13th Dec 2006 15:35
Eleco PLC13 December 2006 Eleco plc Conditional acquisition of Asta Group Limited and vendor placing of 3,750,000 new ordinary shares at 80 pence per share The Board of Eleco plc ("Eleco" or the "Company") today announces theconditional acquisition of Asta Group Limited ("Asta") (the "Acquisition"). Theconsideration of £7.65 million comprises the payment of £3,229,871 in cash, tobe satisfied from the Company's existing resources, the issue to the vendors of£1,420,129 of new ordinary shares and the issue of 3,750,000 of new ordinaryshares which have been conditionally placed on behalf of the vendors to realise£3.0 million (together "New Eleco Shares"). Charles Stanley Securities ("Charles Stanley") has undertaken the vendor placingof 3,750,000 of the New Eleco Shares ("Vendor Placing Shares") at a price of 80pence per share to raise £3.0 million (the "Vendor Placing"). The Acquisitionand the Vendor Placing are conditional upon admission to trading of the NewEleco Shares ("Admission") and further details are set out below. The balance of£1,420,129 of New Eleco Shares (the "Retained Consideration Shares") will beretained by certain vendors, of which £898,165 will be retained by seniormanagement of Asta. Information regarding Asta Business Asta is a leading provider of project and resource management softwareapplications and support services principally to the UK Construction andEngineering industry and also to Information Technology and ProfessionalServices organisations. Asta's project management software is used by 43 out ofthe top 50 main contractors in the UK by turnover and by 9 out of the top 10 UKhouse builders by turnover. Asta is also active in Germany, Holland and Sweden. Financial Asta's financial year end is 31 December and a summary of its audited financialresults for the two years ended 31 December 2005 is set out below together withunaudited results for the nine months ended 30 September 2006: 9 months ended 30 September Year ended 31 December 2005 Year ended 31 December 2006 2004 £000 £000 £000 Turnover 3,108 3,782 3,091 Profit before tax 589 602 233 As at 30 September 2006, Asta had net cash balances of £1.11 million and netassets of £0.91 million. Management and Employees Asta has 54 full time employees. It is headed by Michael McCullen, ManagingDirector, who was one of the original founders in 1986. The senior managementteam intend to remain with Asta following it becoming part of Eleco. The Board of Eleco (the "Board") intends to invite Michael McCullen to join theBoard in due course. It is proposed that he will have responsibility for theenlarged Construction Software activities of Eleco. Background to and Reasons for the Acquisition Asta is a leading provider to the UK construction market of project and resourcemanagement software. Consultec, Eleco's Swedish software subsidiary, has aleading position in the Swedish estimating and project management softwaremarket. Asta and Eleco are also both active in the German and Dutch markets. TheBoard believe that the acquisition of Asta, with its strong presence in the UK,will complement Eleco Construction Software's construction, plant management andestimating software product portfolio, improve Eleco's geographic representationand provide a variety of cross-selling opportunities. Asta operates well controlled software development procedures and has aneffective marketing strategy. The Board believes that the business developmentpractices and strong management within Asta will assist Eleco in its drive toenhance the performance of its existing Construction Software activities. The Boards of Eleco and Asta have identified significant growth opportunitiesand operational synergies that can be realised by combining Eleco's ConstructionSoftware activities with those of Asta. The Board anticipates that the Acquisition will be earnings enhancing in Eleco'scurrent financial year ending 30 June 2007. Terms of the Acquisition The consideration of £7.65 million comprises the payment of £3,229,871 in cash,to be satisfied from the Company's existing resources, the issue to the vendorsof £1,420,129 of Retained Consideration Shares and the issue of 3,750,000 VendorPlacing Shares which have been conditionally placed on behalf of the vendors torealise £3.0 million. The consideration is to be satisfied at Completion, whichwill be on Admission, which is anticipated to be on 15 December 2006. Charles Stanley has undertaken a conditional vendor placing of the VendorPlacing Shares at a price of 80 pence per share to raise £3.0 million. TheRetained Consideration Shares will be retained by certain of the vendors,subject to lock-in arrangements. The number of Retained Consideration Shareswill be calculated by reference to the average of the mid-market price of theCompany's ordinary shares on the 5 business days prior to Admission. These datesare expected to be 8 December to 13 December inclusive (closing mid-marketprice) and 14 December (3:00 p.m.). The vendors have waived their entitlement onthe Retained Consideration Shares to any interim dividend declared in respect ofthe year ending 30 June 2007. If Asta's EBITDA for the year ending 31 December 2006 is less than £977,000(equivalent to profit before tax of approximately £900,000), then theconsideration paid to certain of the vendors (the "Primary Vendors") will berepaid in proportion to the shortfall, the maximum repayment being £650,000, tobe effected on a proportional basis. Under the share purchase agreement certain of the vendors have given certainwarranties and indemnities in relation to Asta and its business (including acovenant in relation to taxation). These are subject to certain financial andother limitations. Current Trading and Prospects At Eleco's Annual General Meeting held on 29 November 2006, John Ketteley,Executive Chairman, stated that the Company had "again made a good start to theyear, with the performance for the first quarter ahead of the same period lastyear. We continue to trade well and I remain confident about the ongoingprospects for the Group". The Terms of the Vendor Placing Eleco and certain of the vendors have today entered into the Vendor PlacingAgreement with Charles Stanley. The Vendor Placing is conditional, inter alia,upon Admission. Charles Stanley has the right, at any time prior to Admission,to terminate its obligations under the Vendor Placing Agreement in certainlimited circumstances. All the New Eleco Shares will, when issued and fully paid, rank pari passu inall respects with the existing issued ordinary shares of the Company. Application has been made for all the New Eleco Shares to be admitted to tradingon AIM and trading is expected to commence on 15 December 2006. Lock - in Arrangements Each of the vendors who will hold Retained Consideration Shares are subject tothe lock-in arrangements described below. The Primary Vendors cannot, (1) priorto the publication of the annual accounts of Eleco for the period ending 30 June2007, dispose of any of the Retained Consideration Shares, (2) for a period of24 months after the Retained Consideration Shares are issued, dispose of anymore than £173,000 Retained Consideration Shares (calculated at the issue price)and (3) for 36 months after the issue of the Retained Consideration Shares,dispose of any of the Retained Consideration Shares otherwise than through theBuyer's principal stockbrokers. The other vendors (other than the PrimaryVendors) cannot, (A) within the first 6 months after the Retained ConsiderationShares are issued, dispose of any of the Retained Consideration Shares and (B)for 12 months after the expiry of the period in (A), dispose of any of theRetained Consideration Shares otherwise than through the Buyer's principalstockbrokers. John Ketteley, Executive Chairman of Eleco, commented: "The acquisition of Asta represents a significant strategic move for Eleco'sConstruction Software activities. At a stroke, it strengthens our softwaremanagement and development capability, it dramatically increases ourconstruction software product portfolio and market footprint and providessignificant marketing, cross selling and product combination opportunities,particularly in international markets. I am delighted to welcome Asta into theEleco Group." Michael McCullen, Managing Director of Asta, commented: "Employing a tight software development discipline and strong customer focus hasenabled Asta to increase turnover and profitability significantly over the last3 years. I am excited about Asta becoming part of Eleco's Construction Softwaredivision which represents the next step in the development of Asta's businessand will enable us to exploit more fully the international potential for Asta'sproducts. On a personal level, I am also looking forward to having a leadingrole in the combined software operations." Advisers and Brokers The Board of Eleco has been advised by Hawkpoint Partners Limited. CharlesStanley acted as Nominated Adviser and Broker to Eleco. 13 December 2006 For further information please contact: Eleco plc John Ketteley 01920 443830 Executive Chairman David Dannhauser Finance Director 01920 443830 Charles Stanley Securities Rick Thompson/Philip Davies 020 7149 6457(Nominated Adviser and Broker to Eleco) Hawkpoint Partners Limited Patrick Wilson / Jeremy Millard 020 7665 4500(Financial Adviser to Eleco) Adventis Financial PR Tarquin Edwards / Chris Steele 020 7034 4758(PR Adviser to Eleco) 020 7034 4759 This announcement does not constitute an offer or invitation to purchase orsubscribe for securities. Hawkpoint Partners Limited is acting exclusively for Eleco and for no one elsein relation to the Acquisition and will not regard any other person as itsclient nor be responsible to anyone other than Eleco for providing theprotections afforded to clients of Hawkpoint Partners Limited, nor for providingadvice in relation to the Acquisition or any other matter referred to in thisannouncement. Hawkpoint Partners Limited is authorised and regulated by theFinancial Services Authority. Charles Stanley Securities is acting exclusively for Eleco and for no one elsein relation to the Acquisition and will not regard any other person as itsclient nor be responsible to anyone other than Eleco for providing theprotections afforded to clients of Charles Stanley Securities, nor for providingadvice in relation to the Acquisition or any other matter referred to in thisannouncement. Charles Stanley Securities, a division of Charles Stanley & Co.Limited, is authorised and regulated by the Financial Services Authority. Notes To Editors: Asta Products Asta offers a range of project management software, headed by Asta Powerproject,which it sells to main contractors, house builders and trade contractors. Annualmaintenance contracts together with support and training services account for inexcess of 60 per cent. of its UK turnover. Asta Powerproject is an easy to use, full-featured, project and resourcemanagement software application that helps users deliver projects on time andwithin budget. It is equally applicable for use on large projects (for exampleit was used on the construction of the London Eye) and for managing multiplesimultaneous projects, such as that of a house builder. Extensive functionalityis provided in scheduling, resource management, cost management, progressmonitoring, and portfolio management. Companion products to Asta Powerproject include: Asta Site Progress - Uses web and PDA technology to enable quick and accurateprogress reporting from multiple sites. The data collected automatically updatesthe master plan in Asta Powerproject. Asta Easyplan - Allows sub-contractors and trade contractors to share projectdata with main contractors using Asta Powerproject. Asta Client Reporter - A web based reporting tool for project status and keyperformance indicators. Asta sells Asta Powerproject both separately and as the core of an integratedsolutions package that encompasses the functionality of all the other productsoutlined above. In servicing small to medium sized IT and Professional Services organisations,Asta offers a project, portfolio and resource management solution. Asta'sprincipal product in this market is Asta Teamplan which is a real-timecollaborative multi-user system for managing multiple projects, resources andcosts with integrated time and expense management. It provides the tools tooptimise staff utilisation rates, improve project collaboration and alignprojects with organisational objectives. Asta Teamplan is a client/serversolution with web-based tools that make timesheets, management reports andproject schedules available to both occasional users and project stakeholders. Companion products to Asta Teamplan include: Asta Timesheet - A flexible, project-orientated, web-based timesheet and expensemanagement software tool that integrates with Asta Teamplan. Asta Project Browser - Provides instant access to project data directly from aweb browser. Asta Portfolio Reporter - A web-based reporting tool for dissemination of keyperformance reports with drill down capability related to projects, resources,and costs. Asta Teamplan is scalable and allows secure, multi-user access to the sharedproject database in real-time, thus enhancing collaboration. 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