Disposal

Armour Group plc

("Armour" or the "Group")

Disposal and proposal for the Group to become an Investing Company

Armour Group plc announces the proposed disposal of Armour Home and Armour Hong Kong ("the Disposal") to AHE 100 Limited ("AHE"). AHE is a company set up by George Dexter, Armour's Chief Executive, and the management of Armour Home for the purpose of acquiring Armour Home and Armour Hong Kong. Armour Group will receive in consideration 250 Ordinary Shares of 1 pence each in the capital of AHE, which represents 25 per cent. of the total share capital of AHE and AHE will assume responsibility for approximately £3.5 million of debt due to GE Commercial Finance Limited, the Group's principal lender. The Group has also lent £1.0 million to Armour Home on a five year term loan at an annual interest rate of 10% per annum.

The sale is conditional upon shareholder approval. A circular containing a Notice of General Meeting, to be held at 12:30pm on 4 August 2014 at the offices of Arnold & Porter (UK) LLP, Tower 42, 25 Old Broad Street, London, EC2N 1HQ, has today been posted to shareholders setting out details of the transaction.

On completion of the sale to AHE it has been agreed that George Dexter will step down from the Group's Board. Following the proposed Disposal the Group will have no debt, the £1.0 million loan referred to above, and approximately £4.0 million of cash. It then intends to become an investing company, specialising in the technology sector.

In the year to 31 August 2013, Armour Home had sales of £17.6 million and made an operating profit of £0.1 million. Armour Home is not expected to achieve profitability in the current financial year and in the six months to 28 February 2014 incurred a loss of £114,000, before central overheads, on revenues of £9.0 million.

Irrevocable Undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolutions from Shareholders representing 48.3 per cent. of the outstanding issued share capital. This includes irrevocable undertakings from George Dexter and certain of the Independent Directors of the Group (being Bob Morton, Steve Bodger and Mark Wilson).

Related Party Transaction

George Dexter will hold 350 shares in AHE representing 35 per cent. of the share capital, is a director of AHE and will be a director of the Group until Completion. Under the AIM Rules, George Dexter's interest in AHE and the proposed Disposal is deemed a related party transaction.

The Independent Directors of the Company consider, having consulted with finnCap, that the terms of the proposed Disposal are fair and reasonable insofar as shareholders of the Company are concerned.

Bob Morton, Chairman, commented: "We are pleased to announce the proposed disposal of Armour Home to AHE. Market conditions remain challenging and growth has been limited over recent years. Given the current prospects of the sector, we believe the proposed terms represent a fair price for Armour Home. Following the Disposal we believe we will be able to achieve greater returns for shareholders by using the Group's cash and AIM listing to invest in high growth opportunities. The Group will retain a 25 per cent interest in Armour Home through its ownership of 25 per cent of the share capital of AHE 100. It will therefore benefit from any return that AHE can generate from the continuing turnaround of Armour Home. The Independent Directors believe that it will be beneficial for the Company and its shareholders to proceed with the Disposal and have recommended shareholders vote in favour as they have done."

The shareholder circular will be posted on the Group's website later today at www.armourgroup.uk.com

Further Details:

Appendix - Further information (as contained in the circular to shareholders)

Investing Policy

Following the Disposal, the Company will be an investing company.

The board, as it will be following the proposed Disposal, has determined that the Company's Investing Policy will be to seek opportunities in the technology sector. The Company's objective is to generate an attractive rate of return for Shareholders by taking advantage of opportunities. There will be no limit on the number of projects into which the Company may invest and the Company's financial resources may be invested in a number of propositions, or in just one investment, which is likely to be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules.

The Company will seek investment opportunities in the technology sector that offer good value and the potential for capital growth and/or income. The Company will seek to achieve this through acquisitions, partnerships or joint venture arrangements and such investments may result in the Company acquiring the whole or part of a company.

The strategy of the Company will be to leverage the expertise and the contacts of the New Board to investigate opportunities available to it.

In particular the Board will seek to identify target investments with some or all of the following characteristics:

· a clear market opportunity;

· significant growth prospects;

· likely to benefit from access to additional equity funding; and

· the likelihood of benefits accruing from being part of a group with publicly traded shares.

The Company's Investing Policy is intended to be long-term but if circumstances arise whereby an acquired business or company may be floated in its own right, or disposed of at a suitable premium, such opportunities will be considered by the Board.

Under the AIM Rules, the Company is required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the date of the General Meeting, failing which the Ordinary Shares would be suspended from trading on AIM in accordance with Rule 40 of the AIM Rules.

If the Company's Investing Policy has not been implemented within 12 months of the date of the General Meeting, then the admission to trading on AIM of the Ordinary Shares would be suspended and the Directors would convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash to Shareholders.