The Company intends to apply for admission of its ordinary shares (“Ordinary Shares”) to the premium listing segment of the Official List of the Financial Conduct Authority (the “Official List”) and to trading on the main market for listed securities of the London Stock Exchange (together “Admission”).

Virgin Money is a strong, uncomplicated retail-only UK bank which is primarily focused on providing residential mortgages, savings and credit cards. It also offers a range of investment and insurance products and has recently launched its first personal current account. Virgin Money provides award-winning customer service to its 2.8 million 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.

Virgin Money is uniquely placed to provide effective competition to the large incumbent banks in the UK. It has potential for significant growth at meaningful scale across a broad range of products and is unburdened by legacy issues.

Offer highlights
• Virgin Money intends to apply for the admission of its Ordinary Shares to the premium listing segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange.
• The Offer comprises a sale by Virgin Financial Investments Limited, funds managed by WL Ross & Co, other minority shareholders, members of the senior management team and other employees of the Company (together, the “Selling Shareholders”) of a portion of their existing holding of Ordinary Shares, and an offer of new Ordinary Shares to be issued by the Company. It is expected that the offer of new Ordinary Shares will raise gross proceeds of approximately £150 million and the Offer is expected to result in a free float of at least 25%.
• The Offer and Admission will support the Company’s growth plans, support the Company’s common equity tier 1 capital ratios, give the Company access to a wider range of capital-raising options and further improve the ability of Virgin Money to recruit, retain and incentivise its key management and employees. The net proceeds of the Offer will also be used for general corporate purposes as well as to satisfy the payment due to HM Treasury in respect of the contingent consideration payable as part of the Company’s acquisition of Northern Rock plc in January 2012 (with £10 million of the £50 million payment due to HM Treasury upon the Company’s listing yet to be provided for). The Offer will also provide the Selling Shareholders with an opportunity for a partial realisation of their respective shareholdings in the Company.
• Each of the Company, its directors and members of its senior management together with the Selling Shareholders will agree to customary lock-up arrangements in respect of their holding of Ordinary Shares for specified periods of time following Admission.
• Immediately following completion of the Offer, it is expected that the Company will have a free float of at least 25% of the issued share capital of the Company. It is expected that Admission will take place in October 2014 and that, following Admission, the Company will become eligible for inclusion in the FTSE UK indices.
• The Offer will comprise an offer of Ordinary Shares: (i) to certain institutional investors in the United Kingdom and elsewhere outside the United States; and (ii) in the United States only to qualified institutional buyers in reliance on an exemption from the registration requirements of the United States Securities Act of 1933, as amended.
• BofA Merrill Lynch and Goldman Sachs International have been appointed as joint sponsors, joint global co- ordinators and joint bookrunners to the Offer, with Barclays and Citi acting as joint bookrunners and Keefe, Bruyette & Woods acting as joint lead manager.
• Full details of the Offer will be included in the Prospectus, expected to be published in due course.

Further payment to the UK Government
• Successful completion of the Offer will lead to a final payment of £50 million being made to HM Treasury by Virgin Money in respect of the contingent consideration payable as part of Virgin Money’s acquisition of Northern Rock plc. When Virgin Money agreed to buy Northern Rock plc in late 2011, it was agreed that this payment would be made in the event of a successful IPO of the combined businesses before the end of 2016. This payment will take the total paid by Virgin Money to HM Treasury for Northern Rock plc to £1.02 billion.

Dividend policy
• The Company intends to adopt a progressive dividend policy and will seek to pay a dividend in its first full financial year following Admission reflecting the strength of the Company’s capital position and franchise.
• The Virgin Money Board is targeting an initial payout ratio of 10% to 20% of statutory profit after tax less any coupons paid on any Additional Tier 1 securities in issue. The Company’s objective is to support dividend distributions in line with the larger, listed UK banks once the business has grown its earnings base and balance sheet.
• Dividend payments will be made on an approximate one-third:two-thirds split for interim and final dividends, respectively. The Directors intend to commence dividend payments with an interim dividend in respect of 2015, which will be payable in the fourth quarter of 2015.

Business highlights
• Virgin Money is a retail bank operating across the UK at meaningful scale to provide effective competition to the large incumbent banks.
• Since Virgin Money completed its acquisition of Northern Rock plc on 1 January 2012, it has transformed and revitalised the business and has created a platform for future growth:
o Mortgage balances have increased from £14.1 billion to £20.3 billion, a CAGR of 16% vs 1% market growth.
o Deposit balances have increased from £16.3 billion to £21.1 billion, a CAGR of 11% vs 6% market growth.
o The Company has acquired £1 billion of credit cards from MBNA and has substantially completed the build of its own credit card operations.
o The Company has launched the first Virgin Money personal current account and has built its own current account operations.
o Over 450 jobs have been created to support business growth.
o The Company has grown Virgin Money Giving, its not-for-profit online fundraising website, to a position where it is now being used by fundraisers to raise over £80 million per year (including Gift Aid) for charities.
o The Company has delivered a 1H 2014 underlying profit of £59.7 million, against £53.4 million for 2013 as a whole. In 2011, Northern Rock made an underlying loss of £111 million for the full year.

• Virgin Money’s success is supported by its powerful brand. Virgin Money is front of mind for 1 in 4 consumers and is considered as a banking provider by over 50% of UK consumers, demonstrating its significant headroom for market share growth.
• The Company’s strategy is focused on creating a business that can continue to grow strongly, maintain a high quality balance sheet, and deliver shareholder returns through both capital growth and progressive dividend payments. 2
• The strategy is underpinned by Virgin Money’s core business strengths: 1. A high-quality balance sheet, set within a strong risk management framework, unburdened by legacy issues such as PPI mis-selling 2. A differentiated approach to banking and a brand that provides mass consumer appeal 3. A capacity for organic growth at meaningful scale 4. A significant potential to improve returns through operational leverage and positive margin development 5. A strong management team with a track record of delivering organic and inorganic growth, supported by highly-engaged colleagues
• Given its core business strengths and positive growth momentum, the Company is targeting a mid-teens return on tangible equity by the end of 2016, with continued improvement targeted beyond this date.

Jayne-Anne Gadhia, Chief Executive Officer of Virgin Money, said:
“We are delighted to be announcing our intention to float Virgin Money. Over the last three years we have transformed our business. We have expanded our product range, increased our customer numbers, grown our balance sheet and enhanced our profitability. Our decision to take the business public marks just how far the Company has come.

We look forward to being a listed company and remain committed to delivering positive outcomes for all of our stakeholders. Our capability to deliver growth at meaningful scale, the quality of our balance sheet and our absence of legacy issues makes us stand apart from other banks, and these strengths give us the potential to deliver ongoing returns to our shareholders through both capital growth and progressive dividend payments.

In addition, and in recognition of their hard work to-date and their contribution to the future value of the business, I am also delighted to announce that each employee will be awarded £1,000 worth of shares in the business upon flotation.”

Sir David Clementi, Chairman of Virgin Money, said:
"I am pleased we have reached the point where Virgin Money is ready to start life as a listed company. We have built a safe, sound and secure bank supported by a strong Board. The Company has an extremely positive future and I am delighted the business is in such a good position.”