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Computer Software (CSW)

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Thursday 10 March, 2005

Computer Software

Acquisition & Placing

Computer Software Group PLC
10 March 2005


                          Computer Software Group plc

  Acquisition of Consensus Information Technology Limited and Placing to raise
                           approximately £2.59 million

The Company is pleased to announce that it has conditionally agreed to acquire
Consensus Information Technology Limited ("Consensus") for a consideration of
£1,618,750 to be satisfied by the issue of 640,000 Ordinary Shares and
£1,218,750 in cash.

It is proposed to raise approximately £2.59 million (before expenses) by way of
a placing to provide cash for the acquisition and to provide additional working
capital.

BACKGROUND TO, AND REASONS FOR, THE ACQUISITION

The Company was admitted to trading on AIM in August 2000. Its main activity at
that time was the provision of cross industry TALENT integrated software
solutions on an IBM iSeries platform. In the period since flotation, the Company
has grown by the careful acquisition of companies that the Directors have
considered offered strategic synergies with the existing Group in relation to
product type and customer base. This has afforded the Group opportunities to
cross-sell to a broader customer base and to explore new markets.

In September 2004, the Company raised £3.5 million by way of a placing and
detailed its acquisitions of Advatech Computer Systems Limited and Pinnacle
Computer Systems Limited, two companies operating in the field services software
market. Both the acquisitions and the placing were noted in the circular to
shareholders dated 6 September 2004, and have now completed. Since September
2004, the Company has acquired Alveston Holdings Limited (trading as "Systems
Team"), a company operating in the membership and charities market, for a total
consideration of £4,800,000, and Prolog Systems Limited, a company operating in
the field services market, for a total consideration of £814,000. The cash
element of both transactions was (and in the case of the deferred payment of
£14,000 in relation to the acquisition of Prolog Systems Limited, will be) met
from the Company's own resources.

As a consequence of the acquisitions undertaken by the Company in the last 18
months, the Company has reorganised the Group into three divisions, each headed
by a management team strengthened by the retention of senior key executives from
the acquired companies:-

The Business Solutions division; offering ticketing, financial, distribution and
e-commerce software applications across multiple platforms.

The Field Services division; offering a management solution focussing on the
domestic appliance, communications and asset management industries.

The Not For Profit division; offering membership management software solutions
for associations, governing bodies and charities.

The Company now intends to extend the Not For Profit division with the
acquisition of Consensus. This acquisition will create an opportunity for cost
rationalisation but more importantly will bring a significant customer base into
the Group for cross-selling activities.

CONSENSUS INFORMATION TECHNOLOGY LIMITED ("CONSENSUS")

Consensus is based in Cheshire and provides membership management, training
administration and skills management software. Its current customer base
includes, among others, the Caravan Club of Great Britain, the Chartered
Institute of Personnel Development and the Audit Commission.

Consensus was founded in 1988 by Gerard Lennox, currently Chairman and Technical
Director. Peter Smith, the Chief Executive Officer of Consensus, has been with
the company since 1993 and has a sales and operations control background gained
from previous positions in several large IT companies. Mr Smith will continue to
be closely involved in the ongoing management of the division.

Consensus' turnover in the year to August 2004 was £1,600,000, which generated
profits before taxation of £236,000. Consensus had net assets of £253,000 at the
year end.

The Company has entered into a conditional share purchase agreement with the
shareholders of Consensus to acquire the entire issued share capital of
Consensus for a consideration of £1,618,750 to be satisfied by the issue of the
Consideration Shares and £1,218,750 in cash of which £1,200,000 will be paid on
Completion and £18,750 will be paid on 9 June 2005. The acquisition of Consensus
is conditional on the passing of the Resolutions and completion of the Placing.

THE PLACING

The Company is proposing to raise approximately £2.59 million by way of the
Placing of 4,540,343 Placing Shares at 57p per share. A Placing rather than a
rights issue, which would involve a dis-proportionate expense to the Company and
might delay Completion, has been chosen as the preferred means of raising the
new funding. The Issue Price is at a discount to the current share price of
(62.5p) to reflect limited liquidity in the Existing Ordinary Shares of the
Company and in the Directors' opinion to encourage investors to participate in
the Placing.

The Placing Shares have been placed with Elderstreet Capital Partners, other
members of the Concert Party, and other investors and therefore the Company has
sought a waiver from The Panel on the issue of these Placing Shares which would
otherwise trigger an offer by the Concert Party pursuant to Rule 9 of the Code.
The Placing is conditional on Admission. Application has been made and it is
expected that Admission will become effective and dealings in the Placing Shares
and the Consideration Shares will commence on AIM on 6 April 2005. The Placing
Shares, once issued and allotted, will rank pari passu in all respects with the
Ordinary Shares, including for all dividends and interest hereafter declared,
paid or made.

The net proceeds of the Placing will be used as consideration for the
acquisition of Consensus and to provide additional working capital to the
Enlarged Group.

Issue of Options

The Board has today granted options to subscribe for Ordinary Shares to certain
members of the Concert Party. These options will be included in the waiver
granted by the Panel and therefore any subsequent exercise of these options
would not trigger an offer by such member of the Concert Party which would
otherwise be required under Rule 9 of the Code.

Vin Murria has been granted options to subscribe for 1,000,000 ordinary shares
exercisable at 57 pence per share at any time form 10 March 2006 to 10 March
2015. David Cotton and Jill Dixon will each be granted options to subscribe for
100,000 Ordinary Shares exercisable at 62.5p per share at any time from 10 March
2006 to 10 March 2015.

THE CITY CODE ON TAKEOVERS & MERGERS

The Placing, the take-up of Placing Shares and the exercise of options by
members of the Concert Party give rise to certain considerations under the Code.
The Panel has agreed, subject to the approval of independent Shareholders at the
Extraordinary General Meeting, to waive the obligation for the Concert Party to
make a general offer to Shareholders under Rule 9 that would otherwise arise
upon completion of the Placing. Accordingly, Resolution 3 is being proposed at
the EGM and will be taken on a poll. No member of the Concert Party will be
entitled to vote on Resolution 3.

EXTRAORDINARY GENERAL MEETING ("EGM")

The Company has convened an EGM to be held on 5 April 2005 at which the
following resolutions will be proposed:

1. to authorise the Directors to allot the Consideration Shares, the Placing
Shares and further Ordinary Shares up to an aggregate nominal amount of
£2,750,000 (representing approximately 50 per cent. of the enlarged issued share
capital);

2. to allow the directors to allot the New Ordinary Shares without adhering to
the pre-emption provisions which would otherwise be required by the Act provided
that any such allotments are limited to sufficient shares to complete the
Placing and the Acquisitions and to allot further shares up to an aggregate
nominal amount of £1,100,000 (representing approximately 20 per cent. of the
enlarged issued share capital).

3. to approve the waiver from the Panel referred to above of the obligation for
the Concert Party to make a general offer to Shareholders under Rule 9 which
would otherwise arise upon Completion.

A circular containing this notice of EGM has today been posted to Shareholders
of Computer Software Gropup plc and will be available at the Company's
registered office, Integra House, 138-140 Alexander Road, London SW19 7JY.

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Further Enquiries:

Vin Murria / Barbara Firth                           020 8879 3939
Computer Software Group plc
Sarah Wharry                                         020 7107 8000
Seymour Pierce Limited




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