Daisy Group PLC Recommended Cash Offer (7182U)

TIDMDAY

RNS Number : 7182U

Daisy Group PLC

20 October 2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO

ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE

RELEVANT LAWS OF SUCH JURISDICTION

20 OCTOBER 2014

RECOMMENDED CASH OFFER

for

DAISY GROUP PLC

CHAIN BIDCO PLC

Further to the announcement by Daisy Group plc ("Daisy" or the "Company") on 13 August 2014 that it was in preliminary discussions with Toscafund Asset Management LLP ("Toscafund"), Penta Capital LLP ("Penta") and Matthew Riley, the Chief Executive Officer of Daisy (with Toscafund, Penta and Matthew Riley being together referred to as the "Consortium"), the Consortium and the Independent Directors of Daisy are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Chain Bidco plc ("Bidco"), a newly incorporated company owned (indirectly) by the Consortium, will acquire the entire issued and to be issued share capital of Daisy not already owned, or agreed to be acquired, by Bidco, to be implemented by means of a takeover offer within the meaning of Part 28 of the Companies Act.

Summary

-- Under the terms of the Offer, Daisy Shareholders will be entitled to receive 185 pence in cash for each Daisy Share held (the "Offer Price").

-- The Offer Price represents a premium of approximately:

-- 16.4 per cent. to the Closing Price per Daisy Share of 159.0 pence on 25 July 2014 (being the last Business Day prior to the Consortium's approach to Daisy);

-- 31.3 per cent. to the volume weighted average Closing Price per Daisy Share of 141.0 pence for the month ended on 25 July 2014 (being the last Business Day prior to the Consortium's approach to Daisy); and

-- 5.7 per cent. to the Closing Price per Daisy Share of 175.0 pence on 12 August 2014 (being the last Business Day prior to the announcement by the Company that it was in preliminary discussions with the Consortium).

-- The Offer values the entire issued and to be issued share capital of Daisy at approximately GBP494 million.

-- In addition, the Offer implies an enterprise value multiple of approximately 11.0 times Daisy's Adjusted EBITDA of GBP57.9 million for the 12 months ended 31 March 2014 and an equity value multiple of approximately 13.4 times Daisy's Adjusted EPS of 13.85 pence for the 12 months ended 31 March 2014.

-- The Independent Directors (being Peter Dubens, Christina Kennedy, Laurence Blackall and Ian McKenzie), who have been so advised by Liberum, consider the terms of the Offer to be fair and reasonable. In providing advice to the Independent Directors, Liberum has taken into account the commercial assessments of the Independent Directors. The Independent Directors intend to recommend unanimously that Daisy Shareholders accept the Offer, as the Daisy Directors (other than Matthew Riley) who hold Daisy Shares have irrevocably undertaken to do in respect of their entire beneficial holdings in Daisy amounting to, in aggregate, 3,098,509 Daisy Shares, representing approximately 1.16 per cent. of the existing issued share capital of Daisy and 2.47 per cent. of the Daisy Shares to which the Offer relates. Liberum is providing independent financial advice to the Independent Directors for the purposes of Rule 3 of the City Code. Oakley Capital Corporate Finance is financial adviser to the Company.

-- Bidco has also received irrevocable undertakings from Host Europe (Bermuda) Limited, Invesco Asset Management Limited and Woodford Investment Management LLP to accept the Offer, in respect of a total of 105,847,835 Daisy Shares, representing, in aggregate, approximately 39.65 per cent. of the entire issued share capital of Daisy and 84.32 per cent. of the Daisy Shares to which the Offer relates. Further details of these irrevocable undertakings are set out in Appendix 4 to this announcement.

-- Matthew Riley owns 61,431,110 Daisy Shares and has an interest under the Daisy Share Schemes in an additional 2,500,000 Daisy Shares. In addition, upon the Offer becoming, or being declared, unconditional in all respects, he will be entitled to acquire a further 1,433,398 Daisy Shares under the Daisy Share Schemes. These Daisy Shares represent, in aggregate, approximately 24.5 per cent. of the entire issued share capital of Daisy. Funds managed or advised by Toscafund own a total of 76,071,356 Daisy Shares, representing approximately 28.5 per cent. of the entire issued share capital of Daisy. Both Matthew Riley and funds managed or advised by Toscafund will exchange 100 per cent. of their existing Daisy Shares (together with those in which Matthew Riley is interested and will acquire under the Daisy Share Schemes) into shares in Topco upon the Offer becoming, or being declared, unconditional in all respects and these Daisy Shares will then be transferred down through the Bidco Group to Bidco. Accordingly, Bidco has agreed to acquire Daisy Shares representing, in aggregate, approximately 53.0 per cent. of the entire issued share capital of Daisy.

-- Accordingly, Bidco has agreed to acquire, or has received irrevocable undertakings to accept, or procure the acceptance of, the Offer in respect of 250,382,208 Daisy Shares representing, in aggregate, approximately 93.79 per cent. of Daisy's existing issued share capital.

-- Bidco is a newly-incorporated company formed at the direction of Matthew Riley, Toscafund and Penta, for the purposes of making the Offer. Toscafund is a leading alternative asset manager based in London with approximately US$3 billion of assets under management. Toscafund has been a supportive investor in Daisy since July 2009 and has a detailed understanding of Daisy's business model as well as the telecoms sector in the UK. Penta is an active private equity investor in UK mid-market companies. Over the last several years, Penta has sought to invest in well-positioned market leaders, similar to Daisy, with select investments in the telecoms and telecoms infrastructure sector including Six Degrees Group, SpiriTel and Wireless Infrastructure Group.

-- The Offer will be conditional upon, amongst other things, Bidco receiving acceptances (which have not been withdrawn) in respect of Daisy Shares which represent not less than 90 per cent. in nominal value of the Daisy Shares to which the Offer relates and of the voting rights attaching to those shares.

-- If the Offer becomes, or is declared, unconditional in all respects and sufficient acceptances of the Offer are received, Bidco intends to procure that Daisy will make an application to the London Stock Exchange for the cancellation of the admission to trading on AIM of all the Daisy Shares. Cancellation of admission to trading is likely to reduce significantly the liquidity and marketability of any Daisy Shares in respect of which the Offer has not been accepted at such time. It is also intended that, following implementation of the Offer, Bidco will seek to re-register Daisy as a private limited company.

-- If the Offer becomes, or is declared, unconditional in all respects and Bidco receives acceptances of the Offer in respect of, and/or otherwise acquires, 90 per cent. or more of the Daisy Shares to which the Offer relates and 90 per cent. or more of the voting rights attaching to such shares, Bidco intends to exercise its rights pursuant to sections 974 to 991 of the Companies Act to acquire compulsorily, on the same terms as the Offer, the remaining Daisy Shares in respect of which the Offer has not at such time been accepted.

-- The Offer will also be conditional upon the approval of the Management Arrangements, details of which are set out in paragraph 11 of this announcement, by an ordinary resolution (the "Ordinary Resolution") of the Independent Shareholders at the Daisy General Meeting. Bidco has received irrevocable undertakings from the Independent Directors, Host Europe (Bermuda) Limited, Invesco Asset Management Limited and Woodford Investment Management LLP to vote in favour of the Ordinary Resolution approving the Management Arrangements, representing, in aggregate, approximately 85.82 per cent. of the Daisy Shares held by the Independent Shareholders.

Commenting on the Offer, Christina Kennedy, Senior Independent Non-Executive Director of Daisy, said:

"I am pleased that we have reached agreement on the terms of an Offer that represents a good outcome for Daisy Shareholders and enables them to exit at a premium for cash. The Independent Directors believe that the Offer represents good value and an attractive balance between the future opportunities and risks facing the business and have therefore decided to recommend unanimously the Consortium's Offer to Daisy Shareholders."

Commenting on the Offer, Peter Dubens, Executive Chairman of Daisy, said:

"I would like to thank Matthew Riley and the management team of Daisy for their skill and hard work in implementing an acquisition-led strategy which has delivered shareholders 185 pence per Daisy Share compared to the placing price in the 2009 reverse takeover of 80 pence per Daisy Share, an increase of 131.3 per cent. When compared with the increase in the FTSE AIM All Share index of 27.5 per cent. since Admission, I believe that this represents a good outcome for all Daisy Shareholders."

Commenting on the Offer, Matthew Riley, Chief Executive of Daisy and a member of the Consortium, said:

"The Company has enjoyed loyal support from its shareholders over the five years it has been quoted on AIM. The Offer provides Daisy Shareholders with a cash premium today and represents a positive development for our 59,000 customers and continuity for our 1,500 employees; it also positions the Company for its next phase of growth in the UK telecoms and IT sector, with the backing and strategic and financial guidance of Toscafund and Penta."

This summary should be read in conjunction with the following full announcement and the Appendices. The Offer will be subject to the Conditions and principal further terms set out in this announcement and to the full terms and conditions that will be set out in the Offer Document and, in respect of Daisy Shares held in certificated form, the Form of Acceptance.

It is intended that the Offer Document and Form of Acceptance containing further details of the Offer and the Form of Proxy for use by Independent Shareholders in connection with the Daisy General Meeting will be despatched to Daisy Shareholders (other than to persons in a Restricted Jurisdiction) as soon as practicable and, in any event, not later than 28 days after the date of this announcement (unless agreed otherwise with the Panel).

Appendix 3 contains bases and sources of certain information contained in this summary and the following announcement. Appendix 4 contains details of irrevocable undertakings received by Bidco. Appendix 5 contains the definitions of certain terms used in this announcement.

Enquiries:

 
 J.P. Morgan Cazenove (financial adviser to Bidco) 
 Hugo Baring                           Tel: +44 (0) 20 7777 2000 
 James Thomlinson Christopher 
  Wood Seán Murphy 
 Redleaf (media enquiries for Bidco) 
 Emma Kane                             Tel: +44 (0) 20 7382 4747 
 Liberum (Rule 3 Adviser, Nominated Adviser and Corporate Broker 
  to Daisy) 
 Steve Pearce                          Tel: +44 (0) 20 3100 2000 
 Neil Patel 
 Steve Tredget Thomas Bective 
 Oakley Capital Corporate Finance (financial adviser to Daisy) 
 Chris Godsmark                        Tel: +44 (0) 20 7766 6900 
 Chris Brooks Zishaan Arshad Marc 
  Jones 
 Redleaf (media enquiries for Daisy) 
 Rebecca Sanders-Hewett                Tel: +44 (0) 20 7382 4730 
 Jenny Bahr 
 Rachael Brown

J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove") is authorised and regulated in the United Kingdom by the Financial Conduct Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Toscafund and Bidco and no-one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters referred to in this announcement and will not be responsible to anyone other than Toscafund and Bidco for providing the protections afforded to clients of J.P. Morgan Cazenove, nor for providing advice in relation to any matter referred to herein.

Liberum Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Daisy as its adviser for the purposes of Rule 3 of the Code and for no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Daisy for providing the protections afforded to clients of Liberum Capital nor for providing advice in connection with the Offer or this announcement or any matter referred to herein.

Oakley Capital Limited is authorised and regulated by the Financial Conduct Authority. Oakley Capital Limited is acting as financial adviser exclusively for Daisy and no one else in connection with the matters set out in this announcement and will not regard any other person as its client nor be responsible to anyone other than Daisy for providing the protections afforded to clients of Oakley Capital Limited nor for providing advice in relation to the matters referred to in this announcement.

IMPORTANT NOTES

This announcement is for information purposes only. It is not intended to and does not constitute, or form part of, an offer or invitation or the solicitation of any offer to sell or purchase any securities or the solicitation of any offer to otherwise acquire, subscribe for, sell or otherwise dispose of any security pursuant to the Offer or otherwise. The Offer will be made solely by means of the Offer Document and, in respect of Daisy Shares held in certificated form, the Form of Acceptance, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in those documents.

This announcement does not constitute a prospectus or prospectus equivalent document. Overseas jurisdictions

The release, publication or distribution of this announcement in, and the availability of the Offer to persons who are residents, citizens or nationals of, jurisdictions other than the United Kingdom may be restricted by laws and/or regulations of those jurisdictions. Therefore any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom should inform themselves about and observe any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.

In particular, copies of this announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in or into or from any Restricted Jurisdiction. Unless otherwise permitted by applicable law and regulation, the Offer may not be made, directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

The receipt of cash pursuant to the Offer by Daisy Shareholders may be a taxable transaction under applicable national, state and local, as well as foreign and other tax laws. Each Daisy Shareholder is urged to consult their independent professional adviser regarding the tax consequences of accepting the Offer.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside of England and Wales.

Notice to US investors

The Offer will be made for securities in a UK company and Daisy Shareholders in the United States should be aware that this announcement, the Offer Document and any other documents relating to the Offer have been, or will be, prepared in accordance with the City Code and UK disclosure requirements, format and style, all of which differ from those in the United States. Daisy's financial statements, and all financial information that is included in this announcement or that may be included in the Offer Document or any other documents relating to the Offer, have been, or will be, prepared in accordance with International Financial Reporting Standards adopted by the European Union and therefore may not be comparable to financial statements of US companies or companies whose financial statements are prepared in accordance with US GAAP.

The Offer, if required to be made, will be made in the United States pursuant to applicable exemptions under the US tender offer rules and securities laws and otherwise in accordance with the requirements of the City Code, the Panel and the London Stock Exchange. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law. In the United States, the Offer will be made solely by Bidco and not by its financial adviser.

Both Daisy and Bidco are companies incorporated under the laws of England and Wales. All of the assets of Daisy and Bidco are located outside of the United States. As a result, it may not be possible for Daisy Shareholders in the United States to effect service of process within the United States upon Daisy or Bidco or their respective officers or directors or to enforce against any of them judgments of the United States predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue Daisy or Bidco or their respective officers or directors in a non-US court for violations of the US securities laws. There is also a substantial doubt as to enforceability in the United Kingdom in original actions, or in actions for the enforcement of judgments of US courts, based on civil liability provisions of US federal securities laws.

Cautionary note regarding forward-looking statements

they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this document could cause actual results, outcomes and developments to differ materially from those expressed in, or implied by, such forward-looking statements and such statements are therefore qualified in their entirety by the risks and uncertainties surrounding these future expectations. Many of these risks and uncertainties relate to factors that are beyond the entities' ability to control or estimate precisely, such as, but not limited to, general business and market conditions both globally and locally, political, economic and regulatory forces, industry trends and competition, future exchange and interest rates, changes in government and regulation including in relation to health and safety, the environment, labour relations and tax rates and future business combinations or dispositions. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, none of Daisy, Bidco or each member of the Consortium can give any assurance, representation or guarantee that such expectations will prove to have been correct and such forward-looking statements should be construed in light of such factors and you are therefore cautioned not to place reliance on these forward-looking statements which speak only as at the date of this document. None of Daisy, Bidco or each member of the Consortium assumes any obligation to update or correct the information contained in this document (whether as a result of new information, future events or otherwise), except as required by applicable law or regulation.

Dealing and Opening Position Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror

other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44(0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Purchases outside the Offer

Bidco or its nominees or brokers (acting as agents) may purchase Daisy Shares otherwise than under the Offer, such as in the open market or through privately negotiated purchases. Such purchases shall comply with the City Code, the AIM Rules and the rules of the London Stock Exchange.

Publication on websites

A copy of this announcement and other documents in connection with the Offer will, subject to certain restrictions relating to persons resident in Restricted Jurisdiction, be available free of charge for inspection on Daisy's website at www.daisygroupplc.com, Toscafund's website at www.toscafund.com and Penta's website at www.pentacapital.com. The contents of these websites referred to in this announcement are not incorporated into, and do not form part of, this announcement.

Information relating to Daisy Shareholders

Please be aware that addresses, electronic addresses and certain information provided by Daisy Shareholders, persons with information rights and other relevant persons for the receipt of communications from Daisy may be provided to Bidco during the Offer Period as requested under Section 4 of Appendix 4 of the City Code to comply with Rule 2.12(c).

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,

IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE

A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

RECOMMENDED CASH OFFER

FOR

DAISY GROUP PLC

CHAIN BIDCO PLC

   1.   Introduction

Further to the announcement by Daisy Group plc ("Daisy" or the "Company") on 13 August 2014 that it was in preliminary discussions with Toscafund Asset Management LLP ("Toscafund"), Penta Capital LLP ("Penta") and Matthew Riley, the Chief Executive Officer of Daisy (with Toscafund, Penta and Matthew Riley being together referred to as the "Consortium"), the Consortium and the Independent Directors of Daisy are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Chain Bidco plc ("Bidco") will acquire the entire issued and to be issued share capital of Daisy not already owned, or agreed to be acquired, by Bidco, to be implemented by means of a takeover offer within the meaning of Part 28 of the Companies Act.

Bidco is a newly incorporated company formed by the Consortium for the purpose of making and implementing the Offer. Further information in relation to Bidco is set out in paragraph 9 of this announcement.

   2.   The Offer

Under the terms of the Offer, which will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to the full terms and conditions to be set out in the Offer Document and, in respect of Daisy Shares held in certificated form, the Form of Acceptance, Daisy Shareholders shall be entitled to receive:

   for each Daisy Share:         185 pence in cash

The Offer Price values Daisy's issued and to be issued share capital at approximately GBP494 million on the basis of the fully diluted share capital of Daisy of approximately 267.0 million Daisy Shares, as at the date of this announcement, and represents a premium of approximately:

-- 16.4 per cent. to the Closing Price per Daisy Share of 159.0 pence on 25 July 2014 (being the last Business Day prior to the Consortium's approach to Daisy);

In addition, the Offer implies an enterprise value multiple of approximately 11.0 times Daisy's Adjusted EBITDA of GBP57.9 million for the 12 months ended 31 March 2014 and an equity value multiple of approximately 13.4 times Daisy's Adjusted EPS of 13.85 pence for the 12 months ended 31 March 2014.

The Daisy Shares will be acquired pursuant to the Offer fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other rights and interests of any nature whatsoever and together with all rights now and hereafter attaching thereto, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

3. Interests in Daisy Shares and irrevocable undertakings

Matthew Riley owns 61,431,110 Daisy Shares and has an interest under the Daisy Share Schemes in an additional 2,500,000 Daisy Shares. In addition, upon the Offer becoming, or being declared, unconditional in all respects, he will be entitled to acquire a further 1,433,398 Daisy Shares under the Daisy Share Schemes. These Daisy Shares represent, in aggregate, approximately 24.5 per cent. of the entire issued share capital of Daisy. Funds managed or advised by Toscafund own a total of 76,071,356 Daisy Shares, representing approximately 28.5 per cent. of the entire issued share capital of Daisy. Both Matthew Riley and funds managed or advised by Toscafund will exchange 100 per cent. of their existing Daisy Shares (together with those in which Matthew Riley is interested and will acquire under the Daisy Share Schemes) into shares in Topco upon the Offer becoming, or being declared, unconditional in all respects and these Daisy Shares will then be transferred down through the Bidco Group to Bidco. Accordingly, Bidco has agreed to acquire Daisy Shares representing, in aggregate, approximately 53.0 per cent. of the entire issued share capital of Daisy.

In addition, Bidco has received irrevocable undertakings from:

-- all the Directors of Daisy who hold Daisy Shares (other than Matthew Riley) to accept, or procure acceptances of, the Offer and, where such persons are Independent Shareholders, to vote, or procure the vote, in favour of the Ordinary Resolution in respect of (i) their own beneficial holdings amounting, in aggregate, to 3,098,509 Daisy Shares, representing approximately 1.16 per cent. of Daisy's existing issued share capital and 2.47 per cent. of the Daisy Shares to which the Offer relates and (ii) where relevant, any Daisy Shares they may acquire pursuant to the exercise of options, warrants and awards held by them under the Daisy Share Schemes; and

-- Host Europe (Bermuda) Limited, Invesco Asset Management Limited and Woodford Investment Management LLP to accept, or procure the acceptance of, the Offer and to vote, or procure the vote, in favour of the Ordinary Resolution in respect of a total of 105,847,835 Daisy Shares, representing approximately 39.65 per cent. of Daisy's existing issued share capital and 84.32 per cent. of the Daisy Shares to which the Offer relates.

All of these irrevocable undertakings will cease to be binding if the Offer terminates or lapses in accordance with its terms or otherwise becomes incapable of ever becoming effective. In addition, the irrevocable undertakings from Host Europe (Bermuda) Limited, Invesco Asset Management Limited and Woodford Investment Management LLP will cease to be binding in certain additional circumstances as set out in Appendix 4 to this document.

See Appendix 4 for further information in relation to these irrevocable undertakings.

Accordingly, Bidco has agreed to acquire or has received irrevocable undertakings to accept, or procure the acceptance of, the Offer in respect of 250,382,208 Daisy Shares, in aggregate, representing approximately 93.79 per cent. of Daisy's existing issued share capital. Bidco has also received irrevocable undertakings to vote, or procure the vote, in favour of the Ordinary Resolution in respect of 108,769,191 Daisy Shares, in aggregate, representing approximately 85.82 per cent. of the Daisy Shares held by the Independent Shareholders.

   1        11 
   2          Background to the Offer

The Consortium believes that the acquisition of Daisy presents an attractive opportunity in the SME and mid-market IT and business communications industry. Daisy is the largest independent provider of telecommunications services and solutions to SMEs and mid-market businesses in the UK by revenue. Daisy's corporate acquisition strategy has enabled it to continue to develop and enhance its capabilities and range of products available to customers, including the addition of cloud and managed services, IT support services and increased data centre capacity, thus reducing dependence on fixed line network services revenue.

The Consortium recognises Daisy's track record of performance across its networks, data, systems and mobile product offerings. The Consortium appreciates Daisy's investment in technology and process improvements which enable Daisy to serve its customers more efficiently and intends to continue to support management in growing Daisy over time. Additionally, it believes that opportunities for further, accelerated consolidation exist and anticipates actively evaluating add-on acquisitions as a complement to the organic growth of Daisy. The Consortium's experience and expertise in telecoms and telecoms infrastructure and deep operating skillsets position it as a resource from which management can draw strategic, financial and operational guidance.

   4.   Current trading

Set out in Appendix 2 to this announcement is the unaudited interim condensed consolidated financial statements for Daisy as at, and for the three month period ended, 30 June 2014.

There has been no significant change in Daisy's financial or trading position since 30 June 2014.

   5.   Background to and reasons for the recommendation

Daisy Group plc was created in July 2009 via the reverse takeover of Freedom4 Group plc by Daisy Communications Limited and Vialtus Limited. At Admission, the Company raised GBP79.7 million net of fees from institutional investors at a placing price of 80 pence per share.

For the 15 month period ended 31 March 2010, the Daisy Group reported Adjusted EBITDA and Adjusted EPS of GBP11.0.million and 4.10 pence, respectively.

Since 2010, the Daisy Group has successfully executed its strategy of consolidating the SME telecoms services market and is now a unified communications provider offering a full suite of solutions including multi-site data networking, mobile and hosting services as well as more traditional telecommunication services.

Since Admission, the Daisy Group has not raised any significant additional equity finance and reported Adjusted EBITDA and Adjusted EPS of GBP57.9 million and 13.85 pence, respectively, for the financial year ended 31 March 2014.

This growth and broadening of the product range has largely been achieved through a significant acquisition strategy which, as at 31 March 2014, has seen 22 businesses acquired since Admission for a total consideration of approximately GBP281.2 million.

Although Daisy's comprehensive unified communications offering places it in a strong position to serve the wider communications and IT needs of SMEs, the market remains fragmented and strong competitive pressures remain. Whilst Daisy's strategy is to continue to focus on increasing the number of services provided to existing customers, it will be important for the acquisition-led strategy to continue, in order to drive stronger top-line revenue growth.

Maintaining this strategy is likely to involve larger acquisitions than in the past, which will require significant additional financing raised by either debt or equity issuance. Continuing to pursue this strategy will take time and expose Daisy Shareholders to more significant risks as deals are consummated and businesses integrated. Cash generation could also be more volatile as larger deals are undertaken, which is more relevant since Daisy commenced paying a dividend in 2013.

While Daisy Shareholders have enjoyed significant value accretion since Admission as a result of the Company pursuing this strategy, the market for Daisy Shares has remained relatively illiquid. The Consortium approached the Board on 27 July 2014 with a proposal which represented a cash exit for Daisy Shareholders at a premium. A committee of Independent Directors was formed to consider the approach, which comprises Peter Dubens (Executive Chairman), Christina Kennedy (Senior Independent Non-Executive Director), Laurence Blackall (Non-Executive Director) and Ian McKenzie (Independent Non-Executive Director).

From time to time, Daisy has received expressions of interest to enter into discussions from much larger telecommunications operators and private equity funds regarding opportunities for industry consolidation. However, until the approach by the Consortium, no expressions of interest or discussions have progressed to a stage where a formal offer for the Company has been made.

In reviewing the Offer, the Independent Directors have taken into account that the terms of the Offer represent a premium, in cash, equivalent to 16.4 per cent. to the Closing Price per Daisy Share of 159.0 pence on 25 July 2014 (being the last Business Day prior to the Consortium's approach to Daisy). The Independent Directors considered this premium against the fact that the Consortium already owns more than 50 per cent. of Daisy's existing issued share capital and, hence, has effective control.

After due consideration, the Independent Directors concluded that the Consortium's proposal, if made as an Offer to Daisy Shareholders, substantially recognises Daisy's growth prospects, as well as the risks associated with those prospects, and provides certainty, in cash, to Daisy Shareholders today. The approach by the Consortium was made public on 13 August 2014. Since that date, no other approach for the Company has been received.

7. Recommendation

The Independent Directors, who have been so advised by Liberum, consider the terms of the Offer to be fair and reasonable. In providing advice to the Independent Directors, Liberum has taken into account the commercial assessments of the Independent Directors. Accordingly, the Independent Directors intend to recommend unanimously that Daisy Shareholders accept the Offer, as the Daisy Directors (other than Matthew Riley) who hold Daisy Shares have irrevocably undertaken to do in respect of their entire beneficial holdings in Daisy amounting to, in aggregate, 3,098,509 Daisy Shares, representing approximately 1.16 per cent. of the existing issued share capital of Daisy and 2.47 per cent. of the Daisy Shares to which the Offer relates.

Liberum is providing independent financial advice to the Independent Directors for the purposes of Rule 3 of the City Code. Oakley Capital Corporate Finance is financial adviser to the Company.

Liberum has advised the Independent Directors that the terms of the Management Arrangements are fair and reasonable in so far as the Independent Shareholders are concerned. The Independent Directors intend to recommend unanimously that the Independent Shareholders vote in favour of the Ordinary Resolution, as the Independent Directors have irrevocably undertaken to do in respect of a total of 2,921,356 Daisy Shares, representing approximately 2.3 per cent. of the Daisy Shares held by Independent Shareholders.

8. Information relating to Daisy

Daisy is an independent UK supplier of cost-effective services and bespoke unified business communications solutions to SMEs and mid-market businesses. Daisy offers a comprehensive range of products and services including fixed line voice, data, hosting, mobile telephony and associated managed services.

The Daisy Group operates three trading divisions, Daisy Retail, Daisy Wholesale and Daisy Distribution. Daisy Retail provides communications services to a directly-owned or managed customer base. Daisy Wholesale provides communications services to smaller telecoms resellers including small to medium sized Internet Service Providers ("ISPs"), telecoms network operators and resellers and IT service providers. Daisy Distribution provides a wide range of mobile handsets and airtime tariffs from O2, Vodafone and EE (including legacy arrangements with Orange and T-Mobile) via a dealer network.

Daisy provides communications services across four broad product areas: (i) Networks; (ii) Data; (iii) Systems; and (iv) Mobile.

(i) Networks. Daisy provides a range of network services, including fixed line calls and rentals, single analogue business lines, 0800 numbers and conference calling services. All network services are provided over third-party networks.

(ii) Data. Daisy provides a range of cloud, hosting and data connectivity services, including fully-managed IP VPN/MPLS networks and internet access that is increasingly delivered over fibre connections.

(iii) Systems. Daisy supplies, manages and maintains both traditional and cloud telephony system services that are either based in one of Daisy's data centres or within the customer's premises. Daisy also offers services such as Voice over IP ("VoIP") technology that can be used to complement or replace a customer's analogue network as well as intelligent call handling services that allow customers to obtain enhanced functionality from their existing analogue network.

(iv) Mobile. Daisy is one of the UK's largest independent mobile services providers to the business community. Daisy offers a range of mobile connections and devices, working in conjunction with the major mobile network operators and manufacturers.

9. Information relating to the Consortium and Bidco

Toscafund

Toscafund has been a supportive investor in Daisy since July 2009 and has a detailed understanding of Daisy's business model as well as the telecoms sector in the UK. Toscafund is part of the Old Oak Group, a financial services group with an office in London, which is engaged in asset management and private equity. It was founded in 2000 by Martin Hughes, the Chief Executive. The holding company for the Old Oak Group is Old Oak Holdings Limited, a company established and owned by Martin Hughes. As at 30 September 2014, the Old Oak Group had combined assets under management of around US$3 billion.

Toscafund's primary activity is to act as an investment manager/adviser to a number of investment funds and accounts that follow primarily equity investment strategies. It was incorporated in England and Wales on 13 June 2006 and has been authorised by the FCA to conduct investment business since 31 October 2006. It is also registered as an investment adviser with the US Securities and Exchange Commission. Its principal place of business is at 7th Floor, 90 Long Acre, London WC2E 9RA.

Tosca Opportunity

Tosca Opportunity is an exempted company incorporated with limited liability under the laws of the Cayman Islands on 13 December 2004 pursuant to the Companies Law of the Cayman Islands under registration number 143032. Toscafund acts as investment manager to Tosca Opportunity and the investment objective of Tosca Opportunity is to achieve superior total returns through capital appreciation. Toscafund seeks to achieve these returns by following a strategy of investing in the equity and other securities of small and medium sized UK and European companies.

The unaudited net asset value of Tosca Opportunity was approximately US$521 million as at 30 September 2014, being the latest practicable date prior to the date of this announcement.

Tosca Mid Cap

Tosca Mid Cap is an exempted company incorporated with limited liability under the laws of the Cayman Islands on 7 November 2007 pursuant to the Companies Law of the Cayman Islands under registration number MC-198692. Toscafund acts as investment manager to Tosca Mid Cap and the investment objective of Tosca Mid Cap is to achieve superior total returns through capital appreciation. Toscafund seeks to achieve these returns by following a strategy of investing in the equity and other securities of small and medium sized UK and European companies.

The unaudited net asset value of Tosca Mid Cap was approximately GBP142.8 million as at 30 September 2014, being the latest practicable date prior to the date of this announcement.

Matthew Riley

Matthew Riley is the Chief Executive Officer of Daisy. Matthew Riley is a British businessman and entrepreneur, having founded three start-up businesses in the communications and technology industry. Matthew Riley has received numerous accolades through the course of his career including, the M&A Awards Dealmaker of the Year Award in 2010, the Bank of Scotland Entrepreneur of the Year Award in 2008, the Ernst & Young Entrepreneur of the Year Award in 2008, the Deloitte Fast 50 Award in 2008 and the Sunday Times Tech Track Winner in 2005.

Penta

Penta is an active private equity investor in UK mid-market companies. Over the last several years, it has sought to invest in well-positioned market leaders, similar to Daisy, with select investments in the telecoms and telecoms infrastructure sector including Six Degrees Group, SpiriTel and Wireless Infrastructure Group. SpiriTel was sold to Daisy in 2010.

Penta was established in 1999 and is majority owned and managed by its partners. Old Oak Holdings Limited, the ultimate parent company of Toscafund, acquired a significant minority position in Penta in 2007, as part of its strategy to establish a broad based asset management group.

Bidco

Bidco, a wholly owned indirect subsidiary of Chain Topco Limited ("Topco"), is a newly incorporated company formed at the direction of Matthew Riley, Toscafund and Penta for the purpose of implementing the Offer and providing management and strategic services to its subsidiaries. Topco is currently owned as to 45.68 per cent. by Toscafund GP Limited (a wholly owned subsidiary of Toscafund), 42.84 per cent. by Matthew Riley and 11.47 per cent. by Penta Capital Investments Limited (a wholly owned subsidiary of Penta). Following the Offer becoming, or being declared, unconditional in all respects and completion of the Share Exchange Agreement and Subscription Agreement but prior to the Management Arrangements being implemented, it is anticipated that Topco will be owned as to 49.70 per cent. by Matthew Riley, 37.87 per cent. by funds managed or15

advised by Toscafund, as to 9.69 per cent. by Toscafund Limited (a wholly owned subsidiary of Old Oak Holdings Limited), 0.04 per cent. by Toscafund GP Limited (a wholly owned subsidiary of Toscafund), 0.01 per cent. by Penta Capital Investments Limited (a wholly owned subsidiary of Penta) and 2.69 per cent. by funds managed or advised by Ares Management Limited or Ares Management UK Limited (together "Ares"). The voting rights attaching to a proportion of the shares held by Matthew Riley representing 9.4 per cent. of the ordinary issued share capital of Topco are suspended until such time as any fund managed or advised by Toscafund sells any of the shares in Topco that it will acquire under the Share Exchange Agreement to certain third parties. The Bidco Group comprises Topco, Chain Pikco Limited ("Pikco"), Chain Midco Limited ("Midco"), Chain Finco Limited ("Finco") and Bidco. Pikco is a wholly owned direct subsidiary of Topco. Midco is a wholly owned direct subsidiary of Pikco. Finco is a wholly owned subsidiary of Midco. Bidco is a wholly owned subsidiary of Finco.

Bidco is a public limited liability company incorporated in England and Wales on 4 September 2014 under the Companies Act with registered number 09203980. It has its registered office at Level 13, Broadgate Tower, 20 Primrose Street, London EC2A 2EW. Bidco was issued with a certificate entitling it to do business and borrow on 9 September 2014.

The directors of Topco are Martin Hughes, Matthew Riley and Steven Scott. The directors of each of Pikco, Midco, Finco and Bidco are Matthew Riley and Steven Scott.

Save for activities in connection with the making, implementation and financing of the Offer, no member of the Bidco Group has carried on any business prior to the date of this announcement, nor has it entered into any obligations. No member of the Bidco Group has paid any dividends or prepared any historical financial accounts.

The principal activity of Bidco is to act as a holding company for Daisy and to provide certain management and strategic services to Daisy. Bidco's principal investment is the proposed acquisition of Daisy Shares pursuant to the Offer or otherwise.

10. Financing arrangements of the Bidco Group

Equity arrangements

On 20 October 2014, each member of the Consortium, Ares, Martin Hughes and Topco entered into a shareholders' agreement which governs (amongst other things) (i) the relationship between the parties to the agreement and the Bidco Group in relation to the conduct of the Offer and (ii) the management of the future affairs of the Bidco Group and its subsidiaries (the "Shareholders' Agreement").

On 20 October 2014, each of Topco, Pikco, Midco, Finco, Bidco, Matthew Riley and Toscafund entered into a share exchange agreement, which governs (amongst other things) the terms upon which each of Matthew Riley and Toscafund shall procure the sale of, and Topco will purchase, certain Daisy Shares in exchange for shares in Topco (the "Share Exchange Agreement"). These Daisy Shares are those held indirectly by Matthew Riley and Daisy Shares in which he has an interest or an entitlement to acquire under the Daisy Share Schemes and two investment funds managed by Toscafund. The Share Exchange Agreement provides for the Daisy Shares which will be acquired by Topco to be transferred down the Bidco Group from Topco to Pikco, then from Pikco to Midco, then from Midco to Finco and finally from Finco to Bidco. The sale of Daisy Shares to Topco and subsequent transfers are conditional upon the Offer becoming, or being declared, unconditional in all respects.

On 20 October 2014, the members of the Bidco Group, Ares and Toscafund Limited entered into an equity subscription agreement with Topco, which governs the terms upon which Toscafund Limited and Ares shall subscribe for ordinary shares and preferred ordinary shares to be issued by Topco for16

a cash subscription of GBP46 million (the "Subscription Agreement"). The purpose of the cash subscription under the Subscription Agreement is to finance (in part) the consideration payable under the Offer and to pay certain fees, costs and other expenses in connection with the Offer.

PIK Loan

On 20 October 2014, Ares entered into a loan agreement with Pikco by which Ares undertook to provide a GBP135 million PIK loan (the "PIK Loan") subject to certain conditions, including the Offer becoming, or being declared, unconditional in all respects. The purpose of the issue of the PIK Loan is to finance (in part) the consideration payable under the Offer, along with the refinancing of certain indebtedness of Daisy and its subsidiaries and to pay certain fees, costs and expenses in connection with the Offer.

Under the PIK Loan, Pikco has agreed to a number of restrictions including in relation to the conduct of the Offer by the Bidco Group including the following:

-- it will not, except as consented to by the PIK Agent in writing, amend, vary, waive or otherwise modify the terms and conditions of the Offer or treat as satisfied any condition, the satisfaction of which involves an assessment regarding the acceptability or otherwise to Bidco of conditions imposed by any regulatory body, if such amendment, variation, waiver, modification or treating as satisfied is material and is reasonably likely to be prejudicial to the interests of the lenders under the PIK Loan and the other finance documents, in each case save to the extent required by the Panel or any other applicable law, regulation or regulatory body; and

-- it will not declare the Offer unconditional as to acceptances until Bidco has received valid acceptances (which have not been validly withdrawn) in respect of the Daisy Shares to which the Offer relates such that following the acquisition of such shares, it will hold not less than 90 per cent. of each class of the shares to which the Offer relates on a fully diluted basis.

Pursuant to the terms of the PIK Loan, on 20 October 2014, Pikco granted a debenture in favour of Ares Management Limited in its capacity as PIK Security Agent.

On 20 October 2014, each of Pikco, Midco, Finco and Bidco entered into a PIK financing subscription agreement which governs the terms upon which the funds from the PIK Loan are to be loaned down the Bidco Group from Pikco to Midco, then Midco to Finco and finally from Finco to Bidco.

Senior Facilities Agreement

On 20 October 2014, Bidco entered into a senior facilities agreement in the amount of GBP265 million (the "Senior Facilities Agreement") with, among others, HSBC Bank plc, Lloyds Bank plc and ING Bank N.V. as lenders (together, the "Lenders") and HSBC Bank plc as facility agent (the "Agent") for the purpose of financing, in part, the consideration payable under the Offer.

Under the Senior Facilities Agreement, Bidco has agreed to a number of restrictions including in relation to its conduct of the Offer including the following:

-- it will not, except as consented to by the Agent in writing, amend, vary, waive or otherwise modify the terms and conditions of the Offer or treat as satisfied any condition, the satisfaction of which involves an assessment regarding the acceptability or otherwise to Bidco of conditions imposed by any regulatory body, if such amendment, variation, waiver, modification or treating as satisfied is material and is reasonably likely to be prejudicial to the interests of the lenders under the Senior Facilities Agreement and the other finance documents, in each case save to the extent required by the Panel or any other applicable law, regulation or regulatory body; and

Acquisition Group Debenture

On 20 October 2014, Finco entered into a debenture (the "Acquisition Group Debenture") in favour of HSBC Corporate Trustee Company (UK) Limited as security agent (the "Security Agent") under which it has provided security over substantially all of its assets, including all the shares of Bidco owned by it from time to time. The Security Agent is appointed by, amongst other parties, the Lenders to hold the assets subject to the security created thereunder for their benefit to secure, amongst other obligations, those under the Senior Facilities Agreement.

On 20 October 2014, Bidco entered into a debenture in favour of the Security Agent under which it has also provided security over substantially all of its assets. Upon the acquisition by Bidco of shares in Daisy, such shares will become subject to the security provided thereunder.

Intercreditor Agreement

On 20 October 2014, Midco, Finco, Bidco, the Agent, the Security Agent and the Lenders entered into an intercreditor agreement (the "Intercreditor Agreement"). The Intercreditor Agreement provides that, amongst other matters, amounts of subordinated loans and equity made available by Midco to Finco shall be subordinated to the claims of the Lenders under the Senior Facilities Agreement and amounts thereunder may only be repaid to the extent permitted under the Intecreditor Agreement. In addition the Intercreditor Agreement provides that certain hedging arrangements entered into by Bidco and its subsidiaries may rank alongside the claims of the Lenders and may share in the security provided by Finco, Bidco and their subsidiaries pari passu with the claims of the Lenders.

11. Management, Management Arrangements, employees and locations

Bidco has confirmed to the Board of Daisy that it believes the skills and experience of the existing management and employees of Daisy are an important part of its business. Bidco confirms that it has given assurances to the Independent Directors of Daisy that, upon and following completion of the Offer, it intends to safeguard fully the existing employment and pension rights of all Daisy Group management and employees in accordance with applicable law and to comply with Daisy Group's pension obligations for existing employees. Bidco confirms that its current plans for Daisy do not include: (i) any changes to Daisy Group management or employees; (ii) any changes to the principal locations of Daisy Group's business; or (iii) any redeployment of Daisy Group's fixed assets.

The Consortium proposes to incentivise key members of Daisy's senior management through an issue of shares in Topco. The Topco shares proposed to be issued to management will be in two classes: ordinary equity shares ("Ordinary Shares") and exit ratchet shares ("Ratchet Shares").

The Ordinary Shares to be issued will carry voting rights and will represent approximately 2.0 per cent of the issued equity share capital of Topco following the issue of Topco shares pursuant to the Share Exchange Agreement and the Subscription Agreement. However, the voting rights will be suspended until such time as any fund managed or advised by Toscafund sells any of the shares in Topco that it will acquire under the Share Exchange Agreement to certain third parties.

The Ratchet Shares will be non-voting and will confer on the holders a right to participate in the equity value of Topco on a sale, listing or winding up. In order for the equity ratchet to operate the Investors must, on the exit event, achieve (i) a minimum internal rate of return on their aggregate investments in the Bidco Group of 22 per cent. per annum compounding annually ("IRR") and (ii) a money multiple of two times the aggregate of the Investors' investments in the Bidco Group. If these minimum return criteria are met on an exit event then the members of Daisy's senior management who hold the Ratchet Shares would, as a group, receive an aggregate share of the ordinary equity value of Topco increasing in line with the amount by which the money multiple exceeds a two times return to the Investors. At a money multiple of two times (subject to the18

minimum IRR), the group holding the Ratchet Shares would be entitled to 1 per cent. of the ordinary equity value of Topco increasing (on a straight line basis) to a maximum of 13.8 per cent. of the ordinary equity value at a money multiple of 3.3 times or more.

The Ordinary Shares and the Ratchet Shares will not be issued until after the Offer has become, or been declared, unconditional in all respects.

It is intended that the Ordinary Shares and the Ratchet Shares will be issued under the recently introduced employee shareholder status scheme (the "ESS"). Shares issued under the ESS cannot be worth less than GBP2,000 or more than GBP50,000 at the time of issue and, under the relevant legislation, the employee receiving the shares may not pay for them but, as consideration, must give up certain statutory employment rights. The Consortium will make arrangements for the nominal value of any shares issued under the ESS to be paid up on behalf of the relevant shareholder. Topco will grant to each manager a short term and limited put option that will allow a manager to put all (but not some only) of his Ordinary and Ratchet Shares issued under the ESS on Topco (or another purchaser nominated by Topco) for an aggregate price of GBP2,000. The put option is exercisable for 30 days after the date of issue of the relevant shares. At the end of this period the put option will expire.

Whether the Ordinary Shares and Ratchet Shares proposed to be issued to incentivise key members of Daisy's senior management are issued under the ESS or not, the Consortium considers that these shares will not have significant value at the time of issue. The Ordinary Shares will rank behind approximately GBP300 million of preferred share capital which will be held by the Investors and Matthew Riley and the combination of this subordination and the transaction fees and expenses which will be payable by the Bidco Group will depress the initial value of the Ordinary Shares. The Ratchet Shares are subject to minimum return criteria which the Consortium considers are stretching but set at an appropriate level for management incentivisation.

Other than the short term and limited put option, there will be no guaranteed minimum returns or minimum sale prices for the Ordinary Shares or Ratchet Shares on exit or on a sale before exit should a management shareholder leave the employment of the Group.

The terms of these arrangements will be set out in more detail in the Offer Document and will require the approval of the Independent Shareholders at the Daisy General Meeting under the terms of the Code before they can be implemented. A notice convening the Daisy General Meeting will be included in the Offer Document, together with a Form of Proxy to be used by the Independent Shareholders who hold their Daisy Shares in certificated form to cast their vote at the Daisy General Meeting. Bidco has received irrevocable undertakings to vote, or procure the vote, in favour of the Ordinary Resolution to be proposed at the Daisy General Meeting in respect of 108,769,191 Daisy Shares, in aggregate, representing approximately 85.82 per cent. of the Daisy Shares held by the Independent Shareholders.

Liberum, as Daisy's adviser for the purposes of Rule 3 of the Code, has confirmed that, in its opinion, the Management Arrangements described above are fair and reasonable.

It is intended that the Non-Executive Directors of Daisy will cease to be directors on the Offer becoming, or being declared, unconditional in all respects (the termination of their appointments being conditional on the commencement of the process to acquire compulsorily any remaining Daisy Shares pursuant to sections 974 to 991 of the Companies Act).

12. Exit Awards

Cash bonus awards ("Exit Awards") are payable to certain directors and senior executives of Daisy in the event of a change of control of Daisy. The Exit Awards form part of the wider executive remuneration package and consist of either: (i) an amount equal to two times basic salary and an amount calculated by reference to value creation from Admission to the date of the change of19

control event; or (ii) an amount equal to annual basic salary plus an amount representing a proportion of potential annual bonus entitlement. Value creation is measured by reference to the growth in the Company's enterprise value between Admission and the Offer. The Remuneration Committee of the Daisy Board considers that significant growth in enterprise value has been achieved over this period which has also generated significant equity value for the benefit of all Daisy Shareholders and that the incentive of the Exit Awards has contributed to this value creation.

The Remuneration Committee first approved the Exit Awards on 17 May 2010 and has periodically reviewed their appropriateness in the context of broader executive remuneration and monitored their effectiveness as an incentive to senior management to continue to grow value and seek exit opportunities for the benefit of Daisy Shareholders. The Remuneration Committee last reviewed the Exit Awards on 24 June 2014 and determined that they continued to be appropriate. This precedes the date that Matthew Riley was approached by Toscafund to form the Consortium and to acquire the Daisy Shares which it did not own or control. Details of the Exit Awards (some of which have been waived, either in whole or in part, in order to reduce the funding required for the Offer) are set out below.

With respect to Peter Dubens, Executive Chairman, the Exit Award payable would amount to GBP2.965 million if the Offer becomes, or is declared, unconditional in all respects. Peter Dubens has waived GBP0.5 million of his entitlement to this Exit Award.

With respect to Matthew Riley, Chief Executive Officer, the Exit Award payable would amount to GBP5.930 million if the Offer becomes, or is declared, unconditional in all respects. Matthew Riley has waived his entire entitlement to this Exit Award.

With respect to Steve Smith, Chief Financial Officer, the Exit Award payable would amount to GBP3.035 million if the Offer becomes, or is declared, unconditional in all respects. Steve Smith has waived GBP0.943 million of his entitlement to this Exit Award.

With respect to David McGlennon, Company Secretary and General Counsel, the Exit Award payable would amount to GBP1.532 million if the Offer becomes, or is declared, unconditional in all respects. David McGlennon has waived GBP0.566 million of his entitlement to this Exit Award.

With respect to Nathan Marke, Chief Technology Officer, the Exit Award payable would amount to GBP0.3 million if the Offer becomes, or is declared, unconditional in all respects. Nathan Marke has waived his entire entitlement to this Exit Award.

Peter Dubens and Steve Smith are directors of Daisy and, accordingly, the Exit Awards payable to each of them are related party transactions pursuant to Rule 13 of the AIM Rules.

Other than the outflow of cash required to pay the relevant amounts (including employer's national insurance contributions) the Exit Awards described above will have no effect on Daisy.

With the exception of Peter Dubens and Steve Smith, who are interested in the Exit Awards as related parties under the AIM Rules, the Daisy Directors consider, having consulted with Liberum in its capacity as the Company's nominated adviser, that the terms of the Exit Awards are fair and reasonable insofar as Daisy Shareholders are concerned.

The Independent Shareholders should note that the Ordinary Resolution relates to the Management Arrangements described in paragraph 11 and that they are not being asked to approve the Exit Awards described in this paragraph 12.

13. Fees to Oakley Capital Corporate Finance

A fee payable by Daisy if the Offer becomes, or is declared, unconditional in all respects to Oakley Capital Corporate Finance, an autonomous business division of Oakley Capital Limited, which is acting as Financial Adviser to Daisy (the "Oakley Capital Corporate Finance Fee"), also constitutes20

a related party transaction pursuant to Rule 13 of the AIM Rules as a result of Peter Dubens' interest in Oakley Capital Limited. The Oakley Capital Corporate Finance Fee is GBP4,308,890.

With the exception of Peter Dubens who is interested in the Oakley Capital Corporate Finance Fee as a related party, the Daisy Directors consider, having consulted with Liberum in its capacity as the Company's nominated adviser, that the terms of the Oakley Capital Corporate Finance Fee are fair and reasonable insofar as Daisy Shareholders are concerned.

   14.   Daisy Shares to which the Offer relates and Daisy Share Schemes

Bidco has already agreed, under the Share Exchange Agreement, to acquire approximately 53.0 per cent. of Daisy's existing issued share capital held, or to be held, by Matthew Riley and funds managed or advised by Toscafund. Accordingly, the Offer extends to the remaining Daisy Shares not already owned, or agreed to be acquired by, Bidco, which represent approximately 47.0 per cent. of Daisy's current issued share capital.

The Offer also extends to any Daisy Shares which are unconditionally allotted or issued and fully paid (or credited as fully paid) on or before the date on which the Offer closes as to acceptances (or such earlier date as Bidco may, subject to the Code, decide) including any such Daisy Shares allotted or issued pursuant to the exercise of existing options, warrants or awards granted under the Daisy Share Schemes following the Offer becoming, or being declared, unconditional in all respects. The trustee of the Daisy Employee Benefit Trust currently holds sufficient number of Daisy Shares to satisfy all outstanding options, warrants and awards and, to the extent that it is possible to satisfy such options, warrants and awards using the Daisy Shares held by the trustee of the Daisy Employee Benefit Trust, then it is proposed that such Daisy Shares will be used to satisfy such options, warrants and awards under the Daisy Share Schemes. Appropriate proposals will be made to Daisy Share Scheme Participants in due course.

   15.   Financing of the Offer

The cash consideration payable under the Offer will be provided by Bidco from the subscription for equity under the Subscription Agreement, the PIK Loan and drawdown under the Senior Facilities Agreement, in each case, as referred to at paragraph 10 above.

J.P. Morgan Cazenove is satisfied that sufficient cash resources are available to Bidco to satisfy full acceptance of the Offer.

Further information in relation to the financing of the Offer will be set out in the Offer Document.

   16.   Opening Position Disclosure

The Consortium made a public Opening Position Disclosure on 26 August 2014 setting out details required to be disclosed by it under Rule 8.1(a) of the Code.

The Consortium's Opening Position Disclosures also included all relevant details in respect of all persons acting in concert with any member of the Consortium (other than Steve Smith who is now deemed to be acting in concert with the Consortium).

   17.   Further terms and conditions of the Offer

The Offer is to be effected by means of a takeover offer within the meaning of Part 28 of the Companies Act. Bidco reserves the right to elect to implement the acquisition of Daisy, with the consent of the Panel and the Independent Directors, by way of a Scheme which will be implemented on the same terms (subject to appropriate amendment) as the Offer.21

In the event of such an election by Bidco, those Daisy Shareholders who have given irrevocable undertakings to accept the Offer have agreed to vote in favour of the shareholder resolutions required in connection with the Scheme. Further details of these undertakings are set out in paragraph 3 and in Appendix 4.

References to the Offer and the Offer Document in this announcement shall include, where applicable, such Scheme.

The Offer will be subject to the Conditions and further terms set out in this announcement and to the full terms and conditions to be set out in the Offer Document and, in respect of Daisy Shares held in certificated form, the Form of Acceptance. Appendix 3 contains bases and sources of certain information contained in this announcement. Appendix 4 contains details of irrevocable undertakings received by Bidco. Appendix 5 contains the definitions of certain terms used in this announcement.

The Offer will be governed by English law. The Offer will be subject to the applicable requirements of the City Code, the Panel and AIM Rules.

   18.   Cancellation of admission to trading of the Daisy Shares on AIM

If the Offer becomes, or is declared, unconditional in all respects and Bidco receives valid acceptances in respect of Daisy Shares which, together with the Daisy Shares acquired, or agreed to be acquired, before or during the Offer by Bidco and/or any other members of the Bidco Group and the Consortium, represent not less than 75 per cent. of the voting rights attaching to the Daisy Shares, Bidco intends to procure that the Company will make an application for the cancellation of the admission to trading on AIM of the Daisy Shares.

It is expected that cancellation will take effect no earlier than 20 Business Days after the date on which Bidco has, by virtue of its shareholdings and acceptances of the Offer, acquired, or agreed to acquire, 75 per cent. of the voting rights attaching to the Daisy Shares. Bidco will notify Daisy Shareholders when the necessary 75 per cent. threshold has been reached and confirm that the notice period has commenced and the anticipated date of cancellation.

Cancellation of admission to trading is likely to reduce significantly the liquidity and marketability of any Daisy Shares in respect of which the Offer has not at such time been accepted.

If the Offer becomes, or is declared, unconditional in all respects and Bidco receives acceptances of the Offer in respect of, and/or otherwise acquires, 90 per cent. or more of the Daisy Shares to which the Offer relates and 90 per cent. or more of the voting rights attaching to such shares, Bidco intends to exercise its rights pursuant to sections 974 to 991 of the Companies Act to acquire compulsorily, on the same terms as the Offer, the remaining Daisy Shares in respect of which the Offer has not at such time been accepted.

It is also intended that, after the Offer becomes, or is declared, unconditional in all respects, Bidco will seek to re-register Daisy as a private limited company.

   19.   Overseas Shareholders

The availability of the Offer to Daisy Shareholders who are not resident in the UK may be affected by the laws and/or regulations of their relevant jurisdiction. Therefore, any persons who are subject to the laws and/or regulations of any jurisdiction other than the UK should inform themselves about and observe any applicable legal or regulatory requirements in their jurisdiction. If you are in any doubt, you should consult your professional adviser in the relevant jurisdiction without delay.

20. Offer-related arrangements

On 5 August 2014, each of Toscafund and Penta entered into a confidentiality and standstill agreement with Daisy in a customary form in relation to the Offer, pursuant to which, among other things, each of Toscafund and Penta undertook, subject to certain exceptions:

-- to keep confidential information relating to Daisy and not disclose it to third parties other than those specifically permitted within the agreement;

-- during discussions on the Offer and for a period of one year after the termination of such discussions, not to solicit or entice away any senior employee of Daisy from their employment with Daisy nor solicit the custom of any customer of Daisy; and

-- not to acquire any interest in the securities of Daisy for a period of 6 months from 5 August 2014.

Except for the non-solicitation and standstill obligations referred to above, the obligations on Toscafund and Penta in the confidentiality and standstill agreements will continue for two years from 5 August 2014.

21. Documents on display

Copies of the following documents will, by no later than 12 noon on the Business Day following the date of this announcement, be published on Daisy's website at www.daisygroupplc.com, on Toscafund's website at www.toscafund.com and on Penta's website at www.pentacapital.com until the end of the Offer Period:

(a) the irrevocable commitments listed in Appendix 4;

(b)the Share Exchange Agreement, the Subscription Agreement, the PIK Loan, the Senior Facilities Agreement, the Intercreditor Agreement and the Acquisition Group Debenture;

(d) letters waiving certain Exit Awards as referred to in paragraph 12 above;

(e) consent letters from each of Liberum Capital Limited and PricewaterhouseCoopers LLP; and

   (f)   this announcement.

Documentation relating to certain arrangements, including market flex, connected with the financing of the Offer (which will not be put on display by 12 noon on the Business Day following the date of this announcement) will be put on display on the websites of Daisy, Toscafund and Penta, if the syndication of the Senior Facilities Agreement has not completed when the Offer Document is issued.

22. Expected timetable

It is intended that the Offer Document and Form of Acceptance containing further details of the Offer, together with the Form of Proxy for use by Independent Shareholders in connection with the Daisy General Meeting will be despatched to Daisy Shareholders (other than to persons in a Restricted Jurisdiction) as soon as practicable and, in any event, not later than 28 days after the date of this announcement (unless agreed otherwise with the Panel).

23. General

Your attention is drawn to the further information contained in the Appendices, which form part of, and should be read in conjunction with, this announcement. Please be aware that addresses, electronic addresses and certain other information provided by Daisy Shareholders, persons with23

information rights and other relevant persons in connection with the receipt of communications from Daisy may be provided to Bidco during the course of the Offer Period as required under Section 4 of Appendix 4 of the Code.

Enquiries:

 
 J.P. Morgan Cazenove (financial adviser to Bidco) 
 Hugo Baring                                   Tel: +44 (0) 20 7777 2000 
 James Thomlinson Christopher Wood Seán 
  Murphy 
 Redleaf (media enquiries for Bidco) 
 Emma Kane                                     Tel: +44 (0) 20 7382 4747 
 Liberum (Rule 3 Adviser, Nominated Adviser and Corporate Broker 
  to Daisy) 
 Steve Pearce                                  Tel: +44 (0)20 3100 2000 
 Neil Patel 
 Steve Tredget 
 Thomas Bective 
 Oakley Capital Corporate Finance (financial adviser to Daisy) 
 Chris Godsmark                                Tel: +44 (0) 20 7766 6900 
 Chris Brooks Zishaan Arshad 
 Marc Jones 
 Redleaf (media enquiries for Daisy) 
 Rebecca Sanders-Hewett                        Tel: +44 (0) 20 7382 4730 
 Jenny Bahr 
 Rachael Brown

Liberum Capital Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Daisy and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Daisy for providing the protections afforded to clients of Liberum Capital nor for providing advice in connection with the Offer or this announcement or any matter referred to herein.

IMPORTANT NOTES

This announcement does not constitute a prospectus or prospectus equivalent document. Overseas jurisdictions

Notice to US investors

Cautionary note regarding forward-looking statements

This announcement, including the information included in this announcement, contains certain forward-looking statements. These statements are based on the current expectations of Daisy, Bidco, Toscafund, Penta and Matthew Riley (as the case may be) and are naturally subject to uncertainty and changes in circumstances. These forward-looking statements may include statements about the expected effects on Daisy, the Bidco Group and/or any member of the Consortium of the Offer, the expected timing and scope of the Offer, strategic options and all other statements in this document other than historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "budget", "schedule", "forecast", "project", "goal", "believe", "hope", "aims", "continue", "will", "may", "should", "would", "could", "subject to", or other words of similar meaning. By their nature, forward-looking statements involve known and unknown risks and uncertainties, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this document could cause actual results, outcomes and developments to differ materially from those expressed in or implied by such forward-looking statements and such statements are therefore qualified in their entirety by the risks and uncertainties surrounding these future expectations. Many of these risks and uncertainties relate to factors that are beyond the entities' ability to control or estimate precisely, such as, but not limited to, general business and market conditions both globally and locally, political, economic and regulatory forces, industry trends and competition, future exchange and interest rates, changes in government and regulation including in relation to health and safety, the environment, labour relations and tax rates and future business combinations or dispositions. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, none of Daisy, Bidco or each member of the Consortium can give any assurance, representation or guarantee that such expectations will prove to have been correct and such forward-looking statements should be construed in light of such factors and you are therefore cautioned not to place reliance on these forward-looking statements which speak only as at the date of this document. None of Daisy, Bidco or each member of the Consortium assumes any obligation to update or correct the information contained in this document (whether as a result of new information, future events or otherwise), except as required by applicable law or regulation.

Dealing and Opening Position Disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Purchases outside the Offer

Publication on websites

A copy of this announcement and other documents in connection with the Offer will, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, be available free of charge for inspection on Daisy's website at www.daisygroupplc.com, on Toscafund's website at www.toscafund.com and on Penta's website at www.pentacapital.com. The contents of these websites referred to in this announcement are not incorporated into, and do not form part of, this announcement.

Information relating to Daisy Shareholders

Appendix 1

Conditions to and certain further terms of the offer

Part A: Conditions of the Offer

1. Acceptance and Management Arrangements Condition The Offer will be conditional upon:

(a) valid acceptances being received (and not, where permitted, withdrawn) by not later than 1.00 p.m. (London time) on the First Closing Date of the Offer (or such later time(s) and/or date(s) as Bidco may, subject to the rules of the Code or with the consent of the Panel decide) in respect of not less than 90 per cent. (1) in nominal value of the Daisy Shares to which the Offer relates and (2) of the voting rights attached to those shares (or, in either case, such lower percentage figure as Bidco may decide). However, this condition will not be satisfied unless Bidco and/or its wholly owned subsidiaries have acquired, or agreed to acquire, Daisy Shares carrying, in aggregate, over 50 per cent. of the voting rights then normally exercisable at general meetings of Daisy. For the purposes of this Condition: (i) the expression "Daisy Shares to which the Offer relates" shall be construed in accordance with sections 974 to 991 (inclusive of the Companies Act 2006; (ii) Daisy Shares which have been unconditionally allotted but not issued before the Offer becomes, or is declared, unconditional, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise, shall be deemed to carry the voting rights they will carry on issue; and (iii) valid acceptances shall be treated as having been received in respect of any Daisy Shares that Bidco shall have acquired, or unconditionally contracted to acquire, pursuant to section 979(8) and, if applicable, section 979(9) of the Companies Act; and

(b) the passing by the Independent Shareholders at the Daisy General Meeting (or at any adjournment thereof) of the Ordinary Resolution or such other resolutions as may be required by the Panel to approve the Management Arrangements.

2. The Offer will be subject to the following conditions (as amended, if appropriate):

In addition, subject as stated in Part B below and to the requirements of the Panel, the Offer will be conditional upon the Acceptance Condition, the Management Arrangements Condition and the following Conditions being satisfied or, where relevant, waived:

Notifications, waiting periods and authorisations

(a) all material notifications, filings or applications which are necessary or reasonably considered appropriate in connection with the Offer having been made and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with in each case in respect of the Offer and all material authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions and approvals ("Authorisations") deemed necessary or reasonably appropriate by Bidco in any jurisdiction for, or in respect of, the Offer and, except pursuant to Chapter 3 of Part 28 of the Companies Act, the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, Daisy having been obtained in terms and in a form reasonably satisfactory to Bidco from any appropriate central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body or authority, court, trade agency, professional association, institution, employee representative body or any other body or person

whatsoever in any jurisdiction (a "Third Party") or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Daisy Group has entered into contractual arrangements and all such Authorisations necessary or reasonably appropriate to carry on the business of any member of the Daisy Group in any jurisdiction having been obtained and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise wholly unconditional and there being no notice or written intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

General antitrust and regulatory

(b) no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, inquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to (in any case which is material in the context of the Offer):

(i) require, prevent or materially delay or affect the divestiture or materially prejudice the terms envisaged for such divestiture by any member of the Daisy Group or Bidco of all or any material part of their respective businesses, assets or property or of any Daisy Shares or other securities in Daisy or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof) to an extent which is material in the context of the Daisy Group, taken as a whole;

(ii) except pursuant to Chapter 3 of Part 28 of the Companies Act, require Bidco to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Daisy Group or any asset owned by any Third Party (other than in connection with the implementation of the Offer);

(iii) impose any limitation on, or result in a material delay in, the ability of Bidco, directly or indirectly, to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Daisy or on the ability of any member of the Daisy Group, directly or indirectly, to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Daisy Group, in each case, to an extent which is material in the context of the Daisy Group, taken as a whole;

(iv) otherwise adversely affect any or all of the business, assets, financial or trading position, profits or prospects of any member of the Daisy Group or Bidco to an extent which is material in the context of the Daisy Group, taken as a whole, or Bidco (as the case may be);

(v) result in any member of the Daisy Group or Bidco ceasing to be able to carry on business to the extent conducted at the date of this announcement under any name under which it presently carries on business to an extent which is material in the context of the Daisy Group, taken as a whole, or Bidco (as the case may be);

(vi) make the Offer or its implementation, or the acquisition or proposed acquisition of any shares or other securities in, or control of, Daisy by Bidco, void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, materially prevent or prohibit, restrict, restrain or delay the same or otherwise interfere with the Offer or its implementation, or impose material additional conditions or obligations with respect to, or otherwise materially impede, interfere or require amendment of the Offer or the acquisition, or proposed acquisition, of any shares or other securities in, or control of, Daisy by Bidco to an extent which is material in the context of the Offer;

   (vii)   29

vii) require, prevent or materially delay a divestiture by Bidco of any shares or other securities (or the equivalent) in any member of the Daisy Group to an extent which is material in the context of the Daisy Group, taken as a whole, or Bidco (as the case may be); or

(vii) impose any limitation on the ability of Bidco to conduct or integrate all or any part of its business with all or any part of the business Bidco and/or the Daisy Group to an extent which is material in the context of the Daisy Group, taken as a whole, or Bidco (as the case may be),

and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer having expired, lapsed or been terminated;

Certain matters arising as a result of any arrangement, agreement, etc.

(c) except as Disclosed, there being no provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Daisy Group is a party or by or to which any such member or any of its assets is, or may be, bound, entitled or subject, or any event or circumstance which, as a consequence of the Offer or because of the change in the control of Daisy or any other member of the Daisy Group represented by the Offer, would, or might reasonably be expected to, result in (in any case to an extent which is, or would be, material in the context of the Daisy Group, taken as a whole):

(i) any monies borrowed by, or any other indebtedness, whether actual or contingent, of, or any grant available to, any member of the Daisy Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) the creation or enforcement of any mortgage, charge or other security interest over the whole, or any part, of the business, property or assets of any member of the Daisy Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen) becoming enforceable;

(iii) any such arrangement, agreement, lease, licence, franchise, permit or other instrument being terminated or the rights, liabilities, obligations or interests of any member of the Daisy Group therein being adversely modified or adversely affected, or any obligation or liability arising or any adverse action being taken or arising thereunder;

(iv) any liability of any member of the Daisy Group to make any severance, termination, bonus or other payment to any of its directors or other officers;

(v) the rights, liabilities, obligations, interests or business of any member of the Daisy Group under any such arrangement, agreement, lease, licence, franchise, permit or other instrument, or the interests or business of any member of the Daisy Group in or with any other person, body, firm or company (or any agreement or arrangement relating to any such interests or business) being, or becoming capable of being, terminated, or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

   (vi)     31

vi) any member of the Daisy Group ceasing to be able to carry on business under any name under which it presently carries on business;

(vi) the value of, or the financial or trading position or prospects of, any member of the Daisy Group being prejudiced or adversely affected; or

(vii) the creation or acceleration of any liability (actual or contingent) by any member of the Daisy Group other than trade creditors or other liabilities incurred in the ordinary course of business,

and no event having occurred which, under any provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Daisy Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would be expected to result in any of the events or circumstances as are referred to in Conditions (c)(i) to (viii) (in each case, to an extent which is material in the context of the Daisy Group, taken as a whole);

Certain events occurring since 31 March 2014

(d) except as Disclosed, no member of the Daisy Group having since 31 March 2014:

(i) issued or agreed to issue, or authorised or proposed or announced its intention to authorise or propose the issue of, additional shares of any class or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold, or agreed to transfer or sell, or authorised or proposed the transfer or sale of Daisy Shares out of treasury (except, where relevant, as between Daisy and wholly owned subsidiaries of Daisy or between the wholly owned subsidiaries of Daisy or pursuant to or in connection with the Daisy Share Schemes);

(ii) other than in respect of the Final Dividend, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) or dividends (or other distributions whether payable in cash or otherwise) lawfully paid or made by any wholly owned subsidiary of Daisy to Daisy or any of its wholly owned subsidiaries;

(iii) other than pursuant to the Offer (and except for transactions between Daisy and its wholly owned subsidiaries or between the wholly owned subsidiaries of Daisy and transactions in the ordinary course of business) implemented, effected, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment, acquisition or disposal of assets or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings, in any such case, to an extent which is material in the context of the Daisy Group, taken as a whole;

(iv) (except for transactions between Daisy and its wholly owned subsidiaries or between the wholly owned subsidiaries of Daisy) disposed of, or transferred, mortgaged or created any security interest over any asset or any right, title or interest in any asset or authorised, proposed or announced any intention to do so which, in any case, is material in the context of the Daisy Group, taken as a whole;

(v) (except for transactions between Daisy and its wholly owned subsidiaries or between the wholly owned subsidiaries of Daisy) issued, authorised or proposed or announced an intention to authorise or propose the issue of, or made any change in or to the terms of, any debentures or, except in the ordinary course of business, become subject to any contingent liability or incurred or increased any indebtedness which, in any case, is material in the context of the Daisy Group, taken as a whole;

   (vi)    32

vi) entered into or varied or authorised, proposed or announced its intention to enter into or vary any material contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) except in the ordinary course of business which is of a long term, unusual or onerous nature or magnitude or which involves an obligation of a nature or magnitude which is likely to be restrictive on the business of any member of the Daisy Group and which, in any case, is material in the context of the Daisy Group, taken as a whole;

(vi) entered into or varied the terms of, or made any offer (which remains open for acceptance) to enter into or vary to a material extent the terms of, any contract, service agreement, commitment or arrangement with any director or senior executive of any member of the Daisy Group, save as agreed by Bidco;

(vii) proposed, agreed to provide or modified to a material extent the terms of any share option scheme, incentive scheme or other benefit relating to the employment, or termination of employment, of any employee of the Daisy Group save as agreed by Bidco or which is required pursuant to the implementation of the Offer;

(viii) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, except in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital, save as agreed by Bidco or which is required pursuant to the implementation of the Offer;

(ix) waived, compromised or settled any claim (other than in the ordinary course of business or between Daisy and its wholly owned subsidiaries or between the wholly owned subsidiaries of Daisy) which is material in the context of the Daisy Group, taken as a whole;

(x) terminated, or varied the terms of, any agreement or arrangement between any member of the Daisy Group and any other person in a manner which would have a material adverse effect on the financial position of the Daisy Group, taken as a whole;

(xi) other than pursuant to the Offer and as envisaged in accordance with the terms of the Offer, made any alteration to its memorandum or articles of association or other incorporation documents, in each case, which is material in the context of the Offer;

(xii) except in relation to changes made or agreed as a result of, or arising from, changes to legislation, made or agreed or consented to any material change to the terms of the trust deeds and rules constituting the pension scheme(s) established for its directors, employees or their dependants or any material change to the benefits which accrue, or to the pensions which are payable, thereunder, or to the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined or to the basis upon which the liabilities (including pensions) of such pension schemes are funded or made, or agreed or consented to, in each case, which is material in the context of the Daisy Group, taken as a whole;

(xiii) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased, or threatened to cease, carrying on all, or a substantial part of, its business, in each case, which is material in the context of the Daisy Group, taken as a whole;

(xiv) (other than in respect of a member of the Daisy Group which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments,

a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of a receiver, administrator, manager, administrative receiver, trustee or similar officer of all, or any material part of, its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed, in each case, which is material in the context of the Daisy Group, taken as a whole;

(xvi) (except for transactions between Daisy and its wholly owned subsidiaries or between the wholly owned subsidiaries of Daisy) made, authorised, proposed or announced an intention to propose any change in its loan capital, in each case, which is material in the context of the Daisy Group, taken as a whole;

(xvii)entered into, implemented or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of business or corporate entities, in each case, which is material in the context of the Daisy Group, taken as a whole;

(xviii)entered into any licence or other disposal of intellectual property rights of any member of the Daisy Group which is material in the context of the Daisy Group, taken as a whole, and outside the normal course of business; or

(xix) entered into any agreement, arrangement, commitment or contract or passed any resolution or made any offer (which remains open for acceptance) with respect to, or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition (d);

No adverse change, litigation, regulatory enquiry or similar

(e) except as Disclosed, since 31 March 2014 there having been:

(i) no adverse change, and no circumstance having arisen which would or might be reasonably expected to result in any adverse change, in the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Daisy Group which, in any case, is material in the context of the Daisy Group, taken as a whole;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings (including, without limitation, with regard to intellectual property rights owned or used by the Daisy Group) having been threatened in writing, announced or instituted by or against or remaining outstanding against or in respect of, any member of the Daisy Group or to which any member of the Daisy Group is, or could reasonably be expected to become, a party (whether as claimant, defendant or otherwise), in each case, which might reasonably be expected to have a material adverse effect on the Daisy Group, taken as a whole, or in the context of the Offer;

(iii) no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Daisy Group having been threatened in writing, announced or instituted or remaining outstanding by, against or in respect of any member of the Daisy Group, in each case which might reasonably be expected to have a material adverse effect on the Daisy Group, taken as a whole, or in the context of the Offer;

(iv) no contingent or other liability having arisen or become apparent to Bidco or increased other than in the ordinary course of business which would, or might reasonably be expected to, adversely affect the business, assets, financial or trading position or profits or prospects of any member of the Daisy Group to an extent which is material in the context of the Daisy Group, taken as a whole, or in the context of the Offer; and

(v) no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Daisy Group which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which might reasonably be expected to have a material adverse effect on the Daisy Group, taken as a whole, or in the context of the Offer; and

No discovery of certain matters regarding information, liabilities and environmental issues (f) except as Disclosed, Bidco not having discovered:

(i) that any financial, business or other information concerning the Daisy Group publicly announced prior to the date of this announcement or disclosed at any time to Bidco or to any of its advisers by or on behalf of any member of the Daisy Group prior to the date of this announcement is misleading, contains a misrepresentation of any fact, or omits to state a fact necessary to make that information not misleading, to an extent which, in any such case, is material in the context of the Daisy Group, taken as a whole;

(ii) that any member of the Daisy Group or any partnership, company or other entity in which any member of the Daisy Group has a significant economic interest and which is not a subsidiary undertaking of Daisy is, otherwise than in the ordinary course of business, subject to any liability, contingent or otherwise, and which is material in the context of the Daisy Group, taken as a whole, or in the context of the Offer;

(iii) that any past or present member of the Daisy Group has not complied in any material respect with all applicable legislation, regulations or other requirements of any jurisdiction or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human or animal health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any material liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Daisy Group which, in any case, is material in the context of the Daisy Group, taken as a whole;

(iv) that there has been a material disposal, discharge, spillage, accumulation, release, leak, emission or the migration, production, supply, treatment, storage, transport or use of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human or animal health which (whether or not giving rise to non-compliance with any law or regulation), would be likely to give rise to any material liability (whether actual or contingent) on the part of any member of the Daisy Group which in any case is material in the context of the Daisy Group, taken as a whole;

(v) that there is, or is reasonably likely to be, any material obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, reinstate or clean up any property or asset currently or previously owned, occupied, operated or made use of or controlled by any past or present member of the Daisy Group (or on its behalf), or in which any such member may have, or previously have had or be deemed to have had, an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation or order of any Third Party in any jurisdiction or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto, which, in any case, is material in the context of the Daisy Group, taken as a whole;

that circumstances exist (whether as a result of the making of the Offer or otherwise) which would be reasonably likely to lead to any Third Party instituting (or whereby any member of the Daisy Group would be likely to be required to institute) an environmental35

audit or take any steps which would in any such case be reasonably likely to result in any actual or contingent liability to improve or install new plant or equipment or to make good, repair, reinstate or clean up any property of any description or any asset now or previously owned, occupied or made use of by any past or present member of the Daisy Group (or on its behalf) or by any person for which a member of the Daisy Group is or has been responsible, or in which any such member may have, or previously have had or be deemed to have had, an interest, which, in any case, is material in the context of the Daisy Group, taken as a whole;

(vii) Daisy is subject to any liability, actual or contingent, which is not disclosed in the annual report and accounts of Daisy for the period ended 31 March 2014 and which is material in the context of the Daisy Group, taken as a whole; or

(vii) that circumstances exist whereby a person has, or class of persons have, or is reasonably likely to have, any legitimate claim or claims against any member of the Daisy Group in respect of any product or process, or materials used therein, now or previously manufactured, sold, supplied or carried out by any past or present member of the Daisy Group, which, in each case, is material in the context of the Daisy Group, taken as a whole.

Part B: Certain further terms of this Offer

Subject to the requirements of the Panel, Bidco reserves the right to waive, in whole or in part, all or any of the above Conditions 1(b) and 2(a) to (f) (inclusive). Each of the Conditions 1(b) and 2(a) to (f) (inclusive) shall be regarded as a separate Condition and shall not be limited by reference to any other condition.

Bidco shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of Conditions 1(b) and 2(a) to (f) (inclusive) by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

If Bidco is required by the Panel to make an offer for Daisy Shares under the provisions of Rule 9 of the Code, Bidco may make such alterations to any of the above Conditions and terms of the Offer as are necessary to comply with the provisions of that Rule.

The Offer will lapse, and will not proceed, if there is a Phase 2 CMA reference or if Phase 2 European Commission proceedings are initiated or if, following a referral of the Offer by the European Commission under Article 9(1) of the European Council Merger Regulation to a competent authority in the United Kingdom, there is a Phase 2 CMA reference, in any such case before 1.00pm (London time) on the First Closing Date or the time and date at which the Offer becomes, or is declared, unconditional as to acceptances (whichever is the later).

The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

The Offer will not be made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone, internet or e-mail) of interstate or foreign commerce of, or of any facility of a national securities exchange of, any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

Daisy Shares which will be acquired under the Offer will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

Under Rule 13.5 of the Code, Bidco may not invoke a condition to the Offer so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to Bidco in the context of the Offer. The conditions contained in paragraph 1 of Part A and the fourth paragraph of this Part B are not subject to this provision of the Code.

The Offer will be governed by the law of England and Wales and will be subject to the jurisdiction of the English courts and to the Conditions and further terms set out in this Appendix 1 and to be set out in the Offer Document. The Offer will be subject to applicable requirements of the Code, the Panel, the London Stock Exchange, the FCA and the AIM Rules.

Appendix 2

PART A

Unaudited Interim Condensed Consolidated financial statements for Daisy Group plc as at and for the three month period ended 30 June 2014

Financial information

Page

Consolidated income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Consolidated statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .      40

Consolidated cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . .   41

Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .        42

As required by the Panel, PricewaterhouseCoopers LLP, as independent auditor to Daisy, has provided an independent review report under Rule 28.1(a) of the Code stating that nothing has come to its attention that causes it to believe that the unaudited interim condensed consolidated financial statements as of and for the three months ended 30 June 2014 have not been prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Notes 1 and 2 to the unaudited interim condensed consolidated financial statements included in Appendix 2 Part A. This report is set out in Part B of Appendix 2 to this announcement.

As required by the Panel, Liberum Capital Limited, as Daisy's adviser for the purposes of Rule 3 of the Code, has provided a report under Rule 28.1(a)(ii) of the Code which is set out at Part C of Appendix 2 to this announcement.

Each of PricewaterhouseCoopers LLP and Liberum Capital Limited has given and not withdrawn its consent to the publication of its report in the form and context in which it is included in this announcement.

Consolidated income statement

Unaudited Unaudited Audited 3 months to 3 months to Year ended

   30 June      30 June     31 March 
   2014            2013            2014 
   Note          GBP'000           GBP'000           GBP'000

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 84,703 84,800

352,675

Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (51,902)

(51,908)     (213,399) 
   Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3   32,801 
32,892        139,276 
   Operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (38,048) 
(38,875)     (157,140)

Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,247)

(5,983)       (17,864) 
 
 Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . 
  . . . . . . . . . 3 12,169 13,450 57,943 
  Amortisation of intangible assets . . . . . . . . . . . . . . 
  . . . . 8 (14,050) (16,509) (63,838) 
  Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 
  . . . . . . . . . . (1,236) (740) (4,057) 
  Exceptional operating costs - direct 
  acquisition costs . . . . . . . . . . . . . . . . . . . . . . 
  . . . . . . . 4,5 (9) (1,889) (3,036) 
  Net exceptional operating costs - other . . . . . . . . . . . 
  . . 5 (1,689) (270) (4,100) 
  Share-based payment costs . . . . . . . . . . . . . . . . . . 
  . . . . . . (432) (25) (776) 
  Operating loss . . . . . . . . . . . . . . . . . . . . . . . . 
  . . . . . . . . . . 3 (5,247) (5,983) (17,864) 
----------------------------------------------------------------

Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

          30              169

Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,642)

   (1,510)         (6,693) 
   Net finance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               (1,602) 
(1,480)         (6,524)

Share of profit of joint venture . . . . . . . . . . . . . . . . . . . . -

      5                13 
   Loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (6,849) 
(7,458)       (24,375) 
   Income tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,288 
2,438           8,743

Loss after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,561)

  (5,020)       (15,632)

Attributable to:

   -                -                  -

Owners of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,561) (5,020) (15,632)

Non-controlling interests

Loss after tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,561)

(5,020)       (15,632)

Loss per share (pence)

Basic and diluted loss per share: . . . . . . . . . . . . . . . . . . . (2.16) (1.95)

(6.06)

For periods where the Group was loss-making, dilution has no effect on loss per share.

A separate consolidated statement of comprehensive income has not been presented as there are no further items of comprehensive income other than as presented in the consolidated income statement above.

Consolidated balance sheet

 
                                                   Unaudited       Unaudited          Audited 
                                                     30 June         30 June         31 March 
                                        Note    2014 GBP'000    2013 GBP'000     2014 GBP'000 
--------------------------------------  ----  --------------  --------------  --------------- 
Assets 
 Non-current assets 
Goodwill .......                           7         135,687         118,881          135,189 
 Other intangible assets . . . . . . 
  . . . . . . . . . . . . . . . . . . 
  . . .                                    8         115,273         149,707          126,763 
Property, plant and equipment . . . 
 . . . . . . . . . . . . . . . . .                    10,309          10,905           10,816 
Investment in joint venture . . . . 
 . . . . . . . . . . . . . . . . . . 
 .                                                         6               -                6 
Deferred tax asset . . . . .                           8,557           8,919            8,584 
                                              --------------  --------------  --------------- 
                                                     269,832         288,412          281,358 
Current assets 
Inventories .                                          6,079           3,927            5,629 
 Trade and other receivables . . . . 
  . . . . . . . . . . . . . . . . . . 
  .                                                   99,873          89,519           97,155 
Cash and cash equivalents . . . . . 
 . . . . . . . . . . . . . . . . . . 
 .                                                    14,035           9,579           43,666 
                                              --------------  --------------  --------------- 
                                                     119,987         103,025          146,450 
Liabilities 
 Current liabilities 
Trade and other payables . .               9        (98,065)        (89,338)        (123,982) 
Current tax liability . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . . . .                                             (889)         (1,454)          (1,679) 
Borrowings . . .                          10           (151)         (5,060)         (10,846) 
Provisions.. .                                         (358)         (1,273)            (878) 
                                              --------------  --------------  --------------- 
                                                    (99,463)        (97,125)        (137,385) 
Net current assets . . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . . . .                                            20,524           5,900            9,065 
Non-current liabilities 
Borrowings.                               10       (152,899)       (118,310)        (144,688) 
Provisions                                             (817)         (1,899)            (772) 
Deferred tax liability . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . . . .                                          (16,556)        (24,936)         (18,601) 
Other non-current liabilities .                     (10,041)        (10,228)         (11,097) 
                                              --------------  --------------  --------------- 
                                                   (180,313)       (155,373)        (175,158) 
                                              --------------  --------------  --------------- 
Net assets .                                         110,043         138,939          115,265 
--------------------------------------  ----  --------------  --------------  --------------- 
Equity attributable to the owners of 
 the parent 
Share capital                             11           5,339           5,339            5,339 
Share merger reserve . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . .                                    11          83,500          83,500           83,500 
Other reserves . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . . . . .                                          91,358          91,358           91,358 
Retained losses                                     (70,154)        (41,258)         (64,932) 
                                              --------------  --------------  --------------- 
                                                     110,043         138,939          115,265 
Non-controlling interests                                  -               -                - 
                                              --------------  --------------  --------------- 
Total equity                                         110,043         138,939          115,265 
--------------------------------------  ----  --------------  --------------  ---------------

Consolidated statement of changes in equity

Attributable to equity

   Share                                        holders          Non-- 
   Share        Share       merger          Other Retained           of the controlling          Total

capital premium reserve reserves earnings parent interests equity

GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000

GBP'000

   Note 11      Note 11      Note 11 
 
    At 1 April 2013                                5,339 89,868  83,500   1,490  (36,261)   143,936   - 143,936 
    Share-based payments                                    - -       -       -        23        23        - 23 
    Cancellation of reserve 
     . . . . . . . . .                               - (89,868)       -  89,868         -         -         - - 
    Loss for the period. 
     .                                                      - -       -       -   (5,020)   (5,020)   - (5,020) 
                                                   ------------  ------  ------  --------  --------  ---------- 
    At 30 June 2013 unaudited                           5,339 -  83,500  91,358  (41,258)   138,939   - 138,939 
                                                   ------------  ------  ------  --------  --------  ---------- 
    At 1 July 2013 unaudited                            5,339 -  83,500  91,358  (41,258)   138,939   - 138,939 
    Share-based payments 
     . . . . . . . . .                                      - -       -       -       747       747       - 747 
    Deferred tax on 
Share-based payments. 
 .                                                          - -       -       -       100       100       - 100 
    Shares exercised from 
     the employee benefit 
     trust . . . . . . .                                    - -       -       -       261       261       - 261 
    Dividends . . . . . . 
     . . . . . . . . . . . 
     . . .                                                  - -       -        - (14,170)  (14,170)  - (14,170) 
    Loss for the period. 
     . . . . . . . . . . .                                  - -       -        - (10,612)  (10,612)  - (10,612) 
                                                   ------------  ------  ----------------  --------  ---------- 
    At 31 March 2014 . . 
     . . . . . . . . . . .                              5,339 -  83,500  91,358  (64,932)   115,265   - 115,265 
                                                   ------------  ------  ------  --------  --------  ---------- 
    At 1 April 2014 . . . 
     . . . . . . . . . . . 
     .                                                  5,339 -  83,500  91,358  (64,932)   115,265   - 115,265 
    Share-based payments 
     . . . . . . . . .                                      - -       -       -       432       432       - 432 
    Deferred tax on 
Share-based payments 
 . . . . . . .                                              - -       -       -      (93)      (93)      - (93) 
    Loss for the period ........................            - -       -       -   (5,561)   (5,561)   - (5,561) 
                                                   ------------  ------  ------  --------  --------  ---------- 
    At 30 June 2014 unaudited 
     . .. . . .                                         5,339 -  83,500  91,358  (70,154)   110,043   - 110,043 
-------------------------------------------------  ------------  ------  ------  --------  --------  ----------

Consolidated cash flow statement

 
                                                                            Unaudited Unaudited        Audited 
                                                                           3 months to 3 months     Year ended 
                                                                                             to       31 March 
                                                                                30 June 30 June   2014 GBP'000 
                                                                                      2014 2013 
                                                                 Note           GBP'000 GBP'000 
---------------------------------------------------------------  ----  ------------------------  ------------- 
Cash (utilised in)/generated from operations 
 . . . . . . . . .                                                 12      (14,584)    (14,134)         44,179 
Net income tax paid . . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . .                                                                      (1,238)     (1,655)        (4,943) 
                                                                       ------------  ----------  ------------- 
  Net cash (utilised in)/generated from 
   operating activities . . . . . . . 
   . . . . . . . . . . . . . . . . . . 
   . . .                                                                   (15,822)    (15,789)         39,236 
Cash flows from investing activities 
Business combinations, net of cash 
 acquired . . . . . . . . .                                         4       (6,984)    (11,642)       (36,191) 
 Payment to acquire intangible assets 
  . . . . . . . . . . . . . .                                       8       (2,075)     (2,750)        (9,303) 
  Investment in discontinued 
   operations/joint venture 
   ................................................                               -           -           (77) 
Purchase of property, plant and equipment 
 . . . . . . . ...... . .                                                     (715)     (1,068)        (1,937) 
  Proceeds from sale of property, plant 
   and equipment . . . . . . . . . . . 
   . . . .                                                                        -           -            597 
Interest received . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . . . .                                                                       40          30            169 
                                                                       ------------  ----------  ------------- 
Net cash used in investing activities 
 . . . . . . . . . . . . . . . .                                            (9,734)    (15,430)       (46,742) 
Cash flows from financing activities 
Proceeds from the exercise of share 
 options . . . . . . . .... . .                                                   -           -            261 
Proceeds from bank borrowings 
 .......................................                                      3,000       5,000         40,000 
 Fees associated with bank borrowings 
  . . . . . . . . . . . . . .                                                 (396)     (2,716)        (2,951) 
Repayment of borrowings . . . . . . 
 . . . . . . . . . . . . . . . . . .                                        (5,000)           -        (5,000) 
Dividends paid 
 .............................................................. 
 ..                                                                               -           -       (14,170) 
Interest paid . . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . 
 . . . . . . .                                                              (1,298)       (278)        (5,277) 
Payment of finance lease liabilities 
 . . . . . . . . . . . . . . . . .                                            (381)        (16)          (499) 
                                                                       ------------  ----------  ------------- 
Net cash generated from financing activities 
 . . . . . . . . .                                                          (4,075)       1,990         12,364 
                                                                       ------------  ----------  ------------- 
  Net (decrease)/increase in cash and 
   cash equivalents . . . . . . . . . 
   . . . . . . . . . . . . . . . . . . 
   . . .                                                                   (29,631)    (29,229)          4,858 
  Cash and cash equivalents at the start 
   of the period . . . . . . . . . . . 
   . . . . . . . . . . . . . . . . . . 
   . . . .                                                                   43,666      38,808         38,808 
                                                                       ------------  ----------  ------------- 
  Cash and cash equivalents at the end 
   of 
   the period . . . . . . . . . . . . 
   . . . . . . . . . . . . . . . . . . 
   . . . . . .                                                               14,035       9,579         43,666 
---------------------------------------------------------------  ----  ------------  ----------  -------------

Notes to the financial information

   1.   BASIS OF PREPARATION

The condensed consolidated financial information ("financial information") does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRS Interpretations Committee (IFRS IC) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

Statutory accounts for the year ended 31 March 2014 were approved by the board of directors on 16 June 2014. The report of the auditors on those accounts was unqualified, did not contain any emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

   2.   ACCOUNTING POLICIES

Except as described below, the accounting policies are consistent with those of the financial statements for the year ended 31 March 2014.

Income tax

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The following standards have been published and are mandatory for accounting periods beginning on or after 1 January 2014 but have not been early adopted by the Group:

-- IFRS 10,'Consolidated financial statements'. The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities to present consolidated financial statements. It defines the principle of control, and establishes controls as the basis for consolidation. It sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. It also sets out the accounting requirements for the preparation of consolidated financial statements.

-- IFRS 11, 'Joint arrangements'. IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the parties to the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and therefore accounts for its share of assets, liabilities, revenue and expenses. Joint ventures arise where the joint venture has rights to the net assets of the arrangement and therefore equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed.

-- IFRS 12, 'Disclosures of interests in other entities'. IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.

3. SEGMENT INFORMATION

The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group board of directors.

Operating segments are determined on the basis of the reports reviewed by the Group board of directors.

Daisy Retail

Daisy Retail provides services across four product areas to SME and mid-market business customers:

Networks fixed line calls, fixed line rentals, inbound telephony

services and select services

Data hosting, broadband, leased lines, bonded DSL, IP

VPN/MPLS networks and VoIP

   Systems                                                      maintenance, engineering and equipment

Mobile mobile phones, smart phones, airtime and data provision

Daisy Wholesale

Daisy Wholesale provides services to the reseller channel in the following product categories:

Networks fixed line calls, fixed line rentals, inbound telephony

services, select services and managed billing

Data IP VPN, broadband, ethernet and hosting

   Systems                                                      maintenance, engineering and equipment

Mobile a white-label offering from O2 and Vodafone

Daisy Distribution

Daisy Distribution provides mobile handsets and airtime tariffs from O2, Vodafone, and EE via a dealer network.

Central costs

Central costs consist of central activities that are not directly attributable to the operating segments.

Segmental revenue represents the total revenue of each business within a reporting segment and includes inter-segment revenue. Segmental profit is the measure used to assess performance internally and is calculated as earnings before interest, taxation, depreciation, amortisation, share-based payment costs and net exceptional operating costs ("adjusted EBITDA"), excluding central costs recharged from the Company.

The Group has opted to disclose additional information on revenue and gross profit in respect of the product categories described above.

All businesses are based in the UK. Inter-segmental transactions are carried out on an arm's length basis. The Group does not have any customers who contribute more than 10% of total revenue.

The unaudited segment information for the 3 months to 30 June 2014 is as follows:

 
                                    Daisy                 Daisy Daisy     Central   Continuing 
                                    Retail     Wholesale Distribution       costs    Operations 
                                   GBP'000       GBP'000      GBP'000     GBP'000       GBP'000 
----------------------------  ------------  ------------  -----------  ----------  ------------ 
Networks . . . . . . . . 
 . . . . . . . . . . . . 
 . . .                              26,155         6,013            -           -        32,168 
Data                                15,020         6,332            -           -        21,352 
Systems .                            4,748         4,959            -           -         9,707 
Mobile                               7,454         3,518       13,919           -        24,891 
                              ------------  ------------  -----------  ----------  ------------ 
Total segment revenue               53,377        20,822       13,919           -        88,118 
Inter-segment revenue                (452)       (1,985)        (978)           -       (3,415) 
                              ------------  ------------  -----------  ----------  ------------ 
External revenue . . . . 
 . . . . . . . . . . . .            52,925        18,837       12,941           -        84,703 
                              ------------  ------------  -----------  ----------  ------------ 
Networks . . . . . . . . 
 . . . . . . . . . . . . 
 . . .                              10,047         1,019            -           -        11,066 
Data                                 6,639         1,297            -           -         7,936 
Systems .                            2,731         3,342            -           -         6,073 
Mobile                               3,258         1,423        3,045           -         7,726 
                              ------------  ------------  -----------  ----------  ------------ 
Total segment gross profit          22,675         7,081        3,045           -        32,801 
                              ------------  ------------  -----------  ----------  ------------ 
Adjusted EBITDA                      8,509         2,431        1,834       (605)        12,169 
Allocation of central costs 
 .                                   (453)         (126)         (97)         676             - 
Amortisation                      (12,089)       (1,812)        (149)           -      (14,050) 
Depreciation                       (1,158)          (57)         (21)           -       (1,236) 
Net exceptional operating 
 costs                             (1,222)         (441)         (14)        (21)       (1,698) 
Share-based payment costs                -             -            -       (432)         (432) 
                              ------------  ------------  -----------  ----------  ------------ 
Operating (loss)/profit            (6,413)           (5)        1,553       (382)       (5,247) 
                              ------------  ------------  -----------  ----------  ------------ 
Total assets                       268,286        59,811       45,352      16,370       389,819 
----------------------------  ------------  ------------  -----------  ----------  ------------

The unaudited segment information for the 3 months to 30 June 2013 is as follows:

 
                                    Daisy                 Daisy Daisy     Central   Continuing 
                                    Retail     Wholesale Distribution       costs    Operations 
                                   GBP'000       GBP'000      GBP'000     GBP'000       GBP'000 
----------------------------  ------------  ------------  -----------  ----------  ------------ 
Networks . . . . . . . . 
 . . . . . . . . . . . . 
 . . .                              30,838         7,204            -           -        38,042 
Data                                13,704         6,057            -           -        19,761 
Systems                              5,284         2,146            -           -         7,430 
Mobile. .                            8,722         2,822       11,108           -        22,652 
                              ------------  ------------  -----------  ----------  ------------ 
Total segment revenue.              58,548        18,229       11,108           -        87,885 
Inter-segment revenue.               (264)       (1,579)      (1,242)           -       (3,085) 
                              ------------  ------------  -----------  ----------  ------------ 
External revenue.                   58,284        16,650        9,866           -        84,800 
                              ------------  ------------  -----------  ----------  ------------ 
Networks                            12,503         1,134            -           -        13,637 
Data                                 5,714         1,349            -           -         7,063 
Systems                              3,344         1,686            -           -         5,030 
Mobile                               3,502           951        2,709           -         7,162 
                              ------------  ------------  -----------  ----------  ------------ 
Total segment gross profit.         25,063         5,120        2,709           -        32,892 
                              ------------  ------------  -----------  ----------  ------------ 
Adjusted EBITDA                     10,954         1,881        1,619     (1,004)        13,450 
Allocation of central costs          (627)         (133)        (128)         888             - 
Amortisation                      (14,855)       (1,648)          (6)           -      (16,509) 
Depreciation                         (652)          (71)         (17)           -         (740) 
Net exceptional operating 
 costs . .                           (126)          (66)            -     (1,967)       (2,159) 
Share-based payment costs                -             -            -        (25)          (25) 
                              ------------  ------------  -----------  ----------  ------------ 
Operating (loss)/profit            (5,306)          (37)        1,468     (2,108)       (5,983) 
                              ------------  ------------  -----------  ----------  ------------ 
Total assets                       289,493        46,786       46,731       8,427       391,437 
----------------------------  ------------  ------------  -----------  ----------  ------------

The audited segment information for the year ended 31 March 2014 is as follows:

 
                                         Daisy Retail                Daisy Daisy         Central    Continuing 
                                              GBP'000     Wholesale Distribution           costs    Operations 
                                                                 GBP'000 GBP'000         GBP'000       GBP'000 
---------------------------  ------------------------  -------------------------  --------------  ------------ 
Networks . . . . . . . 
 . . . . . . . . . . . 
 . . . .                                    . 113,518        28,049            -               -       141,567 
Data                                           60,735        24,471            -               -        85,206 
Systems .                                    . 23,231        15,038            -               -        38,269 
Mobile                                       . 33,825        11,712       55,302               -       100,839 
                             ------------------------  ------------  -----------  --------------  ------------ 
Total segment revenue                       . 231,309        79,270       55,302               -       365,881 
Inter-segment revenue                       . (1,719)       (6,573)      (4,914)               -      (13,206) 
                             ------------------------  ------------  -----------  --------------  ------------ 
External revenue.                           . 229,590        72,697       50,388               -       352,675 
                             ------------------------  ------------  -----------  --------------  ------------ 
Networks . . . . . . . 
 . . . . . . . . . . . 
 . . . .                                     . 47,066         4,322            -               -        51,388 
Data . . . . . . . . . 
 . . . . . . . . . . . 
 . . . . . .                                 . 26,516         5,813            -               -        32,329 
Systems . . . . . . . 
 . . . . . . . . . . . 
 .. . . . .                                  . 13,064        10,634            -               -        23,698 
Mobile . . . . . . . . 
 . . . . . . . . . . . 
 . . . . .                                   . 13,695         4,198       13,968               -        31,861 
                             ------------------------  ------------  -----------  --------------  ------------ 
Total segment gross profit 
 . . . . . . . .                            . 100,341        24,967       13,968               -       139,276 
                             ------------------------  ------------  -----------  --------------  ------------ 
Adjusted EBITDA . . . 
 . . . . . . . . . . 
 .......................... 
 .......................... 
 . 
 . .                                         . 43,024         9,748        8,908         (3,737)        57,943 
Allocation of central 
 costs . . . . . . . .                      . (2,506)         (532)        (513)           3,551             - 
Amortisation 
 .......................... 
 ..........                                  (54,491)       (6,942)      (2,405)               -      (63,838) 
 Depreciation . . . . . 
  . . . . . . . . . . . 
  . . .                                     . (3,706)         (268)         (83)               -       (4,057) 
Net exceptional operating 
 costs . . .                                . (1,953)         (927)         (30)         (4,226)       (7,136) 
Share-based payment costs 
 ...............                                    -             -            -           (776)         (776) 
                             ------------------------  ------------  -----------  --------------  ------------ 
Operating (loss)/profit 
 . . . . . . . . . . .                     . (19,632)         1,079        5,877         (5,188)      (17,864) 
                             ------------------------  ------------  -----------  --------------  ------------ 
Total assets . . . . . 
 . . . . . . . . . . . 
 . . . .                                    . 274,108        63,043       44,761          45,896       427,808 
---------------------------  ------------------------  ------------  -----------  --------------  ------------ 
A reconciliation of operating loss to loss before 
 tax is provided below: 
--------------------------------------------------------------------------------  --------------  ------------ 
                                                                       Unaudited       Unaudited 
                                                                        3 months        3 months       Audited 
                                                                           ended           ended    Year ended 
                                                                         30 June         30 June      31 March 
                                                                            2014            2013          2014 
                                                                         GBP'000         GBP'000       GBP'000 
---------------------------  ------------------------  ------------  -----------  --------------  ------------ 
 
 
 
Operating loss . . . . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . . . . .                                                                         (5,247)  (5,983)  (17,864) 
Net finance expense . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . .                                                                               (1,602)  (1,480)   (6,524) 
Share of profit of joint venture .................................................         -        5        13 
                                                                                     -------  -------  -------- 
Loss before tax . . . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . . . . .                                                                         (6,849)  (7,458)  (24,375) 
-----------------------------------------------------------------------------------  -------  -------  --------

Segment assets are reconciled to total assets as follows:

Unaudited Unaudited

   3 months        3 months          Audited 
   ended            ended   Year ended 
   30 June          30 June      31 March 
   2014                2013               2014 
   GBP'000               GBP'000              GBP'000

Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269,832 288,412

281,358

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,987

103,025        146,450

Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389,819

391,437         427,808

Geographic information

The Group is domiciled in the UK and it generates the majority of its revenue from external customers in the UK. The geographic analysis of revenue is based on the country in which the external customer is invoiced.

Unaudited Unaudited

   3 months        3 months          Audited 
   ended            ended   Year ended 
   30 June          30 June      31 March 
   2014                2013               2014 
   GBP'000               GBP'000              GBP'000 
 
UK.                  83,041  83,136  345,460 
Europe              . 1,301   1,302    5,262 
Americas. ..            291     291    1,142 
Asia Pacific.            70      71      811 
                   --------  ------  ------- 
External revenue   . 84,703  84,800  352,675 
-----------------  --------  ------  -------

4. BUSINESS COMBINATIONS

On 31 May 2014 the Group acquired the entire share capital of Layer 3 Advanced Business Solutions Ltd ("Layer 3") for an initial consideration of GBP1.8 million. An earn-out arrangement is in place which may lead to additional consideration becoming payable, dependent on the performance of the business over a three-year period post-acquisition. Management have estimated the value of contingent consideration that may become payable under the earn-out agreement based on empirical trading data. An associated financial liability of GBP0.4 million has been recognised in the balance sheet.

Layer 3 is a highly skilled technical business, specialising in delivering networking audits, Local Area Networks (LAN) and WiFi services.

The purchase consideration for the acquisition was as follows:

GBP'000 Layer 3

Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .    1,800

Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .             361

Total consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . .      2,161

The provisional carrying amount of assets and liabilities in the books of the acquiree was as follows:

GBP'000 Layer 3

Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . .       13

Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . .          (68)

Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .           358

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . .          320

Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .        (179)

Total carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . .      444

Provisional fair value adjustments have been made as follows:

GBP'000 Note Layer 3

Intangible assets - customer lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

     8               870

Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .               (174)

Total fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.                 696

The provisional fair values of the assets and liabilities and the associated goodwill arising from the acquisitions are as follows:

GBP'000 Note Layer 3

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . 8               870

Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .                     13

Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.                     358

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .                    320

Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.                  (179)

Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .                  (242)

Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .        1,140

Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . .         1,021

Purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .             2,161

The acquisition of Layer 3 has resulted in the recognition of goodwill in the period of GBP1.0 million as the purchase consideration exceeds the fair value of net assets acquired.

Included within trade and other receivables are gross trade receivables as follows:

GBP'000 Layer 3

Gross contractual amounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .              160

160

 
49 
 Cash flows arising from the acquisitions were as follows: 
-----------------------------------------------------------  ----------- 
GBP'000                                                          Layer 3 
-----------------------------------------------------------  ----------- 
Purchase consideration settled in cash . . . . . .           . . . 1,800 
 . . . . . . . . . . . . . . . . . . . . . . . . . . 
 . . . . . 
Direct acquisition costs . . . . . . . . . . . . .               . . . 9 
 . . . . . . . . . . . . . . . . . . . . . . . . . . 
 . . . . . . . . . . . 
Cash and cash equivalents . . . . . . . . . . . . .          . . . (320) 
 . . . . . . . . . . . . . . . . . . . . . . . . . . 
 . . . . . . . . 
                                                             ----------- 
                                                                   1,489 
-----------------------------------------------------------  ----------- 
The cash outflow can be reconciled to the cash flow 
 statement as follows: 
-----------------------------------------------------------  ----------- 
                                                                 GBP'000 
-----------------------------------------------------------  ----------- 
Current year business combinations . . . . . . . .           . . . 1,489 
 . . . . . . . . . . . . . . . . . . . . . . . . . . 
 . . . . . 
Prior period business combinations . . . . . . . .           . . . 5,495 
 . . . . . . . . . . . . . . . . . . . . . . . . . . 
 . . . . . 
                                                             ----------- 
Cash outflow from business combinations . . . . . .          . . . 6,984 
 . . . . . . . . . . . . . . . . . . . . . . . . . . 
 . 
-----------------------------------------------------------  -----------

From the date of acquisition to 30 June 2014, the acquired businesses contributed the following revenue, adjusted EBITDA and net profit before tax:

GBP'000 Layer 3

Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . .        231

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . .       79

Net profit before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . .            79

If the acquisitions had occurred on 1 April 2014, the Group's revenue, adjusted EBITDA and loss for the period would be as follows:

GBP'000 Total

Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,923

Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,240

Net loss before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,780)

5. NET EXCEPTIONAL OPERATING COSTS

Unaudited Unaudited Audited 3 months to 3 months to Year ended

   30 June      30 June    31 March 
   2014            2013           2014 
   Note           GBP'000           GBP'000          GBP'000 
 
    Employee-related restructuring costs 
     (i) . . . . . . . . . .                                               . . .       363     51    1,243 
    Other restructuring costs (ii) . . 
     . . . . . . . . . . . . . . . . . 
     .                                                                     . . .     1,626  1,041    5,182 
    Re-measurement of contingent consideration 
     ...............                                                                     -      -      124 
    Release of provision no longer required 
     (iii) . . . . ...... . .                                              . . .     (300)      -  (1,092) 
    Write off of negative goodwill .....................................                 -  (822)  (1,357) 
    Costs directly relating to acquisitions 
     (iv) . . . . . . . . .                                                . . . 4       9  1,889    3,036 
                                                                                     -----  -----  ------- 
                                                                                     1,698  2,159    7,136 
 ----------------------------------------------------------------------------------  -----  -----  -------

(i) Employee-related restructuring costs principally relate to redundancy costs following the acquisition of Indecs.

(ii) Other restructuring costs include GBP0.7 million of costs mainly relating to the operating lease for our site in Harbour Exchange and a further GBP0.3 million associated with reorganisation costs following the exit of certain DDCS sites. During the period, an additional GBP0.1 million of IT integration costs were also incurred.

(iii) Release of the onerous property provision of GBP0.3 million in the year relates to the Stockley Park site.

(iv) Costs directly relating to acquisitions include GBP9,000 of stamp duty costs associated with the acquisition of Layer 3.

   6.   INCOME TAX

The taxation credit for the 3 months ended 30 June 2013 and the 3 months ended 30 June 2014 comprises corporation tax on losses of the period based on the expected effective tax rate for the respective full financial years, together with adjustments to the corporation tax liability in respect of prior periods and a deferred tax credit, relating principally to the amortisation of intangible assets.

   7.   GOODWILL 
 
                                  Note  GBP'000 
--------------------------------  ----  ------- 
Cost and net book amount 
 At 1 April 2013                        118,445 
Business combinations: 
Current period.                             436 
                                        ------- 
At 30 June 2013 unaudited               118,881 
                                        ------- 
At 1 July 2013 unaudited. .             118,881 
Business combinations: 
Current period.                          16,308 
                                        ------- 
At 31 March 2014.                       135,189 
                                        ------- 
At 1 April 2014.                        135,189 
Business combinations: 
Current period.                      4    1,021 
Prior period                              (523) 
                                        ------- 
At 30 June 2014 unaudited.. . .         135,687 
--------------------------------  ----  -------

Following the finalisation of the completion accounts in relation to Indecs, a refund was received from escrow of GBP0.5 million.

8. OTHER INTANGIBLE ASSETS

 
                               Customer          Computer Supplier             Intellectual 
                                  lists     software relationships  Licences    property       Total 
                         Note   GBP'000       GBP'000      GBP'000   GBP'000        GBP'000  GBP'000 
-----------------------  ----  --------  ------------  -----------  --------  -------------  ------- 
Cost 
At 1 April 2013 
 . . . . . . . . 
 . .                            336,463         8,027        3,570       358          3,396  351,814 
Acquisitions through 
 business combinations 
 . .                              3,119           234            -       693              -    4,046 
Additions . . . 
 . . . . . . . . 
 . . .                              998           314            -        95              -    1,407 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
        At 30 June 2013 
        unaudited . . . 
        . . . . . . . . 
                      .         340,580         8,575        3,570     1,146          3,396  357,267 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
         At 1 July 2013 
        unaudited . . . 
        . . . . . . . . 
                      .         340,580         8,575        3,570     1,146          3,396  357,267 
Acquisitions through 
 business combinations 
 . .                             15,683         (197)            -      (35)              -   15,451 
Additions . . . 
 . . . . . . . . 
 . . .                            6,551         2,038            -       345              -    8,934 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 31 March 2014 
 . . . . . . .                  362,814        10,416        3,570     1,456          3,396  381,652 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 1 April 2014 
 . . . . . . . . 
 . .                            362,814        10,416        3,570     1,456          3,396  381,652 
Acquisitions through 
 business combinations 
 . .                        4       870             -            -         -              -      870 
Additions . . . 
 . . . . . . . . 
 . . .                              716           550            -       424              -    1,690 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
        At 30 June 2014 
        unaudited . . . 
        . . . . . . . . 
                      .         364,400        10,966        3,570     1,880          3,396  384,212 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
Amortisation 
 At 1 April 2013 
 . . . . . . . . 
 . .                            181,314         5,495        3,570       191            481  191,051 
Amortisation for 
 the 
         Period . . . . 
        . . . . . . . . 
                  . . .          15,848           557            -        19             85   16,509 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 30 June 2013 
 unaudited . . . 
 . . . . . . . . 
 .                             197,162   6,052         3,570        210       566            207,560 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 1 July 2013 
 unaudited . . . 
 . . . . . . . . 
 .                             197,162   6,052         3,570        210       566            207,560 
Amortisation for 
 the 
Period . . . . 
 . . . . . . . . 
 . . .                           44,918         1,904            -       252            255   47,329 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 31 March 2014 
 . . . . . . .                 242,080   7,956         3,570        462       821            254,889 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 1 April 2014 
 . . . . . . . . 
 . .                           242,080   7,956         3,570        462       821            254,889 
Amortisation for 
 the 
         Period . . . . 
        . . . . . . . . 
                  . . .          13,244           609            -       114             83   14,050 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 30 June 2014 
 unaudited . . . 
 . . . . . . . . 
 .                             255,324   8,565         3,570        576       904            268,939 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
Net book amount 
At 1 April 2013 
 . . . . . . . . 
 . .                            155,149         2,532            -       167          2,915  160,763 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 30 June 2013 
 unaudited . . . 
 . . . . . . . . 
 .                             143,418   2,523         -            936       2,830          149,707 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
At 31 March 2014 
 . . . . . . .                 120,734   2,460         -            994       2,575          126,763 
                         ----  --------  ------------  -----------  --------  -------------  ------- 
        At 30 June 2014 
        unaudited . . . 
        . . . . . . . . 
                      .         109,076         2,401            -     1,304          2,492  115,273 
-----------------------  ----  --------  ------------  -----------  --------  -------------  -------

Other intangible additions can be reconciled to the cash flow statement as follows:

 
                                                               Unaudited 30 June  Unaudited      Audited 
                                                                2014 GBP'000       30 June        31 March 
                                                                                   2013 GBP'000   2014 GBP'000 
-------------------------------------------------------------  -----------------  -------------  ------------- 
Additions . . .                                                . 1,690            1,407          10,341 
Deferred consideration 
Current year additions                                         -                  -              (2,457) 
Prior period additions.. .                                     . .385             1,343          1,419 
                                                               -----------------  -------------  ------------- 
                                                               2,075              2,750          9,303 
-------------------------------------------------------------  -----------------  -------------  ------------- 
9. TRADE AND OTHER PAYABLES 
-------------------------------------------------------------  -----------------  -------------  ------------- 
                                                               Unaudited          Unaudited      Audited 
                                                               30 June            30 June        31 March 
                                                               2014               2013           2014 
                                                               GBP'000            GBP'000        GBP'000 
-------------------------------------------------------------  -----------------  -------------  ------------- 
Trade payables . . . . . . . 
 . . . . . . . . . . . . . . . 
 . . . . .                                                 ..31,536               28,891         51,056 
Accruals.                                                  . . 35,185             32,794         37,367 
 Deferred income . . . . . . . 
  . . . . . . . . . . . . . . . 
  . . .                                                    . . 19,584             18,446         20,799 
Social security and other taxes.. 
 . .                                                       . 5,228                5,765          4,929 
Deferred consideration                                     -                      2,103          - 
Contingent consideration                                   5,921                  1,041          9,333 
Other payables . . . . . . . 
 . . . . . . . . . . . . . . . 
 . . 
 ........................................................ 
 .............. 
 . .                                                       611                    298            498 
                                                           ---------------------  -------------  ------------- 
                                                           98,065                 89,338         123,982 
---------------------------------------------------------  ---------------------  -------------  ------------- 
10. BORROWINGS 
---------------------------------------------------------  ---------------------  -------------  ------------- 
                                                           Unaudited              Unaudited      Audited 
                                                           30 June                30 June        31 March 
                                                           2014                   2013           2014 
                                                           GBP'000                GBP'000        GBP'000 
---------------------------------------------------------  ---------------------  -------------  ------------- 
 
 
 
Non-current 
Bank borrowings . . . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . . . .                                           153,000  120,000  144,500 
Unamortised fees associated with bank borrowings. 
 . . . . . . .                                       (1,120)  (1,690)  (1,164) 
Finance lease liabilities . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . . . .                                           1,019    -        1,352 
                                                     -------  -------  ------- 
                                                     152,899  118,310  144,688 
---------------------------------------------------  -------  -------  ------- 
Current 
Bank borrowings . . . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . . . .                                           -        5,000    10,500 
 Unamortised fees associated with bank borrowings. 
  . . . . . . .                                      (1,118)  (936)    (930) 
Finance lease liabilities . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . 
 . . . . .                                           1,269    996      1,276 
                                                     -------  -------  ------- 
                                                     151      5,060    10,846 
---------------------------------------------------  -------  -------  -------

Net debt is analysed as follows:

Unaudited Unaudited Audited

   30 June      30 June    31 March 
   2014            2013           2014 
   GBP'000           GBP'000          GBP'000 
 
Total borrowings ..                    . 153,050     123,370  155,534 
Fees associated with bank borrowings 
 . . . . . . . . . .                   . . 2,238     2,626    2,094 
Less: cash and cash equivalents. 
 .                                     . . (14,035)  (9,579)  (43,666) 
                                       ------------  -------  -------- 
Net debt . . . .                       . 141,253     116,417  113,962 
-------------------------------------  ------------  -------  --------

11. SHARE CAPITAL, SHARE PREMIUM AND MERGER RESERVE

 
                                              Share     Share premium  Merger 
                                 Number of     capital                  reserve 
                                 Shares       GBP'000   GBP'000        GBP'000 
-------------------------------  -----------  --------  -------------  -------- 
At 1 April 2013 . . . . . . . 
 . . . . . . . . . . . . . . . 
 . . . . . .                     266,967,587  5,339     89,868         83,500 
Cancellation of reserves . . .   -            -              (89,868)  - 
                                 -----------  --------  -------------  -------- 
At 30 June 2013, 31 March 2014 
 and 30 June 2014. .             266,967,587  5,339     -              83,500 
-------------------------------  -----------  --------  -------------  --------

Following the passing of a special resolution at a general meeting of Daisy Group plc ("the Company") on 24 May 2013, both the share premium account of GBP89.9 million and capital redemption reserve of GBP1.5 million of the Company have been cancelled and a special reserve of GBP91.4 million has been created.

12. CASH GENERATED FROM OPERATIONS

 
                                                                          Unaudited Unaudited      Audited 
                                                                           3 months to 3 months     Year ended 
                                                                           to                       31 March 
                                                                           30 June 30 June          2014 GBP'000 
                                                                           2014 2013 
                                                                           GBP'000 GBP'000 
-----------------------------------------------------------------------  ------------------------  ------------- 
Loss for the period . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . . .                                                           (5,561)       (5,020)     (15,632) 
Share of profit of joint venture. .                                      -                    (5)           (13) 
 Income tax credit . . . . . . . . . . 
  . . . . . . . . . . . . . . . . . . . 
  . . . . . . . .                                                        (1,288)       (2,438)     (8,743) 
 Interest receivable . . . . . . . . . 
  . . . . . . . . . . . . . . . . . . . 
  . . . . . . . .                                                        (40)          (30)        (169) 
Interest payable . . . .. . . . . . . 
 .                                                                       1,642         1,510       6,693 
                                                                         ------------  ----------  ------------- 
Operating loss . . . . . .. . . . . . 
 . . . .                                                                 (5,247)       (5,983)     (17,864) 
Adjustments for: 
Depreciation charge . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . .                                                             1,236         740         4,057 
Direct acquisition costs . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . .                                                               9             1,889       3,036 
Discount on acquisition                                                  -             (1,116)     (1,357) 
Re-measurement of contingent consideration. 
 . . . . . .. .                                                          -             -           124 
Amortisation of intangible assets                                        14,050        16,509      63,838 
Profit on sale of property, plant and 
 equipment. . . . . . .. .                                               -             -           (36) 
Share-based payment costs . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . 
 ...................................................................... 
 ....................... 
 . .                                                                     432           23          770 
                                                                         ------------  ----------  ------------- 
Operating cash flows before movements 
 in working capital .                                                    10,480        12,062      52,568 
Increase in inventories . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . 
 ...................................................................... 
 ....................... 
 . .                                                                     (453)         (99)        (1,331) 
Increase in receivables . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . 
 ...................................................................... 
 ....................... 
 . .                                                                     (2,351)       (2,728)     (4,452) 
Decrease in payables . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . .                                                             (21,758)      (22,754)    (284) 
Decrease in provisions . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . .                                                             (502)         (615)       (2,322) 
                                                                                                   ------------- 
Cash (utilised in)/generated from operations 
 . . . . . . . . . . . 
 ...................................................................... 
 ....................... 
 . .                                                                     (14,584)      (14,134)    44,179

Free cash flow is one of the Group's key performance indicators and is defined as cash generated from operations after the purchase of both tangible and intangible assets, adjusting for net interest and specific items including exceptional items and working capital movements directly linked with acquisitions.

Free cash flow presented for the purposes of management information is shown below:

 
                                                  Unaudited Unaudited      Audited 
                                                   3 months to 6 months     Year ended 
                                                   to                       31 March 
                                                   30 June 30 June          2014 GBP'000 
                                                   2014 2013 
                                                   GBP'000 GBP'000 
Cash (utilised in)/generated from operations.. 
 . .                                             (14,584)     (14,134)     44,179 
Income taxes paid . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . . .                                   (1,238)      (1,655)      (4,943) 
                                                              ----------- 
Net cash (utilised in)/generated from 
 operating activities. .                         (15,822)     (15,789)     39,236 
Included in cash flows from investing 
 activities 
Purchase of property, plant and equipment 
 . . . . . . . . . . . . . . .                   (715)        (1,068)      (1,937) 
Payment to acquire intangible assets . 
 . . . . . . . . . . . . . . . . . . . 
 ..                                              (1,691)      (1,530)      (6,664) 
Proceeds from sale of property, plant 
 and equipment ..................                -            -            597 
Interest paid . . . . . . . .                    (1,298)      (278)        (5,277) 
Interest received . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . . . .                                 40           30           169 
Net cash outflow from exceptional items 
 . . . . . . . . . . . . . . . . .               2,382        1,937        8,735 
                                                              ----------- 
Free cash flow . . . . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . 
 . . . . . . . .                                 (17,104)     (16,698)     34,859

Appendix 2

PART B

The Directors

Daisy Group plc

Daisy House

Lindred Road Business Park

Nelson

Lancashire BB9 5SR

and

Liberum Capital Limited

Ropemaker Place

25 Ropemaker Street London EC2Y 9LY

20 October 2014

Independent review report to the directors of Daisy Group plc Introduction

We have been engaged by management to review the condensed consolidated financial statements of Daisy Group plc (the "Company") as of and for the three months ended 30 June 2014, which comprises the consolidated income statement, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes. These condensed consolidated financial statements have been prepared on the basis of preparation and accounting policies in Note 1 to the condensed consolidated financial statements.

The condensed consolidated financial statements are set out in Appendix 2 Part A to the announcement under Rule 2.7 of the City Code on Takeovers and Mergers (the "City Code") regarding the recommended cash offer for the Company by Chain Bidco plc (the "Offeror") dated 20 October 2014 (the "Document").

Directors' responsibilities

The condensed consolidated financial statements and other information contained in the condensed consolidated financial statements are the responsibility of, and have been approved by, the directors of the Company. The directors are responsible for preparing the condensed consolidated financial statements and other information contained in the condensed consolidated financial statements in accordance with the basis of preparation and accounting policies in Note 1 to the condensed

PricewaterhouseCoopers LLP, 101 Barbirolli Square, Lower Mosley Street, Manchester, M2 3PW T: +44 (0) 161 245 2910, F: +44 (0) 161 245 2910, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.

consolidated financial statements and for determining whether this basis of preparation is appropriate in the circumstances.

Our responsibility

Our responsibility is to express a conclusion on the financial statements based on our review. This report, including the conclusion, has been prepared for and only for the directors of the Company for the purpose of satisfying Rule 28.1(a)(i) of the City Code on Takeovers and Mergers issued by the Panel on Takeovers and Mergers (the "City Code") and is given for the purpose of complying with that rule and for no other purpose. Accordingly, we assume no responsibility in respect of this report to the Offeror or any other person connected to, or acting in concert with, the Offeror or to any other person who is seeking, or may in future seek, to acquire control of the Company (an "Alternative Offeror") or to any other person connected to, or acting in concert with, an Alternative Offeror.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, or to the shareholders of the Company, and for any responsibility arising under Rule 28.1(a)(i) of the City Code to any person as and to the extent therein provided, to the fullest extent permitted by law we do not assume any responsibility, and will not accept any liability, to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.3(b) of the City Code, consenting to its inclusion in the Document.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements as of and for the three months ended 30 June 2014 have not been prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 1 to the condensed consolidated financial statements.

PricewaterhouseCoopers LLP Chartered Accountants

20 October 2014

Manchester

Appendix 2

PART C

INDEPENDENT FINANCIAL ADVISER'S REPORT

Liberum Capital Limited Ropemaker Place

25 Ropemaker Street London

EC2Y 9LY

The Directors

Daisy Group plc

Daisy House

Lindred Road Business Park

Nelson

Lancashire

BB9 5SR

20 October 2014

Dear Sirs

Report in connection with profit estimate of Daisy Group plc

We refer to the statements comprising the Gross profit, EBITDA, Adjusted EBITDA, Operating loss, loss before tax, loss from continuing operations and loss after tax contained in the consolidated financial statements of Daisy Group plc (the "Company") for the three months ended 30 June 2014 (the "Profit Estimate"). The Profit Estimate, and the basis on which it has been prepared, are set out in Appendix 2 of the announcement of the offer by Chain Bidco plc for the Company dated 20 October 2014 (the "Announcement"). The Profit Estimate has been prepared on the basis stated in Appendix 2 of the Announcement and is based on the unaudited management accounts for the three months ended 30 June 2014. The Profit Estimate is required to be presented on a basis consistent with the accounting policies of the Group.

We have discussed the Profit Estimate, together with the bases and assumptions upon which it has been made, with the directors of the Company (the "Directors"), Daisy's financial controller and the Company's reporting accountants, PricewaterhouseCoopers LLP. We have also discussed the accounting policies and bases of calculation for the Profit Estimate with the Directors, Daisy's financial controller and PricewaterhouseCoopers LLP and have considered the letter of today's date addressed to the Directors and to us from PricewaterhouseCoopers LLP on these matters. We have relied upon the accuracy and completeness of all the financial and other information provided to us by the Company, or otherwise discussed with us, and we have assumed such accuracy and completeness for the purposes of providing this letter.

On the basis of the foregoing, we consider that the Profit Estimate, for which you, as Directors are solely responsible, has been prepared with due care and consideration.

This report is provided to you solely in connection with Rule 28.1 of the City Code on Takeovers and Mergers and for no other purpose. No person other than the Directors can rely on the contents of this letter and to the fullest extent permitted by law, we exclude all liability to any other person in respect of this letter or the work undertaken in connection with this letter.

Yours faithfully

Liberum Capital Limited

Appendix 3

Bases and sources

In this announcement:

1.Unless otherwise stated, financial information relating to the Daisy Group has been extracted or derived (without any adjustment) from the audited annual report and accounts for Daisy for the year ended 31 March 2014 and from the unaudited interim condensed consolidated financial statements for Daisy Group as of and for the three month period ended 30 June 2014.

2.References to the existing issued share capital of Daisy are to the number of Daisy Shares in issue as at the close of business on 17 October 2014, being the last Business Day prior to the date of this announcement, which was 266,967,587 Daisy Shares. The International Securities Identification Number for Daisy Shares is GB00B61G9L20.

3.The value of the Offer is calculated on the basis of the fully diluted number of Daisy Shares in issue being the existing 266,967,587 Daisy Shares in issue.

4.The implied enterprise value of Daisy is based on the fully diluted share capital (as set out in paragraph 3) at the Offer Price, Daisy's gross debt of GBP155 million and less Daisy's net cash of GBP14 million, as at 30 June 2014.

5.The Adjusted EPS is the basic loss per share adjusted for the after tax effect of amortisation of acquisition related intangible assets, share based payment costs/(credits), net exceptional operating costs and the share of profit/(loss) of a joint venture.

6.Unless otherwise stated, all Closing Prices have been derived from the AIM Appendix to the London Stock Exchange Daily Official List.

Appendix 4

Details of irrevocable undertakings

 
Name of                                     Percentage of existing 
 Daisy Director                              issued share capital 
                    Number of Daisy Shares   of Daisy 
Peter Dubens        2,916,666(1)            1.09 
Christina Kennedy   4,690(2)                0.00 
Steve Smith         177,153                 0.07

Notes

1. This irrevocable undertaking is granted by HSDL Nominees Limited, which holds the Daisy Shares as nominee for Peter Dubens.

2. This irrevocable undertaking is granted by Project Consultants Limited, a company controlled by Christina Kennedy.

The undertakings referred to above comprise undertakings to accept the Offer and, where given by an Independent Shareholder, to vote in favour of the Ordinary Resolution to approve the Management Arrangements. Those Directors who are Independent Shareholders for this purpose are Peter Dubens and Christina Kennedy. The undertakings shall lapse only if: (i) the Offer document is not published within 28 days of the date of this announcement; (ii) the Offer does not become effective or lapses in accordance with its terms or is otherwise withdrawn; (iii) Bidco announces, with the consent of the Panel that it does not intend to proceed with the Offer; or (iv) a competing offer for Daisy is declared wholly unconditional or otherwise becomes effective.

 
Name of                                           Percentage of existing 
 Daisy Shareholder               Number of Daisy   issued share capital 
                                  Shares           of Daisy 
Host Europe (Bermuda) Limited    36,250,000       13.58 
Invesco Asset Management 
 Limited                         59,295,804       22.21 
Woodford Investment Management 
 LLP                             10,302,031       3.86

The undertakings referred to above comprise undertakings to accept the Offer and to vote in favour of the Ordinary Resolution to approve the Management Arrangements.

The undertakings shall lapse only if: (i) the Offer Document is not published within 28 days of the date of this announcement; or (ii) a third party announces, within 10 days of the posting of the Offer Document, a firm intention to make an offer for the whole of the issued or to be issued share capital of Daisy under which the amount or value of the consideration offered for each ordinary share is not less than 10 per cent. greater than the value per ordinary share offered pursuant to the Offer and, within five Business Days of such announcement, Bidco has not announced a revision to the Offer which matches or exceeds the consideration offered pursuant to such third party's offer.

For the avoidance of doubt, but without prejudice to any of the above, none of the undertakings referred to in this Appendix 4 shall lapse if Bidco, with the consent of the Panel, announces publicly that it is implementing the Offer by way of a Scheme, having previously proceeded with the implementation of the Offer by way of a takeover offer.

Appendix 5

Definitions

"Acceptance Condition"..................... the Condition set out at paragraph 1(a) of Part A of

Appendix 1 to this announcement

"Acquisition Group Debenture".......... the debenture entered into by Finco in favour of the Security

Agent on 20 October 2014

"Adjusted EBITDA"............................. operating profit from continuing operations before

amortisation, depreciation, net exceptional operating costs and share based payment costs

"Adjusted EPS".................................. basic loss per share adjusted for the after-tax effect of

amortisation of acquisition related intangible assets, share based payment costs/(credits), net exceptional operating costs and the share of profit/(loss) of joint ventures

"Admission"....................................... means 21 July 2009, being the date on which Daisy Shares

were admitted to trading on AIM

"Agent".............................................. HSBC Bank plc

"AIM".................................................. AIM, a market of the London Stock Exchange

"AIM Rules"........................................ the AIM Rules for Companies published by the London Stock

Exchange

"Ares"................................................. funds managed or advised by Ares Management Limited or

Ares Management UK Limited

"Ares Management Limited".............. a private limited company, incorporated in England and

Wales with registered number 05837428

"Ares Management UK Limited"........ a private limited company, incorporated in England and

Wales with registered number 08708339

"Bidco"............................................... Chain Bidco plc, a public limited company, incorporated in

England and Wales with registered number 09203980

"Bidco Group".................................... Bidco, its subsidiaries, holding companies and subsidiaries of

such holding companies as defined in the Companies Act

"Board".............................................. the board of directors

"Business Day"................................... a day (other than a Saturday, Sunday, public or bank holiday)

on which banks are generally open for business in London (other than solely for trading and settlement in EURO)

"City Code" or "Code"....................... the City Code on Takeovers and Mergers

"Closing Price"................................... the closing middle market price of a Daisy Share, as derived

from the AIM Appendix of the London Stock Exchange Daily Official List

"Companies Act"................................ the Companies Act 2006, as amended from time to time

"Conditions"....................................... the conditions of the Offer set out in Part A of Appendix 1

to this announcement

   "Consortium"   (i) Toscafund, (ii) Penta and (iii) Matthew Riley

"Disclosed" ........................................ (i) disclosed in the annual report and accounts for Daisy for

the period ended 31 March 2014, (ii) Publicly Disclosed, (iii) disclosed in this announcement, or (iv) fairly disclosed to Bidco by or on behalf of Daisy prior to the date of this announcement

"Daisy" or the "Company"................. Daisy Group plc, a public limited company incorporated in

England and Wales with registered number 03974683

"Daisy Directors"................................ members of the Board of Daisy

"Daisy Employee Benefit Trust"......... the Daisy Group plc Employee Share Ownership Trust

established by a deed dated 10 October 2006

"Daisy General Meeting".................... the general meeting of the Independent Shareholders of

Daisy to be held for the purposes of considering and, if thought fit, approving the Management Arrangements, a notice convening which will be set out in the Offer Document

"Daisy Group".................................... Daisy and its subsidiary and associated undertakings as such

terms are defined in the Companies Act

"Daisy One-off Awards"...................... the options, warrants and awards to acquire Daisy Shares

granted pursuant to stand-alone agreements with the following individuals: David McGlennon, Dan Conlon, Stewart Porter, Ian McKenzie, Michael Read, Peter Dubens and Matthew Riley

"Daisy Share Scheme Participant" ... any person who holds an option, warrant or award granted

pursuant to the Daisy Share Schemes

"Daisy Share Schemes"..................... the Daisy Group plc Long Term Incentive Plan (governed by

rules adopted by shareholder resolution on 1 May 2013), the Daisy Group plc Sharesave Plan 2010 (governed by rules adopted by the Company on 2 July 2010) and the Daisy One-off Awards

"Daisy Shareholders"......................... the holders of Daisy Shares

"Daisy Shares"................................... the ordinary shares of two pence each in the capital of Daisy,

and "Daisy Share" shall be construed accordingly

"FCA"................................................. the UK Financial Conduct Authority

"Final Dividend"................................. the final dividend of 3.1 pence per Daisy Share for the

financial year of Daisy ended on 31 March 2014 payable on 17 October 2014 to Daisy Shareholders on the register of members at the close of business on 26 September 2014

"Finco"............................................... Chain Finco Limited, a private limited company, incorporated

in England and Wales with registered number 09203989

"First Closing Date"............................ the date which falls 21 days after the posting of the Offer

Document

"Form of Acceptance"........................ the form of acceptance and authority relating to the Offer,

which will accompany the Offer Document

   "Form of Proxy"          the form of proxy for use by the Independent Shareholders

who hold their Daisy Shares in certificated form to vote on the resolution in relation to the approval of the Management Arrangements at the Daisy General Meeting

"Independent Directors"..................... Peter Dubens, Christina Kennedy, Laurence Blackall and Ian

McKenzie, each a director of Daisy

"Independent Shareholders"............. all Daisy Shareholders other than Matthew Riley, Toscafund,

Steve Smith and the Management Shareholders

"Intercreditor Agreement".................. the intercreditor agreement dated 20 October 2014 between

Pikco, Finco, Bidco, the Agent, the Security Agent and the Lenders

"Investors".......................................... funds managed or advised by Toscafund or Penta, including

Toscafund Limited

"Lenders"........................................... HSBC Bank plc, ING Bank N.V. and Lloyds Bank plc

"Liberum".......................................... Liberum Capital Limited

"London Stock Exchange"................. London Stock Exchange plc

"Management Arrangements"............ the equity participation arrangements in relation to Topco

"Management Arrangements Condition"

being made available by Topco to Matthew Riley, Steve Smith and other members of senior management, as more particularly described in paragraph 11 of this announcement

the Condition set out at paragraph 1(b) of Part A of Appendix 1 to this announcement

"Management Shareholders"............. each of Nathan Marke, David McGlennon and Andrew

Goldwater

"Matthew Riley"................................. Matthew Riley, the Chief Executive Officer of Daisy

"Midco".............................................. Chain Midco Limited, a private limited company,

incorporated in England and Wales with registered number 09265705

"Non-Executive Directors".................. each of Christina Kennedy, Laurence Blackall and Ian

McKenzie, each a director of Daisy

"Oakley Capital Corporate Finance".. an autonomous business division of Oakley Capital Limited

"Offer"................................................ the recommended cash offer to be made by Bidco at the

Offer Price in accordance with Part 28 of the Companies Act to acquire the entire issued and to be issued ordinary share capital of Daisy not already owned, or agreed to be acquired, by Bidco, another member of the Bidco Group or the Consortium on the terms and subject to the conditions set out in this announcement and to be set out in the Offer Document and, in the case of the Daisy Shares held in certificated form, the Form of Acceptance and, where the context admits, any subsequent revision, variation, extension or renewal of such offer

   "Offer Document"        the document to be sent to Daisy Shareholders which will

contain, amongst other things, the terms and conditions of the Offer and a notice convening the Daisy General Meeting

"Offer Period".................................... the period commencing on 13 August 2014 and ending on

the earlier of the date on which the Offer becomes or is declared unconditional as to acceptances and/or the date on which the Offer lapses or is withdrawn (or such other date as the Panel may decide)

"Offer Price"....................................... 185 pence per Daisy Share

"Official List"...................................... the daily official list maintained by the UK Listing Authority

"Opening Position Disclosure"........... an announcement containing details of interests or short

positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position

"Ordinary Resolution"........................ the ordinary resolution to be proposed to the Independent

Shareholders at the Daisy General Meeting in accordance with the requirements of Rule 16 of the Code for the purposes of considering and, if thought fit, approving the Management Arrangements, voting in respect of which shall be on a poll

"Panel" or "Takeover Panel"............. the Panel on Takeovers and Mergers

"Penta".............................................. Penta Capital LLP, a limited liability partnership registered in

Scotland with number SO302035

"PIK Agent"........................................ Ares Management Limited

"PIK Loan"......................................... a GBP135 million term loan to be advanced to Pikco by Ares

"Pikco"............................................... Chain Pikco Limited, a private limited company, incorporated

in England and Wales with registered number 09203988

"PIK Security Agent".......................... Ares Management Limited

"Phase 2 CMA reference"................... a referral of the Offer to the Chair of the Competition and

Markets Authority for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013

"Phase 2 European Commission ....... proceedings initiated by the European Commission under

proceedings" Article 6(1)(c) of Council Regulation 139/2004/EC in respect

of the Offer

"Publicly Disclosed"........................... fairly disclosed in any public announcement by Daisy to any

Regulatory Information Service

"PwC"................................................ PricewaterhouseCoopers LLP

"Regulatory Information Service" ..... any of the services authorised from time to time by the FCA

for the purposes of disseminating regulatory announcements

"Restricted Jurisdiction"..................... any jurisdiction where local laws or regulations may result in

a significant risk of civil, regulatory or criminal exposure if information concerning the Offer is sent or made available to Daisy Shareholders in that jurisdiction

   "Scheme"      means a scheme of arrangement made under Part 26 of the

Companies Act

"Security Agent"....................... HSBC Corporate Trustee Company (UK) Limited

"Senior Facilities Agreement".... the GBP265 million senior facilities agreement dated 20 October

2014 between, amongst others, the Lenders, the Agent and Bidco

"Share Exchange Agreement".... the agreement dated 20 October 2014 among the members

of the Bidco Group, Matthew Riley and Toscafund as described in paragraph 10 of this announcement

"Shareholders' Agreement"....... the agreement dated 20 October 2014 among the

Consortium, Martin Hughes, Ares and Topco as described in paragraph 10 of this announcement

"SME"...................................... small-to-medium enterprise

"Subscription Agreement"......... the agreement dated 20 October 2014 among the members

of the Bidco Group, Ares and Toscafund Limited as described in paragraph 10 of this announcement

"Third Party"............................ any central bank, government, government department or

governmental, quasi-governmental, supranational, statutory, regulatory, administrative, fiscal, or investigative body, authority (including any national anti-trust or merger control authority), court, trade agency, association, institution or professional or environmental body, employee representative body or any other person or body whatsoever in any relevant jurisdiction

"Topco"................................... Chain Topco Limited, a private limited company,

incorporated in England and Wales with registered number 09162741

"Toscafund"............................. Toscafund Asset Management LLP, a limited liability

partnership registered in England and Wales with number OC320318

"UK" or "United Kingdom".......... the United Kingdom of Great Britain and Northern Ireland

"UK Listing Authority"............... the FCA as the competent authority for listing in the United

Kingdom

"US" or "United States"............. the United States of America, its territories and possessions,

any state of the United States of America and the District of Columbia

"US GAAP"................................ generally accepted accounting principles in the US

sterling 164218

This information is provided by RNS

The company news service from the London Stock Exchange

END

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