Summary of Event: Members Only Q&A with RG and NP - 8 July 2010

Meeting opened at 7:30pm

Q: What is RG's current view about the legal action taken against fans and what does he think the
relationship between the club board and the fans should be?
RG: Sincerely hopes this is now in the past for everyone. Action was ceased as announced by KC at
an AGM. He sees the moves made by LS in seeking closer relations with the fans as the way forward.

Q: Why did RG sign the documents and why didn't he defend fans when past chairman made
unfortunate comments?
RG didn't recall signing the documents. At the time he thought it was correct in that people should
not make slanderous or libellous remarks and we should all be respectful of each other. Maybe In
hindsight they shouldn't have done that.
Q: Can RG assure us that it wouldn't happen again?
RG: I can only speak for myself and have no intention of suing fans and is sure that the current board
feel the same way and want to continue to develop positive relations with the fans.

Q: Comment on the current major shareholders and loans and the interest they may be getting.
RG corrected this stating that nobody is getting any interest payments on the loans as is published in
the accounts. NP said that the accounts have to show that interest is due and is being accrued as
required but nothing had been paid and it is unlikely that any interest will ever be paid. RG added
that company law was being followed and reported in the accounts but interest was not being paid

Q: Several clubs have received substantial investment in recent times. Is there any underlying reason
why SWFC had not attracted such investment.
BG says he genuinely doesn't know why - it isn't a case of blocking by board members or loan note
holders - we haven't had offers to reject. We have sought advice from experts, LS came with a
potential investor but it didn't happen.

This is a lie “I did not come with an investor” I had a meeting with Bob in early September 2008 and
gave him the following message:-

“No one is going to pay 30p a share and repay the loan notes up front not when all of the other deals
that have been done at this level have all been done on the basis of the incumbents just getting the
opportunity to make some money back if the new owners are successful. No one is going to invest in
something that has had such a poor recent PR profile until they see the thing start to turn around
and progress on it s own and you have to proactively go find investors and not rely on waiting for
some Arab billionaire deciding he wants to come to Sheffield. I then offered to develop a business
plan and implement it to affect the turnaround and to put in place a process to proactively go find
investors. RMG said that the club was due diligence ready and clean and the that club was
operationally break even and that he believed that the major shareholders and loan not holders
would take a different deal and that he wanted out personally as quickly as possible. I challenged
Bob on the point about cash neutrality and said that this was only down to selling players and he
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was adamant that that was not the case and that player sales resulted in a cash surplus and that the
club did indeed run on a cash neutral basis at an operational level. We carried out all of the above
work the business plan was based on numbers given to us by RMG that indeed showed that the club
was cash neutral before player sales and other exceptional income (see attachment “November
2008 Investment Financials” – Note the doc shows that the club is historically broadly cash neutral
excluding player sales and other exceptional income). We found 4 investors and tried to get them to
do a deal and then once we assumed the roles of Chairman and CEO we found that the club was not
investor ready and would not have passed a formal due diligence process which disrupted the
original deal.

Until this year we have been cash neutral. I don't know why there isn't a Sheffield person who has
come forward. We have talked to many saying that they could put money into the club in the form
of shares without paying out to share holders or loan note holders or giving DA or KA or GH a bag of
gold.

Q: asked about quoted comments from LS about investors getting to due diligence and finding that
the club is not 'operationally clean' and has made reference to a £1.5million gap in the finances.
RG did not want to get into a tit for tat debate about what LS said. 'What goes on in the boardroom
stays in the boardroom'.
NP - when I read about the £20m investment disappearing because of a hole in the accounts, I didn't
recognise it at all. The infamous hole in the accounts is rubbish. There was a budget set in March 09
anticipating high season ticket sales and match attendances. It was made very clear that the budget
would result in a cash shortfall if the targets were not achieved. There is always a £1- 1.5m buffer in
the reserves (headroom) which was used up when the targets were not achieved. The problem was
compounded further by the loss of about £2-3m of TV and other revenue so we are short of cash
now. Historically the club had always been run with an adequate amount of headroom in its banking
facilities and (under Bob's guidance) that low expectations of gate receipts were used and we would
only spend moneys we actually had. By putting expectations higher and then increasing levels of
expenditure, when those receipts did not arise and budget forecasts were not met.

The Sheffield Star story (http://www.thestar.co.uk/news/Lee-Strafford-3915m-deficit-

helped.6370301.jp) Nick refers to does not suggest that the original £20m deal was killed by the
£1.5m hole and its frankly ludicrous to suggest this as the timing of these two things are nearly a
year apart as can be clearly seen reading the star stories.

With regard to “The infamous hole in the accounts is rubbish” this is an extract from the January
2010 board minutes, this being the first proper board meeting held after NP had concluded his
forensic inspection of the clubs historical accounts following the discovery of the cash hole of circa
£1m-£1.5m in Nov 09/Dec 09 ~ “NP pointed out that the club was cash negative not just this year but
In previous years and it would have been better if that had been made clear before now. RMG
commented that we always had a plan and only spent the money when we have it. In RMG’s 20 years
at the club this had never been a problem. NP stated that during the last two to three years the club
had realised an asset of some sort or received external funding to be able to spend money”
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This clearly is Nick Parker exposing what to us was a revelation to the board and I can’t help but also
remark on Bob Grierson’ words given that the club had no debt when he joined the board and ended
up £30m in debt despite “never having a problem in his 20 years.”

The budget for last year was not “set” in March 2009 a draft budget was created at that time (see
attachment “March 2009 Draft Budget”). Last years budget was finally “set” in August after getting
the final picture on season ticket sales and “setting” the football budget. This budget assumed that
we finished 10th and had a modest cup run befitting of a championship club and had a revenue
assumption for the year of £15.9m (see attachment c).

It is crucial to understand that although by Dec 2009 we were behind the “set” budget we were
nowhere near being £1.5m behind. The shortfall in income can be broken down as follows:-

After 9 home games, average attendance 2000 below budget resulting in a circa £270,000 shortfall.
4 un-sold executive boxes at circa 22k per annum resulting in a circa £44,000 shortfall
No south stand sponsor (circa £50,000k per annum) resulting in a circa £25,000 shortfall
No shirt sponsor (circa £100,000k per annum) resulting in a circa £50,000 shortfall

The above is offset by the £200,000 loan fee received in respect of Richard Woods transfer to
Coventry.

Adding up all of the above and you get a circa £190,000 shortfall and yet we raised £1.5m from
Octopus finance in Dec 2009 to accommodate the “hole” (circa £1.2m) and also cover the cost of
changing the 1st team management staff (circa £300k).

With regard to “the £1m-1.5m buffer that was always there” comment, this is an extract from the
board minutes for the meeting held on September 11 2008 “KC noted that from a cash perspective
the club were over budget for the first two home games of the season and therefore wondered how it
would affect the clubs overall position. RMG replied that we still have approx. £500,000 headroom
within the cash flow plus a similar amount from the our Football League loan advance”

This is of particular interest in two regards, firstly that the headroom as at what should have been
healthy part of the season (Christmas / new year is the low point with the summer being the
historical high point because of season ticket income) was only £500,000. Secondly the very
interesting reference to a loan advance, this was a loan taken by the club against future league and
TV monies that was effectively the club taking cash from 2009-2012 to support cash flow in 2008.

This is an extract from the minutes of the board meeting held on the 17 th of November 2008”RMG
pointed out that the cash flow now showed headroom of £1m following the drawn down of the
advanced TV loan from the Football League.

This is an extract from the minutes of the board meeting held on Dec 15 th 2008 “RMG pointed out
that although the company was still ahead of budget recent attendances at matches had been
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disconcerting. Added to this KC felt that the subject of attendances would be raised at the
forthcoming AGM. KBW pointed out that he had already talked about this matter in the press and
made reference to the number of season ticket holders that were not attending games and therefore
the situation could not all be about price. He also pointed out that it would appear that season ticket
holders who live outside the area quite often do not come along to evening games. RMG then made
reference to the headroom on cash flow forecast which showed that sufficient funds would be
available to get through to the end of the season. “

“KC asked if the £500,000 received from the Football League related to the newly negotiated TV deal
and had the cash been received this year. RMG replied that this was the case and this money had
been earmarked to renegotiate a number of player contracts. PDJ mentioned this in this year’s cash
flow £1m had been received in respect of the Brunt and Bougherra transfers and no further receipts
were due on these initial deals.”

There are two very interesting things that the above identifies. Firstly if you back out the £500,000
Football league loan and the Brunt / Bougherra money of £1m then the club would have run out of
cash in 2008. Secondly that clearly there never was an operating headroom buffer as claimed by Nick
in the original text. It is also very clear that the numbers that we were given pre and post joining the
board by Bob Grierson do not reflect reality and suggested that the club was operating broadly in a
cash neutral position excluding players sales and other exceptional income.

This is a huge issue as the business plan for running the club was built upon false assumptions and all
information given to investors was also based on the same false assumptions.

Q: praised RG if he was involved in LS leaving than said some of us might be worried when we hear
comments that the FD cannot remember signing legal documents which affected peoples' lives and
cost the club thousands in legal fees. Does that mean that the board has simply been just rubber
stamping what DA said? You have spoken to dozens of potential investors and you say you don't
know why they have are not investing. Have you thought of asking them?
RG: I don't recall signing all the documents I sign, I don't rubber stamp anything. I consider
everything as I do it. As regards the investors - we have talked to dozens and frankly dozens of them
do not have the money - they are tyre-kickers, they are on an ego trip.

RG: We did not give GS any credence. Basically they don't have the money. With Paul Gregg who
went through the due diligence, we gave him exclusivity, we saw his money then he changed his
mind and said he wasn't going into football.

Interjection: "Thought it was because of Wednesdayite" "Dave Allen waved a letter"

RG: He didn't go into football.
Interjection: "So DA was lying?"
RG: It was one of the items but I think he changed his mind about football.
Interjection: "DA blamed Wednesdayite".
Q: You were aware that it wasn't Wednesdayite's fault but you didn't say anything.
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RG: It didn't proceed. There have been a lot of others which haven't proceeded. Club 9 hasn't
proceeded. They don't have the money.

Q: Can you tell us what the turnover was last season because it hasn't been published yet?
RG: No I can't
NS: It has been reported as being £15million and I thought it was about £12- 13million
(confirmed by NP) so there has been a £2 - £2.5 million uplift which suggests that there has been an
improvement.
NP: Totally due to tv revenue.

This is a lie.

The uplift in TV and League money was circa £1.8m as a result of the 2008/2009 number being
£1.5m and the 2009/2010 number being £3.3m. In 2008/2009 total revenue was £11.2m. This past
year total revenue was just over £15m. The growth in revenue is therefore £3.8m+ with circa £2.1m
coming from operational / organic revenue growth. This organic revenue growth of circa £2.1m is
the first material growth in revenue not driven by league TV money since 2002. Why the lie? – it
seeks to smear the clear progress we were making on growing revenues until Bob Grierson derailed
everything and also by extension servers to cover up the £1.5m issue.

Q: asked about investors which have been mentioned and can NP give any information about them?
NP: No details.
NP: commented on a 'litmus test' he applies. He talked about how much publicity they sought,
adding that those might be around now were desperate not to have any publicity and he would not
give any background on any of them.
"I am sure Club 9 or Cloud 9 will be desperate to announce that they are talking to the bank or have
made an offer or something like that because I know they are still trying to pull the money together
and I suspect that they do not have any credibility with the bank."

Q: asked about the reported £3million. Will we have to go the bank again next year?
NP: The bank were upset about the story of the £3m from the bank. He has not disclosed that and
that he would not confirm that it is correct but the bank continue to be supportive and helpful. We
have put to the bank a plan which shows that we hope to be cash neutral after the coming season
and I am hopeful that the bank will continue to show the support they have shown over the past few
years.

This is a very interesting thing to say given that the respective journalists have confirmed to me that
they were given this story from the club.

NP: We have had an awful lot of people coming through and time after time they simply do not have
the money to deliver on a deal. It is not because the shareholders and loan note holders are
demanding their cash out. The deal as structured keeps as much of the investment as possible in the
club. If £10million comes in, after fees £8 or £9 million will stay in the club.

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Q: What exactly are we offering the investors, what is the scenario you envisage?
NP: We started out looking for £20million to come into the club via a large share issue. £1-2million
used for fees and necessary outgoings giving £18 million staying in the club. The new investor would
get 86% of the club. The bank would take a significant write-off such that on day one the club would
have net cash in its bank account of at least £6 million.
The loan note holders and significant share holders would get their return on promotion to the PL.
The deal does not involve buying existing shares but until someone comes along with real cash,
nothing will happen.

Interjection: Ask Blackpool how they did It.

RG: They found a rich person who put the money in. If you know one let us know.
Ian: Didn't you ask Deloitte's to find one?
NP: Yes we did.

Q: Apart from seeking investment are there any other plans for developing revenues and have the
club asked fans if they are interested in invested?
RG: If you look across football, rights issues have never raised significant amounts of money.
It is costly unless you have someone to underwrite a rights issue - cost about £250,000.

Q: If someone comes in with enough to cover the cost of a rights issue and a bit more would you be
open to discussions?
NP: No. In order to get the deal you need at least £5million. We are open to that and the bank are
open to that but you need at least £5million.

Q: Why aren't the board out scouring the world for a big investor - why aren't we selling the club to
the world?
NP: We are. ICS are a well known and respected organisation in sports financing and they are
searching on our behalf.

Q: Bob, it's fair to say that the club has not prospered mightily under your stewardship, would you
like to say what you might have learned to help us go forward without making the same mistakes?
Particular points are the boards clear failure to ensure that proper research is done when signing
players, the unevenness of the commercial management and the appalling PR.
RG: From PR view it has been run far better with proper communication with fans. All players are
subject to medicals but players are always going to be prone to injury. The manager selects the
players, the board do not. We put in a system which the manager follows, we don't say to the
manager that you can't have a particular player but we might express our concerns. We give the
manager a budget to spend as he thinks fit. We do not get involved in who the players might be.

In answer to a question about players having been signed in the past solely on video evidence, RG
said he was not aware of that having taken place. The manager and fitness people evaluate and they
have free choice.

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Q: Have all the major shareholders agreed to the deal described by NP. If they have why is DA
making comments about not having made an agreement and what is the business with DA and AC
and any conflict of interest?
NP: The agreement with the loan note holders and shareholders is an agreement in principle. It is
not legally binding. As far as DA is concerned there we understand that there is a legally binding
agreement between DA and the football authorities but we are not told what the details are.

Q: On a lighter note, can Bob share with us any ridiculous conditions players might have tried to
include when signing for the club?
There are always rumours about players - we were reported as buying LeTissier and the car had
been seen being labelled.
Interjection "What about Eric Cantona?"
RG: "I didn't tell Trevor Francis he could or couldn't sign Cantona. TF said he wanted to see him on
grass and EC went to Leeds. You can't blame me for that!.
If we had signed him on video evidence, you'd be complaining about that!

NP: Agents demands - one wanted to discuss his fee. We have a very strict policy fitting in with all
the tax rules and regulations. The agent wanted to have a promotion bonus on the fee. When this
was rejected, he said that he was a big fan of Def Leppard and he would waive the promotion bonus
if NP could get him tickets for a concert - or even a meeting with Michael Vaughan.

Q: 26,000 average gate was budgeted for last season. What is the figure for break-even this season?
NP: We won't break even this season. We have budgeted for 22,000 average gate and £3million of
season ticket revenue.

Note - the average attendance budgeted for last season was 24,300 not 26,000.

If things go better, we can possibly increase spending. The budget AI has been given is good and
players are keen to come here because of the club and because of AI. He is pleased with who he has
brought in. There could be one more to come yet.

NS: What is the loss likely to be?

NP: £2-3 million shortfall this year.

Q: You probably hear my voice from behind you on match days. I can't see that we will progress with
the current people in the club. There need to be changes in the boardroom with more ideas and
resources. The relegation last year could have been avoided with a bit of extra input but the board
sat and watched us get relegated. It is not going to be easy to get out of league 1. The people
responsible are still in the board room. We need changes and to bring in people into the boardroom
who we can have confidence in.

NP: Funds were made available from the bank for loan players in the transfer window. You can't
blame there directors for the fact that players were not brought in.

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This is a lie – funds were not available in the transfer window. Funds were made at the very last
moment in the loan window but at such a late stage it proved impossible for Alan to make use of
said funds.

From 1991, there has been a serious decline in the finances of this club. I can't see any plan to get
the club out of the problem apart from waiting for investment. We need a plan. If the board can't
come up with a proper plan, the board should step aside.

NP: There is a plan. It is based on the football side aiming for promotion. Last years plan, from LS was
to be a top six team. We got relegated.
The plan is to get the club up. We believe the manager we have is a good one and will do a good job.
We are relying on him to bring success. And you can't legislate about injuries.

This is a lie – last year’s plan was to finish 10th it is fair to say that last year’s goal was to try and
sneak into the playoffs. The plans and goals were created as a team and not by me solely.

Q: One of the good things about last season was to bring improvements to the medical side. I hope
that is not going to cost cutting in that area. If we don't get promotion, you have added another £3
million to the debt.
RG: There is nothing we can do about that. We cannot increase the income from any source. We
have to manage costs.

Q: I understand the requirements about raising money fans. What would the board do if we get
good crowds coming in on the back of good results. What will you do?
NP: If that happens, revenues will go up and there would be greater confidence in giving the
manager more resources to put into the team.
RG: Any extra funds will be given as far as possible to the manager for squad development.
Q: So the fans would bring more money in through the gate - what would the directors do in
addition to that.
RG: I personally don't have the resources to pour money into the club. We do not have anyone on
the board with vast financial resources to put money in.

Q: What tasks are individual directors given to allow them contribute to the club's progress. Is there
room to bring other people in to add skills?
RG: Prior to Lee's appointment I worked on the finances - the budget, cash flows and liaising with
the bank. I haven't done much of that in the past year, Lee took that on. I am now back in that area.
We are non-exec directors, with the CEO responsible for day to day running with his team. We
review it and try to suggest improvements. GH used to be the liaison between the manager and the
training ground and would represent the club at away games. KC spends a lot of time developing
the community aspects but is not involved in executive decisions. The club has staff to do that.

This is a lie. I did not take those responsibilities or activities on at all. If the above statement were
true then there should have been a formal announcement that Bob was stepping down as the

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companies’ Financial Director as he had clearly relinquished his duties and as we are a PLC such
changes to directors’ and officers’ roles have to be notified.

The reality is that the operational roles were as follows:-

LS – Executive Chairman – Full Time~ Managing the relationship with 1st team and Academy
Manager, Managing PR and media activities, Defining the strategy around developing the clubs
products / services and repositioning to become a key community asset and hub, Supporting the
investment process.

NP – CEO – Full time ~ Managing the operational management team, cost control, implementing the
changes to the clubs products and services through the management team, managing the
investment process. Managing the dialogue with the Co-op in respect of the investment process,
Controlling the procurement process alongside RMG.

RMG – Non-Executive Finance Director – Part time ~ Managing the finance function through the
Financial Controller (Paul Johnson), Controlling budgetary process, managing Coop bank relationship
in respect of lending. Controlling the procurement process alongside NP.

The only change to the above came by way of Paul Johnson moving into a reporting role to NP in the
summer of 2009 which meant that the day to day dialogue with the bank in regard to lending shifted
to Nick but RMG maintained the dialogue with the senior Co-op management.

Throughout my time I had nominal visibility of the detailed financial workings and zero control over
expenditure.

Q: Do the directors need to be more visible?

RG: I don't think people are interested in what the directors are doing. People are more interested in
what is happening on the pitch. I don't want to be pontificating on every matter.
Q: What about active fund raising in the community - what about actions with schools working to
encourage youngsters to come to SWFC.
NP: Loads of work is going on but perhaps we need to publicise it more.

Q: Did Nick take the decision to close the Kop for the cup match against Palace? Football is not just
about money and even though we might have saved money by closing the kop it spoiled the
atmosphere.
NP: Yes it was me and I apologise for the decision and I realise it was the wrong stand to close.

Q; Currently we have an interim chairman - a football person. Has this led the board to change its
focus and is Howard going to stay?
RG: When Lee left we were pleased that Howard stepped into the breach. The issue about the
chairman will be addressed but we will have to wait and see who it will be. My focus has always
been on football and it hasn't changed. Howard and Alan have the experience and knowledge to be
a good partnership if that is what they want. The environment is there and I believe Alan is using it.
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Q: Can we have an update on the re-development of the ground?
NP: This falls into three categories - one is the World Cup bid requirement - pillars on the kop and
wet stand and covering the corners. This will not be progressed until we know if the bid is successful.
Second -is the developments in the West Stand to provide a learning centre and community
facilities. This is reliant on Government and similar grants and discussions with the council are
ongoing and there is a desire in the council to progress it via the council. The third area is to increase
the corporate facilities - more boxes at the back of the North Stand bur that is not intended to start
yet.
Q: Any plans to increase the number of spaces for disabled supporters?
NP: We are aware that there is a need and this will be looked at.

JG thanked RG and NP and everyone present for taking part in the meeting which closed at 9:15pm

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