INVITATION DOCUMENT Leon Bonds 2 3 IMPORTANT INFORMATION This Invitation Document is important and requires your immediate attention if you want to apply for Leon Bonds. If you are in any doubt about the action you should take or the contents of this Invitation Document, you should contact your bank manager, solicitor, accountant, stockbroker or other professional adviser who is authorised by the Financial Services Authority to conduct investment business and who specialises in advising on investment in bonds, shares and other securities, including unlisted securities. This Invitation Document is an invitation to apply for Leon Bonds, on the terms and conditions set out in this Invitation Document and the Leon Bond Instrument (copies of which are available at www.leonrestaurants.co.uk/theleonbond), the principal terms of which are set out on pages 6 to 7 of this Invitation Document. The Leon Bonds will be non-convertible, unsecured, non-transferable, and will provide investors with a return in the form of £eon Pounds and quarterly prize draws. The Leon Bonds will be repayable in three years’ time at the option of Bondholders. Investment in the Leon Bonds involves certain risks. For a discussion of the benefits and risks that should be considered in connection with an investment, please see the section headed “Risk Factors” on page 22 of this Invitation Document. The historical performance of the Leon Group is no indication of its future performance. The Leon Bonds are an unsecured debt of the Company and they may not be a suitable investment for all people receiving this Invitation Document. Prospective investors should consider carefully whether an investment in the Leon Bonds is suitable for them in the light of their personal circumstances. Investors should not apply for any Leon Bonds referred to in this Invitation Document, except on the basis of the information published in this Invitation Document and the Leon Bond Instrument. The Leon Bonds are not shares and do not confer any equity interest or voting rights in the equity of any member of the Leon Group. Leon Bonds are not protected from loss by the Financial Services Compensation Scheme. Leon Bonds are not transferable or negotiable on any capital market and no application has or will be made for Leon Bonds to be admitted to listing or trading on any market. Investment in an unquoted security of this nature, being an illiquid investment, is speculative and involves a degree of risk. It will not be possible to sell or realise Leon Bonds before they mature or to obtain reliable information about the risks to which they are exposed. This Invitation Document, which is a financial promotion for the purposes of Section 21 of FSMA, is issued by the Company which accepts responsibility for the information contained herein. This Invitation Document has been approved as a financial promotion for UK publication by Reeves which is authorised by the FSA to conduct investment business. Reeves is registered on the FSA’s Register with registered number 135202. Reeves is acting exclusively for the Company in connection with the issue of the Leon Bonds and no one else, and will not regard any other person as its customer or be responsible to any other person for providing the protections afforded to customers of Reeves or for advising any such person in relation to the issue of Leon Bonds. Application should only be made on the basis of this Invitation Document and the Leon Bond Instrument. This Invitation Document does not constitute an offer of transferable securities to the public and accordingly this Invitation Document does not constitute a prospectus to which the Prospectus Rules of the FSA apply. Therefore, this Invitation Document and the Leon Bond Instrument have not been approved by the Financial Services Authority or any other regulatory body. You should ensure that you read and understand all of this Invitation Document before applying for Leon Bonds. This Invitation Document does not constitute an offer to sell, or the solicitation of an offer to buy, Leon Bonds in any jurisdiction in which such offer or solicitation is unlawful. The distribution of this Invitation Document in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this Invitation Document comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions. CONTENTS Introduction 5 About The Leon Bond 6 How To Apply 8 How The Funds Will Be Used 10 The Leon Team 12 Leon Financial Performance 16 Your Questions Answered 18 The Legals 22 Leon And Its Advisers 27 Glossary 29 5 Dear Club Member, There is something magical about fast food. As kids we were spellbound by it. John used to lie on his back and wave his arms and legs in the air with excitement before his termly visit to McDonalds. But then we grew up and realised that fast food makes you fall asleep and wake up fat. So, we asked ourselves: why can’t fast food be good food? Since we opened Leon we have been working to bring about a revolution in fast food that is fresh and full of flavour. We believe that people should be able to eat this in any major city in the world. With your incredible support and loyalty we have thrived since we first opened our Carnaby Street restaurant in July 2004. We are often sent messages asking us to open new restaurants. When we came to thinking about how we will fund this growth we wanted to allow you to benefit from a return as well as the banks. So we thought that we would see if people who ate with us would like to get involved in lending us the money to do so. A growing movement of customers and businesses are doing this. When we tested the water with approximately one quarter of our Club Members earlier this year, the response was extraordinary. We were overwhelmed by the number of people who said they would like to get involved – you can see some of their quotes on these pages. Given this response it is possible that the Bond will be subscribed above our £1.5 million target. In this case we will allocate the Bonds to those who applied earliest. This Invitation Document has been created using the input and questions of those Club Members. Best wishes, Henry and John LEON CO-FOUNDERS “The bond is a brilliant idea! It sums up what I love about Leon :)” LEON CLUB MEMBER INTRODUCTION “Now we want a whole chain of them, please” NIGEL SLATER 6 7 If you wish to invest more you can buy in multiples of any of these amounts up to a total value of £10,000. The response from those Club Members who we sounded out on the idea suggested that the Leon Bonds would be popular. It is possible the Bond will be subscribed above our £1.5 million target. In this case we will allocate the Bonds to those who applied earliest. ABOUT THE LEON BOND invest £1,500 for three years and receive 120 £eon Pounds* each year – equivalent to a net 8% return or 10% gross return for the basic rate taxpayer invest £3,000 for three years and receive 300 £eon Pounds* each year – equivalent to 10% net return or 12.5% gross return for the basic rate taxpayer invest £5,000 for three years and receive 600 £eon Pounds* each year – equivalent to a 12% net return or 15% gross return for the basic rate taxpayer Leon Bonds are essentially a very simple idea. In exchange for taking up a Leon Bond, you will receive a return in the form of £eon Pounds that can be used in Leon restaurants. You will be able to buy food, drink, cookbooks or anything else in any Leon. Your return in the form of £eon Pounds will be loaded onto electronic cards which can be used at our restaurants. You will also automatically be entered into a quarterly prize draw where you could win other edible and non-edible rewards (see below). 1 2 3 THERE ARE THREE BOND OPTIONS * if you are an income tax payer. Corporate Bondholders will receive the gross amount and will be responsible for paying their own corporation tax. The larger the denomination of the Leon Bond the higher the equivalent interest rate: You will be entitled to all of your investment back in full three years after the date of issue. (Subject to our right to repay some or all of the Leon Bonds early at any time. If we do this, we will pay you back an additional 1% in £eon Pounds on your investment when we return the money.) After the first three years, on each anniversary of the date the Leon Bonds are issued, you will be entitled to receive your investment back in full. Or you can choose to hold onto your Leon Bonds and continue to receive your interest and rewards. Leon will make the necessary basic rate income tax payments due on the £eon Pounds return on your investment in the Leon Bond – meaning that there should be no additional liability for tax if you are a basic rate UK income taxpayer. However, all applicants who are or may be liable to tax, especially higher rate taxpayers, should consult their own financial advisers as tax may be payable in some cases. • a place on Leon’s annual cookery school on the river Dart (including accommodation) • a place on week long courses at residential cookery schools run by some of our friends (at home as well as abroad) • hampers of food from artisanal British suppliers (from our suppliers or other producers we like) • a set of five sessions with our nutritionist In addition to the £eon Pounds you earn, every Leon Bond will be entered into a seasonal prize draw only available to Leon Bondholders. This will be drawn four times a year on the autumnal equinox, the winter solstice, the vernal equinox and the summer solstice. The first prize draw will be on 22nd September 2012. Each quarter there will be at least ten prizes, for example: “Great idea – power to the people, not the banks!” LEON CLUB MEMBER THE RIVER DART LEON COOKERY SCHOOL 8 9 If, after carefully reading this Invitation Document, you want to apply please make your application online here: www.leonrestaurants.co.uk/ theleonbond You can pay by debit card or bank transfer. You need to apply and pay by no later than 5pm on 31st July 2012. The response from those Club Members who we sounded out on the idea suggested that the Leon Bonds would be popular. You will be advised in writing if your application has been successful by 17th August 2012 and, in the event that your application has been successful, we will send you a Leon Bond Certificate in respect of each of your Leon Bonds and your first £eon Pound cards. If your application is not successful or we don’t raise enough to go ahead with the Leon Bonds, the amount paid by you would be repaid without interest and at your risk. HOW TO APPLY “It is a miracle. Leon is the Future. It’s one of the rare restaurants I have encountered that actually makes sense. If Leon has its way, and spreads across the nation as widely as it deserves, we will soon be much leaner, happier, cleaner, better people than we are at the moment.” GILES COREN, THE TIMES 11 We started Leon eight years ago, with a vision to make it easy for everybody to eat good food. There have always been three guiding principles behind that ambition: • make food that tastes good and does you good • make our restaurants lovely, sunny places in which to eat food and to work, both through the physical design and through the way we treat each other and the people who eat with us • to create a business that is big and strong – that is sustainable, financially but also in terms of the way we treat the people who work with us, the way we source our food, the resources we use and the way in which we engage with the communities of which we are a part These principles remain core to everything we do. We have come a long way since we opened our Carnaby Street restaurant. We run thirteen thriving restaurants (two operated by our franchise partner), we have shared a little of what we have learned through cookbooks that are published in Britain, France, Germany, Holland and America. We have helped found the not-for-profit Sustainable Restaurant Association (‘SRA’) and in 2012 Leon was awarded a two star sustainability champion rating. We want to use the money raised through the Leon Bond to pursue our vision and fund two endeavours:- OPENING NEW LEON RESTAURANTS AND CREATING JOBS THROUGH CAREFUL GROWTH SETTING UP THE LEON FOUNDATION 1 2 WE WILL ALSO PAY OFF A CONVERTIBLE LOAN To reduce our interest cost and maximise the cash we generate towards these two endeavours, we will pay off a convertible loan of £300,000 from our shareholders. In future we may use the money to set up Leon outside the UK. We may also choose to use a proportion of the money to reduce other borrowings but only where we feel that money would not be better applied to opening new restaurants or to establishing the Leon Foundation. CHEFS AT THE SRA RECEPTION AT 10 DOWNING STREET OPENING NEW LEON RESTAURANTS AND CREATING JOBS THROUGH CAREFUL GROWTH 1 Our current restaurants are trading more profitably than ever, despite the recession, and every week we get requests to open in new locations. We hope to open at least ten restaurants over the next three years, creating over 200 UK jobs. We will do this carefully, doing everything we can to make sure that each restaurant is a huge success. We intend to continue to invest a lot of time in our menu as we open new restaurants to ensure that it remains fresh and exciting. We want to continue to play our part in revitalising the British high street, designing restaurants that make sense in their local settings rather than having the one size fits all approach of many chains. “The dream is to bring really good food at a good price to as many people as possible. It makes Leon sound like a new religion. If so, it’s one that can count our judges as among its growing congregation of worshippers” JAY RAYNER, OBSERVER FOOD MONTHLY AWARDS SETTING UP THE LEON FOUNDATION 2 Our vision is to make it easy for everyone to eat good food. We are currently doing this by serving fast food, but we believe that our expertise and contacts can be of use more broadly. So we are establishing the Leon Foundation, a not-for-profit organisation with the same vision. The first step of the Leon Foundation is to set up an annual summer cookery school with chef Mitch Tonks on the Dart in Devon for children with renal illnesses, who require a very specific diet. The children we will be taking come from homes where very little or no primary cooking is done. HOW THE FUNDS WILL BE USED 12 Henry Dimbleby, CO-FOUNDER & CEO John Vincent, CO-FOUNDER Even before they met, Henry and John had both dreamed of revolutionising fast food. After studying physics and philoso- phy at Oxford, Henry started his career as a commis chef with the Michelin-starred chef Bruno Loubet (now of Bistrot Bruno Loubet on Clerkenwell Road), and used to bore on to friends working in other restaurants about his desire to democratise good food. John was born with an entrepreneur’s restless energy. At Cambridge, he set up a production company and founded an advertising agency with Richard Reed, one of the found- ers of Innocent Smoothies – and still managed to get in a few history lectures. When he came to the job fair, the only application form left was for Procter and Gamble. He got the job and soon found himself promoted to the launch of Max Factor and Oil of Olay. But John loves to eat, and all the time he was selling make-up, he was quietly filling notebooks with thoughts on how to serve good fast food. Henry, meanwhile, had given up his job as a chef – he lacked the dexterity to make ornamental carrots – and joined the Daily Telegraph as a gossip columnist and occasional feature writer. From there he joined Bain & Company, one of the top three global management consultancy firms, becoming a senior manager. A couple of years later John joined Bain too. While working together they travelled all over the country. All they found to eat on these trips was delicious but life-destroying fried chick- en or cold neon-lit sandwiches. Infuriated by the difficulty of finding tasty, nutritious food on the run, they resolved to do something about it themselves. And so Leon – named after John’s dad – was born. THE LEON TEAM Nick Evans, CHAIRMAN Nick joined Leon in 2008. After reading economics at Cambridge, he started his career working for Bain & Company overlapping with Henry and John, although they never met as Nick was busy founding Bain’s Hong Kong operations. After 5 entrepreneurial years in China, India, Indonesia, Korea and the US – whilst loving Asia he found himself missing Europe and particularly Mediterranean food, so he returned to France where he completed an MBA between trips to the sea and mountains. Nick has serial experience in growing retail, leisure and consumer businesses/brands. He led investments in Brantano UK, AS Adventure and Cotswold Outdoor Ltd. He was a founding Partner at Net Fund Europe, a Eu71.5m private equity fund. In 2003 he acquired a significant stake and became the CEO at MW Group Ltd in London (a £70m retail group consisting of Mappin & Webb, Watches of Switzerland and TM Sutton) which he successfully returned to profitability and sold to Baugur – the then owners of Goldsmiths. He currently divides his professional life between bicycles – as Chairman of Evans Cycles Ltd (who sell lovely bikes) and Chairman at Rapha Racing Ltd (who make beautiful bicycle clothing) – and delicious fast food at Leon. He is a Partner at Active Private Equity Advisory – a significant shareholder in Leon Restaurants. Brad, who recently joined Leon, is a highly regarded figure in the U.S. restaurant industry. He created dramatic growth and cultural change as CEO of the Italian chain Olive Garden, where he achieved 33 consecutive quarters of same-restaurant sales increases and built it into a highly profitable $2.7 billion business by providing genuine Italian food – when he arrived there was no olive oil in the menu. One of his favourite accomplishments was opening the Riserva di Fizzano restaurant in an 11th century village in Italy where he flew his chefs to train. After Olive Garden he orchestrated a major turnaround at Burger King as CEO, reversing the company’s downward sales spiral and doubling profits by introducing dishes built on its traditional (and healthier) “flame grilled” style. As CEO of Romano’s Macaroni Grill, he led an initiative to improve the taste of the food while removing a total of 42,000 calories from the menu, reducing fat by 59% and sodium by 46%. After that, Brad founded BLUM Enterprises, whose mission is to “provide good food for the planet” – food that tastes good, is good for you, makes you feel good, is good value and is good for the environment. It is these shared values, his friendship with John, and a love for our food, that attracted him to Leon. Brad spends his free time driving racing cars – in 2005 he was in the top ten at the 2005 Rolex 24 Hours of Daytona. We think he looks a bit like Paul Newman. Brad Blum, NON-EXECUTIVE DIRECTOR Megan started her adult life studying fine art in her home country of France, before moving to the UK to do an MA in design. She wrote her thesis on how packaging design could help people share their food and regenerate communal feasting. A stickler for function over form, she likes making things feel precious and loved. She got a part-time bar job whilst studying and loved it – delving into the world of wine, dining out culture and restaurant branding. She joined Leon as manager of Ludgate Circus “to help promote wholesome goodness” after eight straight years of dishing out alcohol. She was recently made Head of Brand. Her design sense, energy, love of food, and deep understanding of Leon are a potent mix. She loves food but can’t follow a recipe so enjoys setting the table whilst others cook. Megan Bailey, HEAD OF BRAND Simon qualified as a chartered accountant with Ernst & Young, London, in 1992. He immediately transferred to Sydney, returning to London four years later as a Senior Manager in the Banking and Capital Markets Group. In 2003 he was able to merge his career with his copious coffee habit by joining Coffee Republic as Finance Director. Working with founder Bobby Hashemi he stabilised the business and returned it to growth. In early 2007 Simon met John and Henry during the negotiations to sell a Coffee Republic on Strand, which became Leon’s fifth restaurant. Simon joined Leon in July 2007 and has helped the business grow to its current 13 restaurants. Simon is responsible for the unseen essentials of the business, including finance, property, legal affairs and the supply chain. Sadly Simon has decided to leave the Leon family at the end of the summer, having been offered the position of Finance Director with Rex Restaurants, the owner of restaurants such as The Wolseley on Piccadilly. The search to find his replacement is well advanced and we look forward to welcoming his successor to the family soon. Simon will remain a shareholder and an avid Leon consumer. Simon Drysdale, FINANCE DIRECTOR 14 15 Glenn started life in hotel management, before a stint in the US persuaded him that food businesses without accommodation were much more fun. Immediately prior to coming to join us in the spring of last year, Glenn had spent 11 years working closely with Julian Metcalfe at Itsu. As Head of Operations he grew the business from one to 32 shops (from a revenue of £2 million to over £30 million). He simplified kitchen operations, designed new restaurants, and introduced a training and development structure. He streamlined their supply chain. He also spent two years heading up their brand and food development. At Leon he runs all of the restaurants as well as coordinating our marketing (together with Megan, see above) and managing the relationship with our franchised restaurants. He is a very talented man in many areas. He is also quite busy. Toph is responsible for Leon’s food – for making it taste good and doing you good. He creates new dishes, tweaks old ones, and ensures the kitchens are able to produce them all to consistently high standards. He got his love of food from his nan at an early age. She owned a café in the east end of London and cooked amazing, simple British food. It was a secret passion for most of his childhood, as he was sport mad and it all seemed a bit girly. But he grew up and trained to be a professional chef at Westminster College. Following spells in a number of restaurants, Toph took a degree in Food Production, Development and Retailing at Bournemouth University, simultaneously setting up a hotel café bar on the seafront with friends. He developed food for all sorts of people after graduation – Marks & Spencer, Waitrose, Pizza Hut and Debenhams among them – before joining Leon in 2011. “I love the Leon value of blaming process and systems, not the people,” GLENN “I felt on joining Leon that I was coming home. Using quality, natural ingredients in simple yet flavour- packed food, with sparks of innovation and sunshine,” TOPH THE LEON TEAM Glenn Edwards, OPERATIONS DIRECTOR Christopher “Toph” Ford, HEAD OF FOOD James is responsible for making sure that all of our ingredients get to us at their best so they can get to you at their best. He was born in Yorkshire and has worked in food for ten years. Before Leon, he worked with Simon at Coffee Republic and then spent a stint at Cineworld – where he was responsible, among other things, for buying over £30 million worth of popcorn a year. He is methodical, detailed and would walk a mile to save a few pennies. Nonetheless he likes the finer things in life, loves organising parties and understands the critical difference between cost and value – essential for sourcing at Leon. James is a keen cook – a “recipe follower, not a risk-taker”. He lives in Stratford and has an obsession with the Olympics and the Westfield shopping centre that borders on the unhealthy. At Christmas he likes to work for charity and has worked for Crisis and Shelter collecting donations, working in homeless centres and helping out in the distribution centre. James Lee-French, COMMERCIAL DIRECTOR Nickie is the straight-talking Scot on the team. Like Glenn, she started her life in hotels (she has a BA from Napier University in Edinburgh no less). She joined us in 2006. She had eaten at Leon in Spitalfields and loved the food and the energy – so she got in touch. Starting as a manager at our Spitalfields restaurant, Nickie moved to Ludgate Circus before taking on all of the training across Leon earlier this year. She drills our teams with an extraordinary combination of charisma and iron-fisted discipline. Nickie Bartsch, HEAD OF TRAINING “After nearly 6 years with Leon, I enjoy the food more now than I did when I started,” NICKIE 16 17 SALES OVER THE LAST 4 YEARS LEON FINANCIAL PERFORMANCE Leon Restaurants Limited opened its first restaurant on Carnaby Street in 2004 and with the opening of the King’s Cross restaurant in March 2012 and Heathrow Terminal 3 in May 2012 there are now 12 Leons across London and one in the Bluewater shopping centre in Kent. Leon Restaurants Limited is the operating and parent company of Leon Naturally Fast Food plc which will issue the Leon Bond. The following information shows that this measured expansion has increased sales each year and has helped to improve the performance of the Leon Group. We have also seen sizeable improvements in our cash generation since 2008. The King’s Cross and Heathrow Terminal 3 Leons were opened in association with our new franchise partner, HMSHost, who are a transport location specialist operator and with whom we intend to open a number of Leons in airports and train stations in the UK. We believe that by partnering with the right franchisees who share our vision for quality, reasonably priced food produced quickly and ethically, we will grow the brand in a responsible way that benefits you, the people who eat with us, our suppliers, and those who work with us, without whom none of this would have been possible. The tables to the right bear testament to the success of our vision and demonstrate, we believe, that you can still be successful while caring about nutrition and operating in a sustainable way. We’d love you to be a part of that and we hope that you would like to also. 14 12 10 8 6 4 2 0 2008 2009 2010 2011 14 12 10 8 6 4 2 0 2008 2009 2010 2011 2012 £ MILLIONS * EBITDA stands for Earnings Before Interest Tax Depreciation and Amoritsation and is a good measure of cash flow generation. Turnover Cost of Sales Gross Profit Restaurant Operating Costs Restaurant EBITDA Administrative Expenses EBITDA (before pre-opening costs) Turnover Cost of Sales Gross Profit Restaurant Operating Costs Restaurant EBITDA Administrative Expenses EBITDA (before pre-opening costs) 7,825 2,379 5,446 5,149 297 870 (573)¹ 9,340 2,970 6,369 5,253 1,116 833 283 10,268 2.956 7,312 5,896 1,416 1,005 410 12,050 3,404 8,647 7,248 1,399 957 442 4,643 1,378 3,266 2,854 412 311 100 4,864 1,299 3,565 2,799 766 443 324 SUMMARY PROFIT & LOSS ACCOUNT FOR YEARS ENDED DECEMBER Note 1: Before Exceptionals * Extracted from audited accounts supplemented with further details. 2008* £000 2009* £000 2010* £000 2011* £000 Unaudited Management Accounts 5 Months to May 2012 £000 (200) 600 (400) (600) (800) 400 200 0 2009 2010 2011 £ THOUSANDS 2008 GROWTH IN NUMBER OF RESTAURANTS FROM 2008 TO JUNE 2012 EBITDA* OVER THE LAST 4 YEARS Unaudited Management Accounts 5 Months to May 2011 £000 You will see from the table below that the EBITDA before pre-opening costs for the period to May 2012 is over 3 times as much as for the same period last year. This is partly due to the franchise deal that we agreed with HMSHost from which we were able to recognise a one-off benefit in 2012 of £185,000 in addition to the on-going fees from the franchised restaurants. 18 19 Why do you need the money? We regularly get requests from our Club Members to open new restaurants in new areas so that is what we’d like to do in a careful and considered way. At the same time we will also establish the not-for-profit Leon Foundation, the first initiative of which will be to set up an annual cookery school on the Dart for children with renal problems and their parents. We will also use a proportion of the money to reduce our borrowings. In future we may use the money to set up Leon outside the UK. All of these initiatives will bring us closer to our vision of making it easy for everybody to eat good food. Why don’t you raise the money from the bank? We have approximately £1million in bank funding but it is quite difficult to raise funds from banks at the moment. We think that this way of raising money means we can let some of the people who eat with us regularly get involved in the business and give them the benefits, rather than handing those benefits over to a bank. What happens if the bond is oversubscribed? The response from those members of the club who we sounded out on the idea, suggested that the Leon Bonds would be popular. If people want to invest more than the £1.5 million we had hoped to raise we will allocate the Leon Bonds on the basis of who lodged their application first. At the same time, the Leon Bond is set up in such a way that we could raise more than the £1.5 million if we decided to. What happens if the bond is undersubscribed? If we don’t raise what we feel we need, we will return your money to you. Unfortunately we won’t be able to pay interest on any money we return to you but the response to date from Club Members has been so positive that we are confident we won’t have to do this. How many Leon Bonds can I have? You can apply for £10,000 of Leon Bonds in multiples of £1,500, £3,000 or £5,000. Can I change my mind? Yes, provided you do so by 14th August 2012. You have the right to contact us to cancel your application at any time on or before 14th August 2012. If you contact us before then, we will refund your online payment by crossed cheque. If you wish to cancel your application, you should write to us at Leon Restaurants Limited, St Margaret’s House, 18-20 Southwark Street, London SE1 1TJ. YOUR QUESTIONS ANSWERED What is the tax position? The £eon Pounds are taxable income for income tax and, for corporate Bondholders, corporation tax purposes. Leon is obliged to deduct basic rate income tax at source for income tax payers before crediting you with your £eon Pounds. The net figures shown in the summary of Bond options in the section “About the Leon Bond” are what you will receive. For corporate Leon Bondholders, as corporation tax payers are wholly responsible for their own tax affairs, they will be credited £eon Pounds without deduction at source by Leon. The gross figures shown in the summary of Leon Bond options are what corporate Bondholders will receive. What are the tax consequences for me as a Leon Bondholder? We will make the necessary arrangements to deduct tax at source for income tax payers at the basic rate of income tax – so you won’t have to pay anything to the tax man if you are a basic rate income tax payer. Corporate Bondholders will be responsible for the corporation tax payable on their £eon Pounds. In either case, we strongly recommend that all applicants who are or might be liable for tax, especially higher rate income tax payers and corporation tax payers, consult their own independent financial advisers as there may be some further tax payable. Would holding a Leon Bond mean that I have shares in Leon? No. A bond represents a loan to a company not shares in a company. Bonds are traditionally loans for a fixed period with a fixed rate of interest. Leon Bonds cannot be converted into shares. Leon Bonds are not secured on the assets of the company but are guaranteed by the parent company, Leon Restaurants Limited. This means if the Company is not in a position to redeem the Leon Bonds when it should, Leon will step into its shoes and redeem the Leon Bonds (to the extent it is able). Further details of the guarantee can be found at paragraph 13 of the section titled “Leon Bond Instrument” on page 25. [...]... amended) the invitation to apply for Leon Bonds, on the terms and conditions set out in this Invitation Document Leon Leon Restaurants Limited Leon Bonds or Bonds the non-convertible non-transferable bonds of the Company constituted by the Leon Bond Instrument Leon Bondholders” or “Bondholders” holders of Leon Bonds Leon Bond Instrument” the instrument of the Company and Leon (acting as... by Leon of the Outstanding Amount of any outstanding Leon Bonds, such Leon Bonds shall be deemed to have been repaid and cancelled and no further £eon Pound Cards shall be issued in respect of those Leon Bonds 13.3 Leon shall be liable as if it were a principal debtor for all monies or money’s worth payable pursuant to the Leon Bond Instrument (notwithstanding that, as between the Company and Leon, Leon. .. 2012 constituting the Leon Bonds, copies of which are available at www.leonrestaurants.co.uk/theleonbond Leon Bond Certificate” a certificate evidencing title to the Leon Bonds Leon Group” Leon and its subsidiaries (including the Company) “£eon Pounds” a notional currency equivalent, at all times, to pounds sterling which can be redeemed in Leon stores by making purchases of Leon goods and services... and Status of Leon Bonds 2.1 The aggregate principal amount of the Leon Bonds is limited to £1,500,000 save that the Directors have the right to increase the aggregate principal amount of the Leon Bonds up to £3,500,000 subject to demand 2.2 The Leon Bonds shall only be capable of being issued in multiples of £1,500, £3,000 and £5,000 in principal amount and the maximum amount of Leon Bonds that can... Leon Bonds are not transferable in whole or in part and neither the Company nor its Directors shall approve, or arrange or participate in any transfer of Leon Bonds whether by registration or otherwise Leon Bonds and so that such further issues shall be consolidated and form a single series with the then outstanding Leon Bonds 10 Transmission 13 Guarantee 10.1 Any person becoming entitled to Leon Bonds. .. can choose to hold onto your Leon Bonds Can Leon redeem my Leon Bonds? We have the right to redeem some or all of the Leon Bonds at any time (whether before or after the initial three-year term) If we do this, we will pay you back an additional 1% in £eon Pounds on the funds you invested when we return the money Can I sell or give my Leon Bond to someone else? No Leon Bonds are designed to be a personal... secured bank borrowings of the Leon Group There is no certainty or guarantee that the Company and/or Leon Restaurants Limited (who is acting as the Company’s guarantor) will be able to repay the Leon Bonds If the Company is not in a position to redeem the Leon Bonds when it should, Leon will step into its shoes and redeem the Leon Bonds (to the extent it is able) If the Company, Leon Restaurants Limited... member of the Leon Group were to become insolvent, there is a risk that some or all of the Leon Bonds will not be repaid and also a risk that some or all of the return due on the Leon Bonds will not be paid Suitability Leon Bonds may not be a suitable investment for everyone Financial Services Compensation Scheme The market Leon Bonds are not covered by the Financial Services Compensation Scheme Leon faces... holder of Leon Bonds or of any other event giving rise to the transmission of such Leon Bonds by operation of law may, upon producing such evidence as reasonably required by the Directors of the Company and surrendering the relevant Leon Bond Certificate, be registered as the holder of such Leon Bonds 13.1 Leon Restaurants Limited unconditionally and irrevocably guarantees the obligations of Leon Naturally... obtain reliable information about the risks to which Leon Bonds are exposed Use of proceeds by other companies The proceeds from the Leon Bonds may be invested or loaned to other companies within the Leon Group For example, a sister company may be established to launch Leon in America or expand the Leon franchising wing No certainty of repayment The Leon Bonds will be an unsecured debt of the Company and . (as amended) Invitation the invitation to apply for Leon Bonds, on the terms and conditions set out in this Invitation Document Leon Leon Restaurants. issue of Leon Bonds. Application should only be made on the basis of this Invitation Document and the Leon Bond Instrument. This Invitation Document