Proposed Placing, Loan Conversion and Board Update

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

eg solutions plc

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

Proposed Placing to raise £3.2 million, Conversion of Loan Facility

and Board Update

eg solutions plc (AIM:EGS), the back office optimisation software company, is pleased to announce that it proposes to raise up to approximately £3.2 million (before expenses) by way of a placing of up to 4,905,000 new ordinary shares of 1 penny each ("Ordinary Shares", the "Placing Shares" and the "Placing" respectively) with certain existing and new investors, including directors of the Company (the "Directors"), at a price of 65 pence per Placing Share (the "Placing Price").

The Board is also pleased today to confirm that Elizabeth Gooch has agreed to act as chief executive officer of the Company on a permanent, as opposed to acting, basis.

Placing highlights

§ The Placing will raise approximately £3.2 million (before expenses), backed by both existing and new investors, including certain Directors

§ The net proceeds will be deployed to recruit new staff, increase marketing spend, enhance product development and capitalise on the significant market opportunity

§ It is expected that Admission of the Placing Shares to trading on AIM will become effective, and dealings in the Placing Shares will commence, on 13 January 2015

§ Current trading continues to be positive and the Board expects to deliver full year financial performance that is in line with expectations

The Company intends to deploy the proceeds of the Placing in, inter alia, enlarging its sales and delivery teams, continuing to invest in product development, marketing, and bolstering the Company's balance sheet, enabling it to competitively tender for new contracts. Further details of the use of the net proceeds of the Placing are set out below.

Additionally, conditional upon completion of the Placing and in accordance with the terms set out in the Company's announcement on 19 February 2014, the providers of the Company's convertible loan facility arrangement (with an expected total value of £599,425, including accrued interest to the date of the General Meeting) (the "Loan Facility"), have agreed to convert the Loan Facility into 1,198,848 new Ordinary Shares (the "Conversion Shares" and the "Conversion"). Following the Conversion, the Company will have no outstanding indebtedness.

This Placing is conditional upon, inter alia, the passing of certain resolutions (the "Resolutions") to be proposed at a general meeting (the "General Meeting") to be held at 9.30 a.m. on 12 January 2015, notice of which is set out in a circular which will be posted to holders of existing Ordinary Shares (the "Circular" and the "Shareholders" respectively) today.

Further details of the Placing and Conversion (the "Transaction") are set out below and in the Circular. Unless stated otherwise, terms and expressions defined in the Circular have the same meaning in this announcement.

Duncan McIntyre, chairman of the Company, commented:

"After a year of building up significant positive momentum, the Board is delighted to announce that new and existing Shareholders have backed the Company as it enters the next phase of our strategy. The Company has made great progress both financially and operationally, and we now have a record order book including increasing recurring revenues. This fundraising will enable the Group to build on its recent successes by investing further and accelerating our growth plans. I would like to thank all our staff, customers and partners for their significant contribution to our achievements this year."

CONTACTS

Extracts from the Circular, providing details of the Transaction, are set out below

Background to and Reasons for the Placing

The Company is proud to have been a pioneer in the back office workforce optimisation software market. Its software is now being used by over 50 leading international and global companies, with over 100,000 user licences having been sold throughout the world.

The market for back office workforce optimisation software is considered by DMG Consulting LLC, an independent research, advisory and consulting firm, to be growing strongly such that the addressable market for the Company's offering will be approximately £500 million by 2018, whilst the broader workforce optimization market is worth in excess of $3 billion. Furthermore, the Directors consider the opportunity to be made even more compelling by a small number of competitors, to whom the Directors believe the Company's product suite and capabilities, and technical expertise, to be superior.

As set out in the Company's interim results, announced on 17 September 2014, the Directors therefore believe that there is significant potential for growth of the business, not only in the market the Company usually operates in (being the US and UK financial services and insurance sectors) but also more widely internationally and in other sectors such as utilities. The Company intends to complement organic growth with strategic acquisitions as and when opportunities arise, particularly where such acquisitions will bring complementary technology to its existing product suite.

Significant investment has already been made by the Company in building up a strong base. The Board has been strengthened and a number of key hires have been made to bolster the Company's senior management team. The Company's growing revenues have been matched by increasing investment in direct and partner-led sales channels (for example, the Company's sales team is now the equivalent of nine full-time staff and is intended to grow further). Product development continues with the aim of ensuring that the Company remains a technological leader and to meet particular areas of demand.

Accordingly, the Directors believe that the Company is well positioned to take advantage of the market opportunity and proposes to accelerate its strategy for capitalising on this with a view to delivering significantly enhanced growth in revenue and profits in the longer term. The Directors believe that raising new development capital at this time will allow the Company to increase the scope of its operations, fund growth and become the global leader in its market.

Use of proceeds

The Directors intend that the net proceeds of the Placing will be used as follows:

- approximately £1 million in continuing to recruit new staff, principally in the Company's sales and delivery teams, and to increase marketing spend with a view to increasing product awareness. Importantly, the Directors believe that having further financial resources to support a deeper pool of management and sales staff will reduce the risk of its resources having to be adjusted if sales cycles, which are traditionally long, extend further;

- approximately £0.5 million in its marketing and communications strategy, principally to defeat the perception of being a 'well-kept secret' through establishing thought leadership and market awareness, and to further develop its pipeline of new business in both new verticals and territories;

- approximately £0.5 million in product development to retain product and technological leadership, particularly the product suite's forecasting capabilities, and to accelerate mobile and social functionality; and

- the remainder to strengthen the Company's balance sheet to enable it to obtain the best possible terms when negotiating with clients, accommodate the sales cycle of large enterprise clients, support the Company's early stage acquisition plans, and to ensure growth is not restricted by available cash and banking facilities.

Current trading

The Directors maintain a positive outlook on the future prospects of the Company and expect to deliver full year financial performance that is in line with expectations. The Company's base of repeat and recurring revenue has continued to increase resulting in an order book of £13.6 million beyond the current financial year. Recurring revenues have increased 69 per cent. in the year to date with repeat and recurring revenues now accounting for approximately 50 per cent. of total expected revenue for the current financial year. Looking ahead further, the Company have a pipeline of approximately £36 million of revenue opportunities arising from both direct sales leads and as a result of its partnership with Aspect.

Board update

The Board is pleased today to have confirmed that Elizabeth Gooch has agreed to act as chief executive officer of the Company on a permanent, as opposed to acting, basis.

Details of the Placing

Pursuant to the terms of the Placing Agreement, finnCap has conditionally agreed to use its reasonable endeavours, as agent for the Company, to place the Placing Shares with certain institutional and other investors. The Placing has not been underwritten by finnCap. The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting and Admission becoming effective on or before 8.00 a.m. on 13 January 2015 (or such later time and/or date as the Company and finnCap may agree, but in any event by no later than 8.30 a.m. on 27 January 2015).

The Placing Agreement contains warranties from the Company in favour of finnCap in relation to, inter alia, the accuracy of the information in this document and other matters relating to the Group and its business. In addition, the Company has agreed to indemnify finnCap in relation to certain liabilities it may incur in respect of the Placing. finnCap has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties given by the Company to finnCap in the Placing Agreement, the failure of the Company to comply in any material respect with its obligations under the Placing Agreement, the occurrence of a force majeure event or a material adverse change affecting the condition or the earnings or business affairs or prospects of the Group as a whole, whether or not arising in the usual course of business.

Under the Placing Agreement and subject to it becoming unconditional in all respects and not being terminated in accordance with its terms, the Company has agreed to pay finnCap a corporate finance advisory fee and a commission based on the value at the Placing Price of the Placing Shares, together with any applicable value added tax, and proposes to enter into the Warrant Instrument pursuant to which it will grant warrants over 112,850 Ordinary Shares to finnCap. The Warrants are exercisable up until the date falling nine months from Admission and the subscription price for such Warrants will be the Placing Price.

The Placing Shares and the Conversion Shares (together, the "New Ordinary Shares") will be credited as fully paid and will rank pari passu with the existing Ordinary Shares if and when issued.

Application will be made for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and dealings in the New Ordinary Shares will commence on 13 January 2015.

The Circular, setting out full details of the Placing and convening the General Meeting, will be posted to Shareholders today. The Circular will explain why the Board considers the Placing and Conversion to be in the best interests of the Company and the Shareholders as a whole.

The Conversion

On 18 February 2014, the Company entered into an agreement with Duncan McIntyre, chairman of the Company, and certain other existing Shareholders, to provide the Company with the Loan Facility with a total principal value of £550,000 and accruing interest at a rate of 10 per cent. per annum.

Pursuant to the terms of the agreements, the providers of the Loan Facility could at their discretion convert their participation in the Loan Facility, together with accrued interest, into new Ordinary Shares at any time up to and including the earlier of the first anniversary of issue and any material placing (being a placing which raises, net of all costs, £2 million or more for the Company). The conversion price was agreed to be the lower of 50 pence per Ordinary Share and, where conversion takes place on a material placing, the price per Ordinary Share of the material placing.

All three providers of the Loan Facility have, subject to completion of the Placing, agreed to convert their entire participation in the Loan Facility, together with accrued interest, in aggregate into the 1,198,848 Conversion Shares (of which a total of 871,890 will be issued to Duncan McIntyre and Aspect). The Conversion Shares will, following allotment, rank pari passu with the existing Ordinary Shares.

Directors' participation in the Placing and Conversion

The interests of the Directors as at the date of this announcement, and immediately following Admission, are expected to be, as follows:

The participation in the Placing by Duncan McIntyre, Jonathan Kay, John Brougham and Mark Brady (as Directors of the Company) and of Living Bridge VC LLP (or funds managed by Living Bridge VC LLP) (as a substantial shareholder) constitute related party transactions pursuant to the AIM Rules. The Independent Directors, being the Directors who will not participate in the Placing, consider, having consulted with finnCap, the Company's nominated adviser, that the participation in the Placing by these parties, as set out above, is fair and reasonable insofar as Shareholders are concerned.

The Matching Scheme

In its announcement of 24 April 2014, following a subscription for Ordinary Shares by certain Directors, the Company stated that it intended to implement a matching scheme (the "Matching Scheme") in respect of the Ordinary Shares subscribed for, on the same or similar terms as the Company's 2014 Long-Term Incentive Plan (the "LTIP"). The Company will therefore, and on a 'one-off' basis, following the General Meeting, grant a total of 520,000 Options to three Directors, being Duncan McIntyre, John Brougham and Mark Brady.

Options to be granted pursuant to the Matching Scheme are granted with a nominal exercise price per Ordinary Share and vest after three years based on an achievement of share price growth targets and certain performance conditions.

The terms of the Matching Scheme are otherwise the same as the Company's LTIP. Full details of the terms of the LTIP were set out in the Company's notice of annual general meeting dated 16 April 2014. The granting of the Options pursuant to the Matching Scheme will constitute a related party transaction pursuant to the AIM Rules for Companies. The Independent Directors, being the Directors who will not participate in the Matching Scheme, consider, having consulted with finnCap, the Company's nominated adviser, that the terms of the proposed grants pursuant to the Matching Scheme, as set out above, are fair and reasonable insofar as Shareholders are concerned.

- Ends -

About eg solutions plc

eg solutions is a back office workforce optimisation software company. eg pioneered this new market space and developed the most complete, purpose built workforce optimisation software for back offices - the only solution that manages work, people and end-to-end processes wherever they are undertaken, anywhere in the world.

Our software is now used by leading UK, international and global companies in multiple industry sectors including financial services, healthcare and utilities.

Using our forecasting, scheduling, real-time work management and operational analytics capabilities we deliver measureable improvements in service, quality, productivity and regulatory compliance. When supported by our implementation and training services we guarantee return on investment in short timescales.

Regardless of who is serving the customer - call centre, back offices, branches or the field - our solutions provide true insight into the full customer service process and promote world-class operational management capability.

The Company is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange (EGS)

Disclaimer

This announcement contains a number of forward looking statements relating to the Company and its subsidiaries (the "Group") with respect to, amongst others, the following: financial conditions; results of operations; the business of the Group; future benefits of the Placing or Conversion; and management plans and objectives. The Company considers any statements that are not historical facts to be "forward looking statements". They relate to events and trends that are subject to risks, uncertainties and assumptions that could cause the actual results and financial position of the Group to differ materially from the information presented in the relevant forward looking statement. When used in this announcement, the words "estimate"; "project"; "intend"; "aim"; "anticipate"; "believe"; "expect"; "should" and similar expressions, as they relate to the Group or management of it, are intended to identify such forward looking statements. Shareholders are cautioned not to place undue reliance on these forward looking statements which speak only as at the date of this announcement. The Company does not undertake any obligation to update publicly or revise any of the forward looking statements whether as a result of new information, future events or otherwise, save in respect of any requirement under applicable laws, the AIM Rules or other regulations.

finnCap Ltd, which is authorised and regulated by the Financial Conduct Authority, is acting as nominated adviser and broker to the Company in connection with the matters described in this announcement. finnCap Ltd will not be responsible to anyone other than the Company for providing the protections afforded to clients of finnCap Ltd or for advising any other person on the Placing or Conversion or any other arrangements described in this announcement. finnCap Ltd has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by finnCap Ltd for the accuracy of any information or opinions contained in this announcement or for the omission of any information.