Share Subscription

23 May 2012

The Innovation Group plc

('Innovation Group' or the 'Group')

Share subscription to raise £3.5 million

The Innovation Group plc (LSE: TIG.L), today announces a subscription for 17,073,170 new ordinary shares of 2 pence each ("New Ordinary Shares") by existing institutional investors at a price of 20.5 pence per New Ordinary Share (the "Subscription") to raise approximately £3.5 million (before expenses), representing approximately 1.8 per cent. of the existing issued share capital of Innovation Group.

The subscription price of 20.5 pence per New Ordinary Share represents a 4.7 per cent. discount to the closing mid-market price of 21.5 pence per ordinary share on 22 May 2012, being the latest practicable date prior to the publication of this announcement.

£2.6 million of the net proceeds of the Subscription will be used to part fund the consideration payable for the acquisition of Marishal Thompson & Co (Environmental) Ltd (the "Acquisition") which the Group announced earlier today. The balance of the proceeds of the Subscription will be used to fund the acquisition of another identified small bolt-on acquisition.

The Subscription is not conditional on the completion of the Acquisition. In the unlikely event that the Acquisition does not complete, the Directors will consider how to apply the proceeds of the Subscription.

As part of the Subscription, Henderson Volantis Capital has subscribed for 4,878,049 New Ordinary Shares. Henderson Volantis Capital is the holder of 249,374,902 ordinary shares, equating to 26.45 per cent. of the Group's current issued share capital. As such, under the Listing Rules, Henderson Volantis Capital is deemed to be a related party and its participation in the subscription is deemed to be a related party transaction. The Directors consider, having consulted its sponsor Investec Bank plc, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

It is expected that admission of the New Ordinary Shares will occur at 08.00 a.m. on 28 May 2012. The New Ordinary Shares will, when issued, be credited as fully paid and rank pari passu with the existing ordinary shares, including the right to receive all future declared dividends.

Enquiries:

About Innovation Group:

The Innovation Group plc (LSE: TIG.L) is a global provider of business process services and software solutions to the insurance, fleet, automotive and property industries. Innovation Group provides contact centres, repair networks, process management, supply chain and technology operations and decision support analytics to support accident management, repair and estimation and claims management services. Innovation Group has over 800 global clients including AXA, RSA, American Modern Insurance Group, LeasePlan, The Ford Motor Company, Aviva, Toyota and Zurich. The Group processes more than 4 million claims per year with 20 per cent direct claims cost saving achieved. Innovation's 2,300 people are located in the United Kingdom, Australia, Belgium, Canada, France, Germany, Japan, India, Pakistan, South Africa, Spain and United States. www.innovation-group.com 

Certain statements made in this announcement constitute forward-looking statements. Forward-looking statements can be identified by the use of words such as "may", "will", "should", "predict", "assurance", "aim", "hope", "risk", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or other similar expressions that are predictive or indicative of future events. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Group's expectations, intentions and beliefs concerning, amongst other things, the Group's results of operations, financial position, growth strategy, prospects, dividend policy and the industries in which the Group operates, are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Group and the Directors, which may cause the actual results, performance, achievements, dividends of the Group or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. As such, forward-looking statements are no guarantee of future performance.

This announcement has been issued by, and is the sole responsibility of, the Group. No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or by any of its affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Investec, which is authorised and regulated by the FSA, is acting exclusively for Innovation Group solely in connection with the Subscription and for no one else and will not be responsible to anyone other than Tarsus for providing the protections afforded to the customers of Investec or for providing advice in relation to the Placing or any other matter referred to in this announcement.

The distribution of this announcement in certain jurisdictions may be restricted by law. This announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Australia, New Zealand, Canada, Japan or South Africa or in any jurisdiction in which such offer or solicitation would be unlawful and should not be relied upon in connection with any decision, or as any inducement, to subscribe for or acquire any new ordinary shares. In particular, this announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States. No public offer of securities is being made in the United Kingdom or elsewhere.

This announcement is not an offer of securities for sale or a solicitation of any offer to purchase securities in the United States. New Ordinary Shares may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended (the "US Securities Act") or an exemption therefrom. The Group has not and does not intend to register any securities under the US Securities Act and does not intend to offer any securities to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted. The New Ordinary Shares have not been and will not be registered with any regulatory authority of any state within the United States.