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Offer by Earthport PLC

18th Sep 2013 07:00

RNS Number : 2527O

Baydonhill PLC

18 September 2013

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER OR AN INVITATION TO PURCHASE, SUBSCRIBE FOR OR SELL ANY SECURITIES OR A SOLICITATION OF ANY OFFER TO PURCHASE, SUBSCRIBE FOR OR SELL ANY SECURITIES. THE OFFER WILL BE MADE SOLELY BY WAY OF THE OFFER DOCUMENT AND, WHERE APPROPRIATE, THE RELATED FORM OF ACCEPTANCE WHICH TOGETHER WILL CONTAIN THE FULL TERMS AND CONDITIONS OF THE OFFER, INCLUDING DETAILS OF HOW THE OFFER MAY BE ACCEPTED.

18 September 2013

RECOMMENDED CASH OFFER

for

BAYDONHILL PLC

EARTHPORT PLC

Summary

· The Board of Baydonhill and the Board of Earthport are pleased to announce that they have reached agreement on the terms of a unanimously recommended cash offer by Earthport, for the entire issued and to be issued share capital of Baydonhill.

· The Cash Offer is being made on the following basis:

for each Baydonhill Share: 11 pence in cash

The Baydonhill Board, which has been so advised by Smith & Williamson, considers the terms of the Cash Offer to be fair and reasonable and unanimously recommends that Baydonhill Shareholders accept the Cash Offer.

· Baydonhill Shareholders are being offered an alternative offer by Earthport, the Earn-out Offer, on the following basis:

for each Baydonhill Share: 4.80 pence in cash

and

one contingent value right (a "CVR")

· Due to the significant level of uncertainty concerning the value of the CVRs, the Baydonhill Board, which has been so advised by Smith & Williamson, has been unable to form a view as to whether the Earn-out Offer is fair and reasonable and accordingly is not in a position to make a recommendation as to whether or not to accept the Earn-out Offer. The Baydonhill Board believes that, in deciding whether or not to accept the Earn-out Offer, Baydonhill Shareholders should consider carefully the factors set out in this announcement and in the Offer Document.

· The Cash Offer values Baydonhill at approximately £6.42 million on the basis of a fully diluted share capital of 58,333,751 Baydonhill Shares.

· The Earn-out Offer potentially values Baydonhill at up to a maximum of approximately £7.80 million on the basis of a fully diluted share capital of 58,333,751 Baydonhill Shares. This maximum value is based on the initial cash consideration of 4.80 pence per Baydonhill Share, the average middle market closing price of an Earthport Share of 21.24 pence on the ten trading days prior to the date of this announcement, and on the assumption that the maximum amount is payable under the terms of the CVR. Further details on the CVR's are set out in this announcement.

· The Cash Offer represents a cash premium of approximately:

o 266.7 per cent. to 3.0 pence per Baydonhill Share on 13 August 2013 being the date of the latest trade on the BritDAQ facility; and

o 388.9 per cent. to 2.25 pence per Baydonhill Share on 25 October 2012, being the closing market price on the last Business Day prior to the cancellation of Baydonhill's trading on AIM.

· Pursuant to the terms of the Acquisition, Baydonhill Shareholders may elect to receive either 11 pence in cash for each Baydonhill Share that they hold, or receive 4.80 pence in cash and one CVR for each Baydonhill Share that they hold. Each CVR will entitle Baydonhill Shareholders to receive a minimum of 0.097 Earthport Shares and up to an additional maximum of 2.61 pence in Loan Notes and an additional 0.184 Earthport Shares for each CVR that is issued (subject to applicable securities laws and in accordance with the terms and conditions of the CVR), dependent on the financial performance of Baydonhill in the period to 30 June 2016.

· The cash consideration payable by Earthport under the Cash Offer will be funded from cash on its balance sheet. The initial cash consideration payable by Earthport under the Earn-out Offer will be funded from cash on its balance sheet. It is anticipated that payments under the CVRs will be funded through the future free cash flows of Baydonhill.

· It is proposed that the Acquisition will be implemented by way of a takeover offer (as that term is defined under section 974 of the Companies Act 2006) to Baydonhill Shareholders.

· The Offer is conditional upon, amongst other things:

1. FCA approval to the change of ownership of Baydonhill being granted on or before the date falling 60 days after the date of the Offer Document; and

2. valid acceptances being received in respect of such number of Baydonhill Shares which will result in Earthport holding in aggregate not less than 90 per cent. of the total number of Baydonhill Shares.

· In providing financial advice to the Board of Baydonhill, Smith & Williamson has taken into account the Board's commercial assessments. Smith & Williamson is providing the independent financial advice for the purposes of Rule 3 of the City Code and is also acting as financial adviser to the Board of Baydonhill.

· The acquisition of Baydonhill represents a strategic opportunity for Earthport to augment its current foreign exchange services by providing additional capabilities and expertise to existing clients. In addition, the Acquisition should generate cost savings, primarily through the pooling of shared resources and assets. Earthport intends to retain Baydonhill's existing operating structure, which together with Baydonhill's management and staff have contributed to Baydonhill's success to date, and which Earthport would anticipate playing an important role in the development of the Enlarged Group. Accordingly, the Baydonhill business will operate on a commercially independent basis.

· Earthport has received irrevocable undertakings from those members of the Board of Baydonhill who hold interests in Baydonhill Shares (in respect of themselves and, where relevant, their spouse, civil partner, de facto partner or similar) to accept the Earn-out Offer or procure acceptance of the Earn-out Offer in respect of their entire beneficial holdings which total 2,533,777 Baydonhill Shares in aggregate representing approximately 4.38 per cent. of Baydonhill's issued share capital as at the date of this announcement.

· In addition, Earthport has also received irrevocable undertakings from other Baydonhill Shareholders, including Baydonhill's largest shareholder, Ekwienox FX Limited, to accept the Offer in respect of their entire beneficial holdings of 46,792,796 Baydonhill Shares representing approximately 80.91 per cent. of Baydonhill's issued share capital as at the date of this announcement. These undertakings commit the relevant Baydonhill Shareholders to accept the Earn-out Offer in respect of their Baydonhill Shares, except in the case of Brian Neil, who will accept the Earn-out Offer in respect of 441,904 Baydonhill Shares, and who will accept the Cash Offer in respect of 269,097 Baydonhill Shares.

· Earthport has also received irrevocable undertakings from the holders of the Baydonhill In the Money Options to exercise their Baydonhill In the Money Options before Closing and to elect to accept the Cash Offer in respect of their resulting beneficial holdings of 500,000 Baydonhill Shares representing approximately 0.86 per cent. of Baydonhill's issued share capital, as enlarged by the exercise of the In the Money Options, as at the date of this announcement.

· In aggregate, therefore, Earthport has received irrevocable undertakings to accept the Offer or procure acceptance of the Offer in respect of 49,326,573 Baydonhill Shares, representing 85.29 per cent. of the share capital of Baydonhill in issue as at the date of this announcement. Including the exercise of In the Money Options, Earthport has received irrevocable undertakings to accept the Offer or procure acceptance of the Offer in respect of a total of 49,826,573 Baydonhill Shares, representing 85.41 per cent. of the issued share capital of Baydonhill, as enlarged by the In the Money Options as at the date of this announcement. Further details of these irrevocable undertakings are set out in Appendix IV to this announcement.

· The Acquisition will be subject, amongst other things, to the satisfaction or waiver of the Conditions set out in Appendix I to this announcement and in the Offer Document. Further details of the Offer will be set out in the Offer Document which will be posted to Baydonhill Shareholders in due course.

· Hank Uberoi, Executive Director of Earthport plc, commented: "We are very pleased to announce the acquisition of Baydonhill, a firm that we have worked with for several years. Baydonhill's product offering and expertise are an ideal fit with Earthport's strategy to provide a comprehensive, white-labeled, cross-border payment service to clients globally. Baydonhill's foreign exchange capabilities will increase and enhance our range of international payment services for the benefit of our clients across our network of over 50 countries. The combined business is expected to generate mutually beneficial revenue synergies."

· Commenting on the decision by the Board of Baydonhill to recommend the Acquisition, Wayne Mitchell, the Chief Executive Officer of Baydonhill said: "The transaction provides Baydonhill with a platform to expand its current product offering and accelerate its growth by providing additional services to new and existing Earthport clients. It will also provide Baydonhill with the strategic opportunities to enter new markets utilizing Earthport's existing global network. It is a very exciting opportunity for Baydonhill with the complementary activities of Earthport and we look forward to a bright future."

This summary should be read in conjunction with the following full announcement and the Appendices. The Acquisition will be made on the terms and subject to the Conditions and other terms set out in Appendix I to this announcement and to the full terms and conditions which will be set out in the Offer Document. Illustrative CVR payment calculations are set out in Appendix II to this announcement. Appendix III contains bases and sources of certain information contained in this announcement. Details of irrevocable undertakings received by Earthport are set out in Appendix IV to this announcement. Certain terms used in this summary and the full announcement are defined in Appendix V to this announcement.

A copy of this announcement will be available, free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, at Baydonhill's website at www.baydonhillfx.com and at Earthport's website at www.earthport.com by no later than 12 noon (London time) on the Business Day following the date of this announcement. Neither the contents of Baydonhill's website, the contents of Earthport's website, nor the contents of any other website accessible from hyperlinks on either Baydonhill's or Earthport's website, is incorporated into, or forms part of, this announcement.

Enquiries:

Earthport Hank Uberoi / Paul Thomas / Chris Cowlard	+44 (0)20 7220 9700
Charles Stanley Securities (Financial adviser, NOMAD and Broker to Earthport) Mark Taylor	+44 (0)20 7149 6000
Newgate Threadneedle (PR adviser to Earthport) Fiona Conroy / Caroline Evans-Jones / Jasper Randall	+44 (0)20 7653 9850
Baydonhill Julian Kelly	+44 (0)20 7594 0584
Smith & Williamson (Financial adviser to Baydonhill) Azhic Basirov David Jones	+44 (0)20 7131 4000

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise. The Acquisition will be made solely pursuant to the terms of the Offer Document, which will contain the full terms and conditions of the Acquisition. Any decision in respect of, or other response to, the Acquisition should be made only on the basis of the information contained in the Offer Document.

This announcement has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable requirements.

Copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. Unless otherwise permitted by applicable law and regulation the Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

This announcement does not constitute a prospectus or a prospectus equivalent document.

Charles Stanley & Co Limited, trading as Charles Stanley Securities, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Earthport and for no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than Earthport for providing the protections afforded to its clients nor for providing advice in relation to the matters set out in this announcement.

Smith & Williamson Corporate Finance Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Baydonhill and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than Baydonhill for providing the protections afforded to its clients nor for providing advice in relation to the matters set out in this announcement.

Forward-Looking Statements

This announcement contains certain forward-looking statements with respect to Earthport and Baydonhill. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, aim, will, may, would, could or should or other words of similar meaning or the negative thereof. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, financial conditions, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the operations of the Earthport Group or the Baydonhill Group; and (iii) the effects of government regulation on the business of the Earthport Group or the Baydonhill Group.

These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. All subsequent oral or written forward-looking statements attributable to Earthport or Baydonhill or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above.

Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Earthport, Baydonhill or the Enlarged Group following completion of the Acquisition, unless otherwise stated.

Dealing and Opening Position Disclosure Requirements

Under Rule 8.3(a) of the City Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure. Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the City Code). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the City Code, Baydonhill confirms that it has 57,833,751 Baydonhill Shares in issue. Baydonhill has a trading facility with BritDAQ. ISIN: GB00317619.

In accordance with Rule 2.10 of the City Code, Earthport confirms that it has 385,283,294 Earthport Shares in issue and admitted to trading on AIM, a market of the London Stock Exchange under ISIN: GB00B0DFPF10.

18 September 2013

RECOMMENDED CASH OFFER

for

BAYDONHILL PLC

EARTHPORT PLC

1. Introduction

The Board of Baydonhill and the Board of Earthport are pleased to announce that they have reached agreement on the terms of a unanimously recommended cash offer, to be made by Earthport for the entire issued and to be issued share capital of Baydonhill.

2. The Acquisition

Under the terms of the Offer, which will be subject to the Conditions and other terms set out in Appendix I to this announcement and to be set out in the Offer Document, Baydonhill Shareholders will be entitled to elect to either receive:

Under the terms of the Cash Offer:

for each Baydonhill Share: 11 pence in cash; or

Alternatively under the terms of the Earn-out Offer:

for each Baydonhill Share: 4.80 pence in cash

and

one contingent value right (a "CVR")

· Each CVR will entitle Baydonhill Shareholders to receive up to a further maximum of 0.281 Earthport Shares and 2.61 pence in Loan Notes (subject to applicable securities laws), subject to and in accordance with the terms and conditions of the CVR.

· It is intended that the Acquisition will be implemented by way of a takeover offer (as that term is defined under section 974 of the Companies Act 2006).

The Offer is conditional upon, amongst other things:

1. FCA approval to the change of ownership of Baydonhill being granted on or before the date falling 60 days after the date of the Offer Document; and

3. The Cash Offer

The Cash Offer values Baydonhill at approximately £6.42 million on the basis of a fully diluted share capital of 58,333,751 Baydonhill Shares. The Cash Offer represents a cash premium of approximately:

o 266.7 per cent. to 3.0 pence per Baydonhill Share, on 13 August 2013 being the date of the latest trade on the BritDAQ facility;

o 388.9 per cent. to 2.25 pence per Baydonhill Share on 25 October 2012 (being the closing market price on the last Business Day prior to the cancellation of Baydonhill's trading on AIM).

The Baydonhill Shares will be acquired pursuant to the Offer fully paid and free from all liens, charges, equitable interests, encumbrances and rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto.

4. Earn-out Offer

Pursuant to the terms of the Acquisition, Baydonhill Shareholders may elect to receive the Earn-out Offer, which will entitle them to receive 4.80 pence in cash and one CVR for each Baydonhill Share that they hold.

Based on the average middle market closing price of an Earthport Share of 21.24 pence on the 10 trading days prior to the date of this announcement and subject to the terms of the CVR Deed Poll, each CVR will provide a CVR Holder with a contingent right to receive a minimum of 0.097 Earthport Shares and up to an additional maximum of 2.61 pence in Loan Notes and an additional maximum of 0.184 Earthport Shares (subject to applicable securities laws), depending on the financial performance of Baydonhill over the period 1 July 2013 to 30 June 2016 (the CVR Term).

The maximum payment under the Earn-out Offer will be £1.52 million in Loan Notes and £3.48 million in Earthport Shares, based on the average middle market closing price of an Earthport Share on the 10 trading days prior to the date of this announcement being 21.24 pence (subject to applicable securities laws and pro-rated in each case based on the acceptance of the Earn-out Offer) and depending on the financial performance of Baydonhill over the CVR Term.

Subject to the terms of the CVR Deed Poll, the minimum payment under the Earn-out Offer will provide a CVR Holder with a right to receive a minimum of 0.097 Earthport Shares (subject to applicable securities laws) over the CVR Term. The minimum payment under the Earnout Offer will be £1.2 million (pro rated based on the acceptance of the Earn-out Offer), payable in Earthport Shares at an issue price of 21.24 pence per Earthport Share.

The CVR is a complex instrument and a number of factors will determine the actual amount paid to Baydonhill Shareholders by way of the CVRs, full details of which will be set out in the Offer Document.

The CVRs will be payable on the first to occur of one of the following four dates (each a Payment Date):

· within 20 Business Days of the approval of Baydonhill's audited accounts for the year ending 30 June 2016, (such approval date being no later than 31 December 2016) or if the amount payable under the CVRs on such date is disputed, within 10 Business Days following the agreement or determination of the dispute in accordance with the CVR Deed Poll (the Final Payment Date); or

· on any date prior to the Final Payment Date, as notified by Earthport to the CVR Committee in accordance with the terms of the CVR Deed Poll, or if the amount payable under the CVRs on such date is disputed, within 10 Business Days following the agreement or determination of the dispute in accordance with the CVR Deed Poll (the Early Payment Date); or

· if an offer is made for the entire issued share capital of Earthport (Change of Control Offer), immediately before the time that the Change of Control becomes effective (the Change of Control Payment Date); or

· immediately on the occurrence of a specified event of default (each an Event of Default), namely if (i) Earthport fails to comply with its financial obligations under the CVR Deed Poll in relation to the CVR Committee Costs or the separate escrow bank account to be opened by Earthport in accordance with the terms of the CVR Deed Poll (Escrow Account), and such failure is not remedied following service of a notice requiring remedy by the CVR Committee; or (ii) there is a winding up or similar event affecting Earthport or a member of the Earthport Group; or (iii) Earthport ceases to carry on its business as carried on at the date of the CVR Deed Poll or a substantial part thereof (the Event of Default Payment Date).

Each CVR will provide a CVR Holder with a contingent right to receive a minimum of 0.097 Earthport Shares and up to an additional maximum of 2.61 pence in Loan Notes and an additional maximum of 0.184 Earthport Shares (subject to applicable securities laws) at some point prior to 20 Business Days following the approval of Baydonhill's audited accounts for the period from 1 July 2013 and ending on 30 June 2016 (the CVR Term) and subject to an agreement procedure as detailed in the CVR Deed Poll. The Earthport Shares will be issued an issue price of 21.24 pence per Earthport Share (being the average middle market closing price of an Earthport Share on the ten trading days prior to the date of this announcement). The amount payable will depend on the Payment Date and will be dependent on the achievement of targets for Baydonhill's free accumulated cash flow, subject to certain adjustments, as stated in Baydonhill's audited accounts in each of the three financial years during the CVR Term.

CVRs payable on the Final Payment Date

If Baydonhill's adjusted free cash flow is equal to or greater than £3.55 million in the CVR Term, a CVR Holder will be entitled to receive 2.61 pence in Loan Notes and 0.281 Earthport Shares, for each CVR that they hold.

If Baydonhill's adjusted free cash flow is less than £3.55 million but greater than £2.03 million in the CVR Term, a CVR Holder will be entitled to receive a minimum payment of 0.097 Earthport Shares plus additional CVR Entitlements up to an additional maximum of 2.61 pence in Loan Notes and an additional maximum of 0.184 Earthport Shares for each CVR that they hold, depending on the adjusted free cash flow of Baydonhill during the CVR Term.

If Baydonhill's adjusted free cash flow is less than £2.03 million, a CVR Holder will be entitled to receive 0.097 Earthport Shares, for each CVR that they hold.

Illustrative examples of how the formula would be applied to determine the amount of Loan Notes and Earthport Shares to be issued to a CVR Holder, on the basis of the assumptions described therein, are set out in Appendix II of this announcement.

CVRs payable on the Early Payment Date

On an Early Payment Date one year prior to the end of the CVR Term, a CVR Holder will be entitled to receive 2.59 pence in Loan Notes and 0.280 Earthport Shares, for each CVR that they hold, representing the maximum amount payable under the CVR, discounted at an annual rate of 0.5 per cent. over the remaining CVR Term. On an Early Payment Date two years prior to the end of the CVR Term, for each CVR, a CVR Holder will be entitled to receive 2.57 pence in Loan Notes and 0.278 Earthport Shares, for each CVR representing the maximum amount payable under the CVR that they hold discounted at an annual rate of 0.5 per cent. over the remaining CVR Term.

CVRs payable on the Change of Control Payment Date

The CVR payable on a Change of Control Payment Date will be calculated on the same basis as the CVR Entitlement at the end of the CVR Term outlined above except the Adjusted Free Cash Flow shall be calculated by reference to historic performance using the most recently available management accounts for Baydonhill approved by the board of directors of Baydonhill and the forecasts approved by the board of directors of Baydonhill (adjusted, in the absence of agreement between Earthport and the CVR Committee, by an independent expert, to take into account an end of June financial period) or such other forecasts as are agreed between Earthport and the CVR Committee in relation to any part of the CVR Term for which such management accounts are not available or which is subsequent to the date of the Change of Control and applying a multiplier which is equivalent to the aggregate percentage of the adjusted free cash flow forecast achieved by Baydonhill for the period commencing 1 April 2013 for which management accounts are available.

CVRs payable on an Event of Default Payment Date

The CVR Entitlement payable on an Event of Default Payment Date will be calculated on the same basis as a CVR Entitlement payable on a Change of Control Payment Date, but on a pro-rata basis calculated by reference to the amount of the CVR Term which has expired at the date of occurrence of the relevant Event of Default.

Any Loan Notes payable on an Event of Default shall, if not actually issued by Earthport immediately on the occurrence of the Event of Default, be deemed to have been issued immediately before the Event of Default. Any amount held in the Escrow Account on the occurrence of an Event of Default shall be allocated to and used to satisfy or part satisfy the Loan Notes and CVR Entitlement.

For these purposes:

Adjusted Free Cash Flow means the cumulative, free cash flow of Baydonhill from its activities for the CVR term stated in accordance with Baydonhill's accounting policies under IFRS and as agreed in accordance with the terms of the CVR Deed Poll, adjusted for following items: (i) by adding (a) the amount of any repayments of debt and/or interest by Baydonhill during the CVR Term in relation to the loan from Wallich & Matthes Holding B.V. (a group company of Ekwienox FX Limited) to Baydonhill and (b) the outstanding intercompany loan account from Baydonhill to Ekwienox FX Limited or any member of its group as at 30 June 2013, including the net of any sales and purchase ledger, the net amount of such intercompany loan (including any accrued interest) being £133,000; (ii) by subtracting half of the CVR Committee Costs up to £100,000 and any CVR Committee Costs in excess of £1o0,000; (iii) to the extent not excluded in the calculation of free cash flow of Baydonhill, by adding the amount of any costs in relation to any management incentive scheme implemented by Baydonhill in connection with the Offer and the amount of any IFRS non-cash fair value adjustments; (iv) to the extent not excluded in the calculation of the free cash flow, by adding the amount of any professional costs incurred by Baydonhill in relation to the Offer in excess of £100,000 (including irrecoverable VAT) and to the extent included in the calculation of FCF deducting the amount of such costs up to £100,000 (including irrecoverable VAT); (v) by deducting, to the extent included in the calculation of the free cashflow of Baydonhill, any subscription monies received by Baydonhill on the exercise of any Baydonhill Share Options granted before the date of the CVR Deed Poll; and (vi) by making such other adjustments as are agreed between Earthport and the CVR Committee from time to time. Further details of the free cash flow and Adjusted Free Cash Flow will be contained in the Offer Document.

A committee comprising Arthur Hughes and Eric Peacock will be appointed by Earthport (CVR Committee) in accordance with the terms of the CVR Deed Poll having the following functions (i) reviewing the performance by Earthport of its obligations under the CVR Deed Poll; (ii) consulting with the CVR Holders at its discretion; and performing the functions set out in the CVR Deed Poll relating to determination and administration of the CVR Entitlements.

CVR Committee Costs means the costs and expenses of the CVR Committee carrying out its functions pursuant to the CVR Deed Poll, including any irrecoverable VAT.

Following approval by the board of Baydonhill of the audited accounts for the years ending 30 June 2014, Earthport will pay one third of the funds expected to be required to satisfy the CVR Entitlement that would be payable in Loan Notes on the Final Payment date for the year ending 30 June 2014 in a separate escrow bank account (Escrow Account). Following approval by the board of Baydonhill of the audited accounts for the year ending 30 June 2015, Earthport will pay two thirds of the funds expected to be required to satisfy the CVR payment that would be payable in Loan Notes on the Final Payment date for the year ending 30 June 2015 into the Escrow Account. Following approval by the board of Baydonhill of the audited accounts for the year ending 30 June 2016, the CVR Entitlement payable in Loan Notes shall be determined and Earthport shall pay such amount into the Escrow Account, or such amount shall be paid from the Escrow Account to Earthport, as will result in the amount standing to the credit of the Escrow Account to be equal to the amount of the Loan Notes to be issued to satisfy the CVR Entitlements. The amount standing in the Escrow Account at the Final Payment Date will be used to satisfy payment of the Loan Notes.

Actual payments will depend entirely upon free cash flow generated by Baydonhill. There will be no interest conferred by a CVR in the economic activities of the combined business generally.

The CVRs will be an unsecured obligation of Earthport pursuant to the CVR Deed Poll.

Charles Stanley has not been required to confirm, and has not confirmed, that resources are available to Earthport to satisfy payments under the CVRs and shareholders will be at risk if, for any reason, Earthport is not in a position to satisfy these payments.

Each CVR shall not have a nominal value. The CVRs will be non-transferable other than to certain permitted transferees and no application will be made for the CVRs to be listed or dealt in on any stock exchange. The CVRs will be governed by English law and will not be represented by any certificate or other evidence of title. No interest is payable in respect of the CVRs, and the consideration represented by the CVRs will only be payable in certain circumstances described herein and in the Offer Document.

The maximum number of Earthport Shares that may be issued pursuant to the CVR's, on the basis that all Baydonhill Shareholders elected for the Earn-out Offer is 16,384,180 Earthport Shares, which will represent approximately 4.08 per cent. of the issued share capital of Earthport as enlarged by the Acquisition. The Earthport Shares will rank equally in all respects with the existing Earthport Shares and will be entitled to receive any dividends and/or other distributions declared or paid by Earthport in respect of Earthport Shares with a record date on or after their date of issue. Fractions of Earthport Shares will not be issued to Baydonhill Shareholders pursuant to the CVRs and the number of Earthport Shares due pursuant to CVR Entitlements will be rounded down to the nearest whole number.

If the laws of any relevant jurisdiction make it illegal for Baydonhill Shareholders to hold CVRs or would require any qualification of the CVRs under any applicable laws or regulations, they may not be entitled to the CVRs or the amounts which may be payable thereon.

Further details on the CVRs will be contained in the Offer Document.

Loan Notes

The Loan Notes will be governed by English law and will be issued by Earthport, credited as fully paid, in integral multiples of one pound nominal value.

The Loan Notes will be redeemed one day and six months from the date of issue.

The Loan Notes are freely transferable. No application will be made for them to be listed or dealt in on any stock exchange. The Loan Notes will not be qualifying corporate bonds for UK capital gains tax purposes.

The Loan Notes will bear interest from the date of issue to the relevant holder of the Loan Notes at a rate of one per cent. per annum. Interest will be payable on the date of repayment of the Loan Notes.

The Loan Notes will be issued in accordance with the terms of the CVR Deed Poll.

Further details of the Loan Notes will be contained in the Offer Document.

5. Background to and reasons for the Acquisition

Earthport is a regulated, global financial services organisation providing infrastructure and services that enable its clients to execute cross-border transactions in a cost-effective and transparent manner.

Earthport has the capability to provide its services to financial institutions, aggregators, money service businesses and FX houses in over 50 territories.

Earthport brings together a platform specifically developed to process high-volume, low monetary value transactions; a world-wide payment network; and a team with deep domain expertise that together provide unique transaction processing services to clients on a white-label basis. Based on this value proposition, Earthport has built a significant installed client base.

On these strengths, Earthport's objective is to increase its product set to better leverage its assets and serve its clients.

To date, the company has primarily operated core payment services, with additional payment-related services, such as foreign exchange.

Over the past several years, Earthport has provided transaction-processing services to Baydonhill. Through this relationship, Earthport has come to appreciate Baydonhill's expertise and capabilities, as well as the potential synergies that the Acquisition could generate.

The Acquisition will enable Earthport to increase its foreign exchange capabilities and expertise to better serve its customers and improve its margins and product offering to existing and new customers. The Baydonhill business will benefit from Earthport's processing capabilities, trading volume and global footprint. In addition to such revenue and gross-margin synergies, the transaction should generate cost savings, primarily through the pooling of shared resourcesand assets.

6. Background to and reasons for the recommendation

Following the cancellation of the admission of Baydonhill Shares to trading on AIM in October last year, Baydonhill received a number of approaches from potential acquirers. Preliminary discussions were held with a number of such parties and these have led ultimately to the Offer being made by Earthport. The Baydonhill Board believes that the businesses of Baydonhill and Earthport complement each other well and that the Enlarged Group will have significant opportunities to achieve synergies.

Since Baydonhill's de-listing from AIM, there has been only very limited trading in the Baydonhill Shares and this has meant that there has been only limited opportunity for Baydonhill Shareholders to realise their investment in the Company.

The Cash Offer represents an opportunity for Baydonhill Shareholders to achieve an immediate cash exit for their shareholding at a significant premium to the Company's recent share price and at a higher level than the closing share price at any point since July 2011.

On the basis of these and such other factors as the Baydonhill Directors considered relevant, they have concluded that the Cash Offer is fair and reasonable.

The Earn-out Offer enables electing Baydonhill Shareholders to realise cash for a portion of their investment in Baydonhill, but to retain an exposure to the Enlarged Group through the CVR.

The Earn-out Offer may lead to holders of Baydonhill Shares who accept it, receiving, in the long term, either more or less than they would have done pursuant to the Cash Offer, primarily dependant on the financial performance of Baydonhill and Earthport's share price.

Ekwienox FX Limited, Baydonhill's major shareholder holding 78.12 per cent. of the Company's issued shares, has irrevocably undertaken to accept the Earn-out Offer.

Baydonhill Shareholders' attention is drawn to the summary of the CVRs and further information about the Earn-out Offer which will be set out in the Offer Document.

The Baydonhill Board believes that, in reaching a decision whether to elect for the Earn-out Offer, Baydonhill Ordinary Shareholders should take into account, amongst other things, the following factors:

· the CVRs are not generally capable of transfer and will not be admitted to the Official List, AIM or to trading on any other market;

· any payments under the CVRs may not be received until 20 Business Days following the approval of Baydonhill's audited accounts for the period ending 30 June 2016;

· the value of the CVRs is directly linked to the future financial performance of Baydonhill and to Earthport's share price;

· the Loan Notes payable under the CVR will not be admitted to the Official List, AIM or to trading on any other market and are not guaranteed or secured and there can be no certainty that they will be redeemed in accordance with their terms;

· the CVR is a complex instrument and a number of factors will determine the actual amount to be paid to Baydonhill Shareholders by way of the CVRs;

· the minimum value of the Earn-out Offer (based on Earthport's current share price) is significantly lower than the Cash Offer; and

· the risk factors relating to the CVRs will be set out in the Offer Document.

In view of the factors set out above, the Baydonhill Directors have been unable to form a view as to whether the Earn-out Offer is fair and reasonable.

7. Recommendation

Due to the significant level of uncertainty concerning the value of the CVRs, the Baydonhill Board, which has been so advised by Smith & Williamson, has been unable to form a view as to whether the Earn-out Offer is fair and reasonable and accordingly is not in a position to make a recommendation as to whether or not to accept the Earn-out Offer. The Baydonhill Board believes that, in deciding whether or not to accept the Earn-out Offer, Baydonhill Shareholders should consider carefully the factors set out in this announcement and in the Offer Document.

In providing its advice to the Board of Baydonhill, Smith & Williamson has taken into account the Board's commercial assessments. Smith & Williamson is providing the independent financial advice for the purposes of Rule 3 of the City Code and is also acting as financial adviser to the Board of Baydonhill.

The agreement between Earthport and Baydonhill of the terms of the Acquisition has been reached in the spirit of a merger of two complementary businesses whose management teams will work together towards achieving the growth potential of the Enlarged Group. Therefore, notwithstanding that the Baydonhill Directors have recommended that Baydonhill Shareholders accept the Cash Offer and have made no recommendation in relation to the Earn-out Offer, the Baydonhill Directors have irrevocably agreed to accept the Earn-out Offer in respect of their entire beneficial holdings of Baydonhill Shares including Baydonhill Shares resulting from any exercise of their rights to subscribe for or acquire such shares (amounting to, in aggregate, 2,533,777 Baydonhill Shares, representing approximately 4.38 per cent. of the existing issued share capital of Baydonhill). This is in order to enhance the alignment of their interests with Earthport through retaining an equity interest in the Enlarged Group following completion of the Acquisition.

Each Baydonhill Shareholder should consider their own position carefully, and, if in any doubt, should consult their own professional advisers.

8. Irrevocable undertakings

Earthport has received an irrevocable undertaking from Wayne Mitchell, a member of the Board of Baydonhill who holds interests in the Baydonhill Shares (in respect of himself and, where relevant, his spouse, civil partner, de facto partner or similar) to accept the Earn-0ut Offer or procure acceptance of the Earn-out Offer in respect of his entire beneficial holding which totals 2,533,777 Baydonhill Shares in aggregate representing approximately 4.38 per cent. of Baydonhill's issued share capital as at the date of this announcement.

In addition, Earthport has received irrevocable undertakings from other Baydonhill Shareholders, including Baydonhill's largest shareholder, Ekwienox FX Limited, to accept the Offer in respect of their entire beneficial holdings of 46,792,796 Baydonhill Shares representing approximately 80.91 per cent. of Baydonhill's issued share capital as at the date of this announcement. These undertakings commit the relevant Baydonhill Shareholders to accept the Earn-out Offer in respect of their Baydonhill Shares, except in the case of Brian Neil, who will accept the Earn-out Offer in respect of 441,904 Baydonhill Shares, and who will accept the Cash Offer in respect of 269,097 Baydonhill Shares.

Earthport has also received irrevocable undertakings from the holders of the Baydonhill In the Money Options to exercise their Baydonhill In the Money Options before Closing and to elect to accept the Cash Offer in respect of their resulting beneficial holdings of 500,000 Baydonhill Shares representing approximately 0.86 per cent. of Baydonhill's issued share capital, as enlarged by the exercise of the In the Money Options, as at the date of this announcement.

In aggregate, therefore, Earthport has received irrevocable undertakings to accept the Offer or procure acceptance of the Offer in respect of 49,326,573 Baydonhill Shares, representing 85.29 per cent. of the share capital of Baydonhill in issue as at the date of this announcement. Including the exercise of In the Money Options, Earthport has received irrevocable undertakings to accept the Offer or procure acceptance of the Offer in respect of a total of 49,826,573 Baydonhill Shares, representing 85.41 per cent. of the issued share capital of Baydonhill, as enlarged by the In the Money Options as at the date of this announcement. Further details of these irrevocable undertakings are set out in Appendix IV to this announcement.

These irrevocable undertakings will lapse if the Offer Document is not despatched on or before 8 October 2013 (or such other period not exceeding six weeks that the Panel may agree) or if the Offer lapses or is withdrawn.

Further details of these irrevocable undertakings are set out in Appendix IV.

Copies of the irrevocable undertakings will be on display on Baydonhill's and Earthport's websites (www.baydonhillfx.com and www.earthport.com respectively) by no later than 12 noon (London time) on the Business Day following the date of this announcement.

9. Information relating to Earthport

Earthport, a regulated global financial services organisation, specialises in the provision of a white label cross-border payments service.

Through its innovative payments framework, specifically designed for high volumes of low value cross-border payments, Earthport provides a cost-effective and transparent service for secure international payments. Earthport's clients include banks, foreign exchange businesses, money transfer organisations, payment aggregators and e-commerce businesses. Through Earthport's well-established payments infrastructure, clients can clear and settle payments directly to banked beneficiaries in over 50 countries.

The company was founded in 1997 and is headquartered in London and is quoted on the AIM market of the London Stock Exchange. It operates globally with additional regional offices in Dubai and New York. Earthport plc is authorised and regulated by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services and are a participant in SWIFT.

Transaction volumes for the financial year ended 30 June 2012 were up by 53 per cent. compared to the prior year. Total revenue for the year ended 30 June 2012 increased 21 per cent. to £3.0 million (2011: £2.5 million). Gross profit increased 22 per cent. to £2.3 million (2011: £1.9 million). Loss before taxation was £9.6 million (2011: £7.5 million).

Revenue for the six months ended 31 December 2012, increased by 32 per cent. to £1.83 million and gross profit for the period was £1.42 million. The number of transactions processed increased by 72 per cent. compared to the prior period. Earthport's loss before and after taxation fell by 13 per cent. to £4.5 million (H1 2012: £5.2 million).

10. Information relating to Baydonhill

Baydonhill provides foreign currency exchange related products and the provision of cross border payment services to corporate and retail clients. Baydonhill has developed international payment solutions that combines state-of-the-art technology and industry expertise offering an integrated service tailored to the specific requirements of its clients in order that they can implement appropriate overseas payment strategies.

For the year ended 31 March 2013, Baydonhill reported turnover of £1,249 million, gross profit of £4.7 million and a profit before taxation of £0.033 million. Net assets at 31 March 2013 were £1.014 million.

11. ASPone Agreement

Pursuant to a letter of variation dated 11 September 2013, ASPone will, subject to Closing, amend the terms on which it provides its foreign exchange payment system platform to Baydonhill under an agreement dated 27 March 2007 and will grant Baydonhill a non-exclusive, irrevocable, perpetual licence to use the foreign exchange payment system platform. ASPone will also provide Baydonhill with support and consultancy services in relation to the platform. ASPone will be prevented from providing the platform to Baydonhill's competitors for a period of six years from the date of the letter of variation. The ASPone agreement can be terminated by either party on six months' notice or by either party with immediate effect in the case of a material breach of the agreement which is not remedied, the winding up of the other party, or the other party ceasing to carry on business.

12. Financing of the Acquisition

The cash consideration payable by Earthport under the Cash Offer, and the cash element of the Earn-out Offer, will be funded from cash on the balance sheet of the Earthport Group. Charles Stanley is satisfied that resources are available to Earthport sufficient to satisfy in full the immediate cash consideration payable under the Cash Offer and to satisfy the initial cash consideration payable under the Earn-out Offer.

13. Management, employees and intentions regarding the Baydonhill Group

Earthport has high regard for the skills, capabilities and experience of the existing management and employees of Baydonhill. Earthport confirms their existing rights, including pension rights, will be fully safeguarded on completion of the Acquisition observed.

Earthport intends to put in place a £0.5 million management incentive and bonus scheme in Earthport Shares and cash for key Baydonhill staff following completion of the Acquisition. No discussions have taken place at this stage regarding the terms of this scheme or on the basis on which it will be allocated.

Upon completion of the Acquisition it is anticipated that Geoff Mayhill and Eric Peacock will resign from the Board of Baydonhill. It is intended that Arthur Hughes and Eric Peacock will be appointed as members of the CVR Committee.

Earthport attaches great importance to Baydonhill's operations, which have contributed to Baydonhill's success to date, and which Earthport would anticipate playing an important role in the development of the Enlarged Group. Accordingly, it is Earthport's intention to retain Baydonhill's existing operating structure.

Baydonhill's lease on its property and main place of business at 160 Brompton Road, London, expires on 30 September 2013. Baydonhill and Earthport have entered into a sub-lease dated 9 September 2013 in relation to part of Earthport's office premises at 1st Floor, 21 New Street, London EC2M 4HR. The lease is for a term of 9 months and does not benefit from security of tenure. The rent payable by Baydonhill to Earthport under the sub-lease is £207,138 per annum, which is inclusive of service charge and rates.

Further details on this agreement will be disclosed with the Offer Document.

14. Baydonhill Option Schemes

At the date of this announcement there are 1,385,000 Baydonhill Share Options outstanding which entitle the holders of such options to subscribe for Baydonhill Shares at a range of exercise prices between 5.75 pence and 55 pence.

At the date of this announcement there are 500,000 Baydonhill Share Options outstanding which are currently exercisable and which entitle the holders of such options to subscribe for Baydonhill Shares at an exercise price of 5.75 pence, meaning that they will be in the money based on the Cash Offer. The holders of the Baydonhill In the Money Options have given undertakings to Earthport to exercise the Baydonhill In the Money Options immediately before closing and to elect to accept the Cash Offer.

There are 885,000 Baydonhill Share Options outstanding that which entitle the holders of such options to subscribe for Baydonhill Shares at an exercise price of between 18 pence and 55 pence, meaning that they will be out-of-the-money based on the Cash Offer. Accordingly, it is not expected that the Baydonhill Out-of-the-Money Options will be exercised prior to completion of the Acquisition. Earthport has therefore agreed with the Panel that no equivalent offer will be made to the holders of such Baydonhill Share Options. Holders of Baydonhill Share Options will receive further details on the effect of the Acquisition on their outstanding options in separate letters, which will be despatched to them in due course.

The Offer extends to any Baydonhill Shares which are unconditionally allotted or issued whilst the Offer remains open for acceptance (or by such earlier time and/or date as Earthport may determine) as a result of the exercise of Baydonhill Share Options.

15. Disclosure of interests in Baydonhill Shares

Earthport confirms that it is making on the date of this announcement an Opening Position Disclosure, setting out the details required to be disclosed by it under Rule 8.1(a) of the City Code. The Opening Position Disclosure does not include all relevant details in respect of Earthport's concert parties and Earthport confirms that a further disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the City Code will be made as soon as possible, if required.

As at the close of business on 10 September 2013, being the last practicable date prior to the publication of this announcement, save for: (i) the disclosures in this paragraph 15; and (ii) the irrevocable undertakings referred to in paragraph 8 above, neither Earthport nor any of its directors nor, so far as Earthport and the Board of Earthport are aware, any person acting, or deemed to be acting, in concert with Earthport:

· had an interest in, or right to subscribe for, relevant securities of Baydonhill;

· had any short position in (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery of, relevant securities of Baydonhill;

· had procured an irrevocable commitment or letter of intent to accept the terms of the Acquisition in respect of relevant securities of Baydonhill; or

· had borrowed or lent any Baydonhill Shares.

Furthermore, save for the irrevocable undertakings described in paragraph 8 above, no arrangement exists between Earthport or Baydonhill or an associate of Earthport or Baydonhill in relation to Baydonhill Shares. For these purposes, an arrangement includes any indemnity or option arrangement, any agreement or any understanding, formal or informal, of whatever nature, relating to Baydonhill Shares which may be an inducement to deal or refrain from dealing in such securities.

16. BritDAQ trading facility and re-registration

It is intended that Baydonhill's trading facility with BritDAQ will be terminated with effect from 18 September 2013.

As soon as practicable after Closing, it is intended that Baydonhill will be re-registered as a private limited company under the relevant provisions of the Companies Act 2006.

17. Overseas Baydonhill Shareholders

The distribution of this announcement to, and the availability of the Offer to, persons who are not resident in the United Kingdom may be affected by the laws of their relevant jurisdiction. Such persons should inform themselves of and observe any applicable legal or regulatory requirements of their jurisdiction.

Further details in relation to Overseas Baydonhill Shareholders will be contained in the Offer Document.

18. Regulatory conditions

The Acquisition will be subject to the conditions and further terms set out below and in Appendix I and the full terms and conditions which will be set out in the Offer Document. Prior approval of the Acquisition will be required by the Financial Conduct Authority (FCA) in the UK. The Acquisition will not become wholly unconditional until this approval is received from the FCA.

19. Documents on display

Copies of the irrevocable undertakings referred to in paragraph 8 above and summarised in Appendix IV to this announcement will, by no later than 12 noon (London time) on the Business Day following the date of this announcement, be made available on Earthport's website at www.earthport.com and Baydonhill's website at www. baydonhillfx.com until Closing.

20. General

The Acquisition will be subject to the Conditions and other terms set out in this announcement and to the full terms and conditions which will be set out in the Offer Document. Appendix I to this announcement contains a summary of the principal terms and conditions. Illustrative CVR payment calculations are set out in Appendix II to this announcement. Appendix III to this announcement contains bases and sources of certain information contained in this announcement. Details of irrevocable undertakings received by Earthport are set out in Appendix IV to this announcement. Certain terms used in this announcement are defined in Appendix V to this announcement.

A copy of this announcement will be available, free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, at Baydonhill's website at www. www.baydonhillfx.com and at Earthport's website at www.earthport.com by no later than 12 noon (London time) on the Business Day following the date of this announcement. Neither the contents of Baydonhill's website, the contents of Earthport's website, nor the content of any other website accessible from hyperlinks on either Baydonhill's or Earthport's website, is incorporated into or forms part of, this announcement.

Baydonhill Shareholders and persons with information rights should note that Earthport may request details of addresses, electronic addresses and other information provided to Baydonhill for the receipt of documents, announcements and other information in hard copy form or electronic form (as the case may be).

Enquiries:

Earthport Hank Uberoi / Paul Thomas / Chris Cowlard	+44 (0)20 7220 9700
Charles Stanley Securities (Financial adviser, NOMAD and Broker to Earthport) Mark Taylor	+44 (0)20 7149 6000
Newgate Threadneedle (PR adviser to Earthport) Fiona Conroy / Caroline Evans-Jones / Jasper Randall	+44 (0)20 7653 9850
Baydonhill Julian Kelly	+44 (0)20 7594 0584
Smith & Williamson (Financial adviser to Baydonhill) Azhic Basirov David Jones	+44 (0)20 7131 4000

This announcement does not constitute a prospectus or a prospectus equivalent document.

Forward-Looking Statements

Dealing and Opening Position Disclosure Requirements

Rule 2.10 Disclosure

In accordance with Rule 2.10 of the City Code, Baydonhill confirms that it has 57,833,751 Baydonhill Shares in issue. Baydonhill has a trading facility with BritDAQ. ISIN: GB00317619

APPENDIX I

CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER AND THE ACQUISITION

Part A: Conditions of the Offer

The Offer will be conditional upon the following conditions and, accordingly, the necessary actions to make the Acquisition effective will not be taken unless the following conditions (as amended if appropriate) have been satisfied or, where relevant, waived:

(A) valid acceptances being received (and not, where permitted, withdrawn) by 1.00 p.m. on the First Closing Date (or such later time(s) and/or date(s) as Earthport may, in consultation with the Baydonhill Board, decide) in respect of such number of Baydonhill Shares which, together with Baydonhill Shares that Earthport shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, will result in Earthport or any person acting in concert with Earthport holding Baydonhill Shares carrying in aggregate more than 90 per cent. (or such lesser percentage as Earthport may decide provided it is not less than 50.1 per cent.) of the voting rights then normally exercisable at general meetings of Baydonhill (including for this purpose to the extent, if any, any votes attributable to Baydonhill Shares which are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances);

(B) the FCA having:

(i) to the extent necessary, approved or been deemed to have approved, in terms reasonably satisfactory to Earthport, the acquisition by Earthport of control over Baydonhill and any member of the Wider Baydonhill Group which is authorised or regulated by the FCA, either unconditionally or subject to the fulfilment of certain conditions or obligations acceptable to Earthport; or

(ii) notified in writing, to the satisfaction of Earthport, any required consent in accordance with Part XII of FSMA to the proposed acquisition of control over each UK authorised person in the Wider Baydonhill Group by Earthport in the manner contemplated by the Acquisition, such consent being either: (a) unconditional in all respects (save as to the period within which the change of control must occur) or (b) subject to conditions (other than as to timing) which, in the reasonable opinion of Earthport, do not have and are not likely to have a material adverse effect on Earthport, any controller of Earthport or any person in the Wider Baydonhill Group (whether in terms of their actual or prospective liquidity, financial or capital position or the manner in which they conduct their operations or in terms of the ownership of Earthport or otherwise),

in either case on or before the date falling 60 days after the date of the Offer Document.

For the purposes of this condition "control" shall have the meaning given to it in Part XII of FSMA and "controller" shall have the meaning given to it in section 422 of FSMA;

(C) all material notifications, filings and applications having been made, all regulatory and statutory obligations in any relevant jurisdiction having been complied with in each case in respect of the Acquisition, all appropriate waiting and other time periods (including any extensions of such waiting and other time periods) under any applicable legislation or regulations of any relevant jurisdiction having expired, lapsed or been terminated in each case in respect of the Acquisition, the acquisition or proposed acquisition of any shares or other securities in, or control of, Baydonhill or any other member of the Wider Baydonhill Group by any member of the Wider Earthport Group or the carrying on by any member of the Wider Baydonhill Group of its business;

(D) except as Publicly Announced or fairly disclosed in Disclosed Information, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Baydonhill Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or subject, which in each case as a consequence of the Acquisition, the acquisition or proposed acquisition of any shares or other securities in Baydonhill or because of a change in the control or management of Baydonhill, could or might reasonably be expected to result in (in any case, to an extent or in a manner which is material and adverse in the context of the Acquisition or would have a material and adverse effect on the Wider Baydonhill Group as a whole):

(i) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests or business of any member of the Wider Baydonhill Group thereunder, or interests or business of any such member in or with any other person, firm, company or body (or any arrangements to which any such member is a party relating to any such interests or business), being or becoming capable of being terminated or modified or adversely affected or any obligation or liability arising or any action being taken or arising thereunder;

(ii) the rights, liabilities, obligations or interests of any member of the Wider Baydonhill Group under any such agreement, arrangement, licence, permit or instrument or the interests or business of any such member in or with, any person, firm, company or body (or any arrangement or arrangements relating to any such interests or business) being terminated, adversely modified or adversely affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

(ii) any asset owned or used by any member of the Wider Baydonhill Group, or any interest in such asset, being or falling to be disposed of or charged or ceasing to be available to any member of the Wider Baydonhill Group or any right arising under which any such asset or interest could be required to be disposed of or charged or cease to be available to any member of the Wider Baydonhill Group;

(iii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property, assets or interest of any member of the Wider Baydonhill Group or any such mortgage, charge or other security (whenever created, arising or having arisen) becoming enforceable or being capable of being enforced;

(iv) the value of any member of the Wider Baydonhill Group or its financial or trading position or prospects being prejudiced or adversely affected;

(v) any member of the Wider Baydonhill Group ceasing to be able to carry on business under any name which it at present uses;

(vi) the creation of any liability (actual or contingent) by any member of the Wider Baydonhill Group (other than trade creditors or other liabilities incurred in the ordinary course of business);

(vii) any liability of any member of the Wider Baydonhill Group to make any severance, termination, bonus or other payment to any of its directors or other officers;

(viii) any requirement on any member of the Wider Baydonhill Group to acquire, subscribe, pay up or repay any shares or other securities; or

(ix) any monies borrowed by or any other indebtedness (actual or contingent) of, or any grant available to any member of the Wider Baydonhill Group, being or becoming repayable or capable of being declared repayable immediately or prior to its or their stated maturity date or repayment date, or the ability of such member of the Wider Baydonhill Group to borrow monies or incur any indebtedness becoming or being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Baydonhill Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, could reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (x) of this condition (in each case to an extent or in a manner which is material and adverse to in the context of an Acquisition or would have a material and adverse effect on the Wide Baydonhill Group as a whole);

(E) other than in relation to the matters referred to in condition (B) of this Part A, no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, central bank, court, trade agency, association, institution or any other body or person whatsoever in any jurisdiction (each a Third Party) having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or enacted, made or proposed any statute, regulation, decision or order, in each case to an extent which is material in the context of the Wider Baydonhill Group, or having taken any other steps, and there not continuing to be outstanding any statute, regulation or order of any Third Party, in each case which would or might reasonably be expected to (to an extent or in a manner which is material and adverse in the context of the Acquisition):

(i) require, prevent or delay the divestiture, or materially alter the terms of any proposed divestiture by Earthport or any other member of the Wider Earthport Group or by Baydonhill or any other member of the Wider Baydonhill Group of all or any portion of their respective businesses, assets or properties or impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or to own any of their respective assets or properties or any part thereof;

(ii) require, prevent or delay the divestiture by any member of the Wider Earthport Group of any shares or other securities in Baydonhill;

(iii) impose any limitation on, or result in a delay in, the ability of any member of the Wider Earthport Group directly or indirectly to acquire or to hold or to exercise effectively any rights of ownership in respect of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider Baydonhill Group or the Wider Earthport Group or to exercise voting or management control over any such member;

(iv) otherwise materially adversely affect any or all of the business, assets, liabilities, financial or trading position, profits, operational performance or prospects of any member of the Wider Earthport Group or of any member of the Wider Baydonhill Group;

(v) make the Acquisition or its implementation or the acquisition or proposed acquisition by Earthport or any member of the Wider Earthport Group of any shares or other securities in, or control or management of Baydonhill void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, prevent, delay or otherwise interfere with the implementation thereof, or impose additional material adverse conditions or obligations with respect thereto, or otherwise challenge, or interfere with the Acquisition or its implementation;

(vi) require any member of the Wider Earthport Group or the Wider Baydonhill Group to acquire, or to offer to acquire, any shares or other securities (or the equivalent) or interest in any member of the Wider Baydonhill Group or the Wider Earthport Group owned by any third party;

(vii) impose any limitation on the ability of any member of the Wider Earthport Group or the Wider Baydonhill Group to conduct or integrate or co-ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the Wider Earthport Group or the Wider Baydonhill Group; or

(viii) require any member of the Wider Baydonhill Group to relinquish, terminate or amend in any way any contract to which any member of the Wider Baydonhill Group is a party; or

(ix) result in any member of the Wider Baydonhill Group ceasing to be able to carry on business under any name under which it presently does so,

and all applicable waiting and other time periods during which any such Third Party could institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or any other step under the laws of any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any Baydonhill Shares having expired, lapsed or been terminated;

(F) all notifications, notices, filings or applications in connection with the Acquisition other than in relation to the matters referred to in Condition (B) of this Part A that are necessary having been made and all authorisations, orders, grants, consents, clearances, licences, confirmations, permissions and approvals which are necessary (Authorisations), in any jurisdiction, for and in respect of the Acquisition or any aspect of the Acquisition or its financing, or the acquisition or proposed acquisition by any member of the Wider Earthport Group of any shares or other securities in, or control of, Baydonhill by any member of the Wider Earthport Group having been obtained in terms and in a form reasonably satisfactory to Earthport from all appropriate Third Parties and persons or bodies with whom any member of the Wider Baydonhill Group has entered into contractual arrangements, and all such Authorisations together with all authorisations, orders, grants, consents, clearances, licences, confirmations, permissions and approvals (Business Authorisations) necessary or appropriate for any member the Wider Earthport Group to carry on its business remaining in full force and effect (where the absence of such Authorisations or Business Authorisations would be material and adverse in the context of the Acquisition) and all filings necessary for such purpose have been made and there being no notice or intimation of any intention to revoke or not to renew any of the same at the time at which the Acquisition becomes otherwise unconditional and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;

(G) since 31 March 2013 and except as Publicly Announced or fairly disclosed in Disclosed Information, no member of the Wider Baydonhill Group having (in each case, to an extent or in a manner which is material in the context of the Acquisition or would have a material and adverse effect on the Wider Baydonhill Group taken as a whole):

(i) save as between Baydonhill and wholly-owned subsidiaries of Baydonhill or for Baydonhill Shares issues pursuant to the exercise of Baydonhill Share Options, issued, agreed to issue, authorised or proposed the issue of additional shares of any class, or of securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities or redeemed, purchased or repaid any of its own shares or other securities or reduced or made any other change to any part of its share capital;

(ii) other than to another member of the Baydonhill Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

(iii) save for transactions between members of the Baydonhill Group, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition, disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business;

(iv) save for transactions between members of the Baydonhill Group, made or authorised or proposed or announced an intention to propose any change in its loan capital;

(v) issued, authorised or proposed the issue of any debentures or (save in the ordinary course of business or for transactions between members of the Baydonhill Group) incurred or increased any indebtedness or become subject to any liability (actual or contingent);

(vi) implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, scheme, commitment or other transaction or arrangement otherwise than in the ordinary course of business or in respect of the Acquisition;

(vii) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or could be materially restrictive on the businesses of any member of the Wider Baydonhill Group or the Wider Earthport Group or which involves or could involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business and which is material in the context of the Wider Baydonhill Group taken as a whole;

(viii) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings instituted or threatened against it or petition presented or order made for its winding-up (voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(ix) been unable to pay its debts as they fall due or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(x) entered into any contract, transaction or arrangement which would be materially restrictive on the business of any member of the Wider Baydonhill Group or the Wider Earthport Group other than to a nature and extent which is normal in the context of the business concerned;

(xi) waived or compromised any material claim otherwise than in the ordinary course of business;

(xii) entered into any material contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this condition;

(xiii) in respect of the Baydonhill Group, made any alteration to its memorandum or articles of association;

(xiv) except as disclosed in the Disclosed Information proposed, agreed to provide or modified the terms of any employee share scheme or incentive scheme, except for a change in option vesting terms, or other benefit relating to the employment or termination of employment of any person employed by the Wider Baydonhill Group or entered into or changed the terms of any contract with any director or senior executive,

and, for the purposes of this condition, the term Baydonhill Group shall mean Baydonhill and its wholly-owned subsidiaries;

(H) since 31 March 2013 and save as Publicly Announced or fairly disclosed in Disclosed Information, or where not material in the context of the Wider Baydonhill Group taken as a whole:

(i) no material adverse change or deterioration having occurred (or circumstances having arisen which would or might be expected to result in any adverse change or deterioration) in the business, assets, liabilities, financial or trading position or profits, operational performance or prospects of any member of the Wider Baydonhill Group;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Baydonhill Group is or may become a party (whether as a claimant, defendant or otherwise) and no investigation by any Third Party against or in respect of any member of the Wider Baydonhill Group having been instituted, announced, implemented or threatened by or against or remaining outstanding in respect of any member of the Wider Baydonhill Group;

(iii) no enquiry or investigation by, or complaint or reference to, any Third Party having been threatened in writing, announced, implemented or instituted by or against or remaining outstanding against or in respect of any member of the Wider Baydonhill Group;

(iv) no contingent or other material liability in respect of any member of the Wider Baydonhill Group having arisen or become apparent or increased that might reasonably be likely to adversely affect any member of the Wider Baydonhill Group that is material in the context of the Wider Baydonhill Group taken as a whole;

(v) no amendment or termination of any joint venture or partnership to which any member of the Wider Baydonhill Group is a party having been agreed or permitted; and

(vi) no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Baydonhill Group which is necessary for the proper carrying on of its business,

in each case, to an extent or in a manner which is material in the context of the Acquisition and would have a material and adverse effect on the Wider Baydonhill Group, taken as a whole;

(I) except as Publicly Announced or fairly disclosed in Disclosed Information, Earthport not having discovered:

(i) that any financial, business or other information concerning the Wider Baydonhill Group as contained in the information publicly disclosed at any time by or on behalf of any member of the Wider Baydonhill Group, is misleading or contains any misrepresentation of fact or omits to state a fact necessary to make that information not misleading;

(ii) that any member of the Wider Baydonhill Group is subject to any liability (actual or contingent) that has not been Publicly Announced or fairly disclosed in Disclosed Information;

(iii) that any member of the Wider Baydonhill Group, partnership, company or other entity in which any member of the Wider Baydonhill Group has a significant economic interest and which is not a subsidiary undertaking of Baydonhill is subject to any liability (contingent or otherwise) which is not disclosed in the annual report and accounts of Baydonhill for the year ended 31 March 2013; or

(iv) any information which affects the import of any information disclosed in writing at any time by or on behalf of any member of the Wider Baydonhill Group,

in each case, to an extent or in a manner which is material in the context of the Acquisition and would have a material and adverse effect on the Wider Baydonhill Group, taken as a whole; and

(J) except as Publicly Announced or fairly disclosed in Disclosed Information, Earthport not having discovered that:

(i) any past or present member of the Wider Baydonhill Group has failed to comply with any and/or all applicable legislation or regulation, of any jurisdiction with regard to the disposal, spillage, release, discharge, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health or animal health or otherwise relating to environmental matters, or that there has otherwise been any such disposal, spillage, release, discharge, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) any of which disposal, spillage, release, discharge, leak or emission would be likely to give rise to any liability (actual or contingent) on the part of any member of the Wider Baydonhill Group;

(ii) there is, or is likely to be, for that or any other reason whatsoever, any liability (actual or contingent) of any past or present member of the Wider Baydonhill Group to make good, repair, reinstate or clean up any property or any controlled waters now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider Baydonhill Group, under any environmental legislation, regulation, notice, circular or order of any Third Party in any jurisdiction;

(iii) any past or present member of the Wider Baydonhill Group has not complied with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and any laws implementing the same, the UK Bribery Act 2010 and the U.S. Foreign Corrupt Practices Act of 1977; or

(iv) there is, or is likely to be expected to be, or there has been, any:

(a) claim brought against any member of the Wider Baydonhill Group by a person or class of persons in respect of;

(b) circumstances that exist whereby a person or class of persons would be likely to have a claim; or

any material, chemical, product or process of manufacture or materials now or previously held, used, sold, manufactured, carried out or under development or research by any past or present member of the Wider Baydonhill Group,

in each case, which is material in the context of the Wider Baydonhill Group, taken as a whole.

For the purposes of these conditions the Wider Baydonhill Group means Baydonhill and its subsidiary undertakings, associated undertakings and any other undertaking in which Baydonhill and/or such undertakings (aggregating their interests) have a significant interest and the Wider Earthport Group means Earthport and its subsidiary undertakings, associated undertakings and any other undertaking in which Earthport and/or such undertakings (aggregating their interests) have a significant interest and for these purposes subsidiary undertaking and undertaking have the meanings given by the Companies Act 2006, associated undertaking has the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 other than paragraph 19(1)(b) of Schedule 6 to those Regulations which shall be excluded for this purpose, and significant interest means a direct or indirect interest in ten per cent. or more of the equity share capital (as defined in the Companies Act 2006).

Subject to the requirements of the Panel, Earthport reserves the right to waive, in whole or in part, all or any of conditions (A) to (J) above, except for condition (A).

If Earthport or Earthport is required by the Panel to make an offer for Baydonhill Shares under the provisions of Rule 9 of the City Code, Earthport or Earthport may make such alterations to any of the above conditions as are necessary to comply with the provisions of that Rule.

Conditions (A) to (J) (inclusive) must be fulfilled, or be determined by Earthport to be or remain satisfied or (if capable of waiver) be waived prior to Closing. Earthport shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or treat as fulfilled any of the Conditions (A) to (J) (inclusive) at any time prior, notwithstanding that the other Conditions (or any of them) may have been waived (if capable of waiver), satisfied or fulfilled and that there are, at such earlier date, no circumstances indicating that any such Condition may not be capable of satisfaction or fulfilment.

The Acquisition will lapse if, prior to Closing:

1. the FCA has refused to give approval to the change of ownership of Baydonhill or such approval has not been granted on or before the date falling 60 days after the date of the Offer Document (or such later date(s) as Earthport may, in consultation with the Baydonhill Board, decide, subject to the agreement of the Panel); and

2. the Acquisition, or any matter arising from the Acquisition, is referred to the Competition Commission in the United Kingdom.

The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements. If the laws, rules or regulation of any jurisdiction (including any state securities or "blue sky" laws of any state of the United States, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands) would require any registration or qualification in connection with the Acquisition as a consequence of the residence and/or principal place of business of any Baydonhill Shareholder, then such Baydonhill Shareholder may not be entitled to the benefit of the CVRs.

The Offer will be governed by English law and be subject to the jurisdiction of the English courts, to the conditions set out above and in the formal Offer Document and related Form of Election. The Offer will comply with the applicable rules and regulations of the FCA and the London Stock Exchange and the City Code.

Part B: Certain further terms of the Acquisition

(A) Earthport Shares which will be issued pursuant to the CVRs will be acquired with full title guarantee, fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

(B) If the Offer lapses, the Offer will cease to be capable of further acceptances and accepting Baydonhill Shareholders and Earthport shall cease to be bound by acceptances submitted at or before the time when the Offer lapses.

APPENDIX II

ILLUSTRATIVE EXAMPLES OF CVR PAYMENTS

The illustrations and examples contained in this Appendix II are being provided by Earthport for illustrative purposes only and should not be regarded as any guarantee or indication of likely performance.

1. Baydonhill's Adjusted Free Cash Flow is greater than £3.55 million

If Baydonhill's adjusted free cash flow is equal to or greater than £3.55 million, a CVR Holder will be entitled to receive for each CVR that they hold, 2.61 pence in Loan Notes and 0.281 Earthport Shares.

2. Baydonhill's Adjusted Free Cash Flow is greater than £2.03 million but less than £3.55 million

Under the terms of the CVR Deed, a CVR Holder will be entitled to receive additional CVR Entitlements above the minimum payment of 0.097 in Earthport Shares per CVR, only if Baydonhill's Adjusted Free Cash Flow is greater than £2.03 million during the CVR term up to an additional maximum of 2.61 pence in Loan Notes and an additional 0.184 Earthport Shares. The CVR Entitlement per CVR will be calculated as follows:

CVR Entitlement per CVR: 0.097 Earthport Shares plus £3.8 million x A ÷ fully diluted share capital of Baydonhill. 40 per cent. of the additional CVR Entitlement over 2.06 pence (0.097 Earthport Shares) per CVR being paid in Loan Notes and 60 per cent. of the additional CVR Entitlement over 2.06 pence (0.097 Earthport Shares) per CVR being paid in Earthport Shares.

Where A equals Baydonhill's Adjusted Free Cashflow less £2.03 million together ÷ £1.52 million

The table below sets out the CVR Entitlements for a range of adjusted free cash flows between £2.03 million and£3.55 million generated by Baydonhill in the CVR Term.

	Adjusted Free Cashflow of Baydonhill
	£2.03m	£2.25m	£2.50 m	£3.0m	£3.55m
Minimum CVR Entitlement payable in Earthport Shares	0.097	0.097	0.097	0.097	0.097
Additional CVR Entitlement payable in Earthport Shares	Nil	0.027	0.057	0.117	0.184
CVR Entitlement payable in Earthport Shares per CVR	0.097	0.124	0.154	0.214	0.281
CVR Entitlement payable in Loan Notes per CVR (pence)	Nil	0.38	0.81	1.66	2.61

Based on an issue price of 21.24 pence per Earthport Share, under the terms of the Earn-out Offer, Baydonhill's Adjusted Free Cash Flow during the CVR Term would have to equal approximately £3.0 million before the value of the Earn-out Offer was greater than the value of the Cash Offer at £6.42 million, based on 11 pence per Baydonhill Share.

Illustrative example of CVR payment calculation

An example of the CVR calculation, based on Baydonhill generating £2.5 million of Adjusted Free Cash Flow in the CVR Term and Baydonhill's fully diluted issued share capital being 58,333,751 ordinary shares, is outlined below:

	Calculation	CVR Entitlement per CVR

Minimum CVR Entitlement payable in Earthport Shares:	(£1.2m/58,333,751)/ issue price per Earthport Share of 21.24 pence	0.097 Earthport Shares
CVR Entitlement above minimum CVR Entitlement	((£2.5m-£2.03m)/£1.52m) x (1/58,333,751) x £3.8 m	2.01 pence

CVR Entitlement above minimum CVR Entitlement payable in Earthport Shares:	2.01 pence x 60%/ issue price per Earthport Share of 21.24 pence	0.057 Earthport Shares

Total CVR Entitlement payable in Earthport Shares:	0.097 Earthport Shares plus 0.057 Earthport Shares	0.154 Earthport Shares

Total CVR Entitlement payable in Loan Notes:	2.01 pence x 40%	0.81 pence

3. Baydonhill's Adjusted Free Cash Flow is less than £2.03 million

If Baydonhill's adjusted free cash flow is equal to or less than £2.03 million, a CVR Holder will be entitled to receive, for each CVR that they hold, 0.097 Earthport Shares.

4. Early Payment Date

On an Early Payment Date, a CVR Holder will be entitled to receive the maximum amount payable under the CVR of 2.61 pence in Loan Notes and 0.281 Earthport Shares, discounted at an annual rate of 0.5 per cent. over the remaining CVR Term.

The table below sets out the CVR Entitlements for Early Payment Dates one and two years early being 30 June 2015 and 30 June 2014, respectively.

	Payment Date
	30 June 2014	30 June 2015
CVR Entitlement payable in Earthport Shares per CVR	0.278 Earthport Shares	0.280 Earthport Shares
CVR Entitlement payable in Loan Notes per CVR (pence)	2.57 pence	2.59 pence

Actual payments will depend entirely upon the Adjusted Free Cash Flow generated by Baydonhill in the period to 30 June 2016 and are capped at a maximum level of 2.61 pence per CVR payable in Loan Notes and a maximum of 0.281 Earthport Shares per CVR. The minimum payment to CVR Holders will be 0.097 Earthport Shares per CVR.

Adjusted Free Cash Flow means the cumulative, free cash flow of Baydonhill from its activities for the CVR Term stated in accordance with Baydonhill's accounting policies under IFRS and as agreed in accordance with the terms of the CVR Deed Poll, adjusted for following items: (i) by adding (a) the amount of any repayments of debt and/or interest by Baydonhill during the CVR Term in relation to the loan from Wallich & Matthes Holding B.V. (a group company of Ekwienox FX Limited) to Baydonhill and (b) the outstanding intercompany loan account from Baydonhill to Ekwienox FX Limited or any member of its group as at 30 June 2013, including the net of any sales and purchase ledger, the net amount of such intercompany loan (including any accrued interest) being £133,000; (ii) by subtracting half of the CVR Committee Costs up to £100,000 and any CVR Committee Costs in excess of £1o0,000; (iii) to the extent not excluded in the calculation of free cash flow of Baydonhill, by adding the amount of any costs in relation to any management incentive scheme implemented by Baydonhill in connection with the Offer and the amount of any IFRS non-cash fair value adjustments; (iv) to the extent not excluded in the calculation of the free cash flow, by adding the amount of any professional costs incurred by Baydonhill in relation to the Offer in excess of £100,000 (including irrecoverable VAT) and to the extent included in the calculation of FCF deducting the amount of such costs up to £100,000 (including irrecoverable VAT); (v) by deducting, to the extent included in the calculation of the free cash flow of Baydonhill, any subscription monies received by Baydonhill on the exercise of any Baydonhill Share Options granted before the date of the CVR Deed Poll; and (vi) by making such other adjustments as are agreed between Earthport and the CVR Committee from time to time. Further details of the free cash flow and Adjusted Free Cash Flow will be contained in the Offer Document.

Earthport Shares will be issued at a price of 21.24 pence per Earthport Share being the average middle market closing price of an Earthport Share in the preceding ten days to this announcement. After any bonus issue, share consolidation, share split or reduction of capital in relation to Earthport Shares (Reorganisation Event), the average middle market closing price of 21.24 pence of an Earthport Share shall be adjusted accordingly, in accordance with the terms of the CVR Deed, with effect from the date of such Reorganisation Event. On any such Reorganisation Event, unless the CVR Committee and Earthport agree otherwise, the independent accountants shall be requested by the Board to certify the appropriate adjustments and, within 2o Business Days thereafter, notice thereof shall be sent to the Board and the CVR Committee.

There will be no interest conferred by a CVR on the economic activities of the Enlarged Group generally.

The value of the CVRs is directly linked to the future financial performance of Baydonhill and to Earthport's future share price. Neither of these two factors can be determined or estimated with any degree of certainty and as a result the Earn-out Offer may lead to Baydonhill Shareholders who accept it, receiving, in the long term, either more or less than they would have done pursuant to the Cash Offer. The Panel has determined that due to the factors outlined above, an estimate of the value of a CVR in accordance with Rule 24.11 of the Code will not be included in this document.

APPENDIX III

SOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

1. Unless otherwise stated:

· financial information relating to the Earthport Group has been extracted or derived (without any adjustment) from Earthport's audited annual report and accounts for the year ended 30 June 2012 and the unaudited interim accounts for Earthport for the six month period ended 31 December 2012; and

· financial information relating to the Baydonhill Group has been extracted or derived (without any adjustment) from the audited annual report and accounts for Baydonhill for the year ended 31 March 2013.

2. The value of the Acquisition in respect of the Cash Offer is calculated:

· on the basis of the fully diluted number of Baydonhill Shares in issue referred to in paragraph 4 and 5 below.

3. The value of the Acquisition in respect of the Earn-out Offer is calculated:

· by reference to the average middle market closing prices of an Earthport Share, as extracted from the AIM Appendix to the Daily Official List on the last ten Business Days prior to this announcement being 21.24 pence per Earthport Share; and

· on the basis of the fully diluted number of Baydonhill Shares in issue referred to in paragraph 4 and 5 below.

4. As at the close of business on 10 September 2013, being the last Business Day prior to the date of this announcement, Baydonhill had in issue 57,833,751 Baydonhill Shares.

5. The fully diluted share capital of Baydonhill (being 58,333,751 Baydonhill Shares) is calculated on the basis of:

· the number of issued Baydonhill Shares referred to in paragraph 4 above; and

· the maximum number of Baydonhill Shares which could be issued on or after the date of this announcement on the exercise of Baydonhill In The Money Options, amounting in aggregate to 500,000 Baydonhill Shares.

6. Unless otherwise stated, all prices for Baydonhill Shares are quotations derived from BritDAQ.

7. The premia implied by the Offer Consideration have been calculated with reference to a price of 3 pence per Baydonhill Share on 13 August 2013, being the date of the latest trade on the BritDAQ facility and a price of 2.25 pence per Baydonhill Share on 25 October 2012, being the middle market closing price of a Baydonhill Share on the last day Business Day prior to the cancellation of Baydonhill Shares trading on AIM.

APPENDIX IV

DETAILS OF IRREVOCABLE UNDERTAKINGS

Director's Irrevocable Undertaking

Earthport has received an irrevocable commitment from Wayne Mitchell , a member of the Board of Baydonhill, in respect of his own beneficial holding of Baydonhill Shares and (to the extent relevant) the beneficial holdings of his spouse, civil partner, de facto partner, or similarly-related person, representing in aggregate approximately 4.38 per cent. of the existing issued ordinary share capital of Baydonhill. This commitment requires Wayne Mitchell to accept or procure acceptance of the Earn-out Offer.

Name of Baydonhill Director	Number of Baydonhill Shares	% of Baydonhill issued share capital
Wayne Mitchell	2,533,777	4.38

This irrevocable commitment will lapse if the Offer Document is not despatched on or before 8 October 2013 (or such other period not exceeding six weeks that the Panel may agree) or if the Offer lapses or is withdrawn.

Shareholder Irrevocable Undertaking

Earthport has received irrevocable commitments from certain Baydonhill Shareholders in respect of their beneficial holdings of Baydonhill Shares representing in aggregate approximately 80.91 per cent. of the existing issued ordinary share capital of Baydonhill. These commitments require the relevant Baydonhill Shareholders to accept, or procure acceptance of, the Earn-out Offer, except in the case of Brian Neil, who has committed to accept, or procure acceptance of, the Earn-out Offer in respect of 441,904 Baydonhill Shares and to accept, or procure acceptance of, the Cash Offer in respect of 269,097 Baydonhill Shares.

Baydonhill Shareholder	Number of Baydonhill Shares	% of Baydonhill issued share capital
Ekwienox FX Limited	45,179,539	78.12
Brian Neil	711,001	1.23
Niell Harrowell	484,576	0.84
Tania Brownhill	209,680	0.36
Vanessa Bolger	128,000	0.22
David Joel	80,000	0.14
TOTAL	46,792,796	80.91

These irrevocable commitments will lapse if the Offer Document is not despatched on or before 8 October 2013 (or such other period not exceeding six weeks that the Panel may agree) or if the Offer lapses or is withdrawn.

Optionholder Irrevocable Undertakings

Earthport has received irrevocable commitments from the holders of the Baydonhill In the Money Options to exercise their Baydonhill In the Money Options immediately before Closing and to elect to accept the Cash Offer in respect of their resulting beneficial holdings of Baydonhill Shares representing in aggregate approximately 0.86 per cent. of the existing issued ordinary share capital of Baydonhill.

Name of Optionholder	Number of Baydonhill Shares	% of Baydonhill issued share capital
Eric Peacock	200,000	0.35
Bruce Borrie	100,000	0.17
Wayne Mitchell	100,000	0.17
Tania Brownhill	100,000	0.17
TOTAL	500,000	0.86

APPENDIX V

DEFINITIONS

Acquisition	the proposed acquisition of the entire issued and to be issued share capital of Baydonhill by Earthport, to be effected by the Offer
AIM	AIM, being a market operated by the London Stock Exchange
AIM Rules	the rules published by the London Stock Exchange entitled AIM Rules for Companies in force from time to time
ASPone	ASPone Limited
Baydonhill	Baydonhill plc, a company incorporated and registered in England and Wales under company number 3910588, with its registered office at 160 Brompton Road, Knightsbridge, London, SW3 1HW
Baydonhill EMI Plan	the Enterprise Management Incentive Plan adopted by Baydonhill in February 2004
Baydonhill Group	Baydonhill and its Subsidiary and associated undertakings
Baydonhill In the Money Options	the 500,000 outstanding Baydonhill Share Options with an exercise price of 5.75 pence
Baydonhill Shareholders	the holders of Baydonhill Shares
Baydonhill Share Options	share options granted by Baydonhill under the Baydonhill EMI Plan and pursuant to individual option arrangements
Baydonhill Shares	the ordinary shares of 1 pence each in the capital of Baydonhill
Baydonhill Out-of-the-Money Options	the 885,000 outstanding Baydonhill Share Options with a range of exercise prices between 18 pence and 55 pence
Board BritDAQ	the board of directors of the relevant company a trading facility operated by BritDAQ Limited, an appointed representative of Walker Cripps Stockbrokers Limited
Business Day	a day, (other than a Saturday, Sunday, public or bank holiday) on which banks are generally open for business in London
Cash Offer	the offer of 11 pence in cash for each Baydonhill Share
Charles Stanley	Charles Stanley & Co Limited, trading as Charles Stanley Securities
City Code	the City Code on Takeovers and Mergers
Closing	the date the Offer is declared wholly unconditional
Conditions	the conditions of the Acquisition set out in Appendix I to this announcement
CVRs	the contingent value rights to be issued by Earthport
CVR Deed Poll	the deed poll dated 17 September 2013 constituting the CVRs
CVR Holder	a holder of a CVR
CVR Term	the financial performance of Baydonhill over the period 1 July 2013 to 30 June 2016
Disclosed Information	any information which has been (i) fairly disclosed by or on behalf of Baydonhill or its advisers to Earthport or its advisers in connection with or in contemplation of the Acquisition prior to the date of this announcement, whether by electronic means, physical form or orally, (ii) disclosed in Baydonhill's report and accounts for the year ended 31 March 2013, or (iii) disclosed in this announcement
Earthport	Earthport plc, a company incorporated and registered in England and Wales under company number 0342888, with its registered office at 21 New Street, London EC2M 4TP
Earthport Group	Earthport and its Subsidiary and associated undertakings
Earthport Shares	the ordinary shares of 1o pence each in the capital of Earthport
Earn-out Offer	the offer of 4.80 pence in cash and up to a maximum of 2.61 pence in Loan Notes and a maximum of 0.281 Earthport Shares (subject to applicable securities laws) by way of a CVR
Enlarged Group	following completion of the Acquisition, the combined Earthport Group and Baydonhill Group
First Closing Date	the date falling 21 days after the date on which the Offer Document is posted
Form of Acceptance	the form of acceptance and authority, incorporating the form of election to elect for either the Cash Offer or the Earn-out Offer, for use by holders of Baydonhill Shares in connection with the Offer accompanying the Offer Document;
FCA	the Financial Conduct Authority
Listing Rules	the rules and regulations made by the FCA in its capacity as the UK Listing Authority under the Financial Services and Markets Act 2000, and contained in the UK Listing Authority's publication of the same name
Loan Note	the loan notes to be issued by Earthport pursuant to the terms of the CVR Deed Poll
London Stock Exchange	London Stock Exchange plc
Offer	the takeover offer to be made by or on behalf of Earthport to acquire the entire issued and to be issued share capital of Baydonhill and, where the context admits, any subsequent revision, variation, extension or renewal of such offer
Offer Consideration	the consideration payable in connection with the Acquisition
Offer Document	the document to be sent to Baydonhill Shareholders which will contain, inter alia, the terms and conditions of the Offer
Opening Position Disclosure	has the same meaning as in Rule 8 of the City Code
Overseas Baydonhill Shareholders	Baydonhill Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom
Panel	the Panel on Takeovers and Mergers
Publicly Announced	announced publicly and delivered by or on behalf of Baydonhill through a Regulatory Information Service prior to the date of this announcement
Registrar of Companies	the Registrar of Companies in England and Wales
Regulatory Information Service	any of the services set out in Appendix II to the Listing Rules
Restricted Jurisdiction	any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Acquisition is sent or made available to Baydonhill Shareholders in that jurisdiction
Smith & Williamson	Smith & Williamson Corporate Finance Limited
Subsidiary	has the meaning given in section 1159 of the Companies Act 2006
UK or United Kingdom	the United Kingdom of Great Britain and Northern Ireland
UK Listing Authority	the FCA as the competent authority for listing in the United Kingdom
US or United States	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
US Exchange Act	United States Security Exchange Act of 1934, as amended
US Persons	has the meaning set out in the US Securities Act
US Securities Act	United States Securities Act of 1933, as amended
£	the lawful currency for the time being of the United Kingdom

This information is provided by RNS

The company news service from the London Stock Exchange

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