minimum Subscription of
£500,000 is achieved and monthly thereafter.
Seven business days after allotment
Within 5 months of the Company starting to trade in
accordance with Inland Revenue practice
The Directors may at their discretion extend the closing date for the Offer, but in any event, will not do
so beyond 28 February 2005. The Directors may also at their discretion increase the number of shares
offered.
4

Definitions
The following terms used throughout this Document have the following meanings save where the
context requires otherwise:
“the Act”
“Application Form”
“CGT”
“Closing Date”
the Companies Act 1985, as amended
the application form for acceptance of the Offer set out at the end
of this Document
capital gains tax
the closing date of the Offer (subject to any extension agreed by
the Directors)
“the Company” or “Cross Oak Cross Oak Inns plc, registered number 5144171
Inns”
“Corporate Venturer”
“CVS”
“The Directors” or “the Board”
“EIS”, “Enterprise Investment
Scheme”
“flotation”
“FSA”
“Inn”
“Investors”
“Management Agreement”
a company investing in Cross Oak Inns plc under the Corporate
Venturing Scheme
Corporate Venturing Scheme and related reliefs as detailed in
Schedule 15 Finance Act 2000
the Directors of the Company
The Enterprise Investment Scheme and related reliefs as
detailed in Chapter III, Part VII of the Income and Corporation
Taxes Act 1988 and in Sections 150A to 150D and Schedule 5B
and 5BA of the Taxation of Chargeable Gains Act (1992) as
amended
admission of securities to trading on a recognised investment
exchange
The Financial Services Authority
a licensed public house with limited bedrooms for let to the public
persons acquiring Shares pursuant to the Offer
the Management Agreement entered into between Cross Oak
Inns plc and Cross Oak Limited on 30 September 2004
“the Manager” Cross Oak Limited, registered number 2448091
“Maximum Subscription”
“Minimum Subscription”
“New Ordinary Shares”
“Offer”
“Offer Price”
the sum of £3,000,000, unless increased at the discretion of the
Board
the Minimum Subscription of £500,000 required to be achieved
within 40 days of the issue of the Prospectus
3,000,000 ordinary shares to be issued pursuant to the Offer
the Offer for subscription made by the Company as set out in this
Document
£1 per share
5

“Opening Date”
“POS Regulations”
“Pub”
“Pub restaurant”
“Receiving Agents” or
“Registrars”
“Shareholders”
“Shares” or “Ordinary Shares”
“Three Year Period”
“Vantis”
“VCT”
“UK”
the opening date of the Offer
The Public Offers of Securities Regulations 1995, as amended
a licensed public house
a pub or inn which derives a substantial proportion of its sales
from food
SLC Registrars Limited, trading as Gateway Registrars
holders of Shares in the Company
ordinary shares of 50p each in nominal value in the capital of the
Company
the period beginning on the date on which the Shares are issued
and ending three years after that date, or three years after the
qualifying trade of the Company starts, if later
Vantis Corporate Finance Limited, a firm authorised and regulated
by the Financial Services Authority
venture capital trust as defined in s842AA Income and
Corporation Taxes Act 1988
United Kingdom of Great Britain and Northern Ireland
6

Directors, Secretary and Advisers
Directors Anthony Euan Richmond-Watson, CA (Non-executive Chairman)
Peter George Eyles
(Director)
Dinah Joy Young
(Director)
Peter Loring Drown, FCA
(Non-executive Finance)
Robin Jarrard Campbell Privett (Non-executive)
Hugh William Whitbread
(Non-executive)
all of 82 St John Street,
London EC1M 4JN
Registered office
Company Secretary
Financial Advisers
Auditors and Reporting
Accountants
82 St John Street
London EC1M 4JN
Jeremy Rogers, ACIS
Vantis Corporate Finance Limited
82 St John Street
London EC1M 4JN
Wilkins Kennedy
Gladstone House
77-79 High Street
Egham
Surrey TW20 9HY
Solicitors to the Company Russell-Cooke
2 Putney Hill
London SW15 6AB
Receiving Agents and
Registrars
Bankers
Surveyors and valuers
Gateway Registrars
42-46 High Street
Esher
Surrey KT10 9QY
Bank of Scotland
38 St Andrews Square
Edinburgh
EH2 2YR
Christie & Co
Vaughan Chambers
4 Tonbridge Rd
Maidstone
Kent ME16 8RP
7

Part I – Executive summary
The Company
The Company was incorporated in June 2004 to use the capital raised under the Offer, together with
bank borrowings, to acquire, refurbish and operate a portfolio of pub restaurants in Southern England,
predominantly in Berkshire, Hampshire, Kent, Surrey and Sussex.
The Offer
The Company proposes to raise £3 million by way of the Offer. With gearing, this should allow
approximately 5 to 10 pubs to be acquired. The minimum total subscription under the Offer is £500,000.
In addition, two of the Directors, Peter Eyles and Dinah Young, have already invested £300,000 in the
Company and the non-executive directors have invested in total a further £177,500. The investments
by Peter Eyles and Dinah Young do not qualify for all of the EIS reliefs available to subscribers to the
Offer. The minimum individual investment under the Offer is £5,000.
Management
The executive directors are Peter Eyles (age 58), who will lead the management team, and Dinah
Young (age 44). Both have many years experience at senior level in the hospitality and food and drink
retailing industry. Peter was previously chief executive of Norfolk Capital Group plc and executive
chairman of Hanover International PLC, two listed hotel companies. Dinah has over 14 years’
experience at senior levels within the food and drink retailing industry. She has recently resigned from
the position of operations director of Brewster Pub Restaurants, a division of Whitbread, to found the
Company with Peter. The non-executive directors are Anthony Richmond-Watson, Peter Drown, Robin
Privett and Billy Whitbread.
The Business
The pub restaurants will have a strong food element. They will not be branded or themed, but will cater
specifically for their local markets and will aim at the 25 plus age group. Quality of both food and
service will be key to the Company’s success.
EIS Qualifying Investment
Provisional clearance has been received from the Inland Revenue that the Company will qualify for the
taxation advantages offered under the Enterprise Investment Scheme, and that it is also a qualifying
investment for Venture Capital Trusts and under the Corporate Venturing Scheme. Further information
on the various tax reliefs available is given in Part VI of this document.
Financial strategy
The use of commercially sensible levels of borrowing, in addition to the Offer proceeds, should enable
the Company to enhance the level of return to shareholders. In any event, borrowings are not expected
to exceed 70% of the gross asset value of the Company. Indicative borrowing terms on the basis of
full subscription have been agreed with Bank of Scotland.
Possible exit routes for investors
Potential for uplift in the value of the investment lies, primarily, in improved profit performance of the
pubs acquired thereby enhancing their underlying capital value. In the longer term, the Company may
be attractive either to new investors by way of a stock market flotation or to other operators in the event
of a trade sale, after the three year qualifying period.
Matched Bargain Trading Facility
It is intended that shareholders in Cross Oak Inns will have access to the matched bargain share
trading facility operated by J P Jenkins Limited, who specialise in unlisted and unquoted securities. This
facility has been provided to shareholders in case they need to realise their investment before the end
of the Three Year Period during which shares are required to be held to retain the tax reliefs under the
Enterprise Investment Scheme.
Enquiries
Enquiries or requests for further copies of this document can be made by contacting Vantis Corporate
Finance Limited on 020 7417 0417.
8

Part II – Information on the Company
Introduction
Cross Oak Inns plc was incorporated on 3 June 2004 with the intention of developing and operating a
group of pub restaurants in Southern England, predominantly in Berkshire, Hampshire, Kent, Surrey
and Sussex. The Company intends to use the capital raised under the Offer to invest mainly in freehold
free-of-tie premises.
The pub restaurants will have a strong food element. They will not be branded or themed, but will cater
specifically for their local markets. The Board believes strongly in the commercial advantages of
owning pub restaurants of this type.
The Board proposes to ensure that the Company and its trade meet the Enterprise Investment Scheme
(“EIS”) qualifying conditions so that investors may take advantage of the tax reliefs available under the
EIS.
Assuming full subscription for the Offer, the net proceeds will be about £2.76 million, which, together
with bank borrowings and existing cash resources of £477,500, should allow approximately 5 to 10
pubs to be acquired. The Company will then refurbish the units where necessary with a view to having
all of the pub restaurants developed and operating fully under the Company’s template within 2 years
of their purchase.
Through the Management Agreement in place between Cross Oak Inns plc and Cross Oak Limited, the
Board will be able to draw upon the experience and knowledge of the Directors of Cross Oak Limited.
Under this agreement Cross Oak Limited will provide management services to the Company on the
basis of an agreed fee structure. Further details of this agreement are set out on in Part VII, paragraph
8.1.
The Management Agreement has been specifically designed to keep the Company’s fixed costs to a
minimum during its formative period whilst giving a strong incentive to Cross Oak Limited to achieve a
high level of operating profit from the pub restaurants developed by the Company. Higher profits should
enhance the likely capital value of the Company’s assets, the benefit of which will accrue exclusively
to shareholders. By taking this approach the interests of Cross Oak Limited are closely aligned to the
interests of the shareholders of Cross Oak Inns Plc.
The Concept
The Directors believe that there is an excellent opportunity to provide non-branded and un-themed pub
restaurants, which cater for their own local market. It is intended that the properties to be purchased,
once developed, will offer a menu for the more discerning customer with good quality wines from
around the world, traditional ales, and premium brand beers. The intention is to give restaurant style
food and service in more relaxed surroundings. To build good local relations the pub restaurants will
use, wherever possible, local suppliers for meat, game, fish and other fresh produce. To maintain the
vitality of each pub restaurant and increase customer loyalty and repeat business the menu and wine
lists will be reviewed on a regular basis. This regular updating will also enable popular dishes and wines
to be further exploited and seasonal specialities introduced.
In those pub restaurants close by major commercial conurbations, lunchtime trade will be targeted at
business, office workers and leisure eaters. It is expected that the evening trade will comprise mostly
leisure eaters and drinkers of an age group of 25 years and upwards who are looking for a quality, well
priced relaxing experience. The Directors believe that this age group will increasingly prefer a friendly,
relaxed atmosphere in a pub restaurant that offers a good quality and value eating and drinking
experience. The individual appeal and quality offering of these pub restaurants should, in the Directors’
opinion, provide opportunities for successful commercial operations.
It is expected that the majority of sites acquired will require refurbishment in order to achieve the
ambience and quality of presentation that the Board intends to pursue. It is expected that each pub
restaurant purchased will take up to two years from the date of refurbishment to contribute fully to
earnings which allows time for each new acquisition to be redesigned, refurbished or redeveloped as
required.
9

Acquisition Strategy
The sites that the Company intends to acquire will be licensed pubs and inns, which have the potential
to have a bias towards food sales. The sites will be in Southern England, located predominantly in
Berkshire, Hampshire, Kent, Surrey and Sussex. Keeping the estate in a well-defined area of operation
should assist the management in achieving tight operational control. It is the Board’s intention to invest
mainly in freehold sites. Prior to the acquisition of any unit an independent valuation by a firm of
surveyors who specialise in pubs and inns will be obtained.
The acquisition programme will focus on building a quality portfolio of pub restaurants generating good
returns on capital. The target size of each pub restaurant is approximately 3,000 sq feet of trading
area. Several potential sites have already been identified as possible acquisitions for the Company. The
Directors believe that the benefits of developing pub restaurants in the specified areas will offer the
following advantages:
• access to an affluent and substantial market with a customer base that displays the correct
demographics matching those of the Company’s target market;
• the ability to maintain tight operational control over the estate;
• an established eating and drinking out culture which favours good value, quality outlets already
established in the specified areas.
This should result in a business that has both the benefit of improving performance and growing asset
value and should make the Company, in the medium term, attractive either to new investors by way of
a flotation or to other operators in a trade sale.
Christie & Co have been engaged, subject to their normal commercial terms and conditions, to assist
in the identification and acquisition of suitable pubs and inns for the Company.
The Company is in negotiations, but has not yet reached a binding agreement, for the purchase of an
inn closely matching the Company’s acquisition criteria.
The Market
There are approximately 70,000 pubs in the United Kingdom with an estimated worth of £23.3 billion,
a rise of 4% since 1999. Food sales are estimated to be a major contributor at an average of almost
26% of turnover and will increase in importance over the next decade as beer sales continue to fall.
Just over 1 billion meals are currently served by pubs each year.
Recent research indicates that the amount spent by consumers on food in pubs is set to grow from
£6.0 billion this year to £7.4 billion in 2009. By contrast, spending on drinks in pubs will see modest
growth.
In the South East (excluding London) there are believed to be some five million potential customers
over the age of 25.
Christie & Co recently reported in their Business Outlook 2004 publication that pub values once again
rose strongly in 2003 with prices increasing by 6.2%.
Increasing numbers of consumers are recognising that pubs can be a realistic alternative to
restaurants for eating out. Pub food as a percentage of the total pub market has risen from 21% in 1999
to an estimated 25.8% in 2004. Several of the reasons behind this are:-
• An 11% increase in real terms in the value of personal disposable income from 1997-2001 with
regular annual increases averaging 2.4% since 2002.
• The overall population is becoming more affluent and achieving a higher standard of living, resulting
in more consumers being classified within the AB and C1 categories.
• Demographic growth in the key consumer brackets of mid twenties and grey and third age
consumers.
• The steady increase in the numbers of working women in the past two decades, making many
households “cash rich/time poor”, is increasing the propensity to eat out more frequently.
10

This consistently above average growth in food sales is one reason why major pub operators continue
to invest heavily in developing food-led pub businesses. However in their efforts to develop consistency
of offer and product quality, the large companies have standardised their menus and dishes to such an
extent that there is little scope for individuality from pub to pub. This has led to a consumer perception
of homogenised food.
Therefore, with the positive demographic and economic factors expected to continue during the next
five years, there is nothing to suggest that the pub restaurant trade will need to brace itself for a decline
in consumer demand. It is forecast that the pub food market will grow by a further 22% over the period
2004-9. Therefore, the operator that works on a strategy to provide a varied menu of freshly cooked
dishes to a high standard of quality and presentation, in an individual pub environment, should be set
to succeed.
The prosperous pub of the future is expected to have the following features:
• Contemporary style and focus in line with local market
• Well targeted investment
• Minimal price discounting
• High food turnover
• Table service
• Non-smoking restaurant areas
In planning its development strategy, the Company has been mindful of the above list of requirements,
all of which will feature in the re-developed pubs of Cross Oak Inns plc.
Sources for the above section “The Market”:
Christie & Co: Business Outlook 2004
Mintel: Pub Catering, Leisure Intelligence 2004
11

The Company’s management
The Company’s success will depend primarily on the ability of its management to purchase pubs at the
right price and in the right locations, develop the premises acquired in line with the template identified
and then operate the sites profitably. The Board believes that it has assembled a team with the
necessary track record and the specific skills required to achieve the Company’s stated objectives.
Anthony Richmond-Watson (63), non-executive Chairman of the Company, is Chairman of Yule
Catto & Co plc, a listed chemicals company, and Deputy Chairman of Melrose Resources plc, a listed
oil and gas exploration and development company. For many years he was a director of the merchant
bank, Morgan Grenfell & Co Limited, becoming Deputy Chairman of Morgan Grenfell Group plc until
retirement in 1996. He was also a director and subsequently Chairman of Norfolk Capital Group plc, a
listed hotels group with public house interests. He is a member of the Institute of Chartered
Accountants of Scotland. He has invested £148,500 in the Company’s shares prior to the Offer at a
price of 90p per share.
Peter Eyles (58) has held many senior posts in the hospitality industry. From 1995 to 2003 he was
Executive Chairman of Hanover International PLC a fully listed hotel group that he founded. Prior to
that he was Executive Chairman of Pavilion Leisure Plc, a fully listed hotels, leisure and property group,
Chief Executive of Norfolk Capital Group plc, and Chairman and Chief Executive of several private
companies involved in property and marketing activities. He has invested £200,000 in the Company’s
shares prior to the Offer at a price of 70p per share.
Dinah Young (44) has over 14 years’ experience at senior levels within the food and drink retailing
industry. She has recently resigned from the position of operations director of Brewster Pub
Restaurants, a division of Whitbread, to found the Company. Prior to that she was a regional general
manager of Beefeater Restaurants, regional director of Pizza Hut UK Limited and an independent
management consultant working on several new food concepts in the UK. She has invested £100,000
in the Company’s shares prior to the Offer at a price of 70p per share.
Peter Drown (54) is non-executive Director of the Company with responsibility for finance. Since April
2003, Peter, a Chartered Accountant, has been a partner with the AIM-listed accountants, Vantis plc,
specialising in corporate finance and advisory work to a wide range of quoted and family owned
businesses. Prior to that he had been, since 1978, a partner in Beavis Walker, a central London
accountancy practice acquired by Vantis plc. He has invested £10,000 in the Company’s shares prior
to the Offer at a price of 90p per share.
Robin Privett (63), non-executive Director of the Company, is a solicitor and former partner in Herbert
Smith, where he spent many years in corporate and commercial practice serving a range of different
industries. Since retiring from full-time legal practice in 1994, he has been Chairman of Lec
Refrigeration plc and a director of other companies, including Hanover International PLC until its
takeover in 2003. From his experience with Hanover he brings seven year’s knowledge of the leisure
industry. He has invested £9,000 in the Company’s shares prior to the Offer at a price of 90p per share.
Billy Whitbread (62), non-executive Director of the Company, is Consultant to Taverners Trust PLC,
an investment trust, which specialises in pub and restaurant businesses and which is managed by
Aberdeen Asset Managers Limited. Previous positions include Director and Investment Manager of
The Whitbread Investment Company PLC, Managing Director of Thomas Wethered and Sons Limited
and non-executive Director of Hanover International PLC. He has over 30 years’ experience of the
brewing and drink retailing industry and has invested £10,000 in the Company’s shares prior to the
Offer at a price of 90p per share.
Once the Company has started trading the Board intends to take out an appropriate level of keyman
insurance on the lives of Peter Eyles and Dinah Young.
The Board intends to implement a share option scheme, if approved by shareholders, following the
Close of the Offer whereby up to a maximum of 5 per cent of the enlarged share capital of the
Company (after exercise of all options) will be put under option at the Offer price to Peter Eyles and
Dinah Young. Such share options will be subject to challenging performance criteria reflecting the
Company’s objectives.
12

Management Agreement
The Manager of the business will be Cross Oak Limited, of which Peter Eyles and Dinah Young are
directors and which is controlled by Peter Eyles. The fee structure of the Management Agreement has
been designed to keep the fixed costs to a minimum and to assist the Company during its formative
period whilst at the same time giving the Manager a strong incentive to develop the concept and make
the Company a success. The only significant central overhead costs projected to be incurred by the
Company, in addition to the management fee, are Directors’ remuneration, keyman and directors’ and
officers’ insurance, stocktaking costs, health and safety consultancy fees and the audit fee.
Without prejudice to the Company’s Articles of Association, the Board has adopted the policy that in
any Board meeting of the Company where the Management Agreement, and more particularly the
performance of the Manager, is discussed, Peter Eyles and Dinah Young will abstain from taking part
in the discussion or voting, in order to avoid any conflict of interest in relation to their position as
directors and shareholders of the Manager.
The Management Agreement is exclusive and continues until 30 September 2008. The agreement is
then automatically renewable but may be terminated by either party on 12 months’ notice to be given no
earlier than 30 September 2007.
The principal responsibilities of the Manager under the Management Agreement are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
identifying, appraising and recommending to the Company suitable premises for acquisition,
supported by an independent report and valuation;
day to day management, supervision, control and operation of the pub restaurants, including
arrangements with suppliers;
maintaining financial, accounting, maintenance and operating systems and records relating to
the pub restaurants and meeting all costs relating thereto;
organising repairs and refurbishment;
recruitment, training and supervision of all employees;
organising marketing and advertising activities;
arranging for the grant or renewal of licences as appropriate and arranging suitable insurance
cover;
supervision of health and safety procedures.
The Manager will be remunerated for its services by way of an incentive payment to be paid monthly.
The management fee is calculated in accordance with a formula relating to the net sales of each pub
restaurant and the total net operating profit of the Company. Further details are set out in Part VII
paragraph 8.1.
The Directors and Vantis have given much consideration to the structure of the incentive payments with
a view to establishing arrangements that should work in the best interests of the shareholders and be
fair to the Manager. The Directors believe that the arrangements between the Manager and the
Company:
• will assist the Company to minimize management costs in its formative years;
• are straightforward and transparent;
• are linked directly to the trading performance of the pub restaurants;
• will incentivise the Manager to improve the profitability of the pub restaurants, hence the capital
value of the Company’s assets and thus the level of return to shareholders;
• will assist the Company in complying with its banking covenants in its formative years.
Furthermore, there is no supply agreement whereby the Company might in effect agree to share with
the Manager discounts obtained by the Manager from the price lists of third party drinks suppliers. In
the absence of such an agreement, the Company will benefit from 100% of any such discounts, which
might otherwise have been shared by the Company and the Manager. The Directors believe that such
discounts could represent a significant component of the Company’s gross margin.
13

The Manager has, until recently, been a dormant company.
A full summary of the Management Agreement is provided below in paragraph 8.1 of Part VII.
Dividends
Dividend income is taxable in the hands of Shareholders and it is, therefore, the Directors’ intention to
pursue capital growth in order to maximize tax free growth for EIS shareholders. Under EIS rules, any
capital gain on a sale of the Shares should be free of tax to qualifying investors who hold the Shares
for the Three Year Period and comply with the other EIS rules. Therefore, the Directors do not intend
to distribute dividends during the Three Year Period.
Financial strategy
The Board believes that through the use of efficient and commercially sensible gearing in addition to
the Offer proceeds, it should be possible to enhance the level of return to shareholders. It is intended
that the debt will not exceed 70 per cent of the gross asset value of the Company. Indicative terms for
borrowing facilities on the basis of full subscription have been agreed with Bank of Scotland.
Corporate Governance
Although the Combined Code on Corporate Governance does not apply to the Company, as it is not
listed, the Directors intend nonetheless to have regard to certain key aspects of the Code as a means
of reflecting best practice, while at the same time having regard to the Company’s size and resources,
as follows:
(i)
(ii)
(iii)
(iv)
At present the Company has four non-executive directors.
The roles of chairman and chief executive are split.
The Directors intend to hold board meetings regularly throughout the year. The Board will be
responsible for formulating, reviewing and approving strategy, budgets, acquisitions, capital
expenditure and senior personnel appointments. The Directors will be in regular contact with the
Manager to consider operational matters.
An audit committee consisting of Anthony Richmond-Watson and Robin Privett will meet at least
twice a year and will be responsible for ensuring that the financial performance, position and
prospects of the Company are properly monitored and reported on, and for meeting the auditors
and reviewing their reports relating to accounts and internal controls.
Return on Investment
The Directors believe that an investment in the Company offers an asset backed, and therefore more
secure, type of EIS investment in a market with attractive returns and the potential for capital growth.
EIS and VCT Qualifying Investment
Provisional clearance has been received from the Inland Revenue that the Company will qualify for the
taxation advantages offered under the Enterprise Investment Scheme, and that it is also a qualifying
investment for Venture Capital Trusts (VCTs). For example, an individual subscribing for 10,000 shares
at £1 per share would pay £10,000 for the shares. This gross cost would be reduced, for an investor
who obtained income tax relief under the Enterprise Investment Scheme, to a net cost of £8,000, after
EIS relief at 20%. Further information on the EIS tax reliefs available is given in Part VI of this
document.
Corporate Venturing Scheme
The Company has received provisional assurance from the Inland Revenue that it will qualify for the tax
advantages offered under the Corporate Venturing Scheme. Further details of these advantages are
set out in paragraph 7 to Part VI to this document.
14

Possible Exit Routes for Investors
To qualify for certain reliefs under the EIS the Shares will have to be held for a minimum period of three
years from the date upon which the Shares are issued. The Board therefore considers the following to
be possible alternatives, which they expect to put to shareholders at the end of the Three Year Period:
• A trade sale either of the Company’s shares or of its assets. In the case of an offer being made for
the shares, shareholders would be able to realise their investment. If the Company sold all of its
assets leaving it with cash the Company could then be liquidated, enabling funds to be returned to
shareholders.
• A flotation on a public stock market such as the Alternative Investment Market of the London Stock
Exchange, the Official List of the UK Listing Authority or perhaps on Ofex, providing an opportunity
for shareholders to realise investments through a public market in the Shares.
• A share “buy-back” if there were sufficient distributable reserves in the Company to achieve this.
Matched Bargain Trading Facility
It is intended that shareholders in Cross Oak Inns will have access to the matched bargain share
trading facility operated by J P Jenkins Limited, who specialise in unlisted and unquoted securities.
JPJL operates the facility on a “matched bargain” basis by taking orders and expressions of interest
from participating stockbrokers who must (like J P Jenkins) be members of the London Stock
Exchange. Any individual wishing to buy or sell shares must complete the trade through his or her
stockbroker, as J P Jenkins cannot deal directly with the public. Shareholders are reminded that they
may forfeit all or part of their tax reliefs under the Enterprise Investment Scheme if their shares are
sold before the end of the Three Year Period. The JPJL trading facility can be accessed via:
www.jpjl.co.uk
Investors’ attention is drawn to the Risk Factors contained in Part IV below.
15

Part III – Information about the Offer
The Offer
It is the Directors’ intention to raise up to £3 million by the issue of up to 3,000,000 Shares at a price
of £1 per Share by way of the Offer. After allowing for all expenses including commissions paid to
intermediaries, it is estimated that the net proceeds, assuming subscription for the maximum number
of Shares under the Offer, will be approximately £2,760,000.
The subscription list for the Offer will open at 10 am on 5 October 2004, with a closing date of 31
December 2004. The Directors may at their discretion extend the closing date for the Offer, but in any
event, not beyond 28 February 2005. The Directors may also at their discretion increase the number
of shares offered. Allotment of the Shares to applicants in respect of the Offer will be as soon as
practicable after the Minimum Subscription is exceeded and monthly thereafter. A minimum of
£500,000 must be raised by 12 November 2004, being forty days from the date of this Prospectus. If
the Minimum Subscription has not been raised by this date the Offer will be withdrawn.
The subscription monies will be kept in a separate bank account and, if the Minimum Subscription has
not been achieved by 12 November 2004, the subscription monies will be refunded without interest
within 14 days of the Offer closing or being withdrawn and no commission will be payable to introducers
of potential investors.
The minimum investment per applicant is 5,000 Shares at an aggregate price of £5,000. The maximum
investment per applicant is limited to £200,000 in the tax year 2004/05 under current legislation, if the
investor wishes to take full advantage of EIS taxation relief. However, capital gains tax deferral relief
would also be available on investments in excess of £200,000 for each tax year.
The Board reserves the right to exercise discretion in the allocation of successful applications although
allocation will usually be on a first come first served basis. Applicants are encouraged to submit their
Application Forms early in order to be confident that their application will be successful.
The Offer is only being made to persons resident in the United Kingdom. No aspect of this document
constitutes an offer in any other territory or jurisdiction and has not been made directly or indirectly in,
and this document is not being and must not be mailed or otherwise distributed and sent into, any such
territory. Where an application appears to be made by an applicant not so resident, the Directors may
request the applicant to prove that he or she is entitled to apply and, if they are not satisfied, the
Directors may reject the application. Further details of the procedure for application under the Offer are
contained in Part IX of this document.
An investment in the Company involves a significant degree of risk and may not be suitable for all
recipients of this document. Applicants should consider carefully whether an investment in the
Company is suitable for them in the light of their personal circumstances and the financial resources
available to them. Attention is drawn to the section entitled “Risk Factors” contained in Part IV of this
document.
Introductory Commission.
Financial advisers authorised and regulated by the Financial Services Authority will qualify for
commission, at a rate of 3 per cent, on the level of investment made by their clients and which will be
met out of the proceeds of the Offer.
16

EIS Taxation Advantages
The Company has received provisional tax clearance confirming that it will qualify for the taxation
advantages offered under the Enterprise Investment Scheme. The main tax advantages of investing in
an EIS company are summarized as follows and should be read in the context of Part VI, which sets
out the tax information in more detail:
i. Depending on their personal circumstances, tax-paying investors can claim income tax relief of
20 per cent. on the amount invested up to a maximum investment of £200,000 in each tax year
under current legislation. If the Shares are held for the Three Year Period and the Company
continues to qualify, this would reduce the effective net cost of the investment to 80 pence for
each £1 invested.
ii.
iii.
iv.
Investment in an EIS qualifying company will also enable an investor (depending on his or her
personal circumstances) to claim capital gains tax deferral relief. There is no limit to the level of
investment and, therefore, to the amount of taxable gains which may be deferred in this way and
capital gains made as far back as three years from the date of issue of the Shares may be
eligible. In addition, gains realised in the year after may be deferred. The deferred gain
crystallises on the disposal of the Shares or an earlier breach of the EIS rules.
There is no tax on capital gains made on a disposal after the Three Year Period of Shares in the
Company (for investments of up to £200,000 in each tax year under current legislation).
After allowing for any income tax relief obtained at the time of subscription, any loss made on
disposal of the Shares can be set against the individual’s capital gains in the year in which the
disposal occurs and any unused element of the loss can be set against capital gains in future
years. Alternatively, the loss can be set against taxable income either in the tax year or the
preceding year to the tax year in which the disposal occurs.
v. Provided a shareholder has owned shares in a qualifying unquoted trading company for at least
two years and certain conditions are met at the time of transfer, 100 per cent business property
relief is available. This reduces the inheritance tax liability on a transfer to nil.
Corporate Venturing Scheme
The Corporate Venturing Scheme is designed to enable one company to invest in another in a tax
efficient manner in order to develop and broaden its business and improve its use of resources. The
investing company can obtain corporation tax relief at 20% on amounts invested in New Ordinary
Shares and held for at least 3 years from the date on which the Company begins to trade; claim loss
relief, net of investment relief, against income and chargeable gains; claim deferral of corporation tax
from the disposal of CVS qualifying shares where the gain is reinvested in a new CVS investment. The
Company has received provisional assurance from the Inland Revenue that it will qualify under the
Corporate Venturing Scheme.
17

Part IV – Risk factors
Prospective investors should be aware that the value of an investment in the Company may go
down as well as up, the Shares are not readily realisable and there is no certainty that they will
get back the full amount which they invest. In particular, the following risk factors should be
considered prior to an investment in the Company:
• The Company does not have an established trading record and its prospects should be considered
in the light of the risks associated with companies in their formative years.
• The loss to the business of either Peter Eyles or Dinah Young could have an adverse effect on the
Company’s trading performance.
• The Company may not be able to source a sufficient number of premises for acquisition.
• The Investors’ Compensation Scheme operated by the FSA or by any other compensation scheme
will not cover the acquisition or performance of the Shares.
• There are circumstances in which an investor could cease to qualify for the taxation advantages
offered by the EIS.
• If the Company ceases to carry on the business outlined in this document during the Three Year
Period, this could prejudice the qualifying status of the Company under the EIS.
• The information in this document is based upon current tax law and practice and other legislation
and any changes in the legislation or in the levels and bases of, and reliefs from, taxation may affect
the value of an investment in the Company.
• Circumstances may arise where the Directors believe that the interests of the Company are not best
served by acting in a way that preserves the EIS status of the Company. In such circumstances, the
Company cannot undertake to conduct its activities in a way designed to preserve any such relief or
status.
• Opportunities to achieve the possible exit routes of trade sale, flotation or share buyback may not
coincide with the timing of the highest valuation of the Company.
The investment described in this document may not be suitable for all recipients. Accordingly,
investors are recommended to consult an investment adviser authorised under the Financial
Services and Markets Act 2000, and an appropriately qualified taxation adviser, prior to
investing.
18

Part V– Financial information on the Company
Wilkins Kennedy
Chartered Accountants
Gladstone House
77-79 High Street
Egham
Surrey TW20 9HY
4 October 2004
The Directors
Cross Oak Inns plc
82 St John Street
London
EC1M 4JN
Dear Sirs
CROSS OAK INNS PLC (“CROSS OAK INNS” or “THE COMPANY”)
Introduction
We report on the financial information on Cross Oak Inns plc (“Cross Oak Inns”) set out below. This
financial information has been prepared for inclusion in the prospectus (the “Prospectus”) dated
4 October 2004 of Cross Oak Inns.
Basis of preparation
The financial information set out below is based on financial information for the company for the period
from its date of incorporation on 3 June 2004 to 17 September 2004 and shows its state of affairs as
at 17 September 2004. This financial information has been extracted from the financial records of the
Company with no adjustments being considered necessary. No audited financial statements have been
prepared for submission to members in respect of any period since incorporation.
Responsibility
The financial information in relation to Cross Oak Inns as set out below is the responsibility of the
Directors of the Company (the “Directors”). The Directors of Cross Oak Inns are responsible for the
contents of the Prospectus in which this report is included.
It is our responsibility to compile the financial information set out in our report, to form an opinion on
the financial information and to report our opinion to you.
Basis of opinion
We conducted our work in accordance with the Statements of Investment Circular Reporting Standards
issued by the Auditing Practices Board. Our work included an assessment of evidence relevant to the
amounts and disclosures in the financial information.
We planned and performed our work so as to obtain all the information and explanations which we
consider necessary in order to provide us with sufficient evidence to give reasonable assurance that
the financial information is free from material misstatement whether caused by fraud or other
irregularity or error.
Opinion
In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair view
of the state of affairs of Cross Oak Inns as at 17 September 2004.
Consent
We consent to the inclusion in the Prospectus of this report and accept responsibility for the purposes
of paragraphs 45(8)(b) of Schedule 1 to the Public Offers of Securities Regulations 1995.
19

Financial information
The Company was incorporated and registered in England on 3 June 2004 with registered number
5144171 as a public company limited by shares with the name Cross Oak Inns plc. On 14 September
2004, the Registrar of Companies issued a certificate under section 117 of the Companies Act 1985,
entitling the Company to commence business.
Cross Oak Inns has not completed its first accounting period. No statutory financial statements have
been prepared, audited or filed with the Registrar of Companies since incorporation.
Accounting policies
The financial information has been prepared under the historical cost convention and in accordance
with applicable accounting standards.
Balance sheet of Cross Oak Inns at 17 September 2004
Notes £
Current assets
Cash at bank and in hand 300,000
Net assets 300,000
Capital and reserves
Called up share capital 2 214,286
Share premium account 3 85,714
Shareholders’ funds 300,000
Notes to the financial information
1. Trading activity
The Company has not traded, prepared any financial statements for presentation to members, incurred
neither profit nor loss, and has neither declared nor paid any dividends since the date of incorporation.
There have been no transactions other than the allotment of shares described below and the execution
of the material contracts referred to in paragraph 8 of Part VII of the Prospectus. Accordingly no profit
and loss account information is presented in this report.
2. Share capital
At 17
September
2004
Authorised: Number £
20,000,000 ordinary shares of 50 pence each 20,000,000 10,000,000
Allotted, called up and fully/partly paid:
On incorporation – issue of 2 ordinary shares of 50p each nil paid 2 -
Immediately following incorporation – proceeds for shares issued
nil paid 1
On 13 September 2004 – issue of 428,570 ordinary shares at 70p,
fully paid up 428,570 214,285
Total shares in issue at 17 September 2004 428,572 214,286
Cross Oak Inns was incorporated with an authorised share capital of £10,000,000, divided into
20,000,000 Ordinary Shares of 50 pence each, of which 2 shares were issued, nil paid on
incorporation. Immediately following incorporation proceeds of £1 were received in respect of these
shares. On 13 September 2004 a further 428,570 ordinary shares were allotted at 70p per share, all
fully paid up.
20

3. Share premium account
There was a transfer to the share premium account of £85,714 as a result of the issue of the 428,570
ordinary shares of 50p each at a price of 70p per share, which represents a share premium of 20p per
share.
4. Post Balance Sheet Event
On 21 September 2004, a further 197,222 shares were allotted at 90p per share, all fully paid.
Yours faithfully
Wilkins Kennedy
Chartered Accountants
21

Part VI – Information on EIS taxation reliefs
Introduction
To obtain the tax reliefs described below it is necessary to subscribe for ordinary shares in a qualifying
company and claim the relief. The summary below gives only a brief outline of how the tax reliefs are
given assuming the investor is a 40 per cent taxpayer. It does not set out all the rules which must be
met for periods of between three and five years by the Company and the investor. The tax reliefs will
only be relevant to investors who pay income tax and/or wish to defer a capital gain. This summary is
not a substitute for the investor obtaining professional advice before applying for Shares.
EIS Relief
EIS relief has four elements: -
1. Income Tax Relief
Individuals can obtain income tax relief on the amount subscribed for Shares (up to £200,000 in each
tax year) in one or more qualifying companies provided they are not connected with the issuing
company. Husbands and wives can each subscribe up to £200,000. However, when considering
whether an individual’s shareholding exceeds the maximum proportion of the Company allowed under
the EIS (30%), that individual’s shareholdings will be aggregated with shares held by his spouse, lineal
ancestors and lineal descendants. To calculate the relief, the lower rate of tax (currently 20 per cent.)
is multiplied by the amount subscribed. The relief, is given against and cannot exceed the individual’s
income tax liability for the tax year in which the Shares are issued unless the individual makes a carry
back claim.
Example
£
Gross investment in Shares 10,000
Less income tax relief at 20 per cent. (2,000)
Net cost of investment 8,000
2. Exemption from Capital Gains Tax
Any capital gains realised on disposal after the Three Year Period of the Shares on which EIS income
tax relief has been given and not withdrawn, are tax-free.
Example
£
Realised value of Shares after the Three
Year Period 20,000
less original gross investment in Shares (10,000)
Tax free gain 10,000
This relief is in addition to the initial income tax relief of £2,000 described in 1 above
3. Loss Relief against Income or Gains
Tax relief is available where there is a loss on a disposal at any time of Shares on which EIS income
tax relief (see 1 above) or CGT deferral relief (see 4 below) has been given. The amount of the loss
(after taking account of any income tax relief initially obtained) can be set against the individual’s gains
or taxable income in the tax year in which disposal occurs.
Example
£
Realised value of Shares
Nil
Gross investment in Shares (10,000)
Less income tax relief at 20 per cent. 2,000
Deemed net cost of investment and also loss
before tax relief (8,000)
Tax relief at 40 per cent. maximum 3,200
Net cash loss (4,800)
22

4 CGT Deferral Relief
To the extent to which a UK resident investor (including individuals and certain trustees) subscribes for
qualifying shares, he or she can claim to defer paying tax on all or part of a chargeable gain. The gain
may have arisen on the disposal of any asset or a previously deferred gain may have become
chargeable to tax. Although under current legislation there is a limit of £200,000 for income tax relief
and the exemption from CGT (see 1 and 2 above), there is no limit on the amount of gain which can
be deferred. The subscription must be made and the shares issued within one year before or three
years after the date of the disposal which gives rise to the gain or the date when a previously deferred
gain crystallises. The gain is deferred until there is a chargeable event such as a disposal of shares or
an earlier breach of the EIS rules.
5. Inheritance Tax
Provided a shareholder has owned shares in a qualifying unquoted trading company such as Cross
Oak Inns plc for at least two years and certain conditions are met at the time of the transfer, 100 per
cent business property relief is available, which reduces the potential inheritance tax liability on such
an investment to nil.
6. Provisional EIS Clearance
Provisional EIS clearance in respect of the Offer has been received from the Inland Revenue. The
Directors anticipate that the EIS 3 certificates, which investors need to claim the tax relief, should be
available within five months from the date the Company begins trading, subject to Inland Revenue
working practices.
7. Corporate Venturing Scheme (“CVS”)
The CVS is designed to incentivise established companies to invest in the (full-risk) ordinary shares of
companies of the kind which qualify under the EIS rules, and to encourage the two companies to form
mutually beneficial corporate venturing relationships. There is no limit to the value of investments for
which a company may claim CVS relief. Companies investing through the CVS may obtain the following
reliefs:
• Corporation tax relief (at 20%) on the amount invested up to the amount of investor’s corporation
tax liability for the year.
• Relief for most allowable losses (net of investment relief) on the shares (against either income or
chargeable gains).
• Deferral of corporation tax on a chargeable gain from the disposal of CVS qualifying shares where
that gain is reinvested in a new CVS investment.
8. Dividends
No ACT is payable on dividends paid by the Company. Shareholders receive a notional tax credit, such
that basic rate taxpayers have no further tax to pay on the dividend received and higher rate taxpayers
have a liability to pay higher rate tax equivalent to 25 per cent of the amount of the dividend received.
The notional tax credit is no longer repayable.
The figures in this section are examples only. They are not, and should not be construed as,
forecasts or projections of the likely performance of the investment described in this
document. Please note that this is only a condensed summary and should not be construed as
constituting advice which a potential investor should obtain from his or her own investment or
taxation adviser before applying for Shares. The value of any tax reliefs will depend on the
individual circumstances of investors.
23

Part VII – Statutory and general information
1. The Company
1.1 The Company was incorporated and registered in England and Wales on 3 June 2004 with
number 5144171 under the name Cross Oak Inns plc as a public company limited by shares
under the Act. The Company’s registered office is 82 St John Street, London EC1M 4JN.
1.2 The Company has no subsidiary companies (as defined in section 736 of the Act).
1.3 The principal activity of the Company is to be the ownership and management of pub restaurants.
1.4 On 14 September 2004, the Registrar of Companies issued the Company with a certificate under
section 117 of the Act entitling it to commence business and to exercise its borrowing powers.
2. Share Capital
2.1 Set out below are details of the authorised and issued share capital of the Company as at 29
September 2004 (the latest practicable date prior to the publication of this document) and the
authorised and issued share capital of the Company as it will be following Close of the Offer:
As at 29 September 2004
Ordinary Shares Authorised Issued and paid up
Number 20,000,000 625,794
Nominal value £10,000,000 £312,897
Following Close of the Offer (assuming Minimum Subscription)
Ordinary Shares Authorised Issued and paid up
Number 20,000,000 1,125,794
Nominal value £10,000,000 £562,897
Following Close of the Offer (assuming Maximum Subscription)
Ordinary Shares Authorised Issued and paid up
Number 20,000,000 3,625,794
Nominal value £10,000,000 £1,812,897
2.2 The Company was incorporated with an authorised share capital of £10,000,000 comprising
20,000,000 ordinary shares of 50p each. On incorporation two ordinary shares of 50p were
issued to the subscribers to the Memorandum of Association. On 3 June 2004, these ordinary
shares were transferred to Peter Eyles and Dinah Young, in consideration of their undertaking
to pay up such shares in full.
2.3 On 13 September 2004 the Company also allotted, in aggregate, 428,570 ordinary shares of
50p each in the capital of the Company at 70p per share, all fully paid up as follows:
Name
Number of
Ordinary Shares
Peter George Eyles 285,713
Dinah Joy Young 142,857
2.4 On 21 September 2004 the Company made a further allotment of 197,222 ordinary shares of
50p each in the capital of the Company fully paid up at 90p per share as follows:
Name
Number of
Ordinary Shares
Anthony Euan Richmond-Watson 165,000
Peter Loring Drown 11,111
Robin Jarrard Campbell Privett 10,000
Hugh William Whitbread 11,111
24

2.5 The Directors are authorised in accordance with Section 80 of the Act to allot ordinary shares
pursuant to the Offer and otherwise up to an aggregate nominal amount of £10,000,000 until
3 June 2009.
2.6 The Directors are also empowered pursuant to Section 89 of the Act to allot ordinary shares
pursuant to such authority as if Section 89(1) of the Act did not apply, both in connection with a
rights issue and pursuant to the Offer and otherwise up to an aggregate nominal amount of
£10,000,000 until 28 February 2005.
2.7 No shares of the Company are currently in issue with a fixed date on which entitlement to a
dividend arises and there are no arrangements in force whereby future dividends are waived or
have been agreed to be waived.
3. Accounting Reference Date
The accounting reference date of the Company is 31 December in each year and the first
accounting reference period of the Company will be from 3 June 2004 to 31 December 2004.
4. Memorandum and Articles of Association
4.1 Memorandum
The principal objects of the Company are set out in full in clause 4 of its Memorandum of
Association and provide that the Company shall carry on business as a general commercial
company, including but not limited to the ownership and management of public houses.
4.2 Articles of Association
The Articles of Association of the Company (“the Articles”) were adopted at incorporation on
3 June 2004. The Articles contain provisions, amongst other things, having the following effect:
4.2.1 Voting
(a) Subject to any special terms or restrictions as to voting upon which any shares may be
issued or may for the time being be held, at a general meeting every member who (being
an individual) is present in person or (being a corporation) is present by a duly authorised
representative not being himself a member) has one vote, and in the case of a poll every
member present in person or by proxy shall have one vote for every share of which he or
she is the holder.
(b) No member may vote at a general meeting either personally or by proxy in respect of any
share held by him or her unless all monies payable by him or her to the Company in respect
of that share have been paid.
4.2.2 Dividends
(a) Subject to the provisions of the Act and of the Articles, the Company may by ordinary
resolution declare dividends to be paid to members according to their respective rights in the
profits of the Company. However, no dividend shall exceed the amount recommended by the
Board.
(b) Subject to the provisions of the Act, the Board may declare or pay such interim dividends
(including any dividend payable at a fixed rate) as appears to the Board to be justified by the
profits of the Company available for distribution.
(c) Except as otherwise provided by any rights attached to or terms of issue of any shares, all
dividends shall be declared and paid according to the amounts paid up on the shares in
respect of which the dividend is paid. Subject as aforesaid, all dividends shall be
apportioned and paid proportionately to the amount paid up on the shares during any
portion or portions of that period in respect of which the dividend is paid.
(d) No dividends or other monies payable in respect of any share shall bear interest unless
otherwise provided by the rights attached to the share.
25

(e) Any dividend remaining unclaimed for a period of 12 years from the date of being declared
or having become due for payment shall be forfeited and cease to remain owing by the
Company.
4.2.3 Distribution of assets on a winding-up
If the Company is wound up the liquidator may, with the authority of an extraordinary resolution
of the Company and any other sanction required by the Act, divide among the members in kind
the whole or any part of the assets of the Company and may, for that purpose, value any assets
and determine how the assets are to be divided as between the holders of shares or classes of
shares. The liquidator may, with the same authority and sanction, transfer the whole or any part
of the assets to trustees on such trusts for the benefit of members as he or she thinks fit, but
no member shall be compelled to accept any assets upon which there is a liability.
4.2.4 Changes in capital
(a) Any shares in the capital of the Company for the time being may be allotted with such
special rights or restrictions as the Company may by ordinary resolution determine.
(b) Subject to the provisions of the Act, the Company may from time to time by ordinary
resolution increase its capital by the creation of shares or consolidate and/or divide all or
any of its share capital into shares of a larger amount than its existing shares or subdivide
all or any of its share capital into shares of a smaller amount than its existing shares or
cancel any shares which at the date of the passing of the relevant resolution have not been
taken or agreed to be taken and diminish the amount of its share capital by the amount of
shares cancelled.
(c) Subject to the provisions of the Act, the Company may by special resolution reduce its
authorised and issued share capital, any capital redemption reserve and any share premium
account in any way.
(d) Subject to the provisions of the Act, the Company may from time to time purchase its own
shares provided that the terms of any contract under which the Company will be or may
become entitled or obliged to purchase its own shares shall be authorised by special
resolution in advance of the Company entering into the contract.
4.2.5 Transfer of Shares
(a) A transfer of a share must be effected by an instrument of transfer in writing in any usual
form or in any other form approved by the Board. Any instrument of transfer shall be
executed by or on behalf of the transferor and, except in the case of a fully paid share, by
or on behalf of the transferee.
(b) The Board may refuse to register any transfer of a share unless it is:
(i) in respect of a share which is fully paid up;
(ii) in respect of only one class of share;
(iii) in favour of not more than four transferees; and
(iv) delivered to the registered office or such other place as the Board may determine
together with the relevant share certificate(s) and such other evidence as the Board
may reasonably require to show the right of the transferor to make the transfer.
(c) If the Board refuses to register a transfer of a share it shall within two months after the date
on which the transfer was lodged with the Company, send notice of the refusal to the
transferee.
(d) The register of transfers may be suspended at such times and for such periods (not
exceeding 30 days in any year) as the Board may determine.
4.2.6 Pre-emption
There are no pre-emption rights or restrictions on the transfer of shares. The statutory regime
contained in Sections 89 to 96 of the Act requiring certain offers of equity securities of the
Company to be made on a pre-emptive basis applies to the Company’s equity share capital save
to the extent specified in paragraph 2.6 of this Part VII.
26

4.2.7 Redemption
Subject to the provisions of the Act, shares may be issued which are to be redeemed or are
liable to be redeemed at the option of the Company or the holder on such terms and in such
manner as may be prescribed in the Articles.
4.2.8 Directors
(a) Subject to the provisions of the Act and provided that he or she has disclosed to the Board
the nature and extent of any material interest of his or hers, a director:
i. may enter into or otherwise be interested in any arrangement or transaction with the
Company or in which the Company is interested;
ii.
iii.
may be or become a director or other officer of or be employed by or hold any other
office or be a party to any transaction or arrangement with or otherwise interested in any
company promoted by the Company or in which the Company is otherwise interested;
and
shall not be liable to account to the Company for any profit, remuneration or other
benefit realised by any such arrangement or transaction or from any interest in any body
corporate and no such arrangement or transaction shall be avoided on the grounds of
any such interest or benefit.
(b) Save as provided below and under the Act, a director shall not vote on, or be counted in the
quorum in relation to, any resolution of the Board or any committee of the Board in respect
of any matter in which he or she has, directly or indirectly, an interest or duty which is
material and which conflicts or may conflict with the interest of the Company. A director shall
be entitled to vote (and be counted in the quorum) in respect of any resolution at such
meeting if such resolution relates to one of the following matters:
i. the giving to him or her of a guarantee, security or indemnity in respect of money lent
to, or obligations incurred by him or her for the benefit of, the Company or any of its
subsidiaries;
ii.
iii.
iv.
the giving to a third party of any guarantee, security or indemnity in respect of an
obligation of the Company for which he himself has assumed responsibility in whole or
in part, either alone or jointly with others, under a guarantee or indemnity or by the giving
of security;
any issue or offers of shares, debentures or other securities of the Company or any of
its subsidiaries in respect of which he or she is or may be entitled to participate in his
or her capacity as a holder of any securities or in the underwriting or subwriting of which
the director is to participate;
a retirement benefits scheme which has been approved or is conditional upon approval
by the Inland Revenue for taxation purposes.
(c) The Board may delegate any of its powers to a committee consisting of one or more
directors.
(d) The remuneration and other terms and conditions of appointment of a director to any
executive office or employment of the Company shall be such as the Board may from time
to time by ordinary resolution determine and remuneration shall be deemed to accrue from
day to day.
4.2.9 Borrowing powers
(a) Subject to the provisions of the Articles, the Board may exercise all the powers of the
Company to borrow money and to mortgage or charge its undertaking, property, assets and
uncalled capital or any part thereof and, subject to the provisions of the Act, to issue
debentures and other securities, whether outright or as security for any debt, liability or
obligation of the Company or any third party.
27

(b) The Board shall restrict the borrowings of the Company so as to secure that the aggregate
principal amount outstanding in respect of borrowings by the Company shall not at any time,
without the previous sanction of any ordinary resolution of the Company, exceed
£20,000,000.
5. Directors
5.1 Other than their directorships of the Company, the current UK directorships and partnerships of
the Directors and those held during the previous five years are set out below. Where the
company name is marked with an asterisk, the Director concerned is no longer at the date of
this document a director or partner as the case may be of the relevant company or partnership:
Name of director
Anthony Euan Richmond-
Watson
Peter George Eyles
Dinah Joy Young
Peter Loring Drown
Robin Jarrard Campbell
Privett
Company
Gazelle Corporate Finance Limited
Melrose Resources plc
Yule Catto & Co plc
The AERW and RFMA Consultancy
Cross Oak Limited
Basingstoke Country Club Limited *
Basingstoke Country Hotel Limited *
Cardiff Bay Hotel Limited *
Hanover Hotels No.2 Limited *
Hanover International Club Limited *
Hanover International Hotels Limited *
Hanover International Hotels Management (Daventry) Limited *
Hanover International Hotels Management (Reading) Limited *
Hanover International plc *
Hartford Entertainments Limited *
Midmint Limited *
Sundridge Park Management Centre Limited *
Tweed Investments Limited *
Tyne Limited *
Cross Oak Limited
Famous Moe’s Food Service Limited *
London Wrap Company Limited *
Hospice of Hope Romania Limited
Leadley Limited
Morrison McConnell Limited
Questscope
Royal Cinque Ports Golf Club Limited
The Volubilis Foundation
Beavis Walker *
Beavis Walker Limited *
BWL Corporate Finance Limited *
GSB (Holdings) plc *
Otherqueue Limited *
Southwell Motor Co Limited*
SPAM Limited*
Lancing College Limited
Lec Refrigeration plc
Woodard Schools (Southern Division) Limited
Hanover International plc*
Strathcarron Sports Cars plc*
28

Hugh William Whitbread
Epicurean Brasseries Limited
Epicurean Brasseries (Whitacre Heath) Limited
Aldenham School Enterprises Limited*
Hanover International plc*
Hanover International Hotels Limited*
Smiles Brewing Company Limited*
Smiles Trustees Limited*
Smiles Holdings Limited*
The Aldenham School Company*
The Taverners Trust plc*
5.2 The following agreements have been entered into between the Company and the Directors:
5.2.1 By an appointment letter dated 3 June 2004 between the Company and Peter Eyles, Peter Eyles
was appointed as a Director with an entitlement to receive director’s fees at a rate of £1,500 per
annum, payable quarterly in arrears, exclusive of VAT. This fee is subject to review on 1 January
each year. The appointment is for an initial period of 4 years and is terminable (i) by resignation;
(ii) by ordinary resolution of the Company; (iii) in the event that the Management Agreement is
terminated for any reason; or (iv) if Peter Eyles ceases to be a director of Cross Oak Limited.
5.2.2 By an appointment letter dated 3 June 2004 between the Company and Dinah Young, Dinah
Young was appointed as a Director with an entitlement to receive director’s fees at a rate of
£1,500 per annum, payable quarterly in arrears, exclusive of VAT. This fee is subject to review
on 1 January each year. The appointment is for an initial period of 4 years and is terminable (i)
by resignation; (ii) by ordinary resolution of the Company; (iii) in the event that the Management
Agreement is terminated for any reason; or (iv) if Dinah Young ceases to be a director of Cross
Oak Limited.
5.2.3 By an appointment letter dated 24 September 2004 between the Company and Anthony
Richmond-Watson, Anthony Richmond-Watson was appointed as non-executive Chairman with
an entitlement to receive director’s fees at a rate of £12,500 per annum exclusive of VAT. This
director’s fee is subject to review on 1 January each year. This agreement is for an initial period
of 12 months and is terminable on 3 months’ written notice by either side.
5.2.4 By an appointment letter dated 24 September 2004 between the Company, Peter Drown and
Vantis, Peter Drown was appointed as non-executive Director. His services are being provided
by Vantis who will invoice the Company at a rate of £15,000 per annum exclusive of VAT. This
fee is subject to review on 1 January each year. This agreement is for an initial period of 12
months and is terminable on 3 months’ written notice by either side.
5.2.5 By an appointment letter dated 24 September 2004 between the Company and Robin Privett,
Robin Privett was appointed as non-executive Director with an entitlement to receive director’s
fees at a rate of £5,000 per annum exclusive of VAT. This director’s fee is subject to review on
1 January each year. This agreement is for an initial period of 12 months and is terminable on
3 months’ written notice by either side.
5.2.6 By an appointment letter dated 24 September 2004 between the Company and Billy Whitbread,
Billy Whitbread was appointed as non-executive Director with an entitlement to receive director’s
fees at a rate of £5,000 per annum exclusive of VAT. This director’s fee is subject to review on
1 January each year. This agreement is for an initial period of 12 months and is terminable on
3 months’ written notice by either side.
5.3 The aggregate remuneration and benefits in kind payable to the Directors in respect of the
period ended 17 September 2004 was £nil. The aggregate amount of remuneration and benefits
in kind payable to the Directors is estimated at £10,125 in respect of the financial period of the
Company ending 31 December 2004 and £40,500 in respect of the financial year of the
Company ending 31 December 2005.
5.4 None of the Directors has any unspent convictions.
5.5 None of the Directors has been the subject of any public criticism by any statutory or regulatory
authority.
29

5.6 Peter Eyles was executive chairman of Pavilion Leisure plc from 21 September 1990 until 8
March 1991. Pavilion Leisure plc was placed into receivership on 7 March 1991.
5.7 Peter Drown was a non-executive director of GSB (Holdings) plc, which was wound up on 11
March 1999 under a creditors’ voluntary liquidation and dissolved on 3 January 2003.
5.8 Peter Drown was a non-executive director of Netica plc from 9th April 1997 until 16 October
1998. Subsequent to his resignation, on 2 December 1998, Netica plc was placed into
receivership. Netica plc was dissolved on 4 December 2001.
5.9 Robin Privett was a non-executive director and chairman of Strathcarron Sports Cars plc, a
fledgling manufacturer of sports cars, from 31st January 1996 until 3 August 2001. This
company went into creditors voluntary liquidation on 21 November 2001.
5.10 Save as stated in paragraphs 5.6 to 5.9 above, none of the Directors has been a director of a
company at the time of, or within the preceding 12 months of that company being the subject of
a receivership, compulsory liquidation, creditors voluntary liquidation, administration, company
voluntary arrangement or where it is has made any composition or arrangement with its creditors
generally or any class of its creditors.
5.11 None of the Directors has been a partner of a partnership at the time of, or within the preceding
12 months of the partnership being the subject of a compulsory liquidation, administration or
partnership voluntary arrangement nor in that time have the assets of any such partnership
been the subject of a receivership.
5.12 No asset of any Director has at any time been the subject of a receivership.
5.13 None of the Directors is or has been bankrupt or has made at any time an individual voluntary
arrangement.
5.14 None of the Directors is or has ever been disqualified by a court from acting as a director of a
company or from acting in the management or conduct of the affairs of any company.
5.15 There are no outstanding loans granted by the Company to any of the Directors nor has any
guarantee been provided by the Company for their benefits.
5.16 At the date of this document no options had been granted to the Directors to subscribe for
Ordinary Shares in the Company. It is intended that following the close of the Offer and subject
to the approval by ordinary resolution of the Company’s shareholders, the Company shall
establish a share option scheme whereby up to a maximum of 5 per cent of the enlarged share
capital of the Company (after exercise of all options) will be put under option at the Offer price
to Peter Eyles and Dinah Young. Such share options will be subject to challenging performance
criteria reflecting the Company’s objectives.
6. Shareholdings in the Company
The present interests of the Directors in the share capital of the Company, both beneficial and nonbeneficial,
and following Close of the Offer (assuming the Maximum Subscription is achieved), are
expected to be as follows:
At 29 September 2004
At Close of the Offer
Director No. of % of No. of % of
Ordinary existing Ordinary existing
Shares Shares Shares Shares
held held held held
Anthony Euan Richmond-Watson 165,000 26.3% 165,000 4.55%
Peter George Eyles 285,714 45.7% 285,714 7.88%
Dinah Joy Young 142,858 22.8% 142,858 3.94%
Peter Loring Drown 11,111 1.8% 11,111 0.31%
Robin Jarrard Campbell Privett 10,000 1.6% 10,000 0.28%
Hugh William Whitbread 11,111 1.8% 11,111 0.31%
30

Peter Eyles and Dinah Young are directors of Cross Oak Limited, a company controlled by Peter Eyles.
Both Peter Eyles and Dinah Young are therefore interested in the Management Agreement. Save for
the above and the foregoing shareholdings, the Directors have no other interests in the Company. The
Directors are not aware of any persons who, directly or indirectly, jointly or severally, exercise or could
exercise control over the Company.
7. Litigation
So far as the Directors are aware, there are no legal or arbitration proceedings, active, pending or
threatened against, or being brought by, the Company which are having, or may have, a significant
effect on the financial position of the Company.
8. Material Contracts
The following contracts have been entered into by the Company since incorporation, and are, or may
be material:
8.1 A Management Agreement dated 30 September 2004 between the Company and Cross Oak
Limited (“the Manager”) whereby, with effect from the date on which formal legal contracts are
exchanged for the purchase by the Company of its first premises (“the Commencement Date”), the
Manager will manage and operate the pubs acquired by the Company and developed into pub
restaurants, in accordance with good commercial practice. The services to be provided by the
Manager include (i) identifying, appraising and recommending to the Company suitable premises for
acquisition, (ii) day to day management, supervision, control and operation of the pub restaurants,
including arrangements with suppliers; (iii) maintaining financial, accounting, maintenance and
operating systems and records relating to the pub restaurants; (iv) organising repairs and
refurbishment; (v) recruitment, training and supervision of staff; (vi) organising marketing and
advertising activities; (vii) arranging for the grant or renewal of licences as appropriate and arranging
suitable insurance cover; (viii) supervision of health and safety procedures.
Without prejudice to the Company’s Articles of Association, the Board has adopted the policy
that, in any Board meeting of the Company where the Management Agreement, and more
particularly the performance of the Manager is to be discussed, Dinah Young and Peter Eyles
will abstain from taking part in any such discussion or voting, in order to avoid a conflict of
interest in relation to their position as directors and shareholders of the Manager.
All monies received directly by the Manager on behalf of the Company in connection with the
Company’s premises will be received by the Manager as the Company’s agent and paid into a
bank account opened in the name of the Company.
The Manager will be remunerated for its services by way of a monthly payment calculated as
follows:
(i)
a sum equal to 3.5% of the net sales achieved by the Company; and
(ii) a profit share payment equal to 35% of the net operating profit of each of the pub
restaurants owned by the Company after deduction of (i) above.
The operating expenses of the pub restaurants will be met by the Company. The Manager will
meet the cost of maintaining financial, accounting, maintenance and operating systems and
records relating to the pub restaurants and the Company.
In the event that payment of the management fee would lead to a breach of any bank covenants
given by the Company, the above percentages will be reduced to an amount which does not
cause a breach of any such covenants.
Payment of the management fee in full is also conditional on the Company achieving an
earnings per share of at least the previous year’s earnings per share plus the growth in the retail
prices index for the corresponding period (the “Target EPS”). If the Target EPS, calculated after
the deduction from profits of the total management fee, is not achieved, the total management
fee shall be reduced to a level that would allow the Target EPS to be achieved. Earnings for this
purpose are taken to mean net profits before tax.
31

In the event that the management fee is reduced as set out above, the amount of such reduction
is not capable of being deferred beyond the end of the relevant operating year, and nor is the
Manager entitled to recover such reduction under any other mechanism.
The Management Agreement may be terminated by the Company (i) in the event of liquidation
of the Manager; (ii) if the Manager commits a material breach and does not remedy the breach
within 60 days; (iii) if the Company or the relevant group company of the Company sells the
entire share capital of the relevant group company of the company or the Company which owns
the public houses or Inns; (iv) if all the shares of the Manager are acquired by a third party; or
(v) if both Peter Eyles and Dinah Young cease to be directors of the Manager or principally
involved in the operation of the Management Agreement.
The Manager may terminate (i) in the event of liquidation by the Company; (ii) if the Company
commits a material breach which is not remedied within 60 days; (iii) if the Company is subject
to a change of control; or (iv) if the Company fails to provide the amount of working capital
provided for in the agreed annual budget for the management of the pub restaurants and such
failure is prejudicial to the Manager’s ability to comply with its obligations under the Management
Agreement.
On termination as a result of (i) sale of the entire share capital of the relevant group company
of the Company or the company which owns the public houses or inns; or (ii) compulsory
purchase, expropriation or similar proceedings in relation to all the sites, the Manager is entitled
to receive a fee equal to the forecasted fee for the following twelve months.
Either party may terminate the Management Agreement if the Company does not reinstate a
particular pub restaurant following destruction or damage or if the Company elects to withdraw
a particular pub restaurant from the scope of the Management Agreement.
On such termination in relation to a particular pub restaurant, the Manager is entitled to a sum
equal to the higher of (i) the average annual management fee accrued and paid or due to the
Manager on net sales in relation to that particular site and a proportion of operating profit earned
by that site for the period from the Commencement Date to the date of termination divided by the
number of days in such period, multiplied by x, where x is the number of days in the unexpired
period of the first three years of the agreement; and (ii) the annual management fee that would
have become payable for the operating year in which termination occurs, based on an independent
auditor’s best estimate of net sales in relation to a particular site and a proportion of operating
profit earned by that site for that complete operating year.
On termination of the Management Agreement for any reason, the Company must cease using
the names “Cross”, “Oak” or “Cross Oak” or “Cross Oak Limited”. In the event that the
Management Agreement is terminated by the Manager, and as a pre-condition to any
termination of the Management Agreement by the Company, the Company must change the
name of the Company to a name which includes neither the word “cross” nor the word “oak” nor
anything similar to avoid association between the two companies in the future.
The Manager is prevented from entering into material contracts with a value in excess of
£50,000 or for a duration greater than 12 months without the prior consent of the Company.
The Management Agreement may be assigned to the group companies of either party provided
that each party procures that their respective group companies reassign the Management
Agreement to the relevant party in the event that such group company leaves the respective
group. No other assignment of the Management Agreement is permitted without the consent of
the other party.
8.2 On 17 June 2004 the Company signed an engagement letter with Vantis Corporate Finance
Limited in relation to the provision of corporate finance advice and fundraising services in
relation to the Offer. Under this letter the Company has agreed to pay Vantis a fee of £15,000
plus 2 per cent. of all monies raised but limited to 1 per cent. of monies raised from certain
potential investors introduced by Peter Eyles. The Company undertakes to Vantis that they are
authorised to enter into the engagement and will maintain all necessary consents and
authorisations for Vantis to carry out the engagement. The Company also undertakes to provide
all information to Vantis that it may require to allow it to carry out the engagement, not disclose
32

any information in relation to the Offer without the consent of Vantis, to reimburse any out of
pocket expenses incurred by Vantis and also to indemnify Vantis against any loss suffered by
Vantis arising directly or indirectly out of the engagement.
9. Taxation
The statements below are intended only as a general guide to the current law and practice in relation
to UK taxation and may not apply to certain persons who hold shares in the Company or who are not
resident or ordinarily resident in the UK. Any persons who are in any doubt about their tax position are
strongly advised to consult their own professional adviser.
9.1 Taxation of Dividends
9.1.1 Under UK taxation legislation, no tax is withheld at source from dividend payments made by the
Company. The requirement for companies to pay advance corporation tax (“ACT”) on making
dividend payments was abolished with effect from 5 April 1999 and does not apply to dividend
payments after that date.
9.1.2 Dividends paid on or after 6 April 1999 carry an associated notional tax credit of one-ninth of
the net dividend. Basic rate taxpayers have no further tax to pay on the dividend but nontaxpayers
will not be entitled to any repayment of the associated tax credit. Higher rate
taxpayers will have an additional liability, after taking account of the associated tax credit, which
will put them in the same after-tax position as with a dividend under the previous rules.
9.1.3 Trustees of discretionary trusts, liable to account for income tax at the rate applicable to trusts,
will be liable to tax at the Schedule F Trust rate of 32.5 per cent.
9.1.4 UK resident corporate Shareholders will not normally be liable to UK corporation tax or income
tax on any dividends received from the Company.
9.1.5 Shareholders who are resident in countries other than the UK may be entitled to a credit for all
or a proportion of the associated tax credit. Shareholders not resident in the UK should consult
their own tax adviser on the application of such provisions and the procedure for claiming relief.
9.2 Taxation of Chargeable Gains. A subsequent disposal of Shares may result in a liability to
United Kingdom taxation of chargeable gains, depending upon individual circumstances.
9.3 Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)
9.3.1 No liability to stamp duty or SDRT should arise on the allotment of the Shares by the Company
under the Offer.
9.3.2 Subsequent sales of Shares (outside CREST) will generally be liable to ad valorem stamp duty,
at the rate of 50p per £100 (or part thereof) on the amount or value of the consideration.
However, where an instrument of transfer which completes an unconditional agreement to
transfer shares is duly stamped within six years after the agreement was entered into (or it
became unconditional) the stamp duty paid will cancel the SDRT liability and any SDRT paid can
be recovered. The information above is a general summary of certain tax provisions and should
not be construed as constituting advice. Potential investors should obtain advice from their own
investment or taxation adviser.
9.4 Enterprise Investment Scheme
Information on the tax reliefs available is set out in Part VI to this document.
10. Working Capital
The Directors are of the opinion, having made due and careful enquiry, that, after taking into
account the net proceeds of the Offer, and the indicative banking terms, the working capital of
the Company is sufficient for its present requirements, that is, for at least a period of 12 months
from the date on which this document was issued.
33

11. General
11.1 Wilkins Kennedy accepts responsibility for its report and letter set out in Part V of this document
and has given and not withdrawn its written consent to the issue of this document with the
inclusion in it of its report and the references thereto and to its name in the form and context in
which they appear.
11.2 Vantis, Cross Oak Limited and Christie & Co have each given and not withdrawn their consent
to the issue of this document with the inclusion of their names in such form and context as they
appear.
11.3 The Offer is not underwritten.
11.4 The expenses of and incidental to the Offer and all registration fees, printing, advertising and
distribution costs, legal and accounting fees and expenses (which include an estimate for the
3% commission payable to introducers), will (assuming Maximum Subscription) amount to 8 per
cent. of the gross proceeds of the Offer (including Value Added Tax where applicable) and are
payable by the Company. If the maximum of £3,000,000 is raised under the Offer, the net
proceeds will amount to approximately £2,760,000.
11.5 If the minimum of £500,000 is raised the net proceeds will amount to approximately £388,000.
The net proceeds will be applied in accordance with the Company’s investment strategy as
described in this document. The minimum amount which, in the opinion of the Directors, must
be raised by the Offer to provide the sums required in respect of the matters specified in
paragraph 21 to Schedule 1 of the POS Regulations is £500,000 and, together with the
Company’s existing resources, will be applied as follows:
a) The purchase price of any property purchased or to be purchased in whole or part out of
any proceeds of the Offer – £388,000;
b) Any preliminary expenses payable by the Company and commissions so payable to any
person in consideration of his or her agreeing to subscribe for, or of his or her procuring or
agreeing to procure subscriptions for, Shares – £112,000;
c) The repayment of any money borrowed by the Company in respect of any of the foregoing
matters – £nil; and
d) Working capital – £nil.
11.6 The financial information set out in this document relating to the Company does not constitute
statutory accounts within the meaning of section 240 of the Act. No statutory accounts have
been delivered to the Registrar of Companies in respect of the Company and no auditors’ report
under section 235 of the Act has been made in respect of any financial year or period.
12. Documents available for inspection
Copies of the following documents will be available for inspection free of charge during normal
business hours on any weekday (Saturday and public holidays excepted) at the offices of Vantis
Corporate Finance Limited at 82 St John Street, London EC1M 4JN and shall remain available
until the Close of the Offer:
(a) the Prospectus
(b) the Memorandum and Articles of Association of Cross Oak Inns plc
(c) the Accountants’ Report on Cross Oak Inns plc for the period ended 17 September 2004
(d) the Management Agreement referred to in 8.1 above
(e) the letters of appointment of the Directors referred to in paragraph 5.2 above.
Dated: 4 October 2004
34

Part VIII – General terms and conditions of the Offer
The Offer is being made by the Company. Applications must be made on the accompanying application
form. No Application will be accepted unless it is made on an original Application Form.
Terms and Conditions of Application
(a)
(b)
(c)
(d)
The contract created by the acceptance of applications under the Offer will be conditional upon
the Minimum Subscription being received by 12 November 2004.
The right is reserved by the Company to present all cheques and bankers’ drafts for payment on
receipt and to retain surplus application monies pending clearance of successful applicants’
cheques. The Company reserves the right to reject, in whole or in part, or to scale down, any
application. If any application is not accepted in full, or is accepted for fewer Shares than the
number applied for, or if any contract created by acceptance does not become unconditional,
the application monies or, as the case may be, the balance thereof will be returned (without
interest) by crossed cheque in favour of the applicant, through the post to the applicant’s
address set out on the Application Form at the risk of the person(s) entitled thereto within seven
days of the Closing of the Offer. The Company reserves the right to treat as valid and binding
upon the applicant any application, even if the accompanying Application Form is not completed
in all respects in accordance with the instructions or is not accompanied by the power of
attorney where necessary. The right is reserved to reject any application in respect of which the
applicant’s cheque or banker’s draft has not been cleared on first presentation. Notifications of
acceptance or non-acceptance will not be issued pending issue of definitive certificates for the
Shares or return of application monies (as the case may be).
The Company reserves the right to allot and arrange for the issuing of Shares under the Offer
prior to the stated closing.
By completing and delivering an Application Form each applicant:
i. offers to subscribe for the number of Shares specified in his or her Application Form (or
such lesser number for which his or her application is accepted) at the Offer Price on the
terms of and subject to this document, including these terms and conditions, and the
Memorandum and Articles of Association of the Company;
ii.
iii.
iv.
agrees that, in consideration of the Company agreeing that it will not after 31 December
2004 (or such later date if the Offer is extended) issue or allot any Share which is subject
to the Offer to any person other than by means of the procedures referred to in this
document, his or her application shall not be revoked and this paragraph shall constitute a
collateral contract between him or her and the Company which will become binding upon
despatch by post to, or (in the case of delivery by hand) on receipt by, Gateway Registrars
of his or her Application Form;
warrants that his or her remittance will be honoured on first presentation and agrees that if
such remittance is not so honoured, he or she will not be entitled to receive a share
certificate in respect of the Shares applied for or to enjoy or receive any rights or
distributions in respect of any Shares unless and until he or she makes payment in cleared
funds for such Shares and such payment is accepted by the Company (which acceptance
shall be in its absolute discretion and may be on the basis that he or she indemnifies the
Company against all costs, damages, losses, expenses and liabilities arising out of or in
connection with the failure of his or her remittance to be honoured in first presentation) and
that, at any time prior to unconditional acceptance by the Company of such late payment in
respect of such Shares, the Company (without prejudice to any other rights) may avoid the
agreement to allocate such Shares to him or her and may re-allocate Shares to some other
person, in which case he or she will not be entitled to any refund or payment in respect of
such Shares (other than the refund to him or her at his or her risk of any proceeds of the
cheque or bankers’ draft accompanying this application, without interest);
agrees that any monies returnable to him or her may be retained by the Company pending
clearance of his or her remittance and that such monies will not bear interest;
35

v. agrees that applications to the value of approximately £9,000 or more which are settled by
way of a third party payment, e.g. bankers’ draft, building society cheque or a cheque drawn
by someone other than the applicant, will be subject to the UK’s verification of identity
requirements which are contained in the Proceeds of Crime Act 2002 and Money
Laundering Regulations 2003 as amended, updated, replaced or superseded from time to
time;
vi.
agrees with the Company promptly, on request, to disclose in writing any information which
it may request in connection with his or her application and authorises the Company to
disclose any information relating to his or her application it may consider appropriate;
vii. agrees that any definitive share certificate to which he or she might become entitled and
monies to be returned to him or her may be retained pending clearance of his or her
remittance or pending investigation of any suspected breach of the warranties of this Part
VIII and that such monies will not bear interest;
viii. agrees that all applications, acceptance of applications and contracts resulting there from
under the Offer shall be governed by and construed in accordance with English law, and that
he or she submits to the jurisdiction of the English Courts and agrees that nothing shall limit
the right of the Company to bring any action, suit or proceedings arising out of it in
connection with any such applications, acceptances of applications and contracts in any
other manner permitted by law or in any court of competent jurisdiction;
ix.
confirms that in making such application he or she is not relying on any information or
representation in relation to the Company other than the information contained in this
document and accordingly he or she agrees that no person responsible solely or jointly for
this document or any part thereof or involved in the preparation thereof shall have any
liability for any such other information or representation;
x. agrees that, having had the opportunity to read this document, he or she shall be deemed
to have had notice of all information and representations concerning the Company
contained therein;
xi.
confirms and warrants that he or she has read and complied with paragraph (e) below;
xii. warrants that he or she is not under the age of 18;
xiii. agrees that all certificates, documents, monies and cheques sent by post to, by or on behalf
of the Company or Gateway Registrars will be sent at the risk of the person(s) entitled
thereto to the address specified in the Application Form (or in the case of multiple applicants
the first named);
xiv. warrants that, if an Application Form is signed on behalf of somebody else, the signatory
has the authority to do so and such person will be bound accordingly and will be deemed
also to have given the confirmations, warranties and undertakings contained in these terms
and conditions;
xv. warrants that no other application (not being an application under the terms of the
Application Form) is being made by him or her for his or her own account or by another on
his or her behalf or for benefit and with his or her knowledge for such purpose or, if he or
she is applying as agent or nominee of another, that no other application is being made by
him or her (not being an application as aforesaid) as an agent or nominee for that other
person and that other person is not, to his or her knowledge, acting in concert with any other
person or persons as aforesaid;
xvi. warrants that, in connection with the application he or she has observed the laws of all
relevant territories, obtained any requisite governmental or other consents which may be
required, complied with all requisite formalities and paid any issue, transfer or other taxes
due in connection with your application in any territory, other than stamp duty or SDRT, and
that he or she has not taken any action which will or may result in the Company or any of
its directors, officers, agents or employees acting in breach of the regulatory or legal
requirements of any territory in connection with the Offer or the application; and
36

xvii.authorises the Company or its agents to do all things necessary to effect registration into
the applicant’s name(s) of any Shares for which his or her application is accepted and
authorise any representative of the Company to execute and/or complete any document of
title required therefore.
(e)
(f)
No person receiving a copy of this document or an Application Form in any territory other than
the United Kingdom may treat the same as constituting an invitation or offer to him or her, nor
should he or she in any event use such Application Form unless, in the relevant territory, such
an invitation or offer could lawfully be made to him or her or such Application Form could lawfully
be used without contravention of any registration or other legal requirements. It is the
responsibility of any person outside the United Kingdom wishing to make an application
hereunder to satisfy himself or herself as to full observance of the laws of any relevant territory
in connection therewith, including obtaining any requisite governmental or other consents,
observing any other formalities requiring to be observed in such territory and paying any issue,
transfer or other taxes required to be paid in such territory.
Save where the context otherwise requires, words and expressions defined in this document
have the same meaning when used in the Application Form and any explanatory notes in
relation thereto.
Documents of Title
Application Forms must be sent by post or delivered by hand to Gateway Registrars, together with the
appropriate remittance, so as to be received not later than 3.00 pm on 31 December 2004 (unless
extended prior to that date), at 42-46 High Street, Esher, Surrey KT10 9QY. The subscription list will
open at 10.00 am on 5 October 2004 and will close on 12 November 2004 if the Minimum Subscription
has not been received, or if the Minimum Subscription is received by 12 November 2004, at 3.00 pm
on 31 December 2004, unless extended or the Maximum Subscription has been achieved prior to that
date. Temporary documents of title will not be issued. Definitive share certificates will be despatched
by first class post within 7 days of the allotment and issue of Shares under the Offer, pending which,
transfers will be certified against the register. Allotments of Shares will be made at the discretion of the
Board.
Money Laundering Regulations
It is a term of the Offer that, to ensure compliance with the Proceeds of Crime Act 2002 and Money
Laundering Regulations 2003 as amended, updated, replaced or superseded from time to time,
Gateway Registrars may at its absolute discretion require verification of identity from any person
lodging an Application Form (the “Applicant”) and, without prejudice to the generality of the foregoing,
in particular any person who either (a) tenders payment by way of cheque or bankers’ draft drawn on
an account in the name of a person or persons other than the Applicant or (b) appears to be acting on
behalf of some other person. In the former case, verification of the identity of the Applicant may be
required. In the latter case, verification of the identity of any person on whose behalf the Applicant
appears to be acting may be required. If within a reasonable period of time following a request for
verification of identity and in any case by no later than 3.00 pm on the relevant date of allotment
Gateway Registrars has not received evidence satisfactory to it as aforesaid, the Company with the
agreement of Gateway Registrars may, at its absolute discretion, reject any such application in which
event the remittance submitted in respect of that application will be returned to the Applicant (without
prejudice to the rights of the Company to undertake proceedings to recover any loss suffered by it as
a result of the failure to produce satisfactory evidence of identity). Where possible applicants should
make payment by their own cheque. If a third party cheque, bankers’ draft or building society cheque
is used, the Applicant should:
a. write his/her name and address on the back of the draft or cheque and, in the case of an
individual, record his/her date of birth against his/her name; and
b. ask the bank or building society (if relevant) to endorse on the reverse of the draft or cheque
the full name and account of the person whose account is being debited and stamp such
endorsement. In any event, if it appears to Gateway Registrars, that an Applicant is acting on
behalf of some other person, further verification of the identity of any person on whose behalf
the Applicant appears to be acting will be required. In relation to any application in respect of
37

which the necessary verification of the identity of the Application or the person on whose behalf
any Applicant appears to be acting has not been received on or before 3.00 pm on the relevant
date of allotment, the Company will treat the relevant application as invalid and application
monies will be returned (without interest). The above information is provided by way of guidance
to reduce the likelihood of difficulties, delays and potential rejection of an Application Form (but
without limiting Gateway Registrars the right to require verification of identity as indicated
above).
38

Part IX – Application procedure
The following instructions should be read in conjunction with the Application Form:
1. Insert your full name, address, date of birth and National Insurance number in block
capitals in Box 1. Applications may only be made by persons aged 18 or over.
2. Insert in Box 2 (in figures) the number of Shares for which you are applying. Your
application in respect of the Offer must be for a minimum of 5,000 Shares and above that in
multiples of 1,000 Shares.
3. Insert in Box 3 (in figures) the amount of your payment. Your cheque or bankers’ draft
should be for the amount, which represents £1 multiplied by the number of Shares inserted in
Box 2.
4. You must affix to the completed Application Form cheques or bankers’ drafts for the full
amount payable. Your cheque or bankers’ draft must be payable to Cross Oak Inns plc for the
amount payable on application inserted in Box 3 and should be crossed “A/C Payee”. No receipt
will be issued for this payment which must be solely for this application. Your cheque or bankers’
draft must be drawn in sterling on an account at a branch (which must be in the UK, the Channel
Islands or the Isle of Man) of a bank which is either a settlement member of the Cheque &
Credit Clearing Company Limited or the CHAPS Town Clearing Company Limited or a member
of either of the Committees of the Scottish or Belfast Clearing Houses or which has arranged
for its cheques or bankers’ drafts to be presented for payment through the clearing facilities
provided for the members of any of those companies or committees, and must bear the
appropriate sort code number in the top right hand corner. The right is reserved to reject any
application in respect of which the applicant’s cheques or bankers’ drafts have not been cleared
on first presentation. Applications may be accompanied by a cheque or bankers’ draft drawn by
someone other than the applicant(s), but any monies to be returned will be sent by crossed
cheque in favour of the person(s) named in Box 1.
5. Share Certificates. A share certificate will be sent to you incorporating the details included in
Box 1 following the allotment and issue of Shares under the Offer.
6. Sign and date the Application Form.
7. Agents who are entitled to receive commission should stamp and complete Box 6 on the
Application Form, giving their full name and address, telephone number and details of their
authorisation under the Financial Services and Markets Act 2000. The right is reserved to
withhold payment of any commission if Gateway Registrars is not, in its sole discretion, satisfied
that the agent is so authorised.
8. If you have any queries on the procedure for application and payment, you should contact
Gateway Registrars on 01372 478178 or Vantis Corporate Finance Limited on 020 7417 0417,
or your financial adviser.
9. Delivery of Application Form. Send the completed Application Form together with the cheque
or bankers’ draft by post, or deliver it by hand, to Gateway Registrars at 42-46 High Street,
Esher, Surrey KT10 9QY so as to be received no later than 3.00 pm on 31 December 2004
(unless extended prior to that date). In the event that applications are received for an amount in
excess of the Maximum Subscription, Shares will be allocated on a first come first served basis.
If you post your Application Form you are recommended to use first class post and to allow at
least two working days for delivery. Photocopied or faxed copies of the Application Form will not
be accepted. Your attention is drawn to the warranties set out in the paragraph headed “Terms
and Conditions of Application” in Part VIII of this document.
39

Cross Oak Inns plc – Application Form
please use block capitals
1.
Mr, Mrs, Miss, Ms or title
Forename(s) (in full)
Surname
Address (in full)
Postcode
Telephone
Number
Permanent address (if
different from above
Postcode
Date of Birth
National Insurance Number
2. I apply for (a minimum of 5,000 shares, thereafter in multiples of 1,000):
New Ordinary Shares
(or any smaller number of New Ordinary Shares for which the application is accepted) at the Offer Price of £1 per New
Ordinary Share, payable in full on application, on the terms and conditions set out in this Application Form and the
Prospectus dated 4 October 2004 and subject to the Memorandum and Articles of Association of Cross Oak Inns
plc.
3. I attach a cheque or bankers’ draft for the following amount payable to “Cross Oak Inns plc”.
(minimum £5,000)
Please send me certificate confirming my entitlement to EIS tax relief in respect of my subscription for the above.
4. Affix here your cheque or bankers’ draft for the amount in Box 3 made payable to “Cross
Oak Inns plc” and crossed “A/C Payee” (please pin, staple or clip; do not glue or tape your
cheque or bankers’s draft to this form).
5. By signing this form I HEREBY DECLARE THAT:
(i)
(ii)
I have received the Prospectus dated 4 October 2004 and have read the terms and conditions of application
contained therein and agree to be bound by them; and
to the best of my knowledge and belief, the particulars I have given to Cross Oak Inns plc are correct.
The Inland Revenue may inspect this declaration. It is a serious offence to make a false declaration.
Signature
Date
DELIVERY OF APPLICATION FORM
Send completed Application Form, together with the cheque or bankers’ draft by post or deliver by hand to Gateway
Registrars, 42-46 High Street, Esher, Surrey KT10 9QY.
6. Due completion of the agent’s box indicates that the agent is duly
authorised to transact investments of this type under the Financial
Services and Markets Act 2000 and confirms that the requirements
of the applicable Money Laundering Regulations as amended have
been complied with regarding the identification and verification of
the applicant. Commission usually at a rate of 3% of the funds
invested, will be paid to authorised financial intermediaries.
Stamp of authorised financial
intermediary
(if applicable)
✄
Authorised Ref No
40