PUG Public Rec.

RNS Number:5113V
Public Recruitment Group plc
25 April 2007

   Appointment of Luke Johnson as Chairman and restructuring of the Board and
                    Placing of 12,195,121 Ordinary Shares


Public Recruitment Group PLC ("PRG" or the "Group"), the public sector
recruitment and services group is pleased to announce that it is looking to
raise #4.9 million through a placing of new ordinary shares with Risk Capital
Partners and its associates and is restructuring the board of directors, to
better reflect the needs of the business, post the #5.5 million disposal of the
locum doctor division on Monday 23 April 2007.

As part of the management restructuring, Luke Johnson, Chairman of Risk Capital
Partners will join the board of directors as non-executive director following
completion of the EGM. Concurrently, Richard Benton will step down as Chairman
and from 1 June 2007 Luke will be appointed non-executive chairman and Richard
will resign from the board. Dennis Hall, Portfolio Director at Baird Capital
Partners Europe, the Group's largest shareholder, will join the board as a
non-executive director from 30 April 2007, replacing Mike Fell. Within the
executive board, Darren McLaney will resign with immediate effect as Chief
Executive but remains on the board in a non-executive capacity, to facilitate a
smooth hand-over to the new Chief Executive, Dean Kelly who is currently
Managing Director of Education and Social. Nick Williams will also resign as
Group Finance Director and be replaced by Daniel Urmson, Group Financial
Controller on 31 May 2007. These board changes reflect the Group's plans to
streamline the business model, adjusting the cost base in line with the Group's
more focused business in the education and social work markets.

Placing

The Company today also announces that it proposes to raise #4.9 million (net of
expenses) through the placing of new ordinary shares at 41p per share with Risk
Capital Partners and associates who have committed to subscribe for #5 million.
The Placing price represents a premium of 18.8% on the closing price on 24 April
2007.  Together with the recent disposal of the locum doctors division this
placing has reduced net debt by an aggregate #13 million (#12.7 million net of
expenses).

The Placing is subject to shareholder approval. A circular convening an EGM of
the Company, which will take place on 24 May 2007, is being sent to
shareholders.

Commenting on the Placing, Darren McLaney, Chief Executive of Public Recruitment
Group said:

"The disposal of the locum doctor business, alongside the placing halves our
debt. Additionally the Board has been restructured and I am delighted to welcome
Luke Johnson who brings a wealth of experience and demonstrable track record of
success. I firmly believe these changes will allow PRG to exploit its strong
market position in the higher margin education and social work markets and is
consistent with our previously stated aim of reducing net debt and focusing on
organic growth to return value to shareholders. "


For further enquiries:

Enquiries:        Darren McLaney /Nick Williams
                  Public Recruitment Group PLC
                  (0114 283 4925)

                  Ginny Pulbrook / Fiona Bradshaw
                  Citigate Dewe Rogerson,
                  (0207 638 9571)


                               PLACING STATISTICS

                  (assuming all the Placing Shares are issued)


Placing Price                                                                                            41p
Number of Placing Shares being placed on behalf of the Company                                    12,195,121
Number of Ordinary Shares in issue following Admission                                            45,108,095
Percentage of enlarged issues share capital following the Placing which is subject to                    27%
the Placing
Estimated proceeds of the Placing available to the Company (net of expenses)                    #4.9 million





                          EXPECTED TIMETABLE OF EVENTS


Latest time for receipt of Forms of Proxy                                      10.30 a.m. on 22 May 2007
Extraordinary General Meeting                                                  10.30 a.m. on 24 May 2007
Admission of the Placing Shares to AIM                                          8.00 a.m. on 25 May 2007





1.      Introduction

The Board announced today that the Company has agreed, subject to shareholder
approval of the Resolutions, to raise approximately #5m, (#4.9m net of
expenses), by way of a placing. Further details of the Placing, which has not
been underwritten, are set out in paragraph 6 below.

The necessary authority required for the allotment of Placing Shares pursuant to
the Placing will be sought at an Extraordinary General Meeting convened for 10:
30 a.m. on 24 May 2007. The purpose of this document is to provide you with
information on the Placing and to convene the EGM at which your approval will be
sought for the Resolutions, as set out in the notice of EGM at the end of this
document.

2.      Background to and reasons for the Placing

As announced earlier today, the Group intends to raise #4.9 million, net of
expenses, from the Placing.

PRG is a leading provider of qualified teachers and social workers to the UK
public sector. Since it floated on AIM in April 2004, the Group has continued to
acquire complimentary businesses with the objective of achieving a market
leading position in its chosen sectors.

The Group had gearing of 116 per cent. at 31 December 2006. The gearing is
exacerbated by the discrepancy between debtor and creditor days. As a
recruitment business, the Group is legally bound to make a prompt payment to a
candidate for work performed. On average, it pays candidates after 5 days. This
is in contrast to the average of 40 days that its clients take to settle
invoices. The Group has to fund this timing gap of 35 days, and as the Group's
business grows the amount of funding required increases.

At 31 December 2006, the Group had net debt of #24.2m consisting of term loans
of #14.7m, invoice discounting (net of cash) of #7m, both with Barclays Bank
PLC, and loan notes resulting from previous acquisitions of #2.5m.

The proceeds of the Placing will be used to reduce net debt and support the
working capital requirements of the Group.

3.      Sale of Public Recruitment Group Holdings Limited

PRG announced on 23 April 2007 that on 20 April 2007 (the "Completion Date")
Healthcare Locums PLC ("HCL") acquired the entire issued share capital of Public
Recruitment Group Holdings Limited ("PRG Limited"), a wholly owned subsidiary of
the Company. The consideration payable was approximately #4.5m in cash on the
Completion Date with approximately #1m being held in escrow until 31 March 2008
(the "Agreement"). The monies held in escrow will be released in five
instalments. The payment dates for the instalments are spread out over the
period leading up to 31 March 2008.

The sale and purchase agreement contains an either way adjustment mechanism
whereby the Company is obliged to repay to HCL the amount (if any) by which the
net current assets of PRG Limited and its subsidiaries is less than #1 and HCL
is obliged to repay to the Company the amount (if any) by which the net current
assets of PRG Limited and its subsidiaries is greater than #1. The net current
assets of PRG Limited shall be determined as soon as reasonably practicable
after the Completion Date. "Net current assets" for the purposes of the sale and
purchase agreement are defined as the current assets of PRG Limited and its
subsidiaries less the current liabilities of PRG Limited and its subsidiaries at
the Completion Date.

Under the terms of the sale and purchase agreement the Company has given HCL
certain warranties. The proceeds of the disposal of PRG Limited will be used to
reduce net debt and support the working capital requirements of the Group.

4.      Board Changes

Following the disposal of the health care division, the Group's sole focus will
be on the merged education and social care sector. As a consequence, there will
be several changes to the Board over the next few weeks. The proposed changes
are outlined below:

With effect from the conclusion of the EGM, subject to shareholder approval of
the Resolutions, Luke Johnson will be appointed as a non-executive director of
the Company and with effect from 1 June 2007, Luke will be appointed
non-executive chairman and Richard Benton will resign from the Board. Luke
Johnson (45) is Chairman of Channel 4 Television Corporation and chairman of
Risk Capital Partners. He has experience of the staffing industry through Abacus
Recruitment plc, where he was a director, and InterQuest Group plc, where he is
a director and founder. He was involved for ten years until 2006 as an owner and
director of Integrated Dental Holdings Limited, a major supplier to the public
sector.

Dennis Hall, a Portfolio Director at Baird Capital Partners Europe, will be
appointed to the Board as non- executive director from 30 April 2007. Baird
Capital Partners Europe is PRG's largest shareholder and own 38 per cent. of the
ordinary share capital pre Placing. Upon the appointment of Dennis, Michael Fell
will resign from the board.

Darren McLaney will resign his position as CEO with immediate effect and take on
a role of non- executive director. Dean Kelly will be promoted to CEO from his
current position as Managing Director of the Education and Social business.

Nick Williams will leave the position of Group Finance Director and will resign
from the Board from 31 May and will be replaced by Daniel Urmson who is
currently Group Financial Controller. Daniel is a qualified chartered accountant
who has worked at PRG for more than 4 years.

5.      Financial

PRG's annual results for the year ended 31 December 2006, which were announced
on 2 March 2007, are highlighted below:

*         Turnover increased by 8 per cent. to #86.7m (#80.2m) with strong
gains in the education and health sectors;

*         Operating profit, adjusted for exceptional items and amortisation of
goodwill, grew by 23 per cent. to #6.1m (#4.9m). This represented organic growth
of 14 per cent. The increased turnover was achieved at a slightly higher margin
and the conversion of net fee to adjusted operating profit grew to 33 per cent.;

*         Adjusted earnings per share grew to 10.5p (10.3p), and basic
earnings per share grew by 42 per cent.; and

*         The Group generated #2.4m (#2.7m) of cash before financing and
acquisitions.

Bank Funding

In April 2006, the Group agreed a funding facility with Barclays Bank PLC to a
maximum of #30m. The facility consists of a term loan of #16.5m repayable in
varying quarterly instalments to April 2011, an invoice discounting facility to
a maximum of #12m and overdraft facility to a maximum of #1.5m.

6.      The Placing

The Company intends to raise #4.9m, net of expenses, through the placing of the
Placing Shares. The Placing Shares will be offered to the Investors. The Placing
will not be underwritten by Bridgewell. The Investors will subscribe, subject to
shareholder approval of the Resolutions, Luke Johnson's appointment as
non-executive director the Board of the Company and the compliance by the
Company with the terms of the Subscription Agreement, for the Placing Shares at
the Placing Price. The Subscription Agreement contains warranties given by the
Company to the Investors.

The Placing Price represents a premium of approximately 18.8 per cent. to the
closing mid-market price of 34.5 pence per Ordinary Share as at 24 April 2007,
being the latest practicable date prior to the announcement of the Placing. The
Placing Shares will rank in full for all dividends and otherwise pari passu with
the existing Ordinary Shares.

The Placing Shares are expected to be admitted to trading on AIM on 25 May 2007.
The Placing is conditional, inter alia, upon:

*         the approval of the Resolutions at the EGM; and

*         the appointment, conditional only on Admission, of Luke Johnson as a
non-executive director of the Company.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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