Acquisition of EGS Group Limited

PROACTIS Holdings PLC

Acquisition of EGS Group Limited

PROACTIS Holdings PLC, the specialist Spend Control software provider, is pleased to announce that it has entered into an agreement to acquire the entire issued and to be issued share capital of EGS Group Limited ("EGS") for £2.9 million, payable in cash on completion ("the Acquisition"). The net cash consideration is expected to be approximately £2.2 million as EGS is expected to have approximately £0.7 million of cash at completion.

Highlights

§ The enlarged Group will be the largest independent eProcurement solution provider to the UK Public Sector

§ EGS brings over 70 new clients to the Group, managing more than £2.5 billion of spend through 40,000 suppliers

§ More than 90% of clients follow a subscription business model with 3 or 4 year terms contracts

§ Acquired annual recurring revenue is anticipated to be more than £1.6 million

§ Operational synergies will enhance Group profitability

§ Funding requirement satisfied with non-dilutive capital

Information on EGS

EGS is a well-respected competitive solution provider and has more than 70 clients (principally in the Public Sector) that use its hosted software to control more than £2.5 billion of spend through 40,000 active suppliers. The Directors believe that the Acquisition will further strengthen PROACTIS' footprint in the sector and strengthens the Group's position as the largest independent eProcurement solution provider to the UK Public Sector covering approximately 200 Public Sector organisations controlling over £15 billion of public spending across approximately 150,000 suppliers.

EGS' substantial expertise in the Local Government and Higher Education sector, allied with the complementary nature of PROACTIS' expertise and solutions, means that customers can look forward to the delivery of even more robust and broad solutions that they can leverage to support their operations, enhance their procurement effectiveness and extend collaboration with their suppliers. As part of PROACTIS, EGS' customers will have access to truly "end-to-end" procurement solutions that are necessary for Public Sector organisations to make Spend Control processes feasible on a large scale.

In addition, there are a number of cost based synergies that can be realised through the combination.

For the year ended 31 December 2012, the audited accounts of EGS showed turnover of £2,759,000 on which it made an operating profit of £404,000. Gross assets at that date were £1,431,000.

Further information on the Acquisition

Completion of the Acquisition is conditional principally upon exercising and completing certain 'drag along' rights set out in EGS' articles of association in respect of certain minority shareholders. Completion of the Acquisition is expected to occur on or around 31 January 2014.

The Group will fund the Acquisition from a combination of bank debt and its own cash resources. Bank debt will be provided by HSBC Bank plc by way of a Term Loan of £1.5 million repayable over four years at an interest rate of 2.65% per annum over LIBOR.

Rod Jones, CEO commented:

"I am delighted to announce our proposed acquisition of EGS. EGS is an excellent strategic fit for PROACTIS creating what I believe will be the largest independent eProcurement solution provider in the Public Sector specifically and the UK market generally. Its substantial scale, level of profitability and available synergies will immediately benefit the wider PROACTIS business.

"I look forward to being able to report further progress as we work together through the integration of the businesses over the coming months."

Enquiries:

Notes to Editors:

PROACTIS creates, sells and maintains specialist software which enables organisations to streamline, control and monitor all internal and external expenditure, other than payroll. PROACTIS is used in over 300 organisations around the world from the commercial, public and not-for-profit sectors.

PROACTIS is head quartered in Wetherby, West Yorkshire. It develops its own software using an in-house team of developers and sells through both direct and indirect channels via a number of Accredited Channel Partners.

PROACTIS floated on the AIM market of the London Stock Exchange in June 2006.

CLOUD COMPUTING is defined as location-independent computing, whereby shared servers provide resources, software, and data to computers and other devices on demand, as with the electricity grid.