HLL Hill Station

    Hill Station Plc (the "Company")                        

Proposed Placing, Loan Stock Conversion and Approval of the Acquisition

The Company announces that it posted a circular to shareholders on 27 July 2007
in relation to a proposed placing to raise a minimum of �3,000,000 in order to
provide additional working capital for the Company and in order to fund the
cash element of the consideration for the acquisition of The So Real Ice Cream
Company Limited (the "Acquisition"), details of which were made in the
announcement made by the Company 10 July 2007.

The circular contains background information relating to the proposals together
with details of the authorities the Company requires to enable the proposals to
be effected and convenes an EGM for the purpose of seeking shareholders'
approval for the Resolutions.

The circular posted to shareholders may be downloaded from www.cityfin.co.uk

A summary of the Circular is set out below:-

Background to the Proposals

On 10 July 2007, the Company announced details of the issue of the July 2007
Loan Stock and the Acquisition.

Trading update

As reported in the announcement of 10 July 2007, sales in April 2007 were above
expectations due to the warm weather experienced in that month; however since
then the extremely poor, inclement weather over the months of May, June and
July 2007 has had a seriously adverse affect on ice cream sales for all
producers, and the Company is no exception with sales now running at some 25
per cent. below target. This of course represents a serious reduction in the
Company's ability to draw from its debtor finance facility.

The Company reacted swiftly to try to recover the significant increase in raw
material prices of key ingredients, also reported in the 10 July 2007
announcement, by passing this on, in part, to customers but this is a slow
process and has been met with resistance from customers and some further loss
of sales. Competitors are in the same position and the Directors believe that
there will be an across the board price increase over coming months. However,
the squeeze in margins can only lead to a further cash drain.

Work continues apace on reducing the number of product lines, eliminating low/
negative margin sales and on seeking alternatives to the raw materials subject
to the price inflation, which should show benefit in the future. In addition,
improvements in factory efficiency continue to be forced through and plans are
in place for the rapid integration of Real Ice manufacture into the Company's
Cwmbran operation.

The addition of Real Ice products is eagerly anticipated and, through recent
strengthening at the top of the sales team, strategies for building on their
products/brands are being advanced, as part of the overall strategy for the
Group.

The Board believe that the Company has a viable future and is capable of
creating shareholder value in the medium term if it can overcome its current
funding needs and can grow by acquisition.

Terms of the Placing and Use of Placing Funds

The Company is proposing to raise a minimum of �3,000,000 before expenses by
the issue of Placing Shares to institutional and other investors, pursuant to
the Placing at the Placing Price. The Placing Price is yet to be determined.

The net proceeds (after expenses) of the Placing will be used to satisfy the �
650,000 cash consideration element for the Acquisition, the balance will be
used for working capital purposes.

The Placing is conditional upon the Minimum Subscription being raised (�
3,000,000) and also upon Shareholder approval of the Resolutions at the EGM.
Assuming the minimum Placing Price 1,400,000,000 Placing Shares would be issued
representing approximately 360 per cent. of the Existing Ordinary Shares.

The Placing Shares will, if issued, rank pari passu with the Existing Ordinary
Shares, the Loan Stock Shares and the Consideration Shares. The New Ordinary
Shares issued pursuant to the Placing are expected to be admitted to trading on
AIM on 22 August 2007.

Details of a variation of the terms of the November 2006 Loan Stock and the
Loan Stock Conversion

On 10 July 2007, pursuant to a resolution of the holders of the November 2006
Loan Stock, the terms of the November 2006 Loan Stock have been varied such
that the 200% Redemption has been cancelled and the interest rate is reduced to
10% per annum.

The terms of the July 2007 Loan Stock Instrument provide that the July 2007
Loan Stock is convertible into Ordinary Shares at any time, will be secured on
trading stock of the Company, bear fixed interest of 10% per annum and will be
redeemable on the fifth anniversary of the date of issue. On conversion or
redemption, the July 2007 Loan Stock will be entitled to a premium of 100% of
its par value.

At the minimum Conversion Price (which equates to the Placing Price) the Loan
Stock Conversion would result in the issue of 576,000,000 New Ordinary Shares
representing approximately 148 per cent. of the Existing Ordinary Shares. The
Loan Stock Shares would, if converted, rank pari passu with the Existing
Ordinary Shares and the Placing Shares. The New Ordinary Shares issued pursuant
to the Loan Stock Conversion are expected to be admitted to trading on AIM on
22 August 2007.

The Loan Stock Conversion is conditional on Shareholder approval of the
Resolutions at the EGM.

Acquisition

Details of the Acquisition were contained in the announcement dated 10 July
2007. As indicated, in that announcement, the Acquisition is subject to
Shareholder approval. The consideration for the Acquisition will be satisfied
by �650,000 in cash and �100,000 in Consideration Shares at the Placing Price.
The cash element of the consideration is being raised through the Placing.

At the minimum Placing Price the Acquisition would result in 40,000,000
Consideration Shares, representing approximately 10.3 per cent. of the Existing
Ordinary Shares being issued. The Consideration Shares will, if issued, rank
pari passu with the Existing Ordinary Shares, Placing Shares and Loan Stock
Shares. The Consideration Shares are expected to be admitted to trading on AIM
on 22 August 2007.

Related Party Transactions

Transaction with Substantial Shareholders

Rathbone Investment Management Limited ("Rathbone") has an interest over
54,138,729 Ordinary Shares and Electra Quoted Management Limited ("Electra")
has an interest over 50,539,031 Ordinary Shares representing approximately 14.0
per cent. and 13.0 per cent. respectively of the Existing Ordinary Shares. As
they each have an interest in more than 10 per cent. of the Existing Ordinary
Shares Rathbone and Electra, together with their respective underlying funds
are each deemed to be Substantial Shareholders as defined in the AIM Rules.

Assuming the conversion of the July 2007 Loan Stock, Rathbone and Electra would
each be issued with 240,000,000 Loan Stock Shares.

The issue of shares to a Substantial Shareholder constitutes a Related Party
Transaction for the purposes of AIM Rule 13.

Transaction with Directors

As at the date of this document, the Directors are in aggregate interested in
42,000,000 Ordinary Shares representing approximately 10.8 per cent of the
Existing Ordinary Shares.

The Directors subscribed for July 2007 Loan Stock as set out in the table
below:-

                    July 2007 Loan Stock   Loan Stock Shares      Percentage of
                                          assuming issued at  Existing Ordinary
                                             minimum Placing             Shares
                                                       Price    (represented by
                                                             Loan Stock Shares)
                                                                               
William Mapstone                �100,000          80,000,000              20.6%
                                                                               
T Gwynfor Jones                  �10,000           8,000,000               2.1%
                                                                               
G Nicholas Morgan                 �5,000           4,000,000               1.0%
                                                                               
Peter Salter                      �5,000           4,000,000               1.0%

The issue of shares to William Mapstone constitutes a Related Party Transaction
for the purposes of AIM Rule 13.

Where a company whose shares are listed on AIM enters into a Related Party
Transaction, AIM Rule 13 requires the directors of the Company to consider,
having consulted with the Company's nominated adviser, that the terms of the
transaction are fair and reasonable insofar as its shareholders are concerned.

Taking into account the financial condition of the Company, the Directors
consider, having consulted with CFA, the Company's Nominated Adviser, that the
terms of the related party transaction with each of Rathbone and Electra are
fair and reasonable insofar as the Company's shareholders are concerned.

The Directors (with the exception of William Mapstone who is interested in the
transaction) consider, having consulted with CFA, the Company's Nominated
Adviser, that the terms of the related party transaction with William Mapstone
are fair and reasonable insofar as the Company's shareholders are concerned.

Plans if Resolutions not passed

The Company, will by Noon on Friday 17 August 2007 announce whether the Minimum
Subscription has been satisfied and will also announce the Placing Price.

The Board believes that the Company has a viable future and is capable of
creating shareholder value in the medium term if it can overcome its current
funding needs and can grow both organically and by acquisition.

In the event the Minimum Subscription has not been raised the EGM will be
adjourned and the Board will consider its position in relation to the
Acquisition and in respect of its current trading and working capital position.

EGM Resolutions

In order to enable the Company to allot the New Ordinary Shares the following
resolutions have been circulated to Shareholders for consideration and approval
at the EGM:

Resolution 1 Increase of authorised share capital

if passed, will approve the increase in the Company's authorised share capital
from �1,500,000 to �10,000,000 by the creation of 3,400,000,000 new Ordinary
Shares of 0.25 pence each ranking pari passu in all respects with the Existing
Ordinary Shares.

Resolution 2 Approval of the Acquisition

seeks the approval of the Acquisition from the Shareholders

Resolution 3 Directors' authority to allot shares

if passed, will grant the Directors pursuant to section 80 of the Act,
authority to allot relevant securities up to an aggregate nominal amount of �
6,154,967 (the intention being that �3,500,000 will be in respect of the
Placing Shares, �1,440,000 will be in respect of the Loan Stock Shares, �
100,000 will be in respect of the Consideration Shares and �114,967 will be in
respect of outstanding option and warrants.

In addition, resolution 3 grants the Directors authority to allot a further
amount of relevant securities up to an aggregate nominal amount of �1,202,594.
If approved, this authority will expire at the next Annual General Meeting of
the Company or, if earlier, 15 months from the date of passing of this
resolution.

Resolution 4 Disapplication of pre-emption rights

if passed, will approve the disapplication of pre-emption rights conferred by
the Act in connection with the Placing Shares, the Consideration Shares, the
Loan Stock Shares, allotment of shares pursuant to the exercise of warrants and
options and otherwise up to an aggregate nominal amount of �1,202,594
representing up to approximately 20 per cent. of the Enlarged Issued Share
Capital.

If approved, this latter authority will expire at the next annual general
meeting of the Company or, if earlier, 15 months from the date of passing of
this resolution.

Recommendation

The Directors believe the Proposals to be in the best interests of the Company
insofar as Shareholders are concerned.

Accordingly, the Directors unanimously recommend holders of Existing Ordinary
Shares to vote in favour of the Resolutions as they intend to do in respect of
their own beneficial holdings which amount, in aggregate, to 42,000,000
Existing Ordinary Shares, representing approximately 10.8 per cent. of the
Existing Ordinary Shares.

Enquiries:

Hill Station plc

Bill Mapstone

Chairman

01633 833 000

Liam Murray, Nominated Adviser

City Financial Associates Limited

Tel 020 7090 7800



END

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