Trading update and Loan Notes discussions

AIM: KLN

13 January 2015

The Kellan Group PLC

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

Trading update and Convertible Loan Notes discussions

The Directors of Kellan are pleased to announce that it expects its unaudited net fee income for the year ended 31 December 2014 to be approximately £8 million, which is an improvement of approximately 4 per cent. on comparable period in 2013 (£7.66 million). The Directors are also pleased to announce that they expect the Group's unaudited operating profit (before impairment) for the year ended 31 December 2014 to be approximately £150,000, compared to a loss of £1.16 million in 2013, and the Group's unaudited adjusted EBITDA for 2014 to be approximately £700,000, compared to a loss before interest, tax, depreciation and amortisation of £353,000 in 2013 and £524,000 in 2012. Productivity per fee earner in 2014 was approximately £105,000, which represents a 10 per cent. improvement on 2013 productivity per fee earner of approximately £96,000.

The Company currently has £550,000 of nominal secured convertible loan notes outstanding which are redeemable by the Company on 5 February 2015 and £811,000 of nominal unsecured convertible loan notes outstanding which are redeemable by the Company on 14 February 2015 ("the Loan Notes"). The Company has been in discussions with the principal holders of the Loan Notes to find a basis on which to either redeem the Loan Notes at a discount to the nominal value or to refinance the Loan Notes on extended terms. In conjunction with these discussions, the Company is in ongoing discussions to obtain the necessary funding to redeem, as necessary, the Loan Notes. The Directors are pursuing all other options available with regard to the Loan Notes. A further announcement will be made in due course.

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