Statement re Proposals

RNS Number:4012A
FII Group PLC
1 July 2004


                              Fii GROUP PLC 
                              (the Company)

Late on the afternoon of 24 June, the Company's bankers, Barclays appointed KPMG 
as administrator of the Company. The directors of the Company view this move as 
a direct consequence of the Company's pension fund deficit and the recent 
proposed changes in pensions law.

Immediately prior to the AGM of the Company in December 2003, the Company 
received an approach by a company trading on AIM to acquire the Company's 
business. This approach was seen by the larger shareholders in the Company as a 
more attractive solution than the fund raising being proposed at that time. 
Additional approaches of a similar nature were subsequently made by other 
entities.

Before any of these proposals could be put into effect, the Government proposed 
new legislation which could have the potential result of having pension fund 
liabilities (where they are in deficit) follow the business into any new 
company. Further, the potential liability in this instance could be in excess of 
#70 million. Not surprisingly this was seen by the potential purchasers as a 
significant obstacle to the acquisition of the business.

Additionally, the proposed pensions legislation provides lifeboat funding where 
the relevant company is insolvent. This had the adverse effect of making any 
reconstruction and hive-up of the business on a solvent basis unworkable; it was 
viewed as impossible to reconcile the needs of the pension fund with that of the 
business.

Your directors are currently in the process of finalising proposals to be put to 
the administrators which your directors are hopeful will see: the business 
continue; a viable level of creditors move forward with the business; and 
Shareholders of the Company move forward with the business. If these proposals 
are accepted and completed successfully, the current intention is that there 
will be a subsequent floatation of the business on AIM.

Your directors believe in this business and believe that together we can make it 
work going forward with a fresh start and a fresh approach.

Enquiries:

Fii Group PLC [phone] 
Mr Justin Stewart


                      This information is provided by RNS
            The company news service from the London Stock Exchange

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