Recommended Cash Offer by Cap

5th Jun 2008 07:16



FOR IMMEDIATE RELEASE

5 June 2008

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 laws or regulations of such jurisdiction

Recommended Cash Offer of 187.85 pence per Share

for IBS OPENSystems plc ("IBS")

by The Capita Group Plc ("Capita")

Summary

The boards of Capita and IBS have reached agreement on the terms of a recommended cash offer to acquire the IBS Shares at a price of 187.85 pence per IBS Share, valuing the fully diluted ordinary share capital of IBS (excluding Treasury Shares) at approximately £77.7 million. 

The IBS Board, which has been so advised by Numis, unanimously considers the terms of the Offer to be fair and reasonable for IBS Shareholders as a whole. In providing advice to the IBS Board, Numis has taken into account the commercial assessments of the IBS Directors. Accordingly, the IBS Directors will unanimously recommend that IBS Shareholders accept the Offer, as all the IBS Directors have irrevocably undertaken to do (or procure to be done) in respect of their own and their related persons' beneficial holdings of IBS Shares, which amount in aggregate to 180,179 IBS Shares, representing approximately 0.5 per cent. of the existing issued share capital of IBS.

Commenting on the Offer, Paul Pindar, Chief Executive of Capita, said:

"IBS's customer base and range of products and services add to our existing offerings for local authorities and housing associations. This acquisition will give us greater breadth and depth of expertise with which to assist existing clients and attract new ones. In addition, IBS works with a number of local authorities and housing associations which complement Capita's network of customers. We believe that our established strength in the UK outsourcing market will add further credibility and scale to IBS, allowing it to service a wider range of potential customers and projects."

Tim Curtis, Chairman of IBS, said:

"The IBS Board believes that the offer from Capita of 187.85 pence in cash per IBS Share provides both an attractive premium and certainty of value for IBS Shareholders especially against the current backdrop of uncertainty in general economic conditions. We believe that the Capita Group has the financial resources and expertise to invest actively in the future development of the IBS business, thus enhancing IBS's market position for the benefit of its customers and employees."

Further information on the terms and conditions to which the Offer will be subject are contained in Appendix 1 to this announcement and will be contained in the Offer Document, which Capita expects to post to IBS Shareholders shortly.

Strata Partners, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Capita and no one else in connection with the Offer and will not be responsible to anyone other than Capita for providing the protections afforded to clients of Strata Partners nor for providing advice in relation to the Offer, the contents of this announcement or any transaction or arrangement referred to herein.

Numis, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for IBS and no one else in connection with the Offer and will not be responsible to anyone other than IBS for providing the protections afforded to clients of Numis nor for providing advice in relation to the Offer, the contents of this announcement or any transaction or arrangement referred to herein. 

This summary should be read in conjunction with the full text of the attached announcement. Appendix 1 to this announcement contains the conditions of and certain further terms of the Offer. Appendix 2 to this announcement contains source notes relating to certain information presented in this announcement. Terms used in this announcement shall have the meaning given to them in Appendix 3 to this announcement.

Enquiries:

It is intended that the Offer Document and the Form of Acceptance will be posted to IBS Shareholders (other than those in the United States, Canada, Japan or any Prohibited Jurisdiction) shortly. A further announcement in this regard will be made when posting has taken place. The Offer Document and the Form of Acceptance will in any event be posted within 28 days of this announcement, unless otherwise agreed with the Panel.

This announcement is not an offer to sell or an invitation to purchase any securities or the solicitation of any vote or approval in any jurisdiction. The Offer will be made solely by means of the Offer Document, and, in respect of IBS Shares in certificated form, the Form of Acceptance. Any acceptance or other response to the Offer should be made only on the basis of the information contained or referred to in the Offer Document and the Form of Acceptance (if appropriate), which will contain the full terms and conditions of the Offer including details of how it may be accepted. The Offer Document will be available for public inspection and will also be posted on IBS's website www.ibsopensystems.com. 

IBS Shareholders are advised to read carefully the formal documentation in relation to the Offer once it has been despatched.

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 UK.

The availability of the Offer to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Persons who are not resident in the United Kingdom should therefore inform themselves about, and observe, any applicable legal or regulatory requirements of the jurisdiction in which they are resident.

Unless otherwise determined by Capita and permitted by applicable law and regulation, the Offer is not being, and will not be, made, directly or indirectly, in or into or from, or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, the United States, Canada, Japan or of any Prohibited Jurisdiction and, subject to certain exceptions, the Offer cannot be accepted by any such use, means, instrumentality or facility or from within the United States, Canada, Japan or any Prohibited Jurisdiction. Accordingly, copies of this announcement, are not being, and must not be, directly or indirectly, mailed, distributed, transmitted, forwarded or otherwise sent, in whole or in part, in, into or from the United States, Canada, Japan or any Prohibited Jurisdiction. Doing so may render invalid any purported acceptance of the Offer. Persons receiving this announcement (including, without limitation, custodians, nominees and trustees) should not distribute, mail, transmit, forward or send them or any of them in, into or from the United States, Canada, Japan or any Prohibited Jurisdiction or use such mails or any such means, instrumentality or facility for any purpose related to the Offer.

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

In accordance with normal UK market practice, Capita or any person acting on its behalf may from time to time make certain market or private purchases of, or make arrangements to purchase, directly or indirectly, IBS Shares other than pursuant to the Offer. Any information about such purchases will be publicly announced as required by law or regulation in the UK. 

Forward-looking statements

This announcement includes certain statements about IBS or Capita (and their respective groups and/or subsidiary undertakings) that are or may be forward-looking statements. These statements are based on the current expectations of the management of IBS or Capita (as the case may be) and are naturally subject to uncertainty and changes in circumstances. 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 "intend", "expect", "anticipate", "target", "estimate", "goal", "believe", "will", "may", "should", "would", "could", "plan" or other words of similar meaning or import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed in, or implied by, such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Offer, and the Capita Group's ability successfully to integrate the operations and employees of IBS, as well as additional factors, such as changes in economic conditions, changes in the level of capital investment, success of business and operating initiatives and restructuring objectives, customers' strategies and stability, changes in the regulatory environment, fluctuations in interest and exchange rates, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Investors should not place undue reliance on such forward-looking statements and neither IBS nor Capita undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Dealings disclosure requirements

Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes, "interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of IBS, all "dealings" in any "relevant securities" of IBS (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 p.m. (London time) on the Business Day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of IBS, they will be deemed to be a single person for the purpose of Rule 8.3 of the City Code.

Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant securities" of IBS by Capita or IBS, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the City Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8 of the City Code, you should contact the Panel.

If you are in any doubt as to what action you should take, or the contents of this announcement, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser who, if you are taking advice in the United Kingdom, is authorised under the Financial Services and Markets Act 2000 and specialises in advising on the acquisition of shares and other securities, or, if you are taking advice outside the United Kingdom, is an appropriately authorised independent financial adviser with such a specialism. 

  FOR IMMEDIATE RELEASE

5 June 2008

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 laws or regulations of such jurisdiction

Recommended Cash Offer of 187.85 pence per Share

for IBS OPENSystems plc ("IBS")

by The Capita Group Plc ("Capita")

1. Introduction

The boards of Capita and IBS are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Capita for the IBS Shares at a price of 187.85 pence per IBS Share, valuing the fully diluted ordinary share capital of IBS (excluding Treasury Shares) at approximately £77.7 million.

In addition, IBS Shareholders on the register as at the close of business on 9 May 2008 were entitled to receive a final dividend payment of 2.15 pence for each IBS Share; this Final Dividend was paid on 2 June 2008.

2. The Offer

The Offer will be for the entire issued and to be issued share capital of IBS (excluding Treasury Shares) and will be subject to the conditions and further terms contained in Appendix 1 to this announcement and to the conditions and further terms to be set out in the Offer Document and, in respect of IBS Shares in certificated form, in the Form of Acceptance. Under the terms of the Offer, IBS Shareholders who accept the Offer will receive:

187.85 pence in cash for each IBS Share

The terms of the Offer value the current issued and to be issued share capital of IBS (excluding Treasury Shares) at approximately £77.7 million, which represents a premium of approximately:

37.1 per cent. to the Closing Price of 137.0 pence per IBS Share on 24 April 2008, being the last Business Day prior to IBS's announcement that it had received approaches from third parties which may or may not lead to an offer being made for IBS;

52.1 per cent. to the Closing Price of 123.5 pence per IBS Share on 23 April 2008, being the last Business Day prior to any market rumours about a potential offer for IBS; and

65.5 per cent. to the average Closing Price of approximately 113.5 pence per IBS Share for the three months prior to 24 April 2008, being the last Business Day prior to IBS's announcement that it had received approaches from third parties which may or may not lead to an offer being made for IBS.

The IBS Shares will be acquired pursuant to the Offer fully-paid and free from liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights or interests of any nature whatsoever and together with all rights now or hereafter attaching thereto, including all voting rights and the right to receive and retain all dividends and other distributions announced, declared, made or paid on or after the date of this announcement together with all interest accrued thereon.

3. Background to and reasons for recommending the Offer

IBS is a leading provider of software systems and related services for the management of social housing (commonly known as 'housing systems') and the collection and payment of revenues and benefits (commonly known as 'revenues' or 'revenues/benefits systems') to local authorities and housing associations in the UK.

IBS was admitted to AIM on 23 March 2005 at an issue price of 140 pence per IBS share. Since admission, IBS's turnover has grown organically from £18.7 million in the financial year ended 31 December 2005 (on a pro forma basis) to £21.0 million in the financial year ended 31 December 2007. Over the same period, operating profit before amortisation of goodwill has risen from £5.5 million in 2005 (on a pro forma basis) to £7.1 million in 2007.

IBS has built a customer base comprising more than 230 local authorities and housing associations in the UK. While the IBS Directors believe that further opportunities exist to continue growing the IBS Group, both organically and through acquisitions, they recognise that such growth carries risks, while the Offer provides both an attractive premium and certainty of value for IBS Shareholders.

The Offer of 187.85 pence per IBS Share provides IBS Shareholders with an opportunity to realise their investment for an attractive cash premium of approximately 65.5 per cent. over the average Closing Price of 113.5 pence per IBS Share for the three months prior to 24 April 2008, being the last Business Day prior to the announcement by IBS that it had received approaches from third parties which may or may not lead to an offer being made for IBS.

The IBS Directors believe that IBS will benefit significantly from being part of the Enlarged Capita Group. In particular, Capita has the financial resources and expertise to invest actively in the future development of the business, thus enhancing IBS's competitive position for the benefit of its customers and employees.

4. Unanimous recommendation

The IBS Directors, who have been so advised by IBS's financial adviser, Numis, unanimously consider the terms of the Offer to be fair and reasonable to IBS Shareholders as a whole. In providing its advice to the IBS Directors, Numis has taken into account the commercial assessments of the IBS Directors.

Accordingly, the IBS Directors intend unanimously to recommend that IBS Shareholders accept the Offer, as all the IBS Directors have irrevocably undertaken to do (or procure to be done) in respect of their own and their related persons' beneficial holdings of IBS Shares, which amount in aggregate to 180,179 IBS Shares, representing approximately 0.5 per cent. of the existing issued share capital of IBS.

5. Background to and reasons for the Offer

Capita is a leading provider of business process outsourcing and professional support services. A FTSE 100 company, Capita is quoted on the London Stock Exchange, with a market capitalisation of approximately £4.1 billion.

The Capita Directors believe that IBS's software systems and related services for housing associations and local authorities fit well alongside Capita's own software and services offerings for such customers and will add greater scale to its operations.

In addition, the Capita Directors expect good growth prospects by leveraging Capita's established strength in the UK outsourcing market to the IBS business, thereby enabling IBS to service a wider range of potential customers and projects.

Following the Offer becoming or being declared unconditional in all respects, Capita intends to combine IBS's operations with its own businesses, offering software (and related services) and outsourcing services to housing associations and local authorities.

6. Undertakings to accept the Offer

Capita has received irrevocable undertakings and letters of intent to accept, or procure the acceptance of, the Offer in respect of, in aggregate, 26,785,227 IBS Shares, representing approximately 70.12 per cent. of the existing issued share capital of IBS.

Irrevocable undertakings and letters of intent to accept the Offer have been received as follows:

(a) the IBS Directors have given irrevocable undertakings to accept the Offer in respect of 180,179 IBS Shares in which they have a beneficial interest, representing approximately 0.5 per cent. of the existing issued share capital of IBS. These irrevocable undertakings will remain binding in the event of a Competing Offer for IBS;

(b) irrevocable undertakings in respect of 4,786,066 IBS Shares (representing approximately 12.53 per cent. of the existing issued share capital of IBS) which will lapse if a Competing Offer is made at a price of at least 110 per cent. of the Offer Price; 

(c) Irrevocable undertakings in respect of 2,615,320 IBS Shares (representing approximately 6.85 per cent. of the existing issued share capital of IBS) which will lapse if a Competing Offer is made at a price greater than 204 pence per IBS Share (i.e. approximately 108.66 per cent. of the Offer Price);

(d) irrevocable undertakings in respect of 2,448,160 IBS Shares (representing approximately 6.41 per cent. of the existing issued share capital of IBS) which will lapse if a Competing Offer is made at a price of at least 105 per cent. of the Offer Price;

(e) irrevocable undertakings in respect of 11,215,321 IBS Shares (representing approximately 29.36 per cent. of the existing issued share capital of IBS) which will lapse if a Competing Offer is made; and 

(f) letters of intent to accept the Offer in respect of 5,540,181 IBS Shares (representing approximately 14.50 per cent. of the existing issued share capital of IBS).

The IBS Directors have also undertaken that following the Offer being declared or becoming unconditional in all respects they will accept the offer to be made under Rule 15 of the City Code in respect of their "in the money" options granted to them under the EMI Scheme.

Further details about the irrevocables are set out in Appendix 2 to this announcement.

7. Information on IBS and its current trading and prospects

IBS supplies local authorities and housing associations in the UK with comprehensive, integrated software systems (and related services) for housing and revenues/benefits.

IBS's housing system, OPENHousing, provides management and administration services primarily in the areas of rent accounting and arrears; property management, repairs and maintenance; and permanent and temporary property allocation and waiting lists. IBS's revenues/benefits system, OPENRevenues, manages the administration and payment of claimant benefits, and collection of council tax and commercial property rates. OPENContractor, contractor workforce and materials management, and OPENFinancials, financial accounting and reporting systems, are also sold mainly to social housing customers, although both are available as standalone systems.

IBS had approximately 170 full time employees as at 31 December 2007 and has a customer base comprising more than 230 local authorities and housing associations in the UK. IBS is a public limited company registered in England and Wales and is listed on AIM under the symbol OPN-L.

For the financial year ended 31 December 2007, IBS reported turnover of £21.0 million and operating profit before amortisation of goodwill of £7.1 million. IBS's net assets and cash at bank as at 31 December 2007 were approximately £62.6 million and £12.7 million, respectively.

On 23 April 2008, IBS announced in its annual general meeting statement that its first quarter's revenue and operating profit were in line with internal management expectations and ahead of those for the same period in 2007. New business wins for the IBS Group in the first quarter, combined with the prospects of further sales of new software together with the strength of recurring revenues and professional services from the IBS Group's installed base, give the IBS Board confidence of continuing organic revenue growth in 2008.

Since IBS's annual general meeting statement, trading of the IBS Group has been in line with the expectations of the IBS Directors and the IBS Directors are not aware of any significant change to the financial and trading position of the IBS Group.

8. Information about Capita and its current trading and prospects 

Capita is a leading provider of business process outsourcing and professional support services. The Capita Group's service capabilities encompass customer services, insurance services, human resource services, software services, systems and strategic support and property services delivered to both public sector and private organisations. Capita, a FTSE 100 company, is quoted on the London Stock Exchange, with a market capitalisation of approximately £4.1 billion. For the year to 31 December 2007, Capita reported revenues of approximately £2,073 million (2006: £1,739 million), and profit before tax (stated before goodwill amortisation) of approximately £238 million (2006: £200 million). Capita's net assets at 31 December 2007 amounted to £332 million.

Capita has performed strongly in the first five months of 2008. The Capita Board believes that the businesses across the Capita Group are trading well and the market for significant outsourcing opportunities remains buoyant. The Capita Board believes that the prospects for Capita for the current year and thereafter remain strong.

9. Financing of the Offer

Full acceptance of the Offer would require a cash payment by Capita of approximately £77.7 million. The cash consideration payable under the Offer will be funded from a facility agreement between Capita, Barclays Capital and Barclays Bank PLC and existing cash resources of Capita. Capita is not intending to use the assets of IBS to satisfy the payment of interest due on such facility, to repay the principal amount of such facility or to secure such facility.

Strata, as financial adviser to Capita, is satisfied that sufficient resources are available to satisfy in full the consideration payable in the event of full acceptance of the Offer.

10. IBS management, employees and locations

Capita has given assurances to the IBS Board that, upon the Offer becoming or being declared unconditional in all respects, the existing contractual employment rights of all employees of the IBS Group, including pension obligations, will be safeguarded.

Capita has confirmed to IBS that IBS's head office will continue to be based in Newbury, Berkshire.

Immediately following the Offer being declared unconditional in all respects, Capita intends to appoint new directors to the IBS Board and the existing non-executive IBS Directors, namely Tim Curtis, Robert Horvath and Mark Loveland, will resign from the IBS Board from that time.

11. Inducement Fee

IBS and Capita have entered into agreements under which IBS will pay to Capita an inducement fee of £777,271.96 (plus value added tax thereon to the extent it is recoverable by IBS), equivalent to one per cent. of the fully diluted value of the Offer, in the event that: (a) any IBS Director either withdraws or qualifies their recommendation of the Offer or modifies it in a manner which is adverse to Capita or which reduces the likelihood of the Offer becoming wholly unconditional, and the Offer subsequently lapses or is withdrawn; or (b) prior to the Offer becoming or being declared wholly unconditional, lapsing or being withdrawn, either a public announcement is made in respect of an actual or contemplated Competing Offer and the Offer subsequently lapses or is withdrawn or any other Substantial Transaction is publicly announced and the Offer subsequently lapses or is withdrawn.

12. IBS Share Schemes and Warrant Instrument

The Offer extends to any IBS Shares which are unconditionally allotted or issued fully-paid (or credited as fully-paid) before the date on which the Offer ceases to be open for acceptance (or such earlier date as Capita, subject to the City Code, may decide) as a result of the exercise of options or the vesting of awards granted under the IBS Share Schemes or the exercise of warrants under the Warrant Instrument.

If the Offer becomes or is declared unconditional in all respects, appropriate proposals will in due course be made by Capita to participants holding outstanding options or awards pursuant to the IBS Share Schemes or the holder of warrants pursuant to the Warrant Instrument. Details of these proposals will be set out in separate letters to be sent to participants in the IBS Share Schemes and the holder of warrants issued by IBS pursuant to the Warrant Instrument.

13. Disclosure of interests in IBS relevant securities

Save as set out in Appendix 2, neither Capita, nor (so far as Capita is aware) any person acting, or deemed to be acting, in concert with Capita for the purposes of the Offer has:

an interest in, or a right to subscribe for, IBS Shares or in any securities convertible or exchangeable into IBS Shares ("Relevant IBS Securities");

any short position in Relevant IBS Securities (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; or

borrowed or lent any Relevant IBS Securities (except for any borrowed IBS Shares which have been either on-lent or sold) or has any arrangement in relation to Relevant IBS Securities.

For these purposes, 'arrangement' includes indemnity or option arrangements and any agreement or understanding, formal or informal, of whatever nature, relating to Relevant IBS Securities which may be an inducement to deal or refrain from dealing in such securities. In the interests of secrecy prior to this announcement, Capita has not made any enquiries in this respect of certain parties which are or may be deemed to be acting in concert with it for the purposes of the Offer. If such enquiries, which are now being made, reveal any relevant additional interests, this will be discussed with the Panel and, if appropriate, will be disclosed to IBS Shareholders.

14. De-listing and cancellation of trading on AIM and compulsory acquisition

Following the Offer becoming or being declared unconditional in all respects, Capita intends as soon as practicable and in accordance with the AIM Rules to procure the making of an application by IBS to the London Stock Exchange for the cancellation of admission to trading of IBS Shares on AIM and also intends that IBS be re-registered as a private company under the relevant provisions of the CA 1985. If this cancellation of trading on AIM occurs, it will significantly reduce the liquidity and marketability of any IBS Shares not assented to the Offer, and their value may be affected in consequence. It is anticipated that the cancellation of admission to trading on AIM will take effect no earlier than 20 Business Days after the date on which the Offer becomes or is declared unconditional in all respects.

If Capita receives acceptances under the Offer in respect of, or otherwise acquires, 90 per cent. or more of the IBS Shares to which the Offer relates, Capita intends to exercise its rights pursuant to the provisions of sections 979 to 982 inclusive of the Companies Act to acquire compulsorily, on the same terms as the Offer, any outstanding IBS Shares in respect of which the Offer has not been accepted. 

15. Further details of the Offer

There are no agreements or arrangements to which Capita is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a condition of the Offer.

16. Overseas IBS Shareholders 

The availability of the Offer to IBS Shareholders 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. 

Full details in relation to Overseas IBS Shareholders will be contained in the Offer Document. 

17. Other matters

The Offer will be subject to the conditions and further terms set out in Appendix 1 to this announcement and to the conditions and further terms to be set out in the Offer Document and, in respect of IBS Shares in certificated form, in the Form of Acceptance. Source notes relating to certain information presented in this announcement are set out in Appendix 2 to this announcement. Certain terms used in this announcement are defined in Appendix 3 to this announcement.

This announcement is not an offer to sell or an invitation to purchase any securities or the solicitation of any vote or approval in any jurisdiction. The Offer will be made solely by means of the Offer Document and, in respect of IBS Shares in certificated form, the Form of Acceptance. Any acceptance or other response to the Offer should be made only on the basis of the information contained or referred to in the Offer Document and the Form of Acceptance (if appropriate), which will contain the full terms and conditions of the Offer including details of how it may be accepted. The Offer Document will be available for public inspection and will also be posted on IBS's website www.ibsopensystems.com.

IBS Shareholders are advised to read carefully the formal documentation in relation to the Offer once it has been despatched.

Strata Partners, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Capita and no one else in connection with the Offer and will not be responsible to anyone other than Capita for providing the protections afforded to clients of Strata Partners nor for providing advice in relation to the Offer, the contents of this announcement or any transaction or arrangement referred to herein.

Numis, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for IBS and no one else in connection with the Offer and will not be responsible to anyone other than IBS for providing the protections afforded to clients of Numis nor for providing advice in relation to the Offer, the contents of this announcement or any transaction or arrangement referred to herein.

Enquiries:

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 UK. 

The availability of the Offer to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Persons who are not resident in the United Kingdom should therefore inform themselves about, and observe, any applicable legal or regulatory requirements of the jurisdiction in which they are resident.

Unless otherwise determined by Capita and permitted by applicable law and regulation, the Offer is not being, and will not be, made, directly or indirectly, in or into or from, or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, the United States, Canada, Japan or of any Prohibited Jurisdiction and, subject to certain exceptions, the Offer cannot be accepted by any such use, means, instrumentality or facility or from within the United States, Canada, Japan or any Prohibited Jurisdiction. Accordingly, copies of this announcement, are not being, and must not be, directly or indirectly, mailed, distributed, transmitted, forwarded or otherwise sent, in whole or in part, in, into or from the United States, Canada, Japan or any Prohibited Jurisdiction. Doing so may render invalid any purported acceptance of the Offer. Persons receiving this announcement (including, without limitation, custodians, nominees and trustees) should not distribute, mail, transmit, forward or send them or any of them in, into or from the United States, Canada, Japan or any Prohibited Jurisdiction or use such mails or any such means, instrumentality or facility for any purpose related to the Offer.

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

In accordance with normal UK market practice, Capita or any person acting on its behalf may from time to time make certain market or private purchases of, or make arrangements to purchase, directly or indirectly, IBS Shares other than pursuant to the Offer. Any information about such purchases will be publicly announced as required by law or regulation in the UK. 

Forward-looking statements

This announcement includes certain statements about IBS or Capita (and their respective groups and/or subsidiary undertakings) that are or may be forward-looking statements. These statements are based on the current expectations of the management of IBS or Capita (as the case may be) and are naturally subject to uncertainty and changes in circumstances. 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 "intend", "expect", "anticipate", "target", "estimate", "goal", "believe", "will", "may", "should", "would", "could", "plan" or other words of similar meaning or import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will or may occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed in, or implied by, such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Offer, and the Capita Group's ability successfully to integrate the operations and employees of IBS, as well as additional factors, such as changes in economic conditions, changes in the level of capital investment, success of business and operating initiatives and restructuring objectives, customers' strategies and stability, changes in the regulatory environment, fluctuations in interest and exchange rates, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Investors should not place undue reliance on such forward-looking statements and neither IBS nor Capita undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Dealings disclosure requirements

Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes, "interested" (directly or indirectly) in 1 per cent. or more of any class of "relevant securities" of IBS, all "dealings" in any "relevant securities" of IBS (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 p.m. (London time) on the Business Day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of IBS, they will be deemed to be a single person for the purpose of Rule 8.3 of the City Code.

Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant securities" of IBS by Capita or IBS, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the Business Day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the City Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8 of the City Code, you should contact the Panel.

If you are in any doubt as to what action you should take, or the contents of this announcement, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent financial adviser who, if you are taking advice in the United Kingdom, is authorised under the Financial Services and Markets Act 2000 and specialises in advising on the acquisition of shares and other securities, or, if you are taking advice outside the United Kingdom, is an appropriately authorised independent financial adviser with such a specialism.

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