Following the formal announcement on March 10, 2011 of the cash offer for 53.95 per cent of the shares in Watford Leisure plc, we have been monitoring the development with both interest and concern.

In the 15 months since the club was on the brink of administration, we have been impressed with the stability afforded to the club by the management team and the board of Watford Leisure plc. In addition, we are grateful for the continued financial support provided by Fordwat Limited, Graham Simpson and David Fransen.

Since the issue of the secured bonds in April 2010 it is generally well known that the club has been looking for new backers and we know how difficult that search has proved to be in the current financial climate.

We are fortunate to be in a position where our strong relationship with the club has enabled us to keep abreast of the developments. We have had weekly conversations with Julian Winter that have enabled us to discuss our concerns as to whether the potential purchaser of the shares has the long term interest of the club at heart.

With this in mind, the position of Watford Supporters Trust with the various aspects of the cash offer is as follows: Outline of the offer The document released to the London Stock Exchange sets out the process by which a new company (Watford FC Limited (WFCL)) intends to buy the shares in Watford Leisure plc and then operate the club.

WFCL is a new company set up specifically for the purchase of the shares in Watford Leisure plc. Its sole shareholder, Mr Panos Thomas, is holding the shares on trust for Mr Laurence Bassini. The transaction will also see two new individuals appointed to the board of Watford Leisure: Sandra Parnell and Anthony Samuels. Julian Winter and David Fransen will step down from the board of Watford Leisure, but will continue to be on the board of the football club. Graham Taylor will continue as chairman of Watford Leisure and Stuart Timperley will be a non-executive director.

In summary, the offer from WFCL comprises the following: l The purchase of 53.95 per cent of the shares (23,675,233 shares) in Watford Leisure for 1p per share.

l A commitment to provide further working capital of approximately £3.5m to the end of this financial year (June 30, 2011).

l An agreement to purchase the warrants held by Fordwat, Graham Simpson and David Fransen. Converting these warrants will provide WFCL with a further 202,840,000 shares in Watford Leisure which will be 91.8 per cent of the total share capital. It is then the intention of WFCL to remove Watford Leisure from being listed on the stock exchange.

l A commitment to repay the £10.142m of bonds held by Fordwat, Graham Simpson over a three-year period and David Fransen in years four and five. Fordwat’s bonds will continue to be secured on the ground.

l An intention to complete three specific ground developments (the SW corner, relaying the pitch and redeveloping the East Stand).

l An intention for the club to continue to continue its current strategy ‘The Watford Way’ (for example, with the Academy and Community principles ).

Watford Supporters Trust comments While we recognise that further details of the offer will be available in the formal offer document to be released before the end of this month and the Trust is not for or against the offer on principle, we have a number of concerns with the proposed offer as we understand it at present: l On the basis that the offered price is 1p per share, the share offer alone does not have the support of Graham Taylor, Stuart Timperley or Julian Winter as independent directors l We know very little about the business background of any of the individuals involved with WFCL.

l It is not clear whether the money being provided by WFCL is from readily available funds or has been borrowed, and if so, from what source.

l While we welcome the commitment to complete the three specified ground developments, we note that the commitment is only a “current intention” and has no specific timescales.

l Minority shareholders (many of whom are fans) are likely to lose a significant amount of their investment as, if they decide to sell, they will receive only 1p per share. If minority shareholders choose not to sell their shares then it is probable that they will lose the value of their investment completely when Watford Leisure is delisted from the AIM market since they will find it difficult to sell their shares. The Trust holds 56,664 shares and the proxy votes of many other members.

On a positive note, we are pleased to see that Graham Taylor, Stuart Timperley and Julian Winter will continue to be involved with the club on a day-to-day basis. We do know that all three have met WFCL on a number of occasions to outline their vision of the club (known as ‘the Watford Way’) and that WFCL have stated their support for this strategy. This is the vision presented to our members by Julian Winter and Michael Jones at the last AGM of Watford Supporters Trust.

We believe the continued involvement of the members of the current board to be key to the future success of the club. We understand that Lord Ashcroft is continuing to support the club through the deferral of the bond payments, along with Graham Simpson and David Fransen.

Small shareholders were always vulnerable and have little true influence, other than making their opinions clear at the AGM of the club and the plc.

We are concerned that the proposed transaction may unfairly prejudice minority shareholders and reduce the influence that supporters have had with the club, both individually and through the Trust. Having recently pledged £60,000 of support to the club’s Community, Sports and Education Trust we are particularly keen to see that supporters continue to have a mechanism to influence the club.

Next Steps We are therefore seeking a meeting with WFCL at the earliest possible opportunity, to discuss the following points: 1. How will the £3.5m be funded?

2. How will the £10.2m be funded over the next five years?

3. How will the ground developments be funded?

4. How will the structure of the WFCL board ensure the best interests of Watford FC are assured? – Graham Sterry, chairman, Watford Supporters Trust