Notice of General Meeting for Capital Reduction

Stadium Group plc

("Stadium", the "Company" or the "Group")

Posting of Circular and Notice of General Meeting for Proposed Capital Reduction

Stadium (AIM: SDM), a leading supplier of wireless solutions, power supplies and electronic assemblies, announces that a circular (the "Circular") containing a notice of general meeting will be sent to Shareholders today. The purpose of the General Meeting is to seek Shareholder approval for a proposed reduction of the Company's capital. The Capital Reduction would create additional distributable reserves which would provide the Company with further flexibility in relation to the payment of future dividends. The Capital Reduction is conditional upon, amongst other things, the approval of the Court and of Shareholders at the General Meeting.

The General Meeting is to be held at Pinsent Masons LLP, 30 Crown Place, Earl Street, London EC2A 4ES at 11.00 a.m. on 19 January 2017.

Shareholders should note that, unless the Resolution is approved at the General Meeting (and the Court confirms the Capital Reduction), the Capital Reduction will not take place, which may prevent the Company from paying dividends in the future.

The Circular gives more information on the Capital Reduction and is available on the Company's website at www.stadiumgroupplc.com and is also available, free of charge, at Stadium's registered office at Chancerygate Business Centre, Cradock Road, Reading RG2 0AH during normal business hours on any week day (public holidays excepted). Unless otherwise defined in this announcement, all defined terms used in this announcement shall have the meaning ascribed to them in the Circular.

Background to and reasons for the Capital Reduction

The Group operates a legacy defined benefit pension scheme, The Stadium Group plc 1974 Pension Scheme. As at 31 December 2015, the deficit on the Pension Scheme, measured under IAS 19, was £5,205,000. Subsequent to the EU Referendum result on 23 June 2016, corporate bond yields have fallen significantly in the UK and, as this yield is used to discount the Group's pension liability under IAS 19, if the corporate bond yield remains at its current low levels then this is likely to result in a significant increase in the Group's pension deficit as at 31 December 2016. This likely increased IAS 19 pension deficit would have the effect of materially reducing the Company's available distributable reserves, affecting the Company's ability to distribute profits to Shareholders as dividends.

As a result of the 2015 Fundraising, the Company's share premium account was increased by £5,295,000 and, as at 31 December 2015, stood at £10,597,000.

A share premium account is an un-distributable reserve and, accordingly, the purposes for which the Company can use it are extremely restricted. In particular, it cannot be used for paying dividends.

Therefore, given the enlarged share premium account as a result of the 2015 Fundraising and in light of the Group's recent and anticipated further operational progress, the Board is recommending that the share premium account be reduced by £5,295,000, which would restore it to its level prior to the 2015 Fundraising. This would have the effect of creating distributable reserves of this amount, which would provide the Board with additional flexibility to distribute profits to Shareholders as dividends, subject to the financial performance of the Company and subject always to the Act.

Following the implementation of the Capital Reduction, there will be no change in the nominal value of the Ordinary Shares or the number of Ordinary Shares in issue. No new share certificates will be issued as a result of the Capital Reduction.

The Capital Reduction

Under the Act, with the sanction of a resolution of the Shareholders and the confirmation of the Court, the Company may reduce or cancel its share premium account.

In seeking this approval, the Court will need to be satisfied that the interests of the Company's creditors will not be prejudiced as a result of the Capital Reduction. The Court will determine whether any protection is required for the creditors of the Company whose debts remain outstanding as at the date on which the Capital Reduction becomes effective and, if so, what form such protection should take. Any such creditor protection may include seeking the consent of the Company's creditors to the Capital Reduction or the provision by the Company to the Court of an undertaking that the reserves arising on the Capital Reduction will be placed in a special un-distributable reserve until such time as all creditors of the Company as at the date the Capital Reduction becomes effective, have been paid or have consented to the Capital Reduction or that the Company will deposit a sum of money into a blocked account created for the purpose of discharging the non-consenting creditors of the Company.

As at the date of this announcement, consent to the Capital Reduction has been obtained from both the Group's principal lender and the trustees of the Pension Scheme (being the two largest creditors of the Company) and has been requested from the remaining creditors of the Company.

Recommendation

The Directors consider the Capital Reduction to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend Shareholders to vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their beneficial holdings amounting, in aggregate, to 492,582 Ordinary Shares, representing 1.29 per cent. of the existing issued ordinary share capital of the Company.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

1. The expected dates for the confirmation of the Capital Reduction by the Court and the Capital Reduction becoming effective are based on provisional dates that have been obtained for the required Court hearings of the Company's application. These provisional hearing dates are subject to change and dependent on the Court's timetable.

2. The timetable assumes that there is no adjournment of the General Meeting. If there is an adjournment, all subsequent dates are likely to be later than those shown.

3. References to times are to London times unless otherwise stated.

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