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IMPORTANT: You must read the following disclaimer before continuing. This electronic transmissionapplies to the attached document and you are therefore advised to read this disclaimer carefully before reading,accessing or making any other use of the attached prospectus (the ‘‘Prospectus’’) relating to Virgin MoneyHoldings (UK) plc (the ‘‘Company’’) dated 13 November 2014 accessed from this page or otherwise received asa result of such access. In accessing the attached document, you agree to be bound by the following terms andconditions, including any modifications to them from time to time, each time you receive any information fromus as a result of such access. You acknowledge that this electronic transmission and the delivery of the attacheddocument is confidential and intended for you only and you agree you will not forward, reproduce, copy,download or publish this electronic transmission or the attached document whether electronically or otherwise toany other person. The Prospectus has been prepared solely in connection with the proposed offer to certaininstitutional and professional investors (the ‘‘Offer’’) of ordinary shares (the ‘‘Ordinary Shares’’) of theCompany. The Prospectus has been published in connection with the admission of the Ordinary Shares to thepremium listing segment of the Official List of the UK Financial Conduct Authority (the ‘‘Financial ConductAuthority’’) and to trading on the London Stock Exchange plc’s main market for listed securities (together,‘‘Admission’’). The Prospectus has been approved by the Financial Conduct Authority as a prospectus preparedin accordance with the Prospectus Rules made under section 73A of the FSMA. The Prospectus has beenpublished and is available from the Company’s registered office and on the Company’s website athttp://uk.virginmoney.com. Pricing information and other related disclosures have also been published on thiswebsite. Prospective investors are advised to access such information prior to making an investment decision.

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CANADIAN INVESTORS ARE ADVISED THAT THE DOCUMENT ATTACHED HERETO MAY ONLYBE TRANSMITTED IN THOSE JURISDICTIONS IN CANADA AND TO THOSE PERSONS WHEREAND TO WHOM THEY MAY BE LAWFULLY OFFERED FOR SALE, AND THEREIN ONLY BYPERSONS PERMITTED TO SELL SUCH SECURITIES. THE DOCUMENT ATTACHED HERETO ISNOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN ADVERTISEMENT OR APUBLIC OFFERING IN CANADA. NO SECURITIES COMMISSION OR SIMILAR AUTHORITY INCANADA HAS REVIEWED OR IN ANY WAY PASSED UPON THE DOCUMENT ATTACHEDHERETO OR THE MERITS OF THE SECURITIES DESCRIBED THEREIN AND ANYREPRESENTATION TO THE CONTRARY IS AN OFFENCE. THE DISTRIBUTION OF THESECURITIES CONTAINED IN THE DOCUMENT ATTACHED HERETO IS BEING MADE ON APRIVATE PLACEMENT BASIS ONLY AND IS EXEMPT FROM THE REQUIREMENT THAT THECOMPANY PREPARE AND FILE A PROSPECTUS WITH THE RELEVANT CANADIAN SECURITIESREGULATORY AUTHORITIES.

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Confirmation of Your Representation: This electronic transmission and the attached document is delivered toyou on the basis that you are deemed to have represented to Goldman Sachs International, Merrill LynchInternational, Barclays Bank PLC, Citigroup Global Markets Limited and Stifel Nicolaus Europe Limited(trading as Keefe, Bruyette & Woods) (collectively, the ‘‘Banks’’) and the Company and each of the SellingShareholders (as defined in Part XX ‘‘Definitions’’) that (i) you are (a) a QIB acquiring such securities for itsown account or for the account of another QIB or (b) acquiring such securities in ‘‘offshore transactions’’, asdefined in, and in reliance on, Regulation S under the U.S. Securities Act; (ii) if you are in the United Kingdom,you are a relevant person, and/or a relevant person who is acting on behalf of, relevant persons in the UnitedKingdom and/or Qualified Investors to the extent you are acting on behalf of persons or entities in the UnitedKingdom or the EEA; (iii) if you are in any member state of the European Economic Area other than theUnited Kingdom, you are a Qualified Investor and/or a Qualified Investor acting on behalf of, QualifiedInvestors or relevant persons, to the extent you are acting on behalf of persons or entities in the EEA or theUnited Kingdom; and (iv) you are an institutional investor that is eligible to receive this document and youconsent to delivery by electronic transmission.

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You are reminded that you have received this electronic transmission and the attached document on the basisthat you are a person into whose possession this document may be lawfully delivered in accordance with the lawsof the jurisdiction in which you are located and you may not nor are you authorised to deliver this document,electronically or otherwise, to any other person. This document has been made available to you in an electronicform. You are reminded that documents transmitted via this medium may be altered or changed during theprocess of electronic transmission and consequently none of the Company, the Selling Shareholders, theOverallotment Shareholders, the Banks nor any of their respective affiliates accepts any liability or responsibilitywhatsoever in respect of any difference between the document distributed to you in electronic format and thehard copy version. By accessing the attached document, you consent to receiving it in electronic form. None ofthe Banks nor any of their respective affiliates accepts any responsibility whatsoever for the contents of theattached document or for any statement made or purported to be made by it, or on its behalf, in connection withthe Company or the Ordinary Shares. To the fullest extent permitted by law, the Banks and each of theirrespective affiliates each accordingly disclaims all and any liability whether arising in tort, contract or otherwisewhich they might otherwise have in respect of such document or any such statement. No representation orwarranty express or implied, is made by any of the Banks or any of their respective affiliates as to the accuracy,completeness, reasonableness, verification or sufficiency of the information set out in the attached document.

The Banks are acting exclusively for the Company, the Institutional Selling Shareholders and the EBT and noone else in connection with the Offer. They will not regard any other person (whether or not a recipient of thisdocument) as their client in relation to the Offer and will not be responsible to anyone other than the Company,the Institutional Selling Shareholders and the EBT for providing the protections afforded to their respectiveclients nor for giving advice in relation to the Offer or any transaction or arrangement referred to the attacheddocument.

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ProspectusNovember 2014

Virgin M

oney Holdings (U

K) plc P

rospectus – Novem

ber 20

14

This document (the ‘‘Prospectus’’) comprises a prospectus for the purposes of Article 3 of EuropeanUnion Directive 2003/71/EC, as amended (the ‘‘Prospectus Directive’’) relating to Virgin Money Holdings(UK) plc (the ‘‘Company’’) prepared in accordance with the Prospectus Rules of the Financial ConductAuthority (the ‘‘FCA’’) made under section 73A of the Financial Services and Markets Act 2000 (asamended) (the ‘‘FSMA’’). The Prospectus has been filed with the FCA and has been made available to thepublic in accordance with the Prospectus Rules.

Application has been made to the FCA for all of the Ordinary Shares of the Company, issued and to beissued, to be admitted to the premium listing segment of the Official List maintained by the FCA and toLondon Stock Exchange plc (the ‘‘London Stock Exchange’’) for all of the Ordinary Shares to be admittedto trading on the London Stock Exchange’s main market for listed securities (the ‘‘Main Market’’)(together, ‘‘Admission’’). Conditional dealings in the Ordinary Shares are expected to commence on theMain Market of the London Stock Exchange at 8.00 a.m. on 13 November 2014. It is expected thatAdmission will become effective and that unconditional dealings in the Ordinary Shares will commence at8.00 a.m. on 18 November 2014. All dealings in Ordinary Shares before the commencement ofunconditional dealings will be of no effect if Admission does not take place and such dealings will be at thesole risk of the parties concerned. No application is currently intended to be made for the Ordinary Sharesto be admitted to listing or trading on any other exchange.

The directors and the proposed director of the Company, whose names appear on page 48 of thisProspectus (the ‘‘Directors’’ and the ‘‘Proposed Director’’ respectively), and the Company acceptresponsibility for the information contained in this Prospectus. To the best of the knowledge of theCompany, the Directors and the Proposed Director (each of whom has taken all reasonable care to ensurethat such is the case), the information contained in this Prospectus is in accordance with the facts and doesnot omit anything likely to affect the import of such information.

Prospective investors are advised to examine all the risks that might be relevant in connection with aninvestment in the Ordinary Shares. Investors should read the entire document and, in particular, Part II:‘‘Risk Factors’’ for a discussion of certain factors that should be considered in connection with an investmentin the Ordinary Shares.

VIRGIN MONEY HOLDINGS (UK) PLC

(Incorporated under the Companies Act 1985 and registered in England and Wales with registerednumber 03087587)

Offer of 110,400,314 Ordinary Shares of 0.01 pence eachat an Offer Price of 283 pence per Ordinary Share

and admission to the premium listing segment of the Official Listand to trading on the London Stock Exchange

Joint Sponsors, Joint Global Co-ordinators and Joint Bookrunners

BofA Merrill Lynch Goldman Sachs International

Joint Bookrunners

Barclays Citigroup

Joint Lead Manager

Keefe, Bruyette & WoodsA Stifel Company

ISSUED ORDINARY SHARE CAPITAL IMMEDIATELY FOLLOWING ADMISSION

Nominal Value of IssuedNumber Ordinary Shares

441,600,856 £44,160

Issued and fully paid Ordinary Shares of 0.01 pence each

The Company is offering 53,003,534 new Ordinary Shares (the ‘‘New Ordinary Shares’’) and the SellingShareholders are selling in aggregate 57,396,780 existing Ordinary Shares (the ‘‘Existing OrdinaryShares’’, and together with the New Ordinary Shares, the ‘‘Offer Shares’’) under the Offer. In addition, upto a further 11,040,031 Ordinary Shares (representing up to 10 per cent. of the total number of OfferShares) (the ‘‘Over-allotment Shares’’) are being made available by the Over-allotment Shareholderspursuant to the Over-allotment Option (as defined herein). The Company will not receive any of theproceeds of any sale of Existing Ordinary Shares or Over-allotment Shares (if any), all of which will bereceived by the Selling Shareholders. The Offer is conditional, inter alia, on Admission taking place on orbefore 8.00 a.m. on 18 November 2014 (or such later time and/or date as the Company, the MajorShareholders and the Joint Global Co-ordinators (on behalf of the Banks) may agree). The New OrdinaryShares will, upon Admission, rank equally in all respects with the Ordinary Shares in issue prior toAdmission, including the right to receive all dividends or other distributions declared, made or paid on theOrdinary Shares after Admission. The Offer Shares are not being made generally available to the public inconjunction with the Offer.

BofA Merrill Lynch, Goldman Sachs International, Barclays Bank plc, Citigroup Global Markets Limitedand Stifel Nicolaus Europe Limited (trading as Keefe, Bruyette & Woods) (together, the ‘‘Banks’’) are(i) authorised and regulated by the FCA in the United Kingdom and (ii) authorised by the PRA (otherthan Stifel Nicolaus Europe Limited (trading as Keefe, Bruyette & Woods)). The Banks are actingexclusively for the Company, the Institutional Selling Shareholders and the EBT and no one else inconnection with the Offer. They will not regard any other person (whether or not a recipient of thisProspectus) as their respective clients in relation to the Offer and will not be responsible to anyone otherthan the Company, the Institutional Selling Shareholders and the EBT for providing the protectionsafforded to their respective clients nor for providing advice in relation to the Offer or any transaction orarrangement or other matter referred to in this Prospectus.

The Banks and any of their respective affiliates may have engaged in transactions with, and providedvarious investment banking, financial advisory and other services for, the Selling Shareholders and theCompany for which they would have received customary fees.

Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Banks by theFSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdictionwhere the exclusion of liability under the relevant regulatory regime would be illegal, void orunenforceable, none of the Banks accepts any responsibility whatsoever for, or makes any representationor warranty, express or implied, as to the contents of this document or for any other statement made orpurported to be made by it, or on its behalf, in connection with the Company, the Ordinary Shares or theOffer and nothing in this Prospectus will be relied upon as a promise or representation in this respect,whether or not related to the past or future. Each of the Banks accordingly disclaims all and anyresponsibility or liability, whether arising in tort, contract or otherwise (save as referred to above), which itmight otherwise have in respect of this Prospectus or any such statement.

Recipients of this Prospectus are authorised solely to use it for the purpose of considering the acquisitionof the Offer Shares and may not reproduce or distribute this Prospectus, in whole or in part, and may notdisclose any of the contents of this Prospectus or use any information herein for any purpose other thanconsidering an investment in the Offer Shares. Such recipients of this Prospectus agree to the foregoing byaccepting delivery of this Prospectus.

This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or anysolicitation of any offer to purchase or subscribe for, any securities other than the securities to which itrelates or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for,such securities by any person in any circumstances in which such offer or solicitation is unlawful.

Prior to making any decision as to whether to invest in Ordinary Shares, prospective investors should readthis Prospectus in its entirety. In making an investment decision, each investor must rely on their ownexamination, analysis and enquiry of the Company and the terms of the Offer, including the merits andrisks involved.

The investors also acknowledge that: (i) they have not relied on the Banks or any person affiliated with theBanks in connection with any investigation of the accuracy of any information contained in this Prospectusor their investment decision; and (ii) they have relied only on the information contained in this document.

No person has been authorised to give any information or make any representations other than thosecontained in this Prospectus and, if given or made, such information or representations must not be relied

i

on as having been so authorised. Neither the delivery of this Prospectus nor any subscription or sale madeunder it shall, under any circumstances, create any implication that there has been no change in the affairsof the Company since the date of this document or that the information in it is correct as of any subsequenttime.

None of the Directors or the Proposed Director, the Company, the Selling Shareholders, the Banks, or anyof their respective representatives, is making any representation to any prospective investor of theOrdinary Shares regarding the legality of an investment in the Ordinary Shares by such prospectiveinvestor under the laws applicable to such prospective investor. The contents of this Prospectus should notbe construed as legal, financial or tax advice. Each prospective investor should consult his, her or its ownlegal, financial or tax adviser for legal, financial or tax advice.

Notice to overseas shareholders

The distribution of this Prospectus and the offer of the Ordinary Shares in certain jurisdictions may berestricted by law. Other than in the United Kingdom, no action has been or will be taken to permit thepossession, issue or distribution of this Prospectus (or any other offering or publicity materials orapplication form(s) relating to the Ordinary Shares) in any jurisdiction where action for that purpose maybe required or doing so is restricted by law. Accordingly, neither this Prospectus nor any advertisement norany other offering material may be distributed or published in any jurisdiction except under circumstancesthat will result in compliance with any applicable laws and regulations. Persons into whose possession thisProspectus comes should inform themselves about and observe any such restrictions. Any failure to complywith these restrictions may constitute a violation of the securities laws of any such jurisdiction.

In addition, the Ordinary Shares are subject to restrictions on transferability and resale in certainjurisdictions and may not be transferred or resold except as permitted under applicable securities laws andregulations. Investors should be aware that they may be required to bear the financial risk of thisinvestment for an indefinite period of time. Any failure to comply with these restrictions may constitute aviolation of the securities laws of any such jurisdiction. Further information with regard to the restrictionson the distribution of this Prospectus and the offering, sale and transfer and resale of the Ordinary Sharesis set out at paragraph 15 (Selling restrictions) in Part VI: ‘‘Details of the Offer’’. Each subscriber forOrdinary Shares will be deemed to have made the relevant representations made therein.

The Ordinary Shares have not been, and will not be, registered under the US Securities Act of 1933, asamended (the ‘‘Securities Act’’) or under the applicable securities laws or regulations of any state of theUnited States, or under the applicable securities laws of Australia, Canada, Japan or South Africa and maynot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, theregistration requirements of the Securities Act and in compliance with any applicable state securities laws.Subject to certain exemptions, the Ordinary Shares may not be offered or sold in the United States,Australia, Canada, Japan or South Africa or to or for the account or benefit of any national, resident orcitizen of Australia, Canada, Japan or South Africa. The Banks may offer and sell or arrange for the offerand sale of the Ordinary Shares in the United States only to persons reasonably believed to be QualifiedInstitutional Buyers (‘‘QIBs’’) as defined in and pursuant to Rule 144A under the Securities Act(‘‘Rule 144A’’) in reliance on the exemption from the registration requirements of the Securities Actprovided by Rule 144A or another exemption from, or in a transaction not subject to, the registrationrequirements of the Securities Act in offshore transactions outside the United States in reliance onRegulation S under the Securities Act (‘‘Regulation S’’). For a description of these and certain furtherrestrictions on offers, sales and transfers of the Ordinary Shares and the distribution of this Prospectus, seePart VI: ‘‘Details of the Offer’’.

This Prospectus is being furnished by the Company in connection with an offering exempt from theregistration requirements of the Securities Act, solely for the purpose of enabling a prospective investor toconsider the subscription for or acquisition of Ordinary Shares described therein. The informationcontained in this Prospectus has been provided by the Company and other sources identified herein ortherein. This Prospectus is being furnished on a confidential basis only to persons reasonably believed to beQIBs in the United States. Any reproduction or distribution of this document, in whole or in part, in theUnited States and any disclosure of its contents or use of any information herein in the United States forany purpose other than in considering an investment by the recipient in the Ordinary Shares offeredhereby or thereby is prohibited. Each potential investor in the Ordinary Shares, by accepting delivery ofthis document, agrees to the foregoing.

ii

The Ordinary Shares offered in the Offer have not been approved or disapproved by the US Securities andExchange Commission, any state securities commission in the United States or any other US regulatoryauthority nor have such authorities passed upon or endorsed the merits of the offering of the OrdinaryShares or the accuracy or adequacy of this document. Any representation to the contrary is a criminaloffence in the United States.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCEHAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES(‘‘RSA-421-B’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY ISEFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRECONSTITUTES A FINDING BY THE SECRETARY OF STATE IN NEW HAMPSHIRE THAT ANYDOCUMENT FILED UNDER RSA-421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHERSUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR ASECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIREHAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED ORGIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE,OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANYREPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

Dated 13 November 2014.

iii

TABLE OF CONTENTS

Part I. Summary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Part II. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Part III. Directors, Proposed Director, Secretary, Registered and Head Office and Advisers . 48Part IV. Expected Timetable of Principal Events and Offer Statistics . . . . . . . . . . . . . . . . . 50Part V. Presentation of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Part VI. Details of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Part VII. Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Part VIII. Information on Virgin Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105Part IX. Directors, Senior Managers and Corporate Governance . . . . . . . . . . . . . . . . . . . . 152Part X. Regulatory Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160Part XI. Capitalisation and Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173Part XII. Selected Financial Information and Key Performance Indicators . . . . . . . . . . . . . . 174Part XIII. Operating and Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183Part XIV. Selected Statistical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232Part XV. Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235Part XVI. Historical Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248Part XVII. Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424Part XVIII. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427Part XIX. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435Part XX. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487

iv

PART I

SUMMARY INFORMATION

Summaries are made up of disclosure requirements known as ‘‘Elements’’. These Elements are numberedin Sections A to E (A.1 to E.7).

This summary contains all the Elements required to be included in a summary for this type of security andissuer. Because some Elements are not required to be addressed, there may be gaps in the numberingsequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securityand issuer, it is possible that no relevant information can be given regarding that Element. In this case, ashort description of the Element is included in the summary with the mention of ‘‘not applicable’’.

SECTION A—INTRODUCTION AND WARNINGS

A.1 Warning to investors

This summary should be read as an introduction to this Prospectus. Any decision to invest in theOrdinary Shares should be based on consideration of this Prospectus as a whole by the investor.Where a claim relating to the information contained in this Prospectus is brought before a court,the plaintiff investor might, under the national legislation of the Member States, have to bear thecosts of translating this Prospectus before the legal proceedings are initiated. Civil liability attachesto the Directors, the Proposed Director and the Company, who are responsible for this summaryincluding any translation thereof, but only if this summary is misleading, inaccurate or inconsistentwhen read together with the other parts of this Prospectus or it does not provide, when readtogether with the other parts of this Prospectus, key information in order to aid investors whenconsidering whether to invest in the Ordinary Shares.

A.2 Consent for intermediaries

Not applicable: the Company is not engaging any financial intermediaries for any resale ofsecurities or final placement of securities after publication of this Prospectus.

SECTION B—COMPANY

B.1 Legal and commercial name

The legal and commercial name of the Company is Virgin Money Holdings (UK) plc.

B.2 Domicile, legal form and country of incorporation of the Company

The Company is domiciled in the United Kingdom (‘‘UK’’) and is a public limited company,incorporated in England and Wales on 4 August 1995 with its registered office situated in England.The Company operates under the Companies Act 2006 (the ‘‘Act’’).

B.3 Current operations and principal activities

Virgin Money is a strong, uncomplicated retail only UK bank, primarily focused on providingresidential mortgages, savings and credit cards, along with a range of complementary financialproducts including investments and insurance.

Virgin Money has approximately 2.8 million customers and provides access to its products andservices to customers through a range of channels, including digital (online and mobile),intermediaries, call centres and a national network of 75 stores and five customer lounges, as well asaccess to certain banking services through the Post Office’s 11,500 branches. Virgin Money’soperations are centred in Gosforth where, as at 30 June 2014, approximately 1,800 of the 2,800Virgin Money employees were based, with the remainder of Virgin Money’s employees located inLondon, Edinburgh, Norwich, Chester and Milton Keynes and across the network of stores andlounges. As at 30 June 2014, Virgin Money had customer deposits of £21.1 billion and loans andadvances to customers of £21.0 billion.

1

B.4a Significant recent trends

Virgin Money’s results and those of its competitor retail banks are directly and indirectly affected bya number of trends.

In general, Virgin Money and its competitors are affected by the uncertain and unpredictablecondition of the UK economy. During the recent global financial crisis, the UK economyexperienced turbulence and recession which adversely affected, among other things, the state of thehousing market, market interest rates, levels of unemployment, the cost and availability of creditand the liquidity of the financial markets. While economic indicators in the UK have improvedsince early 2013, the outlook for the UK economy remains somewhat uncertain. As Virgin Money’scustomer revenue is derived almost entirely from customers based in the UK, Virgin Money hasbeen, and continues to be, affected by general economic conditions in the UK.

In addition, Virgin Money and its competitors have been affected by recent regulatorydevelopments. Virgin Money and its competitors are subject to a comprehensive and fluidregulatory environment, including (i) prudential regulations, pursuant to which Virgin Money andits competitors are required, among other things, to maintain adequate capital and liquidityresources and to satisfy specified capital and liquidity ratios; (ii) conduct regulations, includingthose relating to the mis-selling of financial products; and (iii) banking reform initiatives, includinga bail-in option under the Banking Act 2009 for resolving failing banks.

The UK has a large and diverse financial services sector. Virgin Money’s main competitors areother providers of personal financial services in the UK. These include mainly other banks, buildingsocieties and insurance companies. New providers, including Virgin Money, have emerged ascompetitors in key areas of the UK personal financial services market. However, the UK retailbanking market is highly concentrated and as a result any actions taken by the large high streetbanks tend to have a strong impact on the overall competitive dynamics of the market.

Participants in the UK retail banking market compete across a wide range of retail bankingproducts and services. UK retail banks compete on the basis of price as well as competing on thebasis of their customer offerings across distribution channels and products. Pricing is driven bystructural factors including UK monetary policy, regulation, market liquidity and the underlyingperformance of the economy.

The overall size of the new residential mortgage market in the UK has shrunk considerably since2007 when gross residential mortgage lending totalled £363 billion. For 2013, the equivalent figurewas £176 billion in each case according to Bank of England data. The rebalancing of the UKmortgage market from its 2007 high is a result of a number of factors, including increasedregulation, a relatively constrained wholesale funding market, tighter lending criteria, customersdeleveraging and prolonged economic uncertainty arising out of the global financial and Europeansovereign debt crises. As economic conditions continue to recover, the UK mortgage market isexpected to expand. However, the nature of competition in this market is essentially unchanged aslenders seek to defend their existing stock of balances while competing for new lending. Newlending is driven by first-time buyers or next-time buyers changing homes and by remortgages orextensions of existing mortgages. In most cases this is for residential purposes, although thepopularity of buy-to-let has grown rapidly in recent years.

Over the 10 years to 2008, the UK retail deposit market became an increasingly commoditisedmarket driven by price, particularly for the flow of new money that generally seeks the mostattractive rates available. The major retail banks with large branch networks and PCA businessesgenerally benefitted from a lower cost of funds as a consequence of their ‘‘relationship banking’’model. However the bank failures of 2007 and 2008 appear to have led customers to spread theirsavings across a number of different providers, particularly those consumers with high balances whoseek to take advantage of the Financial Services Compensation Scheme (‘‘FSCS’’) protection byspreading their savings across a number of providers so as to ensure that they can benefit from themaximum levels of compensation available under the scheme, which is limited to a certain amountper firm. This trend of spreading savings across a number of savings providers has increasedfollowing increased awareness of the FSCS and its thresholds for protection, with the consequencethat smaller financial institutions, such as Virgin Money, are a destination for these secondary,FSCS driven, deposits.

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B.5 Group structure

The Company is the parent company of the Group, which carries on a retail banking businessoperating in the UK. The Group comprises eleven wholly owned subsidiaries of theCompany: Virgin Money Unit Trust Managers Limited, Virgin Money Personal Financial ServicesLimited, Virgin Money Management Services Limited, Church House Trust Limited (formerlyVirgin Bank Limited), Virgin Money plc, Virgin Money Giving Limited and Challenger (Norwich)Limited. Virgin Money Nominees Limited is a wholly owned subsidiary of Virgin Money Unit TrustManagers Limited. Virgin Money Cards Limited, Northern Rock (Guernsey) Limited and NorthernRock Limited are wholly owned subsidiaries of Virgin Money plc.

B.6 Shareholders

At the date of this Prospectus, each of the following persons is, and immediately followingAdmission will be, interested in 3 per cent. or more of the Company’s issued share capital:

Interest followingAdmission assuming no

Ordinary Shares to be sold exercise of theSelling Shareholder(1) in the Offer Over-allotment Option

Virgin Financial Investments Limited . . . . . . . . . . 24,514,092 35.3%WLR IV VM LLC . . . . . . . . . . . . . . . . . . . . . . . 7,414,506 9.9%WLR IV VM II LLC . . . . . . . . . . . . . . . . . . . . . 17,888,777 23.8%Stanhope Investments . . . . . . . . . . . . . . . . . . . . . 3,325,051 4.4%

Note:

(1) Virgin Financial Investments Limited, WLR IV VM LLC and WLR IV VM II LLC together being the ‘‘MajorShareholders’’ and the Major Shareholders, together with Stanhope Investments, being the ‘‘Over-allotmentShareholders.’’

In addition, a number of Ordinary Shares representing 10 per cent. of the Offer Size (representing2.5 per cent. of the issued Ordinary Share capital of the Company on Admission) may be sold by theOver-allotment Shareholders pursuant to the Over-allotment Option. There are relationshipagreements in place between the Company and Virgin Financial Investments Limited and theCompany, WLR IV VM LLC and WLR IV VM II LLC that will take effect from Admission. TheOrdinary Shares owned by the Selling Shareholders after Admission will rank pari passu with otherOrdinary Shares in all respects.

B.7 Selected historical key financial information

The selected historical key financial information set out below has been extracted without materialadjustment from the audited consolidated financial statements of the Group for the three yearsended 31 December 2011, 2012 and 2013 and the six months ended 30 June 2014. The unauditedfinancial statements for the 6 months ended 30 June 2013 have been included for comparativepurposes only.

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Consolidated Income StatementSix months ended Year ended

30 June 31 December

2014 2013 2013 2012 2011

(unaudited)£m

Interest income . . . . . . . . . . . . . . . . . . . . . 379.8 375.7 788.8 633.3 3.8Interest expense . . . . . . . . . . . . . . . . . . . . (207.1) (244.6) (477.6) (498.0) (2.1)Net interest income . . . . . . . . . . . . . . . . . . 172.7 131.1 311.2 135.3 1.7Fee and commission income . . . . . . . . . . . 18.5 17.4 38.0 21.9 2.2Fee and commission expense . . . . . . . . . . . (3.4) (2.7) (5.2) (4.0) —Other operating income . . . . . . . . . . . . . . . 14.3 12.0 29.3 90.6 123.4Gains on sale of property, plant and

equipment . . . . . . . . . . . . . . . . . . . . . . . — — — 0.1 —Gains on sale of investment securities . . . . 7.8 6.6 9.3 16.9 —Fair value gains/(losses) on financial

instruments . . . . . . . . . . . . . . . . . . . . . . 0.1 (0.7) (3.6) 0.8 —Total other income . . . . . . . . . . . . . . . . . . 37.3 32.6 67.8 126.3 125.6Total income . . . . . . . . . . . . . . . . . . . . . . . 210.0 163.7 379.0 261.6 127.3Administrative expenses . . . . . . . . . . . . . . . (138.1) (128.7) (274.2) (224.8) (79.9)Depreciation and amortisation . . . . . . . . . . (7.1) (6.4) (11.5) (16.7) (3.3)Strategic transaction costs . . . . . . . . . . . . . (3.7) (1.5) (3.1) (13.0) (16.0)Total operating expenses . . . . . . . . . . . . . . (148.9) (136.6) (288.8) (254.5) (99.2)Impairment losses on loans and advances . . (11.3) (16.0) (50.7) (3.0) —FSCS levies . . . . . . . . . . . . . . . . . . . . . . . (16.6) (13.4) (13.4) (6.7) —Impairment of intangible assets . . . . . . . . . — — (33.9) — (4.6)Impairment of property, plant and

equipment . . . . . . . . . . . . . . . . . . . . . . . — — (0.7) — —Profit/(loss) before taxation from operating

activities . . . . . . . . . . . . . . . . . . . . . . . . 33.2 (2.3) (8.5) (2.6) 23.5Gains on sale of subsidiary . . . . . . . . . . . . — 202.0 203.4 — —Contingent consideration . . . . . . . . . . . . . . (26.0) — (9.0) 13.0 —Negative goodwill credit . . . . . . . . . . . . . . — — — 149.5 —(Loss)/profit for the period of the disposal

group . . . . . . . . . . . . . . . . . . . . . . . . . . (0.5) — (0.5) 0.3 —Profit before taxation . . . . . . . . . . . . . . . . 6.7 199.7 185.4 160.2 23.5Taxation (charge)/credit . . . . . . . . . . . . . . . (15.1) 2.1 (6.4) 68.0 (10.5)(Loss)/profit for the period after taxation

and attributable to owners . . . . . . . . . . . (8.4) 201.8 179.0 228.2 13.0Other comprehensive income(Loss)/profit for the year after taxation and

attributable to owners . . . . . . . . . . . . . . (8.4) 201.8 179.0 228.2 13.0Available for sale reserve:Movements before taxation . . . . . . . . . . . . (3.2) (3.2) (4.6) 11.3 —Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4) (1.2) (0.5) 0.5 —

(3.6) (4.4) (5.1) 11.8 —Cash flow hedge reserve:Movements before taxation . . . . . . . . . . . . 0.7 6.7 11.8 (11.3) —Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.8 (0.3) — —

0.7 7.5 11.5 (11.3) —Total of items that may be reclassified to

the profit and loss . . . . . . . . . . . . . . . . . (2.9) 3.1 6.4 0.5 —Total comprehensive (expense)/income for

the period attributable to owners . . . . . . (11.3) 204.9 185.4 228.7 13.0

Earnings per shareBasic (loss)/earnings per share (£) . . . . . . . (0.42) 5.04 4.24 5.93 0.63Diluted (loss)/earnings per share (£) . . . . . . (0.42) 5.04 4.24 5.93 0.59

4

Consolidated Balance SheetAs at As at 31 December30 June2014 2013 2012 2011

£m

AssetsCash and balances at central banks . . . . . . . . . . . 888.6 1,423.5 1,604.5 62.8Disposal group assets held for sale . . . . . . . . . . . 84.1 85.9 79.6 —Loans and advances to banks . . . . . . . . . . . . . . . 498.7 626.9 1,310.2 801.8Investment securities . . . . . . . . . . . . . . . . . . . . . 1,313.7 1,688.6 1,534.3 4.6Derivative financial instruments . . . . . . . . . . . . . 143.3 187.5 161.0 0.9Loans and advances to customers . . . . . . . . . . . . 21,029.4 20,351.2 16,761.1 17.6Fair value adjustments of portfolio hedging . . . . . (27.1) (8.7) 133.0 —Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . 34.2 26.0 34.8 19.0Property, plant and equipment . . . . . . . . . . . . . . 73.1 71.2 77.2 10.8Prepayments and accrued income . . . . . . . . . . . . 24.8 19.0 18.8 5.3Deferred taxation . . . . . . . . . . . . . . . . . . . . . . . . 58.9 70.0 77.2 2.2Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.3 23.9 37.2 55.3

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,145.0 24,565.0 21,828.9 980.3

LiabilitiesDeposits by banks . . . . . . . . . . . . . . . . . . . . . . . 576.3 389.2 3.4 253.8Customer accounts . . . . . . . . . . . . . . . . . . . . . . . 21,112.8 21,121.4 18,006.7 110.7Disposal group liabilities held for sale . . . . . . . . . 77.1 78.9 54.3 —Derivative financial instruments . . . . . . . . . . . . . 100.0 147.1 285.6 —Debt securities in issue . . . . . . . . . . . . . . . . . . . . 881.7 1,469.8 2,266.6 —Accruals and deferred income . . . . . . . . . . . . . . . 171.2 189.3 242.2 44.9Provisions for liabilities and charges . . . . . . . . . . 23.9 7.5 13.1 —Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 277.3 226.9 192.4 23.6Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 — — 12.0

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 23,223.7 23,630.1 21,064.3 445.0

EquityShare capital(1) . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Share premium . . . . . . . . . . . . . . . . . . . . . . . . . 509.2 509.2 509.2 509.2Own shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.1) (6.2) (6.2) (2.2)Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 6.7 0.3 (4.6)Retained earnings . . . . . . . . . . . . . . . . . . . . . . . 414.4 425.2 261.3 32.9

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 921.3 934.9 764.6 535.3

Total liabilities and equity . . . . . . . . . . . . . . . . . 24,145.0 24,565.0 21,828.9 980.3

(1) As at 30 June 2014, the total ordinary shares in issue was 40,678,952, each with a nominal value of £0.001, amounting to£40,679.

5

Consolidated Cash Flow StatementSix months ended

30 June Year ended 31 December

2014 2013 2013 2012 2011

(unaudited)£m

Net cash inflow from operatingactivities

Profit before taxation . . . . . . . . . . . . . 6.7 199.7 185.4 160.2 23.5Adjusted for:Changes in operating assets . . . . . . . . . (634.4) (1,259.6) (2,605.5) 1,007.2 153.6Changes in operating liabilities . . . . . . 169.3 2,013.0 3,327.7 1,211.8 8.7Non-cash and other items . . . . . . . . . . 14.0 (294.8) 0.9 (297.0) 9.0Taxation paid . . . . . . . . . . . . . . . . . . . — — — (18.0) (11.2)

Net cash (used in)/provided byoperating activities . . . . . . . . . . . . . (444.4) 658.3 908.5 2,064.2 183.6

Net cash (outflow)/inflow frominvesting activities

Net investment in intangible assets . . . . (11.5) (7.8) (29.7) (5.5) (10.3)Net investment in property, plant &

equipment . . . . . . . . . . . . . . . . . . . . (5.7) (4.3) (1.5) (23.6) (9.5)Net investment in securities . . . . . . . . . (270.4) (379.5) (760.4) (3,121.3) —Proceeds from sale and redemption of

investment securities . . . . . . . . . . . . 662.5 509.6 615.4 2,885.6 75.0Movement in disposal of group assets

and liabilities . . . . . . . . . . . . . . . . . . — 25.3 18.3 (9.6) —Acquisition of Virgin Money plc . . . . . — — — (825.0) —Proceeds from sale of Virgin Money

Cards Limited . . . . . . . . . . . . . . . . . — 192.5 192.5 — —Net investment in credit card portfolio . — (1,019.6) (1,019.6) — —

Net cash inflow/(outflow) frominvesting activities . . . . . . . . . . . . . . 374.9 (683.8) (985.0) (1,099.4) 55.2

Net cash (outflow)/inflow fromfinancing activities

Issuance of ordinary shares . . . . . . . . . — — — — 363.9Loan from banks . . . . . . . . . . . . . . . . — — — (253.8) 253.8Sale of shares by Employee Benefit

Trust . . . . . . . . . . . . . . . . . . . . . . . . — — — 0.6 (2.2)Distribution to non-core tier 1

noteholders . . . . . . . . . . . . . . . . . . . (7.8) — (7.8) — —Net (decrease)/increase in debt

securities in issue . . . . . . . . . . . . . . . (588.1) (453.0) (796.8) 1,320.2 —

Net cash (outflow)/inflow fromfinancing activities . . . . . . . . . . . . . . (595.9) (453.0) (804.6) 1,067.0 615.5

Net (decrease)/increase in cash andcash equivalents . . . . . . . . . . . . . . . (665.4) (478.5) (881.1) 2,031.8 854.3

Cash and cash equivalents at start ofperiod . . . . . . . . . . . . . . . . . . . . . . . 2,015.3 2,896.4 2,896.4 864.6 10.3

Cash and cash equivalents at end ofperiod . . . . . . . . . . . . . . . . . . . . . . . 1,349.9 2,417.9 2,015.3 2,896.4 864.6

Certain significant changes to the Group’s financial condition and operating results occurred duringthe 2011 financial period and the 2012 and 2013 financial years as well as the six months ended30 June 2014. These changes are set out below.

The size of the Group’s loan portfolio has grown significantly, following the acquisition of NorthernRock plc from the UK Government on 1 January 2012 (the ‘‘Northern Rock Acquisition’’) togetherwith its mortgage portfolio and mortgage origination platform. The Group has subsequentlysignificantly increased its levels of organic mortgage loan origination. The Group’s loans and

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advances to customers have increased from £17.6 million as at 1 January 2012, the date of theNorthern Rock Acquisition, to £21,029.4 million as at 30 June 2014.

The Group acquired £1.0 billion of the £3.0 billion book of Virgin Money-branded credit cards fromMBNA on 18 January 2013 and, as a result, the Group’s gross loans and advances to customers inthe form of credit card receivables grew from £nil as at 31 December 2012 to £749.1 million as at30 June 2014.

As a result, the Group’s results of operations have improved, and the Group’s net interest incomehas increased from £1.7 million in 2011 to £311.2 million in 2013 and £172.7 million in the sixmonths ended 30 June 2014.

Recent developments

The Group’s performance seen in the three months ended 30 September 2014 has progressedsatisfactorily since 30 June 2014, generally improving on the growth, margins and returns achievedin the six months ended 30 June 2014.The Group successfully increased gross mortgage lendingduring the third quarter of 2014 with mortgage completions 19 per cent. higher than the average ofthe first two quarters of 2014 and total mortgage balances increasing by 3 per cent. to £20.9 billionat 30 September 2014. At 30 September 2014, retail deposit balances had increased from 30 June2014 by over 3 per cent. to £21.8 billion. Credit card balances at 30 September 2014 remainedslightly ahead of the Group’s expectations at £1 billion. Over £700 million was held on the Group’sbalance sheet with approximately £300 million held by credit card partner MBNA, pending transferto Virgin Money on 30 November 2014.

B.8 Selected key pro forma financial information

The unaudited pro forma statement of net assets set out below has been prepared voluntarily toillustrate the effects of the Offer on the net assets of the Group, had the Offer taken place on30 June 2014. The pro forma net asset statement is based on the audited historical financialinformation of the Group for the six months ended 30 June 2014 and has been prepared in amanner consistent with the accounting policies adopted by the group in preparing its financialstatements for the year ended 31 December 2013.

The unaudited combined pro forma statement of net assets has been prepared for illustrativepurposes only, and by its nature addresses a hypothetical situation and, therefore, does not reflectthe Group’s actual financial position or results. The unaudited consolidated pro forma statement ofnet assets is compiled on the basis set out in the notes below and in accordance with therequirements of items 1 to 6 of Annex II to the Prospectus Rules. This pro forma statement of netassets does not constitute financial statements within the meaning of section 434 of the Act. Noaccount has been taken of any results or other activity since 30 June 2014.

Adjustments

Gross Unaudited proAs at 30 June Proceeds from forma as at

2014(1) the Offer(2) Expenses(3) 30 June 2014

£ million

AssetsCash and balances at central banks . . . . . . 888.6 — 888.6Other assets . . . . . . . . . . . . . . . . . . . . . . 23,256.4 150.0 (16.5) 23,389.9Total assets . . . . . . . . . . . . . . . . . . . . . . . 24,145.0 150.0 (16.5) 24,278.5

LiabilitiesDeposits by banks . . . . . . . . . . . . . . . . . . 576.3 — — 576.3Other liabilities . . . . . . . . . . . . . . . . . . . . 22,647.4 — — 22,647.4Total liabilities . . . . . . . . . . . . . . . . . . . . 23,223.7 — — 23,223.7

Total equity . . . . . . . . . . . . . . . . . . . . . . . 921.3 150.0 (16.5) 1,054.8Total liabilities and equity . . . . . . . . . . . . 24,145.0 150.0 (16.5) 24,278.5

Notes:

(1) The financial information as at 30 June 2014 has been extracted, without material adjustment, from the financialinformation set out in: ‘‘Historical Financial Information’’ of this Prospectus. The accounting policies adopted in

7

preparing the pro forma balance sheet as at 30 June 2014 are consistent with the accounting policies adopted inpreparing the financial information. No account has been taken of actual changes in the trading or financial position ofthe Group since 30 June 2014.

(2) This adjustment reflects the receipt of the gross proceeds from the Offer by the Company. See paragraph E.2.a belowfor further details on the Company’s intended use of the proceeds.

(3) The expenses in relation to the Offer to be borne by the Company are estimated at £17.3 million (inclusive of VAT), ofwhich £0.8 million was recorded in the six months ended 30 June 2014. The remaining balance of £16.5 million will bepaid by the Company out of cash resources.

(4) This pro forma statement of net assets does not constitute financial statements within the meaning of section 434 of theAct.

B.9 Profit forecast or estimate

Not applicable: no profit forecasts or estimates have been made.

B.10 A description of the nature of any qualifications in the report on the historical financialinformation

Not applicable: there are no qualifications in the accountant’s report on the historical financialinformation.

B.11 Working capital—qualifications

Not applicable. The Group has sufficient working capital for its present requirements, that is, for atleast the next 12 months following the date of this Prospectus.

SECTION C—SHARES

C.1 Type and class of securities

When admitted to trading, the Ordinary Shares will be registered with ISIN numberGB00BQ8P0644 and SEDOL number BQ8P064. It is expected that the Ordinary Shares will betraded on the London Stock Exchange under the ticker symbol ‘‘VM.’’. The Ordinary Shares will,on Admission, comprise the entire issued and to be issued Ordinary Share capital of the Company.

C.2 Currency of the issue of securities

The currency of the Ordinary Shares is pounds sterling.

C.3 Number of issued and fully paid Ordinary Shares and Deferred Shares

On Admission, the nominal value of the issued Ordinary Share capital of the Company will be£44,160 divided into 441,600,856 Ordinary Shares of 0.01 pence each, which will be issued fully paid.In addition, the nominal value of the issued Deferred Share capital of the Company will be£10,052.16 divided into 10,052,161 Deferred Shares of 0.1 pence each, which are fully paid and willbe held in treasury by the Company for the foreseeable future.

C.4 Description of the rights attaching to the securities

The Offer Shares being sold pursuant to the Offer will, on Admission, rank pari passu in all respectswith the other Ordinary Shares in issue, including for voting purposes, and will rank in full for alldividends and other distributions thereafter declared, made or paid on the Ordinary Share capitalof the Company. Each Ordinary Share ranks equally in the right to receive a relative proportion ofshares in case of a capitalisation of reserves.

Subject to the provisions of the Act, any equity securities issued by the Company for cash must firstbe offered to shareholders in proportion to their holdings of Ordinary Shares. The Act and ListingRules allow for the disapplication of pre-emption rights which may be waived by a special resolutionof the shareholders, whether generally or specifically, for maximum period not exceeding five years.

Except in relation to dividends which have been declared and rights on a liquidation of theCompany, the shareholders have no rights to share in the profits of the Company.

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The Ordinary Shares are not redeemable. However, the Company may purchase or contract topurchase any of the Ordinary Shares on or off market, subject to the Act and the requirements ofthe Listing Rules.

C.5 Restrictions on the free transferability of the Ordinary Shares

Not applicable: the Ordinary Shares will be freely transferable upon Admission.

In addition, under section 178 of the Financial Services and Markets Act (‘‘FSMA’’), if a personintends to acquire or increase its ‘‘control’’ of UK authorised person (which includes the Bank), itmust first notify the appropriate regulator (in the case of the Company, this is the PRA). The PRAmust then (after consulting with the FCA) decide whether to approve the acquisition or increase ofcontrol within 60 working days’ of receipt of this notice (assuming it has been provided with acomplete application). The PRA will not approve any new controller or any increase of controlwithout being satisfied that the controller is financially sound and suitable to be a controller of, oracquire increased control of, the UK authorised person. Acquiring control for the purposes ofFSMA includes where a person first holds 10 per cent or more of the shares or voting power in anauthorised person or its parent undertaking. A person will be treated as increasing his or hercontrol over a UK authorised person, and therefore require further approval from the PRA, if thelevel of his or her shareholding or entitlement to voting power increases from a holding belowcertain thresholds to a holding above them. The thresholds are 10 per cent., 20 per cent., 30 percent. or 50 per cent. of shares or voting power.

When determining a person’s level of control, that person’s holding of shares or entitlement tovoting power will be aggregated with the holdings or entitlements of any person with whom he orshe is ‘‘acting in concert’’.

Acquisition or increase of control without PRA approval is a criminal offence.

C.6 Admission

Application will be made to the FCA for all of the Ordinary Shares, issued and to be issued, to beadmitted to the premium listing segment of the Official List of the FCA and to the London StockExchange for such Ordinary Shares to be admitted to trading on the London Stock Exchange’smain market for listed securities. No application has been made or is currently intended to be madefor the Ordinary Shares to be admitted to listing or trading on any other exchange and noapplication has been made or is currently intended to be made for the Deferred Shares to beadmitted to the Official List of the FCA or to be admitted to trading on the London StockExchange or any other investment exchange.

C.7 Dividend policy

The Virgin Money Board aims to deliver a balance of growth, quality and returns to its shareholdersacross all business lines. The Company intends to adopt a progressive dividend policy and will seekto pay a dividend in Virgin Money’s first full financial year following Admission, reflecting thestrength of the Company’s capital position and franchise.

The Virgin Money Board is targeting an initial dividend payout ratio at the higher end of the rangebetween 10 to 20 per cent. of statutory profit after tax less any coupons paid on any additional tier 1securities in issue. The Virgin Money Board believes that Virgin Money will, in time, be able tosupport dividend distributions commensurate with the larger, listed UK banks once it hassufficiently grown its earnings base and balance sheet.

Dividend payments will be made on an approximate one-third:two-thirds split for interim and finaldividends, respectively. The Directors intend to commence dividend payments with an interimdividend in respect of 2015, which will be payable in the fourth quarter of 2015.

The ability of the Company to pay dividends is dependent on a number of factors and there is noassurance that the Company will pay dividends or, if a dividend is paid, what the amount of suchdividend will be.

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SECTION D—RISKS

D.1 Key information on the key risks that are specific to the Company or its industry

Risks related to the macroeconomic environment in which Virgin Money operates

• As Virgin Money’s customer revenue is derived almost entirely from customers based in theUK, Virgin Money is subject to inherent risks arising from general economic conditions in theUK and the wider macroeconomic elements which impact the UK economy. Virgin Money isexposed to house prices, interest rates, levels of unemployment and fluctuations in consumers’disposable income. While economic indicators in the UK have improved since early 2013, theoutlook for the UK economy remains uncertain. If financial markets exhibit uncertainty,volatility and/or the UK returns to a recessionary environment, it is likely to have a materialadverse impact on both the funding and lending profile of Virgin Money. This would then havea material adverse impact on Virgin Money’s business, financial condition and results ofoperations.

• Virgin Money is currently not active in and has minimal reliance on the European wholesale ordebt markets but could still be materially adversely affected by volatility in those markets. Areturn to macroeconomic or financial instability in the Eurozone may have a material adverseeffect on Virgin Money’s business, financial condition and results.

• Interest rates affect Virgin Money’s impairment levels and customer affordability of bothmortgage products and unsecured lending products, including its credit card portfolio. Asinterest rates rise and products become more expensive for customers to service, Virgin Moneymay experience a rise in arrears, provisions and write-offs. If interest rates remain at theircurrent levels or fall further, this could result in lower margins for Virgin Money. Eitherscenario may have a material adverse impact Virgin Money’s financial condition andperformance.

• A decline in house prices could, among other things, increase impairment charges which inturn could have a material adverse effect on Virgin Money’s financial position andperformance. Virgin Money could also be materially adversely affected by significant increasesin house prices over a short period of time, as it would affect the affordability of mortgagesand/or reduce demand for such products. Sustained volatility could also discourage potentialbuyers from committing to a house purchase, making it more difficult for Virgin Money togrow its mortgage portfolio. In addition, any fall in rental income of buy-to-let mortgagees maylead to increased impairment charges on Virgin Money’s buy-to-let mortgage portfolio.

Risks related to the execution of Virgin Money’s strategy

• Virgin Money faces a number of risks in executing its business plan. One of the key risks is theacquisition of a significant portfolio of credit card assets from the Virgin Money-branded creditcard portfolio managed by MBNA. The acquisition exposes Virgin Money to risks in respect ofthe systems and processes Virgin Money is building to enable it to issue its own credit cards tonew and existing customers and migrate the assets to its own platform. A failure to deliver theprogramme in a timely manner could have a material adverse effect on Virgin Money’sprofitability.

• Virgin Money is a challenger bank and aims to grow its mortgage and credit card asset books,savings deposit base, personal current account business and its insurance and investmentproduct businesses. Virgin Money’s ability to implement its growth strategy is subject to certainexecution risks, including, cost base management increased competition and significant and/orunexpected changes in regulation in the sector.

• The success of Virgin Money’s strategy relies significantly on the strength and appeal of VirginMoney’s brand and Virgin Money’s reputation with customers. Any circumstance that causesreal or perceived damage to the Virgin Money brand or the Virgin brand could have a materialadverse effect on Virgin Money’s ability to retain customers and attract new customers. Inaddition, Virgin Money is exposed to the risk that others associated with the Virgin brand bringthe brand into disrepute which may have a negative effect on the reputation and the strength ofthe Virgin brand and may have similar consequences on the Virgin Money brand.

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Risks related to the legal and regulatory environment in which Virgin Money operates

• Virgin Money conducts its business subject to ongoing regulation by the FCA and the PRA.Virgin Money faces risks associated with an uncertain and continuously evolving prudentialand conduct regulatory environment. The regulatory regime requires Virgin Money to be incompliance across many aspects of its activity. Certain aspects of Virgin Money’s business mayalso be determined by the Competition and Markets Authority, HM Treasury, the FinancialOmbudsman Service or the courts as not being conducted in accordance with applicable lawsor regulations, or, in the case of the Financial Ombudsman Service, with what is fair andreasonable in the Ombudsman’s opinion. If Virgin Money fails to comply with any relevantregulations, there is a risk of a material adverse impact on its business and reputation due tosanctions, fines or other actions imposed by the regulatory authorities.

• Virgin Money is subject to emerging capital and leverage requirements which have thepotential to constrain its profitability and/or growth, particularly because of the highproportion of lower risk secured borrowing on Virgin Money’s balance sheet. Changes toregulation in these areas may be imposed in the future, and failure to comply with suchrequirements or existing regulations could expose Virgin Money to regulatory actions orrequire Virgin Money to raise additional capital.

Risks related to Virgin Money’s balance sheet

• In addition to the credit and interest rate risks described above, Virgin Money is subject toliquidity risk as an inherent part of its business. Liquidity risk is the risk that an institution maynot have sufficient funds at any time to make full payment in respect of liabilities falling due atthat time. Virgin Money raises funds principally through accepting retail deposits and, to alesser extent, in the wholesale funding market. It also has a portfolio of investments and assetsthat provide a further source of liquidity. However, if access to liquidity is constrained for aprolonged period of time, the cost of accessing the wholesale markets would rise, VirginMoney’s ability to realise its liquid investments would be constrained and Virgin Money’s costof funding would increase as competition for retail deposits would intensify.

Risks related to the operation of Virgin Money’s business

• Virgin Money’s reliance on a number of corporate partners and strategic suppliers raises arange of potential operational risks. Virgin Money is effectively indirectly exposed to anycommercial, financial or operational risk facing such organisations, and, in general, any failureby a key third party has potential to have a material adverse effect on Virgin Money’s revenuestream, customer service and brand.

• Virgin Money’s business is exposed to operational risks related to IT systems and otherprocesses, whether people related or external events. While Virgin Money has a robust ITinfrastructure and information security controls, a failure in such infrastructure or controlscould result in significant financial losses and a material adverse impact on Virgin Money’soperational performance and reputation.

D.3 Key information on the key risks that are specific to the Ordinary Shares

• Virgin Money is subject to the provisions of the Banking Act 2009, which enable HM Treasury,the Bank of England and the FCA to engage with and stabilise certain UK-incorporatedinstitutions that are failing or are likely to fail. Use of any such powers in the case of aresolution of Virgin Money would impact Shareholders’ ongoing holding of Ordinary Shares,including, but not limited to, potential substantial reductions in the value of such holdings.

• Future sales of substantial amounts of Ordinary Shares in the public market by Virgin Moneyfollowing the Offer may have a material adverse effect on the market price of Ordinary Sharesand may make it more difficult for investors to sell their Ordinary Shares at a time and pricewhich they deem appropriate, or at all. In particular, the market price of Ordinary Shares couldbe negatively affected by sales of substantial amounts of Ordinary Shares in the public marketsfollowing the expiry of the lock-up periods which the Selling Shareholders (including the MajorShareholders) are subject to under the terms of the Underwriting Agreement. The JointGlobal Co-ordinators may consent to a waiver of such lock-ups and the decision on whether todo so is outside of the Company’s control.

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• Prior to the Offer, there has been no public trading market for the Ordinary Shares. VirginMoney can give no assurance that an active trading market for the Ordinary Shares willdevelop, or, if developed, can be sustained following the closing of the Offer. If an activetrading market is not developed, the liquidity and trading price of Ordinary Shares could bematerially adversely affected. Even if an active trading market is developed, the market pricefor Ordinary Shares may fall below the Offer Price.

• The Additional Tier 1 Securities issued by the Group are subordinated obligations of VirginMoney but rank senior to the Ordinary Shares in any winding up of Virgin Money andautomatically convert into Ordinary Shares if the Group’s common equity tier 1 ratio fallsbelow a specified trigger point. As a result, Virgin Money’s existing shareholders would sufferdilution in their percentage ownership.

SECTION E—OFFER

E.1 Net proceeds and expenses of the Offer

The Company will receive approximately £132.7 million net proceeds from the Offer (after bearingunderwriting commissions, other estimated Offer-related fees and expenses and VAT ofapproximately £17.3 million).

The gross proceeds from the Offer receivable by the Selling Shareholders will be approximately£162.4 million. The aggregate underwriting commission, other fees and expenses and amounts inrespect of stamp duty or SDRT payable by the Selling Shareholders in connection with the Offer areexpected to be up to approximately £3.4 million.

No expenses will be charged to any purchaser of Offer Shares by the Company or the SellingShareholders.

E.2.a Reasons for the Offer and use of proceeds

The Directors believe that the Offer and Admission will support the Company’s growth plans andcapital ratios (including its leverage ratio), give the Company access to a wider range of capital-raising options, further improve the ability of Virgin Money to recruit, retain and incentivise its keymanagement and employees and create a liquid market in the Ordinary Shares.

The Company intends to use the net proceeds it receives from the Offer to satisfy the payment dueto HM Treasury in respect of the contingent consideration payable as part of the acquisition ofNorthern Rock plc in January 2012 (with £10 million of the £50 million payment due to HMTreasury as a result of Admission yet to be provided for), and for general corporate purposes.

The sale of Existing Ordinary Shares by the Selling Shareholders will provide the SellingShareholders and certain of the Directors and Senior Managers with an opportunity for a partialrealisation of their respective shareholdings in the Company.

E.3 Terms and conditions of the Offer

The Offer comprises an offer of:

• 53,003,534 New Ordinary Shares to be issued by the Company; and

• 57,396,780 Existing Ordinary Shares to be sold by the Selling Shareholders.

In addition, up to a further 11,040,031 Ordinary Shares (representing 10 per cent. of the totalnumber of Offer Shares), in aggregate, are being made available by the Over-allotmentShareholders pursuant to the Over-allotment Option.

All Offer Shares will be sold at the Offer Price. Under the Offer, the Offer Shares will be offered tocertain institutional and professional investors in the UK and elsewhere outside the United Statesin reliance on Regulation S of the Securities Act and in the United States to persons reasonablybelieved to be QIBs in reliance on Rule 144A or another exemption from, or in a transaction notsubject to, the registration requirements of the Securities Act.

Admission is expected to become effective, and unconditional dealings in the Ordinary Shares areexpected to commence on the London Stock Exchange, at 8.00 a.m. on 18 November 2014.

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The Offer is subject to the satisfaction of conditions, which are customary for transactions of thistype, contained in the Underwriting Agreement, including Admission becoming effective no laterthan 8.00 a.m. on 18 November 2014 and the Underwriting Agreement not having been terminatedprior to Admission.

The Underwriting Agreement has been entered into between the Company (for itself and as agentfor and on behalf of each Individual Selling Shareholder pursuant to the Deeds of Election), theDirectors, the Institutional Selling Shareholders, the EBT and the Banks. The UnderwritingAgreement provides for the Banks to be paid a commission in respect of the Offer Shares sold. Anycommissions received by the Banks may be retained and any Ordinary Shares acquired by them maybe retained or dealt in, by them, for their own benefit.

None of the Ordinary Shares may be offered for subscription, sale, purchase or delivery, and neitherthis Prospectus nor any other offering material in relation to the Ordinary Shares may be circulated,in any jurisdiction where to do so would breach any securities laws or regulations of any suchjurisdiction or give rise to an obligation to obtain any consent, approval or permission, or to makeany application, filing or registration.

E.4 Material interests to the Offer

The Company considers that the Selling Shareholders have interests that are material to the Offerby virtue of the size of their existing shareholding in the Company. The Company does not considerthat there is a conflicting interest or that there are other interests, including conflicts of interest,that are material to the Offer.

E.5 Selling Shareholders and lock-ups

57,396,780 Ordinary Shares are currently expected to be sold by the Selling Shareholders pursuantto the Offer. In addition, a number of Ordinary Shares representing up to 10 per cent. of the OfferShares are being made available by the Over-allotment Shareholders pursuant to theOver-allotment Option.

Pursuant to the Underwriting Agent, the Institutional Selling Shareholders have agreed a 180-daylock-up period following Admission, during which time they may not dispose of any interest in theirOrdinary Shares.

Pursuant to the Deeds of Election, the Individual Selling Shareholders have agreed a 365-day lock-up period following Admission, during which time they may not dispose of any interest in theirOrdinary Shares.

For a 365-day lock-up period following Admission, the Company will not issue or dispose of anynew Ordinary Shares. The Directors are also subject to a 365-day lock-up period followingAdmission during which they will not sell any Ordinary Shares they own in the Company.

All lock-up arrangements are subject to customary exceptions, which are more fully described atparagraph 11 of Part VI: ‘‘Details of the Offer’’ of this Prospectus.

E.6 Dilution resulting from the Offer

53,003,534 New Ordinary Shares will be issued pursuant to the Offer. The Existing Ordinary Shareswill represent 13 per cent. of the total issued Ordinary Shares immediately following Admission.

E.7 Estimated expenses charged to the investor

Not applicable: there are no commissions, fees, expenses or taxes to be charged to investors by theCompany or the Selling Shareholders under the Offer.

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PART II

RISK FACTORS

Any investment in the Ordinary Shares is subject to a number of risks. Prior to investing in the Ordinary Shares,prospective investors should consider carefully the factors and risks associated with any investment in theOrdinary Shares, the Group’s business and the industry in which it operates, together with all other informationcontained in this Prospectus including, in particular, the risk factors described below.

Prospective investors should note that the risks relating to the Group, its industry and the Ordinary Sharessummarised in the section of this document headed ‘‘Summary Information’’ are the risks that the Groupbelieves to be the most essential to an assessment by a prospective investor of whether to consider an investmentin the Ordinary Shares. However, as the risks which the Group faces relate to events and depend oncircumstances that may or may not occur in the future, prospective investors should consider not only theinformation on the key risks summarised in the section of this document headed ‘‘Summary Information’’ butalso, among other things, the risks and uncertainties described below.

The following is not an exhaustive list or explanation of all risks which prospective investors may face whenmaking an investment in the Ordinary Shares and should be used as guidance only. Additional risks anduncertainties relating to the Group that are not currently known to the Group, or that the Group currentlydeems immaterial, may also individually or cumulatively have a material adverse effect on the Group’s business,financial condition, results of operations and prospects and, if any such risk should occur, the price of theOrdinary Shares may decline and investors could lose all or part of their investment. Prospective investorsshould consider carefully whether an investment in the Ordinary Shares is suitable for them in light of theinformation in this Prospectus and their personal circumstances.

The order in which the following risk factors are presented does not necessarily reflect the likelihood of theiroccurrence or the relative magnitude of their potential material adverse effect on the Group’s business, financialcondition, results of operations and prospects, or the market price of the Ordinary Shares.

RISKS RELATED TO THE MACROECONOMIC ENVIRONMENT IN WHICH VIRGIN MONEYOPERATES

1. Virgin Money’s business and financial performance have been and will continue to be affected bygeneral economic conditions in the UK and elsewhere, and any adverse developments in the UK orglobal financial markets could cause its earnings and profitability to decline.

1.1 As Virgin Money’s customer revenue is derived almost entirely from customers based in the UK,Virgin Money is directly and indirectly subject to the inherent risks arising from general economicconditions in the UK, other economies which impact the UK economy and the state of the globalfinancial markets both generally and as they specifically affect financial institutions. In particular,Virgin Money is exposed to the condition of the UK economy, including house prices, interestrates, levels of unemployment and fluctuations in consumers’ disposable income.

1.2 During the recent global financial crisis, the UK economy experienced turbulence and recessionwhich adversely affected, among other things, the state of the housing market, market interestrates, levels of unemployment, the cost and availability of credit and the liquidity of the financialmarkets. While economic indicators in the UK have improved since early 2013, supported byhighly accommodative monetary policy, the outlook for the UK economy remains somewhatuncertain, with some forecasts predicting the UK’s recovery to continue with modest levels ofGDP growth and an environment of gradually increasing interest rates over the near to mediumterm. If the UK’s economic conditions weaken, resulting in a fall in demand for Virgin Money’sproducts, or if there is a fall in the level of customers’ disposable income, or if financial marketsexhibit uncertainty and/or volatility, Virgin Money’s business could be materially adverselyaffected. This may have an adverse impact on Virgin Money’s ability to grow its business or, if theUK returns to a recessionary environment, have a material adverse impact on Virgin Money’sbusiness, financial condition and results of operations.

1.3 In addition, a deterioration in economic conditions in the Eurozone, including a return tomacroeconomic or financial market instability, may pose a risk to Virgin Money’s business,despite the fact that Virgin Money has limited direct financial exposure to the Eurozone. Shouldthe economic conditions in the Eurozone deteriorate, the macroeconomic risks faced by VirginMoney would be exacerbated given the influence the Eurozone has on the UK’s economic

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performance, and may have an adverse impact on consumer confidence, spending and demandfor credit in the UK, any of which could have material adverse effect on Virgin Money’s business,financial condition or results of operations. Further, the UK financial markets have, in recentyears, been negatively affected by ongoing fears surrounding the large sovereign debts and/orfiscal deficits of several countries in Europe. These concerns were felt in the UK economygenerally and by UK financial institutions and placed strains on funding markets at times whenmany financial institutions had material ongoing funding needs. While Virgin Money currentlyhas minimal reliance on the wholesale debt markets, market volatility has a material adverseimpact on the ability of financial institutions to access the wholesale funding markets which, ifsuch access becomes difficult, may have a material adverse impact on Virgin Money. For furtherdetails see ‘‘Virgin Money’s business is subject to inherent risks concerning liquidity. If the availabilityof traditional sources of funding such as retail deposits or its access to wholesale money marketsbecomes limited and/or becomes more expensive, this may have a material adverse effect on VirginMoney’s business and profitability’’ below.

1.4 As the global economy continues to recover, central banks in advanced economies havemaintained supportive policies, including historically low levels of global interest rates. Inaddition, the UK Government has provided support to UK financial institutions to supportlending in the UK economy. These policies have helped to support demand at a time ofpronounced fiscal tightening and balance sheet repair for most major financial institutions.Decreased levels of support for UK lending by the Bank of England and the UK Governmentcould have a material adverse effect on Virgin Money’s business. For further details see ‘‘VirginMoney’s business and financial performance are linked to interest rate levels and volatility’’ below.

1.5 Virgin Money is also exposed to the performance of the UK stock market through the provisionof various FTSE tracker funds to its clients. Should the underlying markets which those fundstrack become stressed or deliver below projected forecasts, Virgin Money’s financial return fromthose products may be adversely affected thereby impacting Virgin Money’s financialperformance.

2. Virgin Money’s business and financial performance are linked to interest rate levels and volatility.

2.1 Interest rate levels and volatility may have a material adverse effect on Virgin Money’s results,trading volumes, profitability and returns, in a variety of different ways across its lending anddeposit products. Interest rates are driven by factors outside of Virgin Money’s control, includingthe UK Government’s fiscal policies and the Bank of England’s monetary policy, as well as UK,European and global economic and political conditions.

2.2 A higher interest rate environment could reduce demand for Virgin Money’s primary lendingproducts, mortgages and credit cards, and other lending products generally, as individuals are lesslikely or less able to borrow when interest rates are high. This could reduce the volume of newbusiness for Virgin Money’s lending products and therefore have a material adverse impact onVirgin Money’s revenue and profits.

2.3 In addition, given that 27 per cent. of Virgin Money’s mortgage book is variably priced or pricedbased on the Virgin Money standard variable rate (‘‘SVR’’), and thus repayable without penalty,there is a risk that a sudden rise in interest rates, or an expectation thereof, could encouragesignificant demand on the part of Virgin Money’s customers to re-mortgage onto fixed-rateproducts. High levels of re-mortgaging over a short time period could put considerable strain onVirgin Money’s business and operations. While this scenario would likely be an industry-widephenomenon in response to increasing interest rates or the expectation thereof, Virgin Moneymay not be willing or able to price its fixed-rate products as competitively as others in the market.This could lead to high levels of customer attrition and, consequently, have a negative effect onVirgin Money’s profitability.

2.4 Higher interest rates would also lead to higher interest costs for existing borrowers, which wouldaffect their ability to repay their borrowings and may lead to an increased rate of default. Thiswould increase Virgin Money’s impairment charges and reduce its profitability. The customerinterest rate on both Virgin Money’s outstanding non-fixed residential mortgage loan and creditcard products are potentially subject to changes in interest rates. 27 per cent. of Virgin Money’smortgages are currently subject to changes in interest rates, with the remaining 73 per cent. onfixed rates that will revert to Virgin Money’s SVR after their current fixed-rate period expires. In

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an increasing interest rate environment, borrowers seeking to avoid increased monthly paymentsby re-mortgaging may no longer be able to find available replacement products at comparably lowinterest rates, and this could lead to an increase in arrears in Virgin Money’s lending portfolio aswell as an increase in its impairment charges in respect of that portfolio. Credit card rateshistorically have not been driven materially to the same extent as mortgages (as they are typicallyon ‘‘managed’’ rates) by changes in interest rates, but they could be in the future. Hence,increasing rates could have a similar impact for credit card customers and this could lead to anincrease in arrears in Virgin Money’s credit card portfoli