Fonebak plc - Offer for CRC Group plc

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY OF THE EXCLUDED TERRITORIES

FOR IMMEDIATE RELEASE

14 December 2006

Recommended Cash Offer by

KBC Peel Hunt Ltd

on behalf of

Fonebak plc

to acquire the entire issued and to be issued

ordinary share capital of

CRC Group plc

Summary

The boards of Fonebak and CRC are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by KBC Peel Hunt on behalf of Fonebak to acquire the entire issued and to be issued ordinary share capital of CRC for 50 pence per CRC Share. The Offer values the Existing CRC Share Capital at approximately £12.3 million.

Fonebak will fund the consideration under the Offer, together with the refinancing of existing bank facilities, through a proposed placing with institutional and other investors of 6,756,757 new Fonebak Shares to raise approximately £10.0 million (before expenses) and new bank facilities totalling £25.0 million provided by KBC Bank. The Placing has been fully underwritten by KBC Peel Hunt.

The terms of the Offer:

The Offer is for the entire issued and to be issued ordinary share capital of CRC on the following basis:

50 pence in cash for each CRC Share

The Offer represents a premium of approximately:

· 78.6 per cent. to the closing price of 28 pence per CRC Share on 29 June 2006 being the last Business Day prior to the announcement by CRC that it had received an approach which may or may not lead to an offer;

· 71.2 per cent. to the average closing price of 29.2 pence per CRC Share during the period from 29 June 2006, being the last Business Day prior to the announcement by CRC that it had received an approach which may or may not lead to an offer, to 4 December 2006, being the last Business Day prior to the announcement that CRC was in advanced discussions with a party regarding a possible cash offer for CRC at a price of 50 pence per CRC Share; and

· 11.1 per cent. to the closing price of 45 pence per CRC Share on 13 December 2006, being the last Business Day prior to the Announcement.

The CRC Directors, who have been so advised by Rothschild, believe the Offer to be fair and reasonable so far as CRC Shareholders as a whole are concerned, and they unanimously recommend that CRC Shareholders accept the Offer as they and certain persons connected to them have irrevocably undertaken to do in respect of 1,181,111 CRC Shares which they and persons connected with them hold, representing approximately 4.8 per cent. of the Existing CRC Share Capital.

In addition Fonebak has received an irrevocable undertaking from another CRC Shareholder to accept the Offer in respect of a further 2,534,021 CRC Shares, representing approximately 10.3 per cent. of the Existing CRC Share Capital. This irrevocable undertaking will remain binding unless a third party announces a competing offer for CRC which values each CRC Share at a price greater than ten per cent. higher in value than the Offer Price.

Background to and reasons for the Offer

The CRC Group provides technology repair services to service providers and manufacturers in the communications and IT industries for electronic products and technologies used in the home, in the work place and on the move. These products and technologies include mobile handsets, digital set-top boxes, cash dispensers (ATM (Taiwan OTC: 3423.TWO - news) 's), chip and pin equipment, laptops, computer peripherals, satellite navigation devices and MP3 players. CRC's ordinary shares were admitted to trading on AIM in November (Stuttgart: A0Z24E - news) 1997.

The Fonebak Group is a leading outsource service provider for mobile phone handset services, including fulfilment, repair, resale, recycling and environmental support services. It offers an end-to-end solution for the full life cycle of mobile phone handsets and associated products, which complies with product sale and environmental legislation. It works together with its clients (mobile phone network operators, manufacturers, retailers, charities and corporate clients) to deliver a range of solutions that support their customer acquisition and retention strategies and cost reduction programmes, and supports and protects its customers' brands both nationally and internationally. The Fonebak Shares were admitted to trading on AIM in March 2005.

The Fonebak Directors believe that the acquisition of CRC represents an opportunity to:

· achieve a further increase in the scale of the Fonebak Group's business and benefit from the associated economies of scale by:

o extending the Fonebak business model to the CRC Group's client base;

o accelerating the roll out of the Fonebak Group's European footprint utilising the CRC Group's current European infrastructure; and

o sharing resources and exploiting synergies created by the Enlarged Group and maximising the efficiencies of the operating infrastructure;

· improve profitability and cash flow by offering a "one-stop" pan-European capability for full life cycle product management across an expanded set of technologies, thereby producing market leadership from existing fragmentation; and

· reinforce Fonebak's position as a market leader in environmental management services for the mobile telecommunications sector.

The Fonebak Directors believe that the acquisition of CRC should present opportunities for the Enlarged Group to accelerate its strategy and provide a full service model solution for the converging telecommunications, personal computing and media product sectors.

In addition, the Enlarged Group will be well positioned to enter the growing outsourced electronic devices service market both in the UK and across Europe (Chicago Options: ^REURUSD - news) , particularly in the context of the implementation of the Waste Electrical and Electronic Equipment ("WEEE") Directive (2002/96/EC and 2003/108/EC) across Europe. This Directive will place a number of operating and reporting requirements on both producers and distributors/retailers of electronic equipment from the time that it comes into force, which is expected to be January 2007. The Fonebak Group already has systems and procedures in place to support clients in meeting their obligations under the Directive.

Upon the Offer becoming or being declared unconditional Gary Stokes, current Chief Executive Officer of CRC, will be appointed as Chief Executive Officer of the Enlarged Group.

Commenting on the Offer, Gordon Shields, Non-executive Chairman of Fonebak, said:

"We are delighted to have agreed to acquire CRC, with our offer being recommended unanimously by the CRC Board. Fonebak is a solid business in the mobile phone market as demonstrated by its trading record but the acquisition of CRC puts the enlarged business in a strong position to be able to take advantage of the consolidation occurring in consumer technology products as a result of technical development and consumer demand. Combining the two businesses provides clear benefits to both sides by underpinning its position, role and growth in the consumer electrical products market."

Commenting on the Offer, Jan Astrand, Chairman of CRC, said:

"The CRC Board has carefully considered the offer by Fonebak and believes that the best interests of CRC and its shareholders are now served by accepting the Offer in full. The Offer provides greater certainty of value to CRC Shareholders than the alternative strategies available to the CRC Group at this time. The combination of Fonebak and CRC will create a wider European based group capable of servicing a broad range of warranty management and after-sales support services. I would like to thank all CRC's employees for their valuable contribution to the business and in particular for their support during the uncertainty of recent months"

Enquiries:

Fonebak	01708 683 400
Gordon Shields (Non-executive Chairman)
Arthur Crocker (Finance Director)
KBC Peel Hunt (Financial Adviser, Nominated Adviser and broker to Fonebak)	0207 418 8900
Jonathan Marren
Gordon Suggett
Oliver Stratton
Pelham Public Relations (PR adviser to Fonebak)	0207 743 6670
James Henderson
Charles Vivian
Philip Dennis
CRC	01844 261 900
Gary Stokes (Chief Executive Officer)
David Kelham (Chief Financial Officer)
Rothschild (Financial Adviser and Nominated Adviser to CRC)	0121 600 5252
Roger Hemming
Weber Shandwick Square Mile (PR adviser to CRC)	020 7067 0700
Chris Lynch

This summary should be read in conjunction with the full text of the Announcement. Appendix I contains certain of the terms and conditions of the Offer. Appendix II contains a loss forecast from CRC. Appendix III contains the sources and bases of information contained in the Announcement. Appendix IV contains definitions of certain terms used in this summary and the Announcement.

KBC Peel Hunt, which is authorised and regulated by the Financial Services Authority in the United Kingdom, for investment business activities, is acting as financial adviser to Fonebak in connection with the Offer and no one else, and will not be responsible to anyone other than Fonebak for providing the protections afforded to clients of KBC Peel Hunt nor for providing advice in relation to the Offer, or any arrangement referred to herein.

KBC Peel Hunt has given and not withdrawn its written consent to the release of this announcement with the inclusion of the reference to its name in the form and context in which it is included.

Rothschild, which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for CRC and no one else in relation to the Offer and will not be responsible to anyone other than CRC for providing the protections afforded to clients of Rothschild nor for providing advice in relation to the Offer or any arrangement referred to herein.

Rothschild has given and not withdrawn its written consent to the release of this announcement with the inclusion of the reference to its name in the form and context in which it is included.

KPMG Audit Plc has given and not withdrawn its written consent to the release of this announcement with the inclusion of its name and letter in the form and context in which they are included.

The Fonebak Directors accept responsibility for the information contained in this announcement other than that relating to the CRC Group, the CRC Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the Fonebak Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The CRC Directors accept responsibility for the information contained in this announcement relating to the CRC Group, the CRC Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the CRC Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

The Offer is not being made, directly or indirectly, in or into, or by use of the mails, or by any means or instrumentality (including, without limitation, facsimile transmission, internet, email, telex or telephone) of interstate or foreign commerce, or of any facility of a national securities exchange, of any of the Excluded Territories and cannot be accepted by any such use, means, instrumentality or facility or from within any of the Excluded Territories.

Neither the Offer nor the Placing constitutes an offer of securities for sale, or the solicitation of an offer to buy securities in any Excluded Territory and the new Fonebak Shares to be issued pursuant to the Placing have not been and will not be registered under the United States Securities Act of 1933, or under the laws of any state, district or other jurisdiction of the United States or of any Excluded Territory and no regulatory clearances in respect of new Fonebak Shares have been or will be, applied for in any jurisdiction. Accordingly, unless an exemption under the US Securities Act of 1933 or other relevant securities laws is applicable, the new Fonebak Shares are not being, and may not be offered, sold, resold, delivered or distributed, directly or indirectly, in or into the United States or any of the Excluded Territories or to, or for the account or benefit of, any US person or person resident in any of the Excluded Territories.

This announcement contains a number of forward-looking statements relating to the Fonebak Group and the CRC Group with respect to, among others, the following: financial condition; results of operations; the business of the Enlarged Group; future benefits of the acquisition of the CRC Shares pursuant to the Offer; and management plans and objectives. Fonebak and CRC consider any statements that are not historical facts as "forward-looking statements". They involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Important factors that could cause actual results to differ materially from estimates or forecasts contained in the forward-looking statements include, among others, the following possibilities: future revenues are lower than expected; costs or difficulties relating to the integration of the businesses of the Fonebak Group and the CRC Group, or of other future acquisitions, are greater than expected; expected cost savings from the transaction or from other future acquisitions are not fully realised or realised within the expected time frame; competitive pressures in the industry increase; general economic conditions or conditions affecting the relevant industries, whether globally or in the places where the Fonebak Group and the CRC Group conduct business are less favourable than expected, and/or conditions in the securities market are less favourable than expected.

This Announcement does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to purchase any securities, pursuant to the Offer or otherwise. The Offer will be made solely by the Offer Document and, in the case of CRC Shares in certificated form, the Form of Acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted.

Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of CRC, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the Business Day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of CRC they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of CRC by CRC or Fonebak, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY OF THE EXCLUDED TERRITORIES

FOR IMMEDIATE RELEASE

14 December 2006

Recommended Cash Offer by

KBC Peel Hunt Ltd

on behalf of

Fonebak plc

to acquire the entire issued and to be issued

ordinary share capital of

CRC Group plc

1. Introduction

The boards of Fonebak and CRC are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by KBC Peel Hunt on behalf of Fonebak to acquire the entire issued and to be issued ordinary share capital of CRC for 50 pence per CRC Share. The Offer values the Existing CRC Share Capital at approximately £12.3 million.

The CRC Directors, who have been so advised by Rothschild, believe the Offer to be fair and reasonable so far as CRC Shareholders as a whole are concerned, and they unanimously recommend that CRC Shareholders accept the Offer as they and certain persons connected to them have irrevocably undertaken to do in respect of 1,181,111 CRC Shares which they and persons connected with them hold, representing approximately 4.8 per cent. of the Existing CRC Share Capital.

In addition Fonebak has received an irrevocable undertaking from another CRC Shareholder to accept the Offer in respect of a further 2,534,021 CRC Shares, representing approximately 10.3 per cent. of the Existing CRC Share Capital. Further details of this irrevocable undertaking and set out in the Announcement and in the Offer Document which is expected to be posted to CRC Shareholders on or around 19 December 2006.

2. The Offer

The Offer will be made on and subject to the terms and conditions set out in Appendix I to the Announcement and the further terms and conditions set out in the Offer Document expected to be posted to CRC Shareholders on or around 19 December 2006 and, in the case of CRC Shares held in certificated form, the Form of Acceptance which will accompany the Offer Document.

The Offer is for the entire issued and to be issued ordinary share capital of CRC on the following basis:

50 pence in cash for each CRC Share

The Offer represents a premium of approximately:

· 78.6 per cent. to the closing price of 28 pence per CRC Share on 29 June 2006 being the last Business Day prior to the announcement by CRC that it had received an approach which may or may not lead to an offer;

· 71.2 per cent. to the average closing price of 29.2 pence per CRC Share during the period from 29 June 2006, being the last Business Day prior to the announcement by CRC that it had received an approach which may or may not lead to an offer, to 4 December 2006, being the last Business Day prior to the announcement that CRC was in advanced discussions with a party regarding a possible cash offer for CRC at a price of 50 pence per CRC Share; and

· 11.1 per cent. to the closing price of 45 pence per CRC Share on 13 December 2006, being the last Business Day prior to the Announcement.

The CRC Shares which are the subject of the Offer will be acquired by Fonebak fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and other third party rights or interests of any nature whatsoever and together with all rights now or in the future attaching to them, including the right to receive and retain all dividends and other distributions (if any) declared, made or paid on or after the date of the Offer Document.

The Offer is conditional, inter alia, on: (i) Fonebak Shareholders resolving to approve the resolutions necessary to effect the Placing; (ii) the admission to trading on AIM of the Placing Shares in accordance with the AIM Rules; and (iii) valid acceptances being received in respect of not less than 90 per cent. (or such lesser percentage as the board of Fonebak may, subject to the City Code, decide with the approval of KBC Peel Hunt (under the Placing Agreement) and KBC Bank (under the Facilities Agreement)) of the voting rights carried by the CRC Shares to which the Offer relates.

Fonebak will fund the consideration under the Offer through a proposed placing of 6,756,757 new Fonebak Shares to raise approximately £10.0 million (before expenses) and new bank facilities totalling £25.0 million provided by KBC Bank. The new bank facilities with KBC Bank consist of a £17.5 million term loan and a £7.5 million revolving credit facility. The monies raised from the Placing and the new bank facilities will also be used to refinance existing bank facilities in Fonebak and CRC.

KBC Peel Hunt has conditionally agreed to procure placees for, or itself subscribe for, 6,756,757 new Fonebak Shares at a price of 148 pence per share, raising approximately £10.0 million (before expenses). The Placing Shares will represent approximately 35.2 per cent. of the Existing Fonebak Share Capital. The Placing is conditional, inter alia, on the Offer becoming or being declared unconditional in all respects (save only for Admission) and on Admission.

KBC Peel Hunt is satisfied that the necessary financial resources are available to Fonebak to enable it to satisfy in full in cash the consideration payable by Fonebak under the Offer.

3. Background to and reasons for the Offer

Fonebak Shares were admitted to trading on AIM in March 2005 with the intention of Fonebak becoming an outsourced service provider to the mobile telecommunications sector by offering its clients a fully integrated solution for the full life cycle of products. The solution offered by Fonebak complies with both product sale and environmental legislation, whilst also contributing to client cost reduction programmes. It protects and enhances client brands both nationally and internationally.

Initially, Fonebak's business was focused on mobile phones, but it was intended to extend the business model to other technology and communication products in the future. This strategy has been actively pursued and, following the acquisitions of Intec Group Limited and the Stoke based mobile phone repair and administration business from DSG Retail Limited ("DSG"), Fonebak now offers a full spectrum of post product sale outsourced services to the mobile telecommunications sector. The Fonebak Directors believe that the acquisition of CRC represents an opportunity to:

· achieve a further increase in the scale of the Fonebak Group's business and benefit from the associated economies of scale by:

o extending the Fonebak business model to the CRC Group's client base;

o accelerating the roll out of Fonebak's European footprint utilising the CRC Group's current European infrastructure; and

o sharing resources and exploiting synergies created by the Enlarged Group and maximising the efficiencies of the operating infrastructure;

· improve profitability and cash flow by offering a "one-stop" pan-European capability for full life cycle product management across an expanded set of technologies, thereby producing market leadership from existing fragmentation; and

· reinforce Fonebak's position as a market leader in environmental management services for the mobile telecommunications sector.

Immediately upon completion of the Offer, Fonebak intends to commence integration of the business of the CRC Group with its existing operations, which will involve, inter alia:

· continuing with the current restructuring plan being implemented by the CRC Group;

· combining the expertise and knowledge of the management and staff of Fonebak with those of CRC to create a strong team to manage and control the Enlarged Group as evidenced by the proposed appointment of Gary Stokes, the current Chief executive of CRC, to be Chief executive of the Enlarged Group;

· integrating, where appropriate, the operations of the Fonebak Group and the CRC Group;

· realisation of CRC corporate cost savings of approximately £1 million on an annualised basis; and

· reducing the operating costs of the combined businesses.

The Fonebak Directors believe that the acquisition of CRC should present opportunities for the Enlarged Group to accelerate its strategy and provide a full service model solution for the converging telecommunications, personal computing and media product sectors.

In addition, the Enlarged Group will be well positioned to enter the growing outsourced electronic devices service market both in the UK and across Europe, particularly in the context of the implementation of the WEEE Directive across Europe. This European Directive is designed to reduce the quantity of waste from electrical and electronic products and increase re-use, recovery and recycling from private households The WEEE Directive will place a number of operating and reporting requirements on both producers and distributors/retailers of electronic equipment from the time that it comes into force, which is expected to be January 2007. The Fonebak Group already has systems and procedures in place to support clients in meeting their obligations under the Directive.

The proposed acquisition of CRC is not expected to have any impact on the Fonebak Group's earnings for the current year but is expected to materially enhance earnings in the first full year following completion of the acquisition. This statement does not constitute a profit forecast and should not be interpreted to mean that earnings for the year to 30 June 2007 or 30 June 2008 and or any subsequent financial period would necessarily be greater than those for any preceding financial period.

4. Background to and reasons for recommending the Offer

Background to recommending the Offer

The CRC Directors believe that the terms of the Offer represent an opportunity for CRC Shareholders to realise their investment in cash, providing certainty of value after a challenging period for the CRC Group.

Since the second half of 2005, the CRC Group has experienced a number of set-backs, of both a trading and non-trading nature, which have adversely impacted its business. Following an encouraging start to 2005, the CRC Group experienced a decline in trading performance as certain customers deferred business with CRC and weak market conditions impacted the UK business in particular. In addition an adverse business mix, shifting towards lower margin type products, also reduced profitability. These weaknesses highlighted underlying issues in the CRC Group which have become more evident through 2006.

In addition the CRC Group has experienced some significant customer losses , notably the notification in January 2006 that Unipart Logistics Limited ("UTL") intends to take Vodafone (LSE: VOD.L - news) 's repair business in the UK back in house during 2007 and the collapse of BenQ Mobile GmbH's Italian operations which led to the administration of CRC's Italian operations.

A wrongful disposal of stock belonging to a major customer was a significant non-trading issue for the CRC Group in early 2006 and indicated the requirement for CRC to improve its financial and operational controls.

On 26 May 2006 CRC announced that the new executive team, under the leadership of Gary Stokes, had completed a thorough review of the business, the defining of a restructuring plan and the trading outlook for the remainder of the year. This led to the conclusion that CRC anticipated making a pre tax loss for the full year.

Since then this new management team, including David Kelham, the newly appointed Chief Financial Officer, who joined on 6 June 2006, have made progress in stabilising the CRC Group's business and in identifying and addressing the issues giving rise to the difficulties in the CRC Group's strategy. However, while there are signs of recovery and new sales opportunities have presented themselves, including new contracts secured with Tom Tom (Amsterdam: TOM2.AS - news) , Sony (Stuttgart: 853687 - news) , Epson, Lipman, ACER (Other OTC: ASIYF.PK - news) , Wistron and Toshiba (Dusseldorf: TSE1.DU - news) , risks remain in the execution of the restructuring plan, particularly given the relatively high indebtedness of the business and CRC's weakened capital base. Furthermore, in order to continue the implementation of the restructuring plan on a stand alone basis, the management team concluded that a refinancing of the business would be required, including the injection of further equity funding from shareholders and the continued support of the CRC Group's bank.

On 30 June 2006 it was announced that CRC had received an early stage expression of interest from a party in making an offer for the entire issued share capital of CRC. The announcement stated that the Board was also considering other strategic options to maximise CRC Shareholder value, including a standalone restructuring plan and its additional funding requirements.

Following a thorough review of the expressions of interest received since then and the other options available to CRC, the CRC Board has concluded that, in light of the risks associated with the CRC Group's standalone restructuring plan and the requirement for a substantial injection of equity into the business in order to implement the plan, a strategic offer for CRC would deliver more certain value for CRC Shareholders than if the CRC Group remained independent.

Reasons for recommending the Offer

Accordingly the Board believes the Offer to be in the best interests of CRC Shareholders and has, for the following reasons, concluded that the Offer is fair and reasonable:

· despite the progress made by the new management team over recent months, there are still many challenges to overcome. The execution of the recovery plan is essential to the future prospects of the CRC Group and carries with it uncertainty as to its success;

· while management has identified further opportunities for the CRC Group, the risks in exploiting them are significant for a business of the CRC Group's size and indebtedness and would require a refinancing of the business and the continuing support of the CRC Group's bank;

· the technology repair market has been consolidating across Europe. The weakened financial state of the CRC Group means that it is not able to act as a consolidator in the technology repair market and cannot provide the same breadth of support as certain of its competitors;

· by being part of a larger group, the CRC Group should be able to compete more effectively in the technology repair market, benefiting from the Fonebak Group's refurbishment and end of life re-use and recycling capabilities and complementary geographic footprint;

· the CRC Board has explored a number of expressions of interest and has also reviewed the alternative of a standalone restructuring plan with the CRC Group remaining independent and concluded that the Offer represents the best way of delivering certainty of value to CRC Shareholders, particularly given the requirement for a refinancing of the business including an injection of equity if a stand alone plan were to be pursued;

· the CRC Board believes that the cash offer from Fonebak provides immediate certainty of value to CRC Shareholders at a level that is unlikely to be achieved by CRC Shareholders in the near future.

The Offer represents a premium of approximately 78.6 per cent. to the closing middle market price of 28 pence per CRC Share on 29 June 2006, the Business Day prior to the announcement that CRC had received preliminary approaches which may or may not lead to an offer for the issued and to be issued share capital of CRC.

5. Irrevocable undertakings

Fonebak has received irrevocable undertakings to accept the Offer from each of the CRC Directors who holds CRC Shares and from certain persons connected with the CRC Directors in respect of, in aggregate, 1,181,111 CRC Shares, representing approximately 4.8 per cent. of the Existing CRC Share Capital. These irrevocable undertakings, which require each person who has given one to accept or procure the acceptance of the Offer in respect of the number of CRC Shares which are the subject of the irrevocable undertaking, will continue to be binding in the event of a competing offer for CRC.

In addition, Fonebak has received an irrevocable undertaking to accept the Offer from another CRC Shareholder in respect of a further 2,534,021 CRC Shares, representing approximately 10.3 per cent. of the Existing CRC Share Capital. This irrevocable undertaking will remain binding unless a third party announces a competing offer for CRC which values each CRC Share at a price greater than ten per cent. higher in value than the Offer Price.

Accordingly, Fonebak has received irrevocable undertakings to accept the Offer in respect of, in aggregate, 3,715,132 CRC Shares representing approximately 15.1 per cent. of the Existing CRC Share Capital.

Fonebak has also received a letter from INVESCO Asset Management Ltd ("IAML"), a CRC Shareholder, confirming its current intention, following the posting of the Offer Document to accept (or to use all their reasonable endeavours to procure acceptance of) the Offer in respect of a further 3,427,500 CRC Shares, representing 13.9 per cent. of the Existing CRC Share Capital. They reserve their right to revise their current intention in light of any additional information at any time. The letter is not legally binding. To the extent that IAML ceases to control any or all of these shares, the letter will cease to apply to such shares.

Further details of these irrevocable undertakings to accept the Offer will be set out in the Offer Document.

6. Inducement fee

As part of the negotiations between CRC and Fonebak, CRC entered into an inducement fee arrangement with Fonebak on 3 October 2006. The inducement fee, which is equal to one per cent. of the fully diluted value of CRC at the Offer Price (inclusive of irrecoverable VAT, if any), is payable by CRC to Fonebak in certain events including, inter alia, CRC breaching the terms of the exclusivity agreement between CRC and Fonebak dated 3 October 2006; the CRC Directors, or any independent committee of the Board, withdrawing or modifying, in a manner adverse to Fonebak, its recommendation to CRC Shareholders in respect of the Offer; or any person or entity (other than Fonebak) making a higher competing offer which is recommended by the CRC Directors. Nothing in the agreement shall oblige CRC to pay any amount which the Panel determines would not be permitted by Rule 21.2 of the Code.

Pursuant to Rule 21.2 of the Code, Rothschild and CRC have confirmed to the Panel that they consider the terms of the inducement fee to be in the best interests of CRC Shareholders.

Further details relating to the inducement fee will be set out in the Offer Document.

7. Information on the Fonebak Group

The Fonebak Group is a leading outsource service provider for mobile phone handset services, including fulfilment, repair, resale, recycling and environmental support services. It offers an end-to-end solution for the full life cycle of mobile phone handsets and associated products, which complies with product sale and environmental legislation. It works together with its clients (mobile phone network operators, manufacturers, retailers, charities and corporate clients) to deliver a range of solutions that support their customer acquisition and retention strategies and cost reduction programmes, and supports and protects its customers' brands both nationally and internationally. The service encompasses stock management, back office, call centre and administration support, repair and refurbishment, product resale and environmental management.

The services provided are intended to positively impact customer perception of the Fonebak Group's clients' organisations and to generate financial returns for them, rather than incurring net costs. Clients use the services to support their environmental and corporate responsibility policies. Since 1 July 2002, the Fonebak Group has processed approximately ten million mobile phones for re-use and recycling, approximately 3.5 million of which were processed in the 12 months to 30 November 2006.

The Fonebak Group is responsible for managing each repair, refurbishment or recycling project to ensure that its clients' needs are met and financial returns are maximised whilst meeting environmental regulatory requirements. This can range from developing marketing campaigns and setting up software systems to collections in retail outlets and providing a complete audit trail of all products received. The Fonebak Group has invested significant amounts in systems and software and offers its clients a range of online tools including software for recording and facilitating the receipt and payment for mobile phones returned during their trade-in processes and software to facilitate marketing campaigns.

Following repair and/or refurbishment, mobile phones are repackaged and then sold to retailers and distributors predominantly in Africa and the Asia Pacific (Chicago Options: ^RASPUSD - news) region. In these regions, mobile phones are not normally subsidised by the network providers and new handsets are usually prohibitively expensive for the majority of the population.

The Fonebak Directors believe that the business model is a showcase for the telecommunications industry, complying with current legislation including the forthcoming WEEE Directive, which sets guidelines and targets for the take-back and recycling of potentially harmful electrical waste. This European Directive is designed to reduce the quantity of waste from electrical and electronic products and increase re-use, recovery and recycling from private households.

Fonebak's acquisition of Intec Group Limited in July 2005 and DSG's Stoke based mobile phone repair and administration business in September 2006 extended the Fonebak Group's support services activities to include call centre and insurance administration and fulfilment services for both mobile phones and other digital products.

The Fonebak Group has an experienced international sales team with a wide range of technical sales expertise and market knowledge. The customer base, which typically includes small to medium sized retailers and distributors, is predominantly drawn from Africa and the Asia Pacific region. The Fonebak Group is committed to the development of new markets and to the continual expansion of its client base. In addition, the Fonebak Group has experience with high security shipping and consignments can often be shipped within 24 hours.

In 2005, Fonebak opened a new logistics hub in France (Lille) and three new marketing offices in Portugal (Lisbon), Italy (Rome) and Turkey (Istanbul).

Regulatory and market drivers

Fonebak supports clients in all aspects of current and forthcoming environmental compliance, including waste transfer regulations, duty of care responsibilities, special waste regulations and the forthcoming WEEE Directive. The WEEE Directive directly affects the electronics sector in the UK and Europe. In the UK, the regulations are anticipated to come into effect in January 2007.

The WEEE Directive deals with both the recovery of electrical goods and the safe treatment of the products received with verified recycling rates. The Fonebak Group's integrated service already meets all of the criteria in relation to mobile phone handsets and accessories with established, well-publicised take-back mechanisms, product tracking and reporting that includes a proven recycling rate which meets the 65 per cent. recycling rate specified within the regulations.

Protection of the environment is central to the Fonebak Group's business strategy and accordingly an environmental management system has been developed to ISO 14001 standards. The system has been incorporated into all operations to ensure that environmental risk is managed, minimised and measured to enable annual public reporting of the Fonebak Group's environmental performance. All other systems in the UK and Romania are also certified to ISO 14001.

Competition

The Fonebak Directors believe that Fonebak leads the re-use and recycling market for mobile phones in the UK. Competitors are mainly small operators, independent brokers and various charity collectors. The European market is still developing and competition is fragmented.

The Fonebak Directors believe that Fonebak has the following key strengths which create barriers to entry:

· long established relationships with network operators;

· software systems developed specifically to provide product tracking and reporting;

· established environmental reputation;

· project management skills that combine market awareness with in-depth environmental awareness and compliance;

· an international sales team with market knowledge, relationships and technical expertise;

· cost effective refurbishment capability with substantial expansion capacity;

· technical capabilities; and

· an integrated offering providing full life cycle services.

Financial information

In the year ended 30 June 2006, Fonebak reported an audited consolidated operating profit before exceptional items and goodwill amortisation of £3.75 million on turnover of £60.4 million. This yielded a profit on ordinary activities before taxation, exceptional items and goodwill amortisation of £3.3 million. Consolidated (Berlin: YO3.BE - news) net assets as at 30 June 2006 were £16.0 million.

8. Information on the CRC Group

The CRC Group provides technology repair services to service providers and manufacturers in the communications and IT industries for electronic products and technologies used in the home, in the work place and on the move. Approximately 50 per cent. of current year revenues are derived from the repair and servicing of mobile handsets, approximately 25 per cent. from the repair and servicing of digital set top boxes and the balance from the repair and servicing of IT equipment which includes cash dispensers (ATM's), chip and pin equipment, laptops and computer peripherals.

The business

Originally established in 1984 as a division of distribution group Memec Group Holdings Limited, CRC was acquired by the then management team in 1994 and subsequently admitted to trading on AIM on 14 November 1997.

A number of key acquisitions took place between 1998 and 2005, including: Automated Integrated Diagnosis Limited; Communication Repair Centre (UK) Limited; the repair centre of Siemens Business Services GmbH, an unincorporated business, using CRC (Deutschland) GmbH; the Wincor Nixdorf Engineering Centre, an unincorporated business, using CRC (Grossbeeren) GmbH; ADP Technical Services Limited; Teleca Telephone Service S.p.A ("Teleca"); and Kronos 2002 S.r.l ("Kronos").

As a result, by the start of 2006, the CRC Group had established a network of eleven repair sites across Europe. These were in Glenrothes in Scotland; Nottingham, Huntingdon and Thame in England; Warsaw in Poland; Catania, Milan, Reggio Emilia and Rome in Italy; and Paderborn and Grosbeeren in Germany.

Until early 2006, the CRC Group's business was organised between its communications division and its information technology division. The communications division, focused on the repairs of mobile phones for customers such as Siemens (BSE: SIEMENS.BO - news) , Sony Ericsson, Nokia (Stockholm: NOKI-SEK.ST - news) , Motorola (NYSE: MOT - news) and Vodafone. The information technology division, serviced a broad range of products including ATMs, digital set-top boxes, computers and other technology products for customers such as Fujitsu Siemens, NTL/Telewest, Wincor Nixdorf (Other OTC: WNXDF.PK - news) and Apple (NasdaqGS: AAPL - news) .

In the second half of 2005, CRC reported a decline in trading performance following the deferral of business from certain customers, notification of a number of contract losses and an adverse shift in the product mix which resulted in lower margins being experienced in the communications division.

In January 2006 CRC received notice from Vodafone that it would be outsourcing all UK mobile phone reverse logistics to UTL, including repair, with the consequence that the CRC Group's business with Vodafone undertaken at the Nottingham facility would be transferred to UTL's own logistics centre. While the impact of the Vodafone decision will not be felt until 2007, the transfer will significantly reduce the revenues and profits of the CRC Group if it is fully implemented.

In February 2006, the CRC Group announced that it had discovered trading activities in one part of the business that included the wrongful disposal of stock held on behalf of a third party. Following a comprehensive investigation it was confirmed that the activity was confined to a handful of employees in one business unit and that within the rest of the CRC Group's business no further untoward stock or other such trading issues were identified. Subsequently CRC reinstated the customer to its original position, and the transactions and corrective actions were reflected fully in the 2005 audited accounts.

Given these difficulties a new management team was appointed in the first half of 2006, the divisional management structure was removed and the remaining corporate functions downsized and replaced with a leaner country based management structure. The Chief Executive, Gary Stokes, supported by the Chief Financial Officer, David Kelham, undertook a thorough review of the CRC Group, its business and opportunities. As a result a number of underperforming and loss making units were identified which needed to be addressed.

In August 2006 the closure of the Thame site was announced. Headcount at the Huntingdon site has also been reduced to reflect the current level of activity whilst capacity and space at Glenrothes are being increased to accommodate work displaced from other sites as well as additional volumes from new business development activities.

The combined impact of these factors has been lower sales on a year on year basis for the UK business with a consequent negative impact on profits although operational improvements amounting to at least £4.0 million per annum on an annualised basis have been achieved. A goodwill impairment charge amounting to £4.9 million relating to the UK mobile phone repair business was recorded in the interim accounts to June 2006.

The trading performance of CRC Italia (the business formed by the merger of Teleca and Kronos in June 2006) since acquisition had been disappointing. A number of customers withdrew their business in 2005, and the two principal customers suffered a fall in market share which adversely affected the residual business. CRC Italia struggled to acquire new customers quickly enough to replace these volume shortfalls. To recover the situation the management of CRC Italia commenced a significant restructuring of the business in early 2006.

Actions taken to improve the performance of the businesses included the closure of the Catania site, the relocation to a lower cost centre in Milan and the recruitment of additional sales resource to secure more business.

Despite these actions, the Italian businesses continued to sustain losses which required significant funding in order to enable it to continue trading. Given the deteriorating position in Italy the CRC Board sanctioned the appointment of advisors to explore the possibility of the sale of the business. However, in October 2006 CRC was notified of the collapse of BenQ Mobile GmbH, the principal customer to CRC Italia representing approximately 50 per cent. of CRC Italia's revenues. Despite efforts to secure the future of CRC Italia the CRC Board could not justify the commitment of any further funding to Italy given the increasing losses, and consequently on 2 November 2006 CRC announced that the board of CRC Italia had decided to make an application to the relevant authorities to appoint an administrator.

A non-cash charge of £2.1 million was made to cover the write down of loans made to CRC Italia since its acquisition, and a further charge of £0.5 million was made to cover other potential liabilities. The goodwill arising on the acquisition of CRC Italia (£5.4 million) had been written off in the interim accounts to June 2006.

Previously the CRC Group has commented that the German operations have experienced price pressures leading to a decline in margins although contracts have now been renewed with the main customers, Fujitsu Siemens and Wincor Nixdorf. In order to compete more effectively in Germany, options to reduce operating costs are currently being explored and negotiations have commenced with the Works Councils in Paderborn and Grosbeeren.

Financial information

On 20 March 2006, CRC published the CRC Group's results for the year ended 31 December 2005. In this period, CRC reported audited consolidated turnover of £78.8 million (2004: £69.3 million) and consolidated operating profit before amortisation of goodwill and exceptional items of £3.1 million (2004: £5.6 million). As at 31 December 2005, the CRC Group had consolidated net assets of £24.5 million.

In addition, on 29 September 2006, CRC announced the CRC Group's unaudited interim results for the six months ended 30 June 2006. In this period, CRC reported CRC Group consolidated turnover of £38.4 million (six months ended 30 June 2005: £38.0 million) and operating profit before amortisation of goodwill and exceptional items of £0.1 million (six months ended 30 June 2005: £3.0 million). As at 30 June 2006, the CRC Group had consolidated net assets of £10.4 million.

9. CRC Share Schemes

The Offer extends to any CRC Shares unconditionally allotted or issued whilst the Offer remains open for acceptance (or such earlier date as Fonebak may, subject to the Code, determine, such earlier date not, without the consent of the Panel, being earlier than the date on which the Offer becomes unconditional as to acceptances or, if later, the first closing date) as a result of the exercise of options granted under the CRC Share Schemes or otherwise.

In the event that the Offer becomes or is declared unconditional in all respects, Fonebak will write to the participants in the CRC Share Schemes to inform them of the effect of the Offer on their rights under the CRC Share Schemes and to set out appropriate proposals to be made in respect of their options. It should be noted, however, that the exercise price of all the options granted by CRC are all greater than the Offer Price.

10. CRC management and employees

The CRC Board are pleased to confirm that the Fonebak Board has given assurances that, following the Offer becoming or being declared unconditional in all respects, the existing employment rights, including pension rights, of all employees and management of the CRC Group will be fully safeguarded. Fonebak intends to continue the implementation of the restructuring plans already announced by CRC during 2006, following the Offer becoming unconditional, a strategy which the CRC Board supports. In the medium term an evaluation of the business of the CRC Group (having regard to the business needs and operational efficiencies of the Enlarged Group) will be undertaken by Fonebak.

All of the non-executive CRC Directors (namely; Jan Astrand, David Bird, Robert Gogel and Pat Thompson) have agreed to resign upon the Offer becoming or being declared unconditional in all respects. Each will receive a termination payment equal to his contractual notice entitlement, further details of which will be set out in the Offer Document. Following the Offer becoming or being declared unconditional in all respects, Fonebak intends to appoint new directors to the board of CRC as replacements for the non-executive directors.

David Kelham (Chief Financial Officer) has also agreed to resign following the Offer becoming or being declared unconditional in all respects. A compromise agreement reflecting his entitlement under his employment contract was entered into on 13 December 2006 with CRC and the payments to be made under his contractual entitlement will be set out in the Offer Document. The compromise agreement and payment due under the terms of the agreement are conditional on the Offer becoming or being declared unconditional in all respects.

David Kelham has agreed to assist with transitional arrangements for a short period following the Offer becoming or being declared unconditional, notwithstanding that his current employment will terminate immediately upon the Offer becoming or being declared unconditional in all respects. David will provide services to the Enlarged Group on agreed terms, further details of which will be set out in the Offer Document.

Upon the Offer becoming or being declared unconditional Gary Stokes, current Chief Executive Officer of CRC, will be appointed as Chief Executive Officer of the Enlarged Group. Gary Stokes will enter into a new service agreement with Fonebak on substantially the same terms and conditions as his current agreement, save that he will be granted options over 500,000 Fonebak Shares.

Pursuant to a resolution of the remuneration committee of the CRC Board dated 29 June 2006, it was agreed that as the share options held by each of Gary Stokes and David Kelham over CRC Shares were significantly below the option price, such options provided no incentive or benefit to the individuals. The remuneration committee of the CRC Board resolved to cancel the existing options and awarded a bonus of £100,000 to Gary Stokes and £70,000 to David Kelham payable, in each case, on either the successful sale or refinancing of CRC in recognition of the effort and commitment demonstrated by those individuals to effect such a sale or refinancing. The bonus, is payable, in each case, in two equal instalments, the first when a contractually binding agreement has been signed relating to a sale of share capital or other change of control and the second when the transaction is complete, or, in the case of re-financing, the first when an arrangement has been made the subject of written agreement and the second when drawdown commences or additional share capital is received. The CRC Board intends to make these payments in full upon the Offer becoming wholly unconditional.

11. Compulsory acquisition and cancellation of trading

If the Offer becomes or is declared unconditional in all respects, Fonebak intends to procure the making of an application by CRC as soon as it is appropriate to do so to cancel admission to trading of the CRC Shares on AIM. It is anticipated that such cancellation of admission to trading will take effect no earlier than 20 Business Days after the Offer becomes or is declared unconditional in all respects. Such cancellation would significantly reduce the liquidity and marketability of any CRC Shares not acquired by Fonebak pursuant to the Offer.

If Fonebak receives acceptances under the Offer in respect of, and/or otherwise acquires, 90 per cent. or more of the CRC Shares to which the Offer relates and the Offer becomes or is declared unconditional in all respects, Fonebak intends to exercise its rights pursuant to the provisions of sections 428 to 430F (inclusive) of the Companies Act to acquire compulsorily any remaining CRC Shares to which the Offer relates and which are not acquired or agreed to be acquired by Fonebak pursuant to the Offer on the same terms as the Offer.

If the Offer becomes or is declared unconditional in all respects, Fonebak will seek to procure the re-registration of CRC as a private company in due course.

12. Expected timetable of principal events

First (OTC BB: FSTC.OB - news) closing date of the Offer		10 January 2007
Fonebak extraordinary general meeting		10.00 a.m on 11 January 2007
Admission and commencement of dealings in the Placing Shares on AIM*		18 January 2007
CREST stock accounts credited in respect of Placing Shares to be held in uncertificated form*		18 January 2007
Despatch of definitive share certificates in respect of Placing Shares to be held in certificated form*		25 January 2007

* The above times and dates assume that the Offer becomes or is declared unconditional in all respects (other than in respect of Admission) immediately following the Fonebak extraordinary general meeting referred to above. In the event that any of the dates set out in the Expected timetable of principal events set out above is changed, Fonebak will notify such amended dates through a Regulatory Information Service and to shareholders of CRC and Fonebak as appropriate.

Enquiries:

Fonebak	01708 683 400
Gordon Shields (Non-executive Chairman)
Arthur Crocker (Finance Director)
KBC Peel Hunt (Financial Adviser, Nominated Adviser and broker to Fonebak)	0207 418 8900
Jonathan Marren
Gordon Suggett
Oliver Stratton
Pelham Public Relations (PR adviser to Fonebak)	0207 743 6670
James Henderson
Charles Vivian
Philip Dennis
CRC	01844 261 900
Gary Stokes (Chief Executive Officer)
David Kelham (Chief Financial Officer)
Rothschild (Financial Adviser and Nominated Adviser to CRC)	0121 600 5252
Roger Hemming
Weber Shandwick Square Mile (PR adviser to CRC)	020 7067 0700
Chris Lynch

Appendix I contains certain of the terms and conditions of the Offer. Appendix II contains a loss forecast from CRC. Appendix III contains the sources and bases of information contained in this announcement. Appendix IV contains definitions of certain terms used in this announcement.

KBC Peel Hunt, which is authorised and regulated by the Financial Services Authority in the United Kingdom, for investment business activities, is acting as financial adviser, to Fonebak in connection with the Offer and no one else, and will not be responsible to anyone other than Fonebak for providing the protections afforded to clients of KBC Peel Hunt nor for providing advice in relation to the Offer, or any arrangement referred to herein.

KBC Peel Hunt has given and not withdrawn its written consent to the release of this announcement with the inclusion of the reference to its name in the form and context in which it is included.

Rothschild, which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting for CRC and no one else in relation to the Offer and will not be responsible to anyone other than CRC for providing the protections afforded to clients of Rothschild nor for providing advice in relation to the Offer or any arrangement referred to herein.

Rothschild has given and not withdrawn its written consent to the release of this announcement with the inclusion of the reference to its name in the form and context in which it is included.

KPMG Audit Plc has given and not withdrawn its written consent to the release of this announcement with the inclusion of its name and letter in the form and context in which they are included.

The Fonebak Directors accept responsibility for the information contained in this announcement other than that relating to the CRC Group, the CRC Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the Fonebak Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The CRC Directors accept responsibility for the information contained in this announcement relating to the CRC Group, the CRC Directors and members of their immediate families, related trusts and persons connected with them. To the best of the knowledge and belief of the CRC Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

The Offer is not being made, directly or indirectly, in or into, or by use of the mails, or by any means or instrumentality (including, without limitation, facsimile transmission, internet, email, telex or telephone) of interstate or foreign commerce, or of any facility of a national securities exchange, of any of the Excluded Territories and cannot be accepted by any such use, means, instrumentality or facility or from within any of the Excluded Territories.

Neither the Offer nor the Placing constitutes an offer of securities for sale, or the solicitation of an offer to buy securities in any Excluded Territory and the new Fonebak Shares to be issued pursuant to the Placing have not been and will not be registered under the United States Securities Act of 1933, or under the laws of any state, district or other jurisdiction of the United States or of an Excluded Territory and no regulatory clearances in respect of new Fonebak Shares have been or will be, applied for in any jurisdiction. Accordingly, unless an exemption under the US Securities Act of 1933 or other relevant securities laws is applicable, the new Fonebak Shares are not being, and may not be offered, sold, resold, delivered or distributed, directly or indirectly, in or into the United States or any of the Excluded Territories or to, or for the account or benefit of, any US person or person resident in any of the Excluded Territories.

The Announcement contains a number of forward-looking statements relating to the Fonebak Group and the CRC Group with respect to, among others, the following: financial condition; results of operations; the business of the Enlarged Group; future benefits of the acquisition of the CRC Shares pursuant to the Offer; and management plans and objectives. Fonebak and CRC consider any statements that are not historical facts as "forward-looking statements". They involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Important factors that could cause actual results to differ materially from estimates or forecasts contained in the forward-looking statements include, among others, the following possibilities: future revenues are lower than expected; costs or difficulties relating to the integration of the businesses of the Fonebak Group and the CRC Group, or of other future acquisitions, are greater than expected; expected cost savings from the transaction or from other future acquisitions are not fully realised or realised within the expected time frame; competitive pressures in the industry increase; general economic conditions or conditions affecting the relevant industries, whether globally or in the places where the Fonebak Group and the CRC Group conduct business are less favourable than expected, and/or conditions in the securities market are less favourable than expected.

The Announcement does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to purchase any securities, pursuant to the Offer or otherwise. The Offer will be made solely by the Offer Document and, in the case of CRC Shares in certificated form, the Form of Acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted.

Dealing Disclosure Requirements

Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of CRC all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the Business Day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of CRC they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of CRC by CRC or by Fonebak, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.

APPENDIX I - CONDITIONS OF THE OFFER

Conditions of the Offer

The Offer is subject to the following conditions:

1.

Acceptances

Valid acceptances being received (and not, where permitted, withdrawn) by no later than 1.00pm on the first closing date of the Offer (or, subject to the Code or with consent of the Panel, such later time(s) and/or dates(s) as Fonebak may decide) in respect of not less than 90 per cent. (or such lesser percentage as Fonebak may, subject to the Code, decide with the prior approval of KBC Peel Hunt (under the Placing Agreement) and KBC Bank (under the Facilities Agreement)) of the voting rights carried by the CRC Shares to which the Offer relates. However, this condition will not be satisfied unless Fonebak and/or its wholly owned subsidiaries have acquired or agreed to acquire (whether pursuant to the Offer or otherwise) CRC Shares carrying, in aggregate, over 50 per cent. of the voting rights then normally exercisable at general meetings of CRC including, for this purpose, to the extent (if any) required by the Code, the voting rights attaching to any CRC Shares which may be unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise. In this condition:

1.1 the expression "CRC Shares to which the Offer relates" shall be construed in accordance with sections 428 to 430F (inclusive) of the Companies Act; and

1.2 CRC Shares that cease to be held in treasury are "CRC Shares to which the Offer relates"; and

1.3 CRC Shares which have been unconditionally allotted but not issued shall be deemed to carry the voting rights which they will carry when they are issued; and

1.4 valid acceptances shall be treated as having been received in respect of any CRC Shares that Fonebak and/or its wholly owned subsidiaries shall, pursuant to section 429(8) and, if applicable, section 430E of the Companies Act, be treated as having acquired or contracted to acquire by virtue of acceptances of the Offer.

2.

Shareholder approval and Admission of Placing Shares

2.1 The passing at an extraordinary general meeting of Fonebak (or any adjournment thereof) of such resolutions as may be necessary to approve, implement and effect the Placing and the issue of the Placing Shares; and

2.2 the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules.

3.

Authorisations

3.1 All authorisations in any jurisdiction which Fonebak reasonably considers necessary or appropriate for, or in respect of, the Offer, its implementation or any acquisition of any shares in, or control of, CRC or any other member of the Wider CRC Group by any member of the Wider Fonebak Group having been obtained in terms and in a form satisfactory to Fonebak (acting reasonably) from any relevant person or from any person or body with whom any member of the Wider CRC Group has entered into contractual arrangements and all such authorisations remaining in full force and effect and there being no intimation of any intention to revoke, suspend, restrict, modify or not renew the same.

3.2 All authorisations which Fonebak reasonably considers necessary to carry on the business of any member of the Wider CRC Group remaining in full force and effect and there being no intimation of any intention to revoke or not to renew the same.

3.3 All filings which Fonebak reasonably considers necessary having been made and all applicable waiting and other periods having expired, lapsed or been terminated and all applicable statutory or regulatory obligations in any jurisdiction having been complied with.

4.

Regulatory Intervention

No relevant person having taken, instituted, implemented or threatened any action, proceeding, suit, investigation, enquiry or reference or having made, proposed or enacted, any statute, regulation, order or decision or taken any other measures or steps or required any action to be taken or information to be provided and there not continuing to be outstanding any statute, regulation, order or decision that would or might reasonably be expected to:

4.1 make the Offer, its implementation or the acquisition or proposed acquisition of any shares in, or control or management of, the Wider CRC Group by Fonebak illegal, void or unenforceable in any jurisdiction; or

4.2 otherwise directly or indirectly prevent, prohibit or otherwise materially restrict, restrain, delay or interfere in the implementation of or impose additional conditions or obligations with respect to or otherwise impede, challenge or interfere or require amendment of the Offer or the proposed acquisition of CRC by Fonebak or any acquisition of shares in CRC by Fonebak or any acquisition of control or management of CRC or the Wider CRC Group by Fonebak; or

4.3 require, prevent or delay the divestiture by Fonebak of any shares or other securities in CRC in any such case in a manner or to an extent which would be material in the context of the Wider CRC Group or Wider Fonebak Group taken as a whole; or

4.4 limit or delay or impose any limitation on the ability of any member of the Wider Fonebak Group or any member of the Wider CRC Group to acquire or hold or exercise effectively, directly or indirectly, any rights of ownership of shares or other securities or the equivalent in any member of the Wider CRC Group or management control over any member of the CRC Group in any such case in a manner or to an extent which is material to Fonebak in the context of the Offer or as the case may be, in the context of the Wider Fonebak Group or the Wider CRC Group taken as a whole; or

4.5 require, prevent or delay the disposal by CRC, or require the disposal or alter the terms of any proposed disposal by any member of the Wider CRC Group, of all or any material part of their respective businesses, assets or properties or impose any limitation on the ability of any of them to conduct their respective businesses or own their respective assets or properties in each case in a manner or to an extent which would be material and adverse in the context of the CRC Group taken as a whole; or

4.6 limit the ability of Fonebak or any member of the Wider CRC Group to conduct its business, or any part of it, with the businesses or any part of the businesses of any member of the Wider CRC Group or Wider Fonebak Group in any such case to an extent which is material in the context of the Wider CRC Group or the Wider Fonebak Group taken as a whole; or

4.7 require any member of the Wider Fonebak Group or of the CRC Group to offer to acquire any shares or other securities (or the equivalent) in any member of the Wider CRC Group owned by any third party (in each case, other than in implementation of the Offer) where such acquisition would be material to Fonebak in the context of the Offer or as the case may be, in the context of the Wider CRC Group or the Wider Fonebak Group taken as a whole; or

4.8 result in any member of the Wider CRC Group ceasing to be able to carry on business under any name under which it presently does so to an extent which is material to Fonebak in the context of the Offer or, as the case may be, in the context of the Wider CRC Group taken as a whole; or

4.9 otherwise materially adversely affect in the context of the CRC Group taken as a whole any or all of the businesses, assets, prospects, financial or trading position or profits of any member of the Wider CRC Group;

and all applicable waiting and other time periods during which any such relevant person could institute, implement or threaten any legal proceedings having expired, lapsed or been terminated.

5.

Consequences of the Offer

Save (Milan: SAVE.MI - news) as Publicly Announced or Disclosed there being no provision of any agreements to which any member of the Wider CRC Group is a party, or by or to which any such member, or any part of its assets, may be bound, entitled or subject, which would or might be reasonably expected to, in each case as a consequence of the Offer or of the acquisition or proposed acquisition of all or any part of the issued share capital of, or change of control or management of, CRC or any other member of the CRC Group result in (to an extent which would be material and adverse in the context of the CRC Group taken as a whole):

5.1 any assets or interests of any member of the Wider CRC Group being or falling to be disposed of or charged in any way or ceasing to be available to any member of the Wider CRC Group or any rights arising under which any such asset or interest could be required to be disposed of or charged in any way or could cease to be available to any member of the Wider CRC Group otherwise than in the ordinary course of business; or

5.2 any moneys borrowed by or other indebtedness or liabilities (actual or contingent) of, or any grant available to, any member of the Wider CRC Group being or becoming repayable or capable of being declared repayable immediately or earlier than the repayment date stated in such agreement or the ability of such member of the Wider CRC Group to incur any such borrowing or indebtedness becoming or being capable of becoming withdrawn, inhibited or prohibited; or

5.3 any such agreement or the rights, liabilities, obligations or interests of any such party to it or any such member under it being terminated or adversely modified or affected or any onerous obligation arising or any adverse action being taken under it; or

5.4 the interests or business of any such member in or with any third party (or any arrangements relating to any such interests or business) being terminated or adversely modified or affected; or

5.5 the financial or trading position or prospects or value of any member of the Wider CRC Group being prejudiced or adversely affected; or

5.6 the creation of any mortgage, charge or other security interest over the whole or any part of the business, property, interests or assets of any member of the Wider CRC Group or any such mortgage, charge or other security interest (whenever arising or having arisen) becoming enforceable or being enforced; or

5.7 the creation of actual or contingent liabilities by any member of the Wider CRC Group other than in the ordinary course of business;

and no event having occurred which, under any provision of any such agreement to which any member of the Wider CRC Group is a party, or by or to which any such member, or any of its assets, may be bound, entitled or subject, could or which may reasonably be expected to result in any of the events or circumstances as are referred to in subparagraphs 5.1 to 5.7 inclusive.

6.

No corporate action taken since the Accounting Date

Since the Accounting Date, save as otherwise Publicly Announced or Disclosed or pursuant to transactions in favour of CRC or a wholly owned subsidiary of CRC, no member of the Wider CRC Group having:

6.1 issued or agreed to issue or authorised or proposed the issue or grant of additional shares of any class or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or transferred or sold any shares out of treasury (save pursuant to the CRC Share Schemes); or

6.2 redeemed, purchased, repaid or reduced or proposed the redemption, purchase, repayment or reduction of any part of its share capital or made or proposed the making of any other change to its share capital or loan capital; or

6.3 recommended, declared, paid or made or proposed to recommend, declare, pay or make any dividend, bonus issue or other distribution whether payable in cash or otherwise; or

6.4 merged or demerged with or from, or acquired, any body corporate, partnership or business or authorised or proposed or announced any intention to propose any such merger or demerger; or

6.5 other than in the ordinary course of business acquired or disposed of, transferred, mortgaged or charged, or created or granted any security interest over, any assets (including shares and trade investments) or authorised or proposed or announced any intention to propose any acquisition, disposal, transfer, mortgage, charge or creation or grant of any security interest which in any case is material in the context of the Wider CRC Group taken as a whole; or

6.6 issued or authorised or proposed the issue of any debentures or incurred or save in the ordinary course of business, increased any borrowings, indebtedness or liability (actual or contingent) of an aggregate amount which is material in the context of the Wider CRC Group taken as a whole; or

6.7 entered into, implemented, effected or varied, or authorised or proposed the entry into, implementation or variation of, or announced its intention to enter into or vary, any transaction, arrangement, contract or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or could involve an obligation of such nature or magnitude or which is or could be restrictive to the existing business of any member of the Wider CRC Group or which is other than in the ordinary course of business and which in any such case is material in the context of the CRC Group taken as a whole; or

6.8 entered into, implemented, effected, authorised or proposed or announced its intention to enter into, implement, effect, authorise or propose any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business and which in any such case is material in the context of the CRC Group taken as a whole; or

6.9 waived or compromised any claim which is material in the context of the CRC Group taken as a whole; or

6.10 entered into or varied or made any offer (which remains open for acceptance) to enter into or vary the terms of any contract with any of the CRC Directors or, to the extent it is material in the context of the Wider CRC Group taken as a whole, any of the directors of any other member of the Wider CRC Group; or

6.11 made or permitted a variation in the terms or rules governing the CRC Share Schemes or any other incentive scheme or any other benefit relating to the employment or termination of employment of any person employed by the Wider CRC Group which, taken as a whole, are material in the context of the Wider CRC Group taken as a whole; or

6.12 taken or proposed any corporate action or had any legal proceedings instituted or threatened against it or petition presented for its winding up (voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any of its assets and revenues or for any analogous proceedings or steps in any jurisdiction or for the appointment of any analogous person in any jurisdiction and which in any such case is material in the context of the CRC Group taken as a whole; or

6.13 been unable, or admitted in writing that it is unable, to pay its debts or has stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business in any case which is or would be material in the context of the Wider CRC Group taken as a whole; or

6.14 made any alteration to its memorandum or articles of association or other incorporation documents; or

6.15 in relation to the pension schemes established for its directors and/or other employees and/or their dependants, made or consented to any change in any case which is or would be material in the context of the Wider CRC Group taken as a whole, to:

(i) the terms of the trust deeds constituting such pension schemes or to the benefits which accrue;

(ii) the pensions which are payable, under them;

(iii) the basis on which qualifications for or accrual of or entitlement to such benefits or pensions are calculated or determined;

(iv) the basis upon which the liabilities (including pensions) of such pension schemes are funded or made;

(v) agreed or consented to any change to the trustees of such pension schemes; or

6.16 entered into any agreement or passed any resolution or made any offer (which remains open for acceptance) or proposed or announced any intention with respect to any of the transactions, matters or events referred to in this condition 6 which is material in the context of the CRC Group taken as a whole.

7.

Other events since the Accounting Date

In the period since the Accounting Date, save as Publicly Announced or Disclosed:

7.1 no litigation or arbitration proceedings, prosecution, investigation or other legal proceedings having been announced, instituted, threatened or remaining outstanding by, against or in respect of, any member of the Wider CRC Group or to which any member of the Wider CRC Group is or may become a party (whether as claimant, defendant or otherwise) which is material in the context of the CRC Group taken as a whole; or

7.2 no material adverse change or deterioration having occurred in the business or assets or financial or trading position or prospects, assets or profits of any member of the Wider CRC Group which is material in the context of the CRC Group taken as a whole; or

7.3 no enquiry or investigation by, or complaint or reference to, any relevant person against or in respect of any member of the Wider CRC Group having been threatened, announced, implemented or instituted or remaining outstanding by, against or in respect of, any member of the Wider CRC Group which is material in the context of the CRC Group taken as a whole;

7.4 no material contingent or other liability having arisen or become apparent or increased which is material in the context of the CRC Group taken as a whole; or

7.5 no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any material licence or permit held by any member of the CRC Group which is necessary for the proper carrying on of the business of the CRC Group taken as a whole.

8.

Environmental and other issues

Save as Publicly Announced or Disclosed, Fonebak not having discovered that:

Environmental

8.1 any past or present member of the Wider CRC Group has not complied in all material respects with all applicable legislation or regulations or authorisations of any jurisdiction with regard to the use, handling, storage, transport, production, supply, treatment, keeping, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to damage or impair the environment or harm human health or otherwise relating to environmental matters or the health and safety of any person or that there has otherwise been any such use, handling, storage, transport, production, supply, treatment, keeping, disposal, discharge, spillage, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations or authorisations and wherever the same may have taken place), which, in any such case, would be likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Wider CRC Group in any case which is material in the context of the Wider CRC Group taken as a whole; or

8.2 there has been a material disposal, discharge, release, spillage, leak or emission of any waste or hazardous substance or any substance likely to damage or impair the environment or harm human health which would be likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Wider CRC Group in any case which is material in the context of the Wider CRC Group taken as a whole; or

8.3 there is, or is likely to be any liability (whether actual or contingent) or cost on the part of any member of the Wider CRC Group to make good, repair, reinstate or clean up any relevant asset or any other property or any controlled waters under any environmental legislation, regulation, notice, circular, order or other lawful requirement of any relevant person or third party or otherwise in any case which is material in the context of the Wider CRC Group taken as a whole; or

8.4 circumstances exist (whether as a result of the making of the Offer or otherwise):

(i) which would be likely to lead to any relevant person instituting; or

(ii) whereby any past or present member of the Wider CRC Group would be likely to be required to institute

an environmental audit or take any steps which would in any such case be likely to result in any actual or contingent liability to improve or modify existing plant or install new plant, machinery or equipment or carry out any changes in the processes carried out or make good, repair, reinstate or clean up any relevant asset or any other property or any controlled waters in any case which is material in the context of the Wider CRC Group taken as a whole;

Product Liability

8.5 circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider CRC Group in any case which is material in the context of the Wider CRC Group taken as a whole; or

Information

8.6 any financial, business or other information disclosed at any time by any member of the Wider CRC Group (and not subsequently superseded by subsequent disclosures), whether publicly or in the context of the Offer, either is materially misleading, contained a material misrepresentation of fact or omitted to state a fact necessary to make the information disclosed not misleading in a material respect; or

8.7 any member of the Wider CRC Group is subject to any liability (actual or contingent) which is not Disclosed or Publicly Announced and which in any case is material in the context of the Wider CRC Group taken as a whole.

Certain Further Terms of the Offer

The conditions are inserted for the benefit of Fonebak and no CRC Shareholder shall be entitled to waive any of the conditions without the prior consent of Fonebak.

Subject to the requirements of the Panel, Fonebak reserves the right to waive all or any of conditions 2 to 8 (inclusive) in whole or in part.

Each of conditions 1 to 8 shall be regarded as a separate condition and shall not be limited by reference to any other condition.

The Offer will lapse if the proposed acquisition of CRC is referred to the Competition Commission or if the European Commission either initiates proceedings under Article 6 (1)(c) of the ECMR or makes a referral to a competent authority of the United Kingdom under Article 9 (1) of the ECMR before 1.00 p.m. on the first closing date or the time and date on which the Offer becomes or is declared unconditional as to acceptances (whichever is the later).

If the Offer lapses, it will cease to be capable of further acceptance and persons accepting the Offer and Fonebak shall thereupon cease to be bound by acceptances submitted before the time the Offer lapses.

The Offer will lapse unless all of the conditions relating to the Offer have been fulfilled or (if capable of waiver) waived by, or, where appropriate, have been determined by Fonebak to be, and remain satisfied by, midnight on the twenty first day after the later of:

(a) the first closing date; or

(b) the date on which the Offer becomes unconditional as to acceptances

or such later date as Fonebak may, with the consent of the Panel, decide. Fonebak shall be under no obligation to waive or treat as satisfied any condition by a date earlier than the latest date specified above for its satisfaction even though the other conditions of the Offer may, at such earlier date, have been waived or fulfilled and there are, at such earlier date, no circumstances indicating that any such conditions may not be capable of fulfilment.

If Fonebak is required by the Panel to make an offer for CRC Shares under Rule 9 of the Code, Fonebak may make such alterations to the conditions of the Offer set out above, including condition 1, as are necessary to comply with that Rule.

CRC Shares will be acquired by Fonebak fully paid and free from all liens, equities, charges, equitable interests, encumbrances, rights of pre-emption and any other third party right and/or interests of any nature whatsoever and together with all rights attaching to them, now or in the future, including the right to receive and retain all dividends, interest and other distributions declared, paid or made after the date of the Offer Document.

The Offer will not be made, directly or indirectly, in, into or by use of the mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of any of the Excluded Territories. This announcement does not constitute an offer in the Excluded Territories or any such other jurisdiction and the Offer should not be accepted by any such use, means, instrumentality or facilities or otherwise from or within the Excluded Territories or any such other jurisdiction. Accordingly, copies of this announcement are not being and must not be mailed, transmitted or otherwise distributed in whole or in part, in, into or from the Excluded Territories or any such other jurisdiction and persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in, into or from the Excluded Territories or any such other jurisdiction. Doing so may render invalid any purported acceptance of the Offer.

The Offer will be governed by English Law and the Code and is subject to the jurisdiction of the English courts.

APPENDIX II - CRC LOSS FORECAST

On 26 May 2006, CRC announced the following trading update:

"Current trading is particularly disappointing and has led the Company to reassess its outlook for the remainder of the year. It is now anticipated that the reduced sales level will lead to a shortfall in operating profits resulting in the Company trading below break-even (pre-amortisation of goodwill). With a number of one-off costs noted below, the Company now anticipates reporting before tax losses in both the first half and the full year."

This announcement constitutes a loss forecast for the year ending 31 December 2006, as defined by Rule 28 of the Code.

The loss forecast has been made in respect of the loss before tax after accounting for the impairment of goodwill and other exceptional items related to the ongoing restructuring of the CRC Group.

The CRC Directors have considered and re-confirm the loss forecast statement that the CRC Group will make a loss before tax for first half, ended 30 June 2006, and the full year ending 31 December 2006. The loss forecast is based on CRC's unaudited interim financial statements for the 6 months ended 30 June 2006 the unaudited management accounts for the four months ended 31 October 2006 together with the forecasts prepared by the CRC Directors for the six months ending 31 December 2006.

The principal assumptions upon which the loss forecast is based are:

· that there will be no acquisitions or disposals in the period between the date of this announcement and the 31 December 2006, which will have a material impact on the loss forecast; and

· that there will be no material new contract wins or exceptional profits before the 31 December 2006, which will have a material impact on the loss forecast.

The CRC Board confirms that the loss forecast has been properly compiled on the basis of the assumptions stated above and that the basis of accounting is consistent with UK GAAP as applied by CRC in the preparation of its financial statements for the year ended 31 December 2005.

The accounting policies and calculations for this loss forecast have been examined and reported on by KPMG Audit Plc in accordance with Rule 28.3 (b) of the Code.

Reports

KPMG Audit Plc's report and a letter from Rothschild on the loss forecast are set out below and will be included in the Offer Document:

Report from KPMG Audit Plc addressed to the CRC Directors and Rothschild

"We report on the loss forecast comprising the forecast loss before taxation of CRC Group plc ("the Company") and its subsidiaries ("the Group") for the year ending 31 December 2006 ("the Loss Forecast"). The Loss Forecast, and the material assumptions upon which it is based, are set out in the announcement dated 14 December 2006 issued in connection with the bid for the Company ("the Announcement"). This report is required by Rule 28.3(b) of the City Code on Takeovers and Mergers ('the City Code') and is given for the purpose of complying with that rule and for no other purpose. Accordingly, we assume no responsibility in respect of this report to the offeror or to any person connected to, or acting in concert with, the offeror, or to any other person who is seeking or may in future seek to acquire control of the Company ('an Alternative Offeror') or to any person connected to, or acting in concert with, an Alternative Offeror.

Responsibilities

It is the responsibility of the directors of the Company ('the Directors') to prepare the Loss Forecast in accordance with the requirements of the City Code.

It is our responsibility to form an opinion as required by the City Code as to the proper compilation of the Loss Forecast and to report that opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 28.4 of the City Code, consenting to its inclusion in the Announcement.

Basis of Preparation of the Loss Forecast

The Loss Forecast has been prepared on the basis stated in the Announcement and is based on the unaudited interim financial results for the six months ended 30 June 2006, the unaudited management accounts for the four months ended 31 October 2006 and a forecast to 31 December 2006. The Loss Forecast is required to be presented on a basis consistent with the accounting policies of the Group.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included evaluating the basis on which the historical financial information included in the Loss Forecast has been prepared and considering whether the Loss Forecast has been accurately computed based upon the disclosed assumptions and the accounting policies of the Group. Whilst the assumptions upon which the Loss Forecast are based are solely the responsibility of the Directors, we considered whether anything came to our attention to indicate that any of the assumptions adopted by the Directors which, in our opinion, are necessary for a proper understanding of the Loss Forecast have not been disclosed or if any material assumption made by the Directors appears to us to be unrealistic.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Loss Forecast has been properly compiled on the basis stated.

Since the Loss Forecast and the assumptions on which it is based relate to the future and may therefore be affected by unforeseen events, we can express no opinion as to whether the actual results reported will correspond to those shown in the Loss Forecast and differences may be material.

Opinion

In our opinion the Loss Forecast, so far as the accounting policies and calculations are concerned, has been properly compiled on the basis of the assumptions made by the Directors and the basis of accounting used is consistent with the accounting policies of the Group."

Letter from Rothschild addressed to the CRC Directors

"We have discussed with you as Directors of CRC Group plc, the forecast pre-tax loss after goodwill amortisation, exceptional items and any goodwill impairment charge relating to CRC Group plc (''the Company'') and its subsidiaries (''the Group'') for the 6 months ended 30 June 2006 and the year ending 31 December 2006 and the bases and assumptions on which it has been prepared. We have also discussed the accounting policies and basis of calculation for the loss forecast with KPMG Audit Plc, the CRC Group plc's auditors, and we have considered their letter of today's date addressed to both yourselves and ourselves on this matter.

On the basis of the foregoing, we consider that the loss forecast for which you as Directors of CRC Group Plc are solely responsible, has been compiled with due care and consideration.

This letter is provided to you solely in connection with Rule 28.3(b) of the City Code on Takeovers and Mergers and for no other purpose."

APPENDIX III - SOURCES AND BASES OF INFORMATION

1.

General

Unless otherwise stated, the financial information relating to the CRC Group has been extracted from the audited consolidated financial statements of CRC for the years ended 31 December 2005, 31 December 2004 and 31 December 2003 or the consolidated unaudited interim results of CRC for the six months ended 30 June 2006.

Unless otherwise stated, the financial information relating to the Fonebak Group has been extracted from the audited consolidated financial statements of Fonebak for the financial year ended 30 June 2006, and for the period ended 30 June 2005.

2.

Value of the Offer

The value placed by the Offer on the Existing CRC Share Capital is based on 24,635,401 CRC Shares in issue on 13 December 2006 (the last Business Day prior to the date of the Announcement).

3.

Share prices

The closing prices of a CRC Share on 29 June, 4 December and 13 December 2006 are taken from the London Stock Exchange (LSE: LSE.L - news) website.

APPENDIX IV - DEFINITIONS

"Accounting Date"	31 December 2005
"Admission"	the admission of the Placing Shares to trading on AIM in accordance with the AIM Rules
"AIM"	a market operated by the London Stock Exchange
"AIM Rules"	the rules of AIM published by the London Stock Exchange from time to time
"Announcement"	this announcement dated 14 December 2006
"Board" or "CRC Board"	the board of CRC Directors
"Associated undertaking" or "undertaking"	to be construed in accordance with the Companies Act (but for this purpose ignoring paragraph 20(1)(b) of Schedule 4A thereof)
"Business Day"	any day other than Saturday, Sunday or Bank Holidays on which the clearing banks in London are open for business
"Code" or "City Code"	the City Code on Takeovers and Mergers
"the Companies Act" or "the Act (Taiwan OTC: 3492.TWO - news) "	the Companies Act 1985, save to the extent this Act is amended or repealed by the Companies Act 2006, references to, or parts of, the Companies Act or the Act in this announcement shall be deemed to be interpreted by reference to the relevant sections or parts of the Companies Act 2006, to the extent such sections or parts are in force
"CREST"	the Relevant System (as defined in the CREST Regulations) in respect of which CRESTCo Limited is the Operator (as defined in the CREST Regulations)
"CRC"	CRC Group plc, a public limited company incorporated under the laws of England and Wales
"CRC Group"	CRC, its subsidiaries and subsidiary undertakings at the date of this announcement
"CRC Italia"	the CRC Group's Italian operation formed by the merger of Teleca and Kronos in June 2006
"CRC Option Holders"	holders of options over CRC Shares granted under the CRC Share Schemes
"CRC Shares"	the existing unconditionally allotted or issued and fully paid ordinary shares of 2 pence each of CRC and any further such shares which are unconditionally allotted or issued fully paid, or credited as fully paid, before the date on which the Offer closes (or before such earlier date as Fonebak may, subject to the Code, decide not being earlier than (a) the date on which the Offer becomes or is declared unconditional as to acceptances or (b), if later, the first closing date of the Offer)
"CRC Share Schemes"	the CRC Group plc Unapproved Executive Share Option Scheme, The CRC Group plc Company Share Option Plan 2001, The CRC Group plc Executive Share Option Scheme 2004 and The CRC Group plc Employee Share Ownership Plan
"CRC Shareholders"	holders of CRC Shares
"Directors" or "CRC Directors"	Jan Astrand, Gary Stokes, David Kelham, David Bird, Robert Gogel and Pat Thompson
"Disclosed"	fairly disclosed in writing by or on behalf of CRC to Fonebak or its advisers prior to the date of the Announcement
"ECMR"	Council regulation (EC) No 139/2004
"Enlarged Group"	Fonebak and its subsidiaries and subsidiary undertakings immediately following completion of the Offer and Admission
"Enlarged Share Capital"	the issued ordinary share capital of Fonebak immediately following Admission, as enlarged by the Placing
"Excluded Territories"	Canada, Australia, Japan (EUREX: FMJP.EX - news) , the Republic of South Africa and their respective provinces and territories and any other jurisdiction where the making or acceptance of the Offer would constitute a violation of the laws of such jurisdiction or would require a registration, filing or other formality which Fonebak regards as unduly onerous subject, however, to Rule 30.3 of the City Code
"Existing CRC Share Capital"	the issued ordinary share capital of CRC at the date of the Announcement
"Existing Fonebak Share Capital"	the issued ordinary share capital of Fonebak at the date of the Announcement
"Facilities Agreement"	the debt and working capital facilities agreements dated 14 December 2006 between Fonebak and KBC Bank
"first closing date"	the date falling 21 days after the date on which the Offer Document is posted
"Fonebak"	Fonebak plc, the offeror, a public limited company incorporated under the laws of England and Wales
"Fonebak Board"	the board of Fonebak Directors
"Fonebak Directors"	the directors of Fonebak as at the date of this announcement
"Fonebak Group"	Fonebak, its subsidiaries and subsidiary undertakings at the date of this announcement
"Fonebak Shareholders"	holders of Fonebak Shares
"Fonebak Shares"	ordinary shares of 2 pence each in Fonebak
"Form of Acceptance"	the form of acceptance and authority relating to the Offer which, in the case of CRC Shares held in certificated form, will accompany the Offer Document
"KBC Bank"	KBC Bank NV
"KBC Peel Hunt"	KBC Peel Hunt Ltd, Fonebak's financial adviser, nominated adviser and broker, a member of the London Stock Exchange and which is authorised and regulated by the Financial Services Authority
"London Stock Exchange"	London Stock Exchange plc
"Offer"	the recommended cash offer to be made by KBC Peel Hunt on behalf of Fonebak to acquire all of the issued and to be issued CRC Shares on the terms and subject to the conditions set out in this announcement and to be set out in the Offer Document and in respect of CRC Shares in certificated form, the Form of Acceptance and, where the context so requires, any subsequent revision, variation, extension or renewal thereof
"Offer Document"	the document to be sent to CRC Shareholders containing the terms and conditions of the Offer
"Offer Period"	the period commencing on 30 June 2006 until the later of: (i) the first closing date, (ii) the date on which the Offer becomes unconditional as to acceptances, or (iii) the date on which the Offer lapses or is withdrawn
"Offer Price"	50 pence per CRC Share
"Panel"	the Panel on Takeovers and Mergers
"Placing"	the conditional placing by KBC Peel Hunt of 6,756,757 new Fonebak Shares at the Placing Price
"Placing Agreement"	the placing agreement in relation to the Placing dated 14 December 2006 between Fonebak, the Fonebak Directors and KBC Peel Hunt
"Placing Price"	148 pence per Placing Share
"Placing Shares"	6,756,757 new Fonebak Shares to be issued pursuant to the Placing
"Publicly Announced"	specifically disclosed in the annual report and accounts of CRC for the year ended on the Accounting Date or in this announcement or in any other announcement made to a Regulatory Information Service since the date of publication of such report and accounts and prior to the date of the Announcement
"Regulatory Information Service" or "RIS"	as defined in the AIM Rules
"Rothschild"	NM Rothschild ∓ Sons Limited, financial adviser and nominated adviser to CRC
"Subsidiary" and "subsidiary undertaking"	Have the meanings given to these expressions in the Companies Act
"Substantial Interest"	a direct or indirect interest in 20 per cent. or more of the equity capital of an undertaking
"United States" or "US"	the United States of America, its territories and possessions, any state of the United States and the District of Columbia and all other areas subject to its jurisdiction
"US Person"	a US person as defined in Regulation 5 under the US Securities Act
"US Securities Act"	the US Securities Act of 1933, as amended, and the rules and regulations as promulgated thereunder
"Wider Fonebak Group"	Fonebak and its subsidiaries, subsidiary undertakings, associated undertakings and any other undertakings in which Fonebak and/or such subsidiaries or undertakings (aggregating their interests) have a Substantial Interest
"Wider CRC Group"	CRC and its subsidiaries, subsidiary undertakings, associated undertakings and any other undertakings in which CRC and/or such subsidiaries or undertakings (aggregating their interests) have a Substantial Interest