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Johnston Group PLC (JHT)

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Wednesday 20 October, 2004

Johnston Group PLC

Further re: Offer

Johnston Group PLC
20 October 2004


20 OCTOBER 2004

Not for release, publication, or distribution, in whole or in part, in or into
the United States, Canada, Australia or Japan

      RECOMMENDATION BY THE INDEPENDENT DIRECTORS OF JOHNSTON OF OFFER FOR
                              JOHNSTON BY ENNSTONE

Summary

- As announced on 30 September 2004, the offer made on behalf of Anglo
  American for Johnston lapsed following its referral by the Office of Fair
  Trading to the Competition Commission and is no longer available for 
  acceptance.
- The offer made on behalf of Ennstone for Johnston remains open for
  acceptance until 3 p.m. on 29 October 2004.
- Following the lapsing of the Anglo Offer, the Independent Directors are
  now recommending the Ennstone Offer which became unconditional as to 
  acceptances on 13 October 2004.

Introduction

On 29 September 2004 the Office of Fair Trading announced that it had referred
the anticipated acquisition of Johnston by Anglo American to the Competition
Commission. As announced by Anglo American on 30 September 2004, the effect of
this was that the Anglo Offer lapsed as required under the City Code.

The Ennstone Offer

Ennstone announced on 14 October 2004 that the Ennstone Offer, which was posted
to Johnston Shareholders on 4 August 2004, (including the Mix and Match
Election) had been extended until 3 p.m. on 29 October 2004. Ennstone also
announced that the Ennstone Offer had become unconditional as to acceptances.
The Ennstone Offer remains subject to certain other conditions as set out in the
Offer Document.

The Ennstone Offer of 35 New Ennstone Shares and 560p in cash for every 4
Johnston Shares equated to 446.25 pence per Johnston Share based on the Ennstone
Closing Price of 35p immediately prior to the announcement of the Ennstone
Offer. Based on the Ennstone Closing Price on 19 October 2004, the Ennstone
Offer continues to value each Johnston Share at 446.25p, a premium of
approximately 88 per cent. over Johnston's share price immediately prior to the
announcement of the Ennstone Offer. A Mix and Match Election and Loan Note
Alternative are also available. Ennstone have not made any offer for the
Johnston Preference Shares.

Owing to the involvement of Michael Johnston and Philippa Marriott with Ennstone
and the Ennstone Offer, the Independent Directors (comprising Chris Woodwark,
Kash Pandya, David Hamilton, Brian Watkins and David Tree) have taken
responsibility for considering the Offers and advising Shareholders on their
merits.

The Independent Directors consider the terms of the Ennstone Offer to be fair
and reasonable and are now recommending that Shareholders accept the Ennstone
Offer.

The Johnston Family Irrevocable Undertakings

As the Independent Directors stated when they wrote to Johnston Shareholders on
18 August 2004, Ennstone had secured irrevocable undertakings to accept the
Ennstone Offer from Johnston Family Shareholders (the 'Ennstone Undertakings')
representing, in aggregate, approximately 50.1 per cent of the issued ordinary
share capital of Johnston.

In connection with the Anglo Offer, Ennstone released the Johnston Family
Shareholders from the Ennstone Undertakings to the extent required to enable
them to irrevocably undertake to accept the Anglo Offer, subject to certain
conditions.

As a consequence of the Anglo Offer lapsing, the Ennstone Undertakings became
binding again and pursuant to such undertakings the Johnston Family Shareholders
have now accepted the Ennstone Offer with the effect that the Ennstone Offer
became unconditional as to acceptances on 13 October 2004.

The lapsing of the Anglo Offer

The Independent Directors' primary concern throughout this process has been to
maximise value for all Shareholders. The opportunity of an offer from Anglo
American at 491 pence in cash per Johnston ordinary share was one which the
Independent Directors believed fully deserved to be recommended to Shareholders.

However, the Independent Directors were also mindful of the competition concerns
that could be raised due to the involvement of a significant industry
participant such as Anglo American and, following advice, sought an undertaking
from Anglo American to undertake to the Office of Fair Trading to dispose of
assets in order to seek to avoid a reference to the Competition Commission.
Following negotiation, Johnston obtained an undertaking from Anglo American to
dispose of Johnston assets (other than those at Leaton). In addition, Anglo
American entered into an option agreement with Ennstone to enable Ennstone to
acquire Leinthall quarry and asphalt plant for £11.25 million in the event that
the Anglo Offer was successful.

Unfortunately, despite the giving of the undertaking and the existence of the
option agreement with Ennstone, the Office of Fair Trading still had potential
residual competition concerns and referred the proposed merger to the
Competition Commission. Following this referral, Anglo American announced on 30
September 2004 that the Anglo Offer had lapsed.

Current Trading and Prospects

As stated in the Interim Results for Johnston announced on 28 September 2004,
market conditions are expected to remain difficult this year. The cost reduction
plans currently underway will produce savings in future years. Whilst current
trading is in line with these statements, resolution of the offer process will
reduce the risk that the future prospects of Johnston will be impaired.

Recommendation of the Ennstone Offer

On 18 August 2004, prior to the Anglo Offer, the Independent Directors
anticipated that, absent a higher competing offer, barring unforeseen
circumstances or material new information, they would recommend that
Shareholders accept the Ennstone Offer.

The Independent Directors also acknowledged that the Ennstone Offer Price was at
a substantial premium to the pre-Ennstone Offer share price of the Company.

Following the lapsing of the Anglo Offer, and the acceptance of the Ennstone
Offer by the Johnston Family Shareholders pursuant to the Ennstone Undertakings,
the Ennstone Offer became unconditional as to acceptances on 13 October 2004.

The Ennstone Offer remains subject to certain other conditions as set out in the
Offer Document. Whether the Ennstone Offer becomes wholly unconditional or not
depends primarily on the approval of the Ennstone Offer by the Ennstone
Shareholders at its EGM, which is outside the control of Johnston Shareholders
and of the Independent Directors. Ennstone have announced that the adjourned EGM
will be held at 11 a.m. on 29 October 2004. In the event that Ennstone fails to
secure approval from its shareholders, the Ennstone Offer will lapse. Ennstone
have also announced that the second EGM, convened following receipt by Ennstone
of an EGM requisition from North Atlantic Value LLP (a shareholder of Ennstone
holding approximately 6.9% of the issued share capital of Ennstone), will also
be held on 29 October 2004.

Shareholders should be aware that Ennstone will shortly be posting to
Shareholders supplementary listing particulars which update the Ennstone listing
particulars dated 4 August 2004 and which will, in particular, include details
of Ennstone's current trading update made on 15 October 2004. Shareholders are
recommended to read this document carefully.

The Independent Directors, who have been so advised by Close Brothers, consider
the terms of the Ennstone Offer to be fair and reasonable. In providing advice
to the Independent Directors, Close Brothers has taken into account the
commercial assessments of the Independent Directors.

After due and careful consideration of all the circumstances and in particular
the fact that the Ennstone Offer has become unconditional as to acceptances due
to the irrevocable undertakings given by the Johnston Family Shareholders, the
Independent Directors recommend that Shareholders accept the Ennstone Offer as
they will do in respect of their own shareholdings, representing approximately
0.09 per cent. of the issued ordinary share capital of Johnston.

A circular will be posted to Shareholders as soon as practicable.

Following posting, copies of the circular will be submitted to the UKLA and will
shortly be available for inspection at the UKLA's Document Viewing Facility,
which is situated at: Financial Services Authority, 25 The North Colonnade,
Canary Wharf, London E14 5HS.

Enquiries:

Johnston                     Chris Woodwark         020 7920 3150

Close Brothers               Andrew Cunningham      020 7655 3100
                             Tim Evans

Tavistock Communications     Lulu Bridges           020 7920 3150
                             Peter Willetts

The Independent Directors accept responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the Independent
Directors (who have taken all reasonable care to ensure that such is the case),
the information contained in this announcement is in accordance with the facts
and does not omit anything likely to affect the import of such information.

Close Brothers Corporate Finance Limited ('Close Brothers'), which is regulated
in the United Kingdom for the conduct of investment business by the Financial
Services Authority, is acting for Johnston as financial adviser (within the
meaning of the Rules of the Financial Services Authority) in connection with the
matters described herein and no-one else and will not be responsible to anyone
other than Johnston for providing the protections afforded to customers of Close
Brothers, nor for providing advice in relation to the matters described herein.

                             APPENDIX : DEFINITIONS

The following definitions apply throughout this Announcement unless the context
requires otherwise:

'Altium Capital'           Altium Capital Limited

'Anglo American'           Anglo American plc

'Anglo Offer'              the offer made on 7 September 2004 by Cazenove on 
                           behalf of Anglo American to acquire all of the
                           Johnston ordinary shares not already owned by
                           Anglo American or its subsidiaries

'Australia'                the Commonwealth of Australia, its states, its 
                           territories and possessions

'Canada'                   Canada, its possessions, provinces and territories
                           and all areas subject to its jurisdiction and any 
                           political sub-division thereof

'Cazenove'                 Cazenove & Co. Ltd

'City Code'                the City Code on Takeover and Mergers

'Close Brothers'           Close Brothers Corporate Finance Limited

'Competition Commission'   the Competition Commission established in the UK 
                           under the Competition Act 1998

'Ennstone'                 Ennstone plc

'Ennstone Closing Price'   the closing middle market price of an Ennstone Share
                           as derived from the Daily Official List of the 
                           London Stock Exchange

'Ennstone Offer'           the offer made on 4 August 2004 by Altium Capital on
                           behalf of Ennstone to acquire all the Johnston 
                           Shares other than those Johnston Shares
                           already held by Ennstone on the terms and subject to
                           the conditions set out or referred to in the Offer
                           Document and in the Form of Acceptance including, 
                           where the context admits, the Loan Note Alternative
                           and the Mix and Match Election and, where the
                           context requires, any subsequent revision, 
                           variation, extension or renewal thereof

'Ennstone Offer Price'     560p payable in cash and 35 New Ennstone Shares for
                           every 4 Johnston Shares

'Ennstone Shareholder'     a registered holder of Ennstone Shares

'Ennstone Shares'          ordinary shares of 25p each in Ennstone

'Ennstone Undertakings'    the irrevocable undertakings secured by Ennstone to
                           accept the Ennstone Offer from Johnston Family 
                           Shareholders, as amended

'Extraordinary General 
Meetings'                  the extraordinary general meetings of shareholders
                           of Ennstone or 'EGMs' convened for 1 September 2004
                           and adjourned to 29 October 2004 or any further
                           adjournment thereof, and Extraordinary General 
                           Meeting or EGM means either one of them, as the
                           context requires

'Form of Acceptance'       the form of acceptance, authority and election 
                           relating to the Ennstone Offer

'Independent Directors'    Chris Woodwark, Kash Pandya, David Hamilton, Brian
                           Watkins and David Tree

'Interim Results'          the interim results announced by Johnston on 
                           28 September 2004

'Japan'                    Japan, its cities, prefectures, territories 
                           and possessions

'Johnston' or 'Company'    Johnston Group PLC

'Johnston Family 
Shareholders'              members of the Johnston family and certain related
                           trusts controlling, in aggregate, 5,424,147 Johnston
                           Shares

'Johnston Preference
 Shares'                   the 10 per cent. cumulative non-equity preference
                           shares of £1 each in the capital of Johnston

'Johnston Shareholder'     or a registered holder of Johnston Shares
'Shareholder'

'Johnston Shares'          the existing unconditionally allotted or issued and 
                           fully paid ordinary shares of 10p each in the
                           capital of Johnston currently in issue and any
                           further such shares which have been unconditionally
                           allotted or issued fully paid after 4 August 2004
                           and before the date on which the Ennstone Offer 
                           closes (or such earlier date, not being earlier than
                           the date on which the Ennstone Offer becomes
                           unconditional as to acceptances, as Ennstone may,
                           subject to the City Code, determine) including any
                           such share unconditionally allotted or issued upon
                           exercise of options granted under the Johnston Share
                           Option Scheme 

'Johnston Share 
Option Scheme'             the Johnston Group PLC 1994 Executive Share
                           Option Scheme

'Loan Note Alternative'    the alternative under which eligible Johnston
                           Shareholders who validly accept the Ennstone Offer 
                           may elect to receive Loan Notes in lieu of all or
                           part of the cash to which they would otherwise 
                           become entitled under the Ennstone Offer

'Loan Note Instrument'     the instrument constituting the Loan Notes

'Loan Notes'               means the unsecured guaranteed loan notes to be 
                           issued by Ennstone pursuant to the Loan Note
                           Alternative, having the rights and subject to the
                           restrictions set our in the Loan Note Instrument

'London Stock Exchange'    London Stock Exchange plc

'Mix and Match Election'   the right of Johnston Shareholders to elect, subject
                           to availability, to vary the proportions in which 
                           they receive New Ennstone Shares and cash under the
                           Ennstone Offer

'New Ennstone Shares'      the new Ennstone Shares to be allotted and issued to
                           Johnston Shareholders other than certain Overseas 
                           Shareholders credited as fully paid pursuant to the
                           Ennstone Offer

'Offers'                   the Ennstone Offer and the Anglo Offer

'Offer Document'           the document dated 4 August 2004 posted to Johnston
                           Shareholders setting out the Ennstone Offer

'Overseas Shareholders'    Johnston Shareholders whose registered addresses are
                           outside the United Kingdom or who are citizens or 
                           residents of countries other than the United Kingdom
                           or who are nominees of, or custodians, or guardians
                           for, any such residents, citizens or nationals

'Previous Circular'        means the circular to Shareholders dated 18 August
                           2004 setting out the response by the Independent 
                           Directors to the Ennstone Offer

'UKLA'                     the Financial Services Authority acting in its 
                           capacity as the competent authority for the purposes
                           of Part VI of the Financial Services and Markets Act
                           2000 and in the exercise of its functions in respect
                           of the admission of securities to the Official List

'United States'            the United States of America, its territories and 
                           possessions, any state of the United States of 
                           America and the District of Columbia and all other
                           areas subject to its jurisdiction




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