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APPENDIX 2.3

(referred to in paragraphs 2.51, 4.14, 4.24 and 5.23)

Questionnaire sent to banks, br okers and financial advisers

In February 1998 we sent the following questionnaire to 110 investment banks, brokers and financial

advisers, of which 67 responded.

Definitions

[Not reproduced here.]

Questions

Background

1. Please state the name of your firm or financial grouping. Please state the names of relevant sub-sidiaries that carry out investment banking and/or stockbroking activities. Please make clear if a

separate response is being sent by another part of your group.

2. It appears the main types of equity offering may include:New Issues by Listed Companies

Rights issuePlacing with clawback (open offer)Placing without clawbackVendor placing with clawbackVendor placing without clawbackCash underpinning to provide a cash alternative in offer.IPOs

Open price tender offerPlacingPlacing and intermediaries offerOffer for sale or subscription at a fixed priceOffer for sale or subscription by way of tenderAre there others of significance? Please explain the factors you would take into account in advis-

ing on offer structures and the circumstances in which you would recommend that each be used.

3. If your understanding of the meaning of the term underwriting differs from the definitionabove, please say what it is.

4. In which of the following business areas are you engaged:Corporate financial advice;Issuing securities: (a) equities, (b) bonds, (c) convertibles, (d) warrants;Stockbroking: (a) corporate broking, (b) institutional clients, (c) private clients;Securities trading;Fund management;Other (please specify).

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5. Of the business areas covered in question 4, which are separated by Chinese Walls? What

arrangements are in place to maintain such Chinese Walls?

Investment banking market

6. To which London listed companies have you (or firms you have taken over) given financialadvice in the last five years as:

(a)financial adviser specified in the report and accounts;(b)corporate broker?Please indicate if the position is held jointly with one or more other firms.

7. How long have you (or firms you have taken over) held the position with respect to each of thecompanies mentioned in question 6? Please state the number of years or more than 10 years.

8. For each of the listed companies to which you (or a firm you have taken over) were appointed,within the last five years, as

(a)financial adviser(b)corporate brokerplease explain how you obtained the appointment (eg by formal competition, personal approach

by the company, marketing initiative by you).

9.Which listed companies have replaced you (or a firm you have taken over) with another invest-ment bank, within the last five years, as

(a)financial adviser(b)corporate broker?Please also give the date on which this occurred. What reasons were given for your replacement

by another firm?

10. Do you actively market your services to firms who you know to be clients of other firms?11. What services do you provide in your role as

(a)financial adviser(b)corporate broker?

12. Do you lose or win business on the basis of fees or commission?13. How do you charge specifically for financial advice provided in connection with an equity

offering? How is this charge calculated?

14. How do you charge for the other advisory services you provide as(a)financial adviser(b)corporate broker(for example: annual charge, charge per person-hour worked, through charges for transactions)?

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15. Who do you regard as your four closest competitors with specific regard to the provision offinancial advice and corporate broking services to London listed companies?

16. Apart from the regulatory requirements, what in your view are the entry requirements for entryinto the market as a

(a)financial adviser(b)corporate brokerserving

i. a typical FTSE 100 companyii.a typical Mid-Cap companyiii.a typical smaller listed companyiv.a typical small company seeking a listing for the first time?

17. What sources of advice, in addition to your own, do your client companies have on mattersrelating to equity issues (eg non-executive directors)? What matters are particularly contentious

and how often do companies seek a second opinion?

18. When acting as adviser on an equity offering, how do you choose the offer price to recommendin:

(a)Pre-emptive New Issues by Listed Companies;(b)Non pre-emptive New Issues by Listed Companies;(c)IPOs?If appropriate, please distinguish between your advice as a bank and as a broker. Please relate

to one or more recent issues (if necessary on an anonymous basis).

19. Have any of your corporate clients ever considered with you issuing equity in the UK anddecided not to because of the cost or technical difficulty of doing so? If so, please give details.

20. Are there any features of the UK arrangements for issuing equity which restrict the ability ofcompanies to raise capital or make it more expensive than it need be?

Data on equity offerings

[Not reproduced here.]

General questions on under writing

26. How should we understand the lead underwriters fee: is it purely compensation for the risk thatthe offering cannot be sub-underwritten or does it also remunerate services provided by the lead

underwriter and, if so, which services?

27. Which services are remunerated by the brokers commission for distributing underwriting?28. How efficient is the market for nil paid rights? Is there any general trend in the price of nil paid

rights over the course of the period of trading in nil paid?

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29. If you have acted as a broker to a sub-underwritten equity offering or offerings in the last threeyears:

(a)What are your criteria for selecting those to be offered the sub-underwriting and the amountof sub-underwriting that each was offered?

(b)How often does the final allocation differ significantly from the initial allocation?(c)What reasons are most frequently given when offers of sub-underwriting are refused?(d)To what extent, if any, is the issuing company involved in the decision to whom to offer

sub-underwriting?

If appropriate, please illustrate with respect to a typical recent issue or issues (if necessary on an

anonymous basis).

30. If you have acted as a broker to a sub-underwritten equity offering or offerings in the last threeyears, would you offer sub-underwriting to an institution that had previously refused to sub-

underwrite an offering?

31. Have you participated (as lead underwriter or broker) in issues with underwriting at the tra-ditional standard fee rate of 2 per cent plus 0.125 per cent for every seven days or part thereof

beyond the initial 30 days since the Stakis issue (announced on 31 October 1996). If so, why

was the underwriting not tendered?

32. Apart from tendering for sub-underwriting, what are the most significant recent changes in theway that equity issues are conducted? Do you expect these changes to continue?

33. What effect on the level of sub-underwriting fees do you expect tendering to have in themedium term?

34. What, if anything, would encourage more sub-underwriting to be tendered in future?35. To what extent do you expect the standard 2 per cent fee for underwriting to be charged in

future equity issues?

36. How would you define a deep discounted rights issue? Why is deep discounting so rarely usedin rights issues?

37. Have you ever advised an issuing company against a deep discount in a rights issue in the lastfive years? If so, for what reason?

Accounting data

38. Is underwriting treated as a separate profit centre?39. Please provide a copy of the accounts of the entity within the group undertaking underwriting

activities for the years 1995 to 1997, together with a segmental breakdown indicating the size of

underwriting in comparison with other activities.

40. What accounting records are kept to record the financial outcome of the underwriting/sub-underwriting activities undertaken?

41. Please provide a statement of the results of underwriting over the three years 1995 to 1997 (orthe three financial years of the company ending nearest 31 December), showing fees received,

direct and indirect costs. Please indicate how costs have been allocated for this purpose.

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42. If relevant, please indicate whether a cost of capital is involved, how it is measured and whetheraccount is taken of it in the statements of underwriting results (question 41).

43. Where the outcome of an unsuccessful issue (acceptance of shares underwritten) is treated as acost when and how is that cost measured?

44. Has the pattern of underwriting costs changed over the preceding five years as a result ofchanges to capital raising practice in the City? For instance has the advent of tendering for sub-

underwriting on some issues involved more or less work in house?

45. How might the pattern of costs change in future, for instance if underwriting/initial sub-underwriting took place at varying rates rather than by reference to a conventional scale of

commission?

46. What changes would be made to direct costs if it was known that the scale of underwriting wasto change significantly in the following yearfor instance a doubling of the level of activity or

alternatively withdrawal from the activity?

Information on other countries (USA, Australia, Germany, France, Switzerland, Japan)

47. In the other countries mentioned above in which you issue equity, does the method of raisingcapital through

New Issues by Listed CompaniesIPOsdiffer from that in the UK and, if so, how?

48. For these other countries, please provide data for equity offerings in which you have beeninvolved during the calendar year 1997.

[Details not reproduced here.]

49. Is there any other information you would like to give us?