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Recommended proposal for the acquisition of Broca

5th Feb 2009 07:00

RNS Number : 8338M

2 ergo Group plc

05 February 2009

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

5 February 2009

RECOMMENDED PROPOSAL FOR THE ALL SHARE ACQUISITION

2 ergo Group plc

Broca plc

(to be effected by means of a scheme of arrangement)

Summary

The 2 ergo Independent Directors and the Broca Independent Directors announce that they have reached an agreement on the terms of a recommended all share acquisition of the entire issued and to be issued ordinary share capital of Broca.

Highlights

Existing Broca Shareholders will be entitled to receive 0.0909 of a New 2 ergo Share in exchange for the cancellation of each of their existing Ordinary Shares based on 2 ergo's Closing Price at 4 February 2009 of 137.5p

The Acquisition values each Ordinary Share at approximately 12.5p and the existing issued ordinary share capital of Broca at approximately £4.9 million,

The consideration represents a premium of:

approximately 25.0 per cent. to 10.0p per Ordinary Share, being the Closing Price on 14 January 2009, the last dealing day prior to commencement of the Offer Period; and

approximately 3.3 per cent. to 12.1p per Ordinary Share, being the average Closing Price for the three months prior to 14 January 2009, the last dealing day prior to commencement of the Offer Period.

Assuming no further Ordinary Shares are issued in the period between the date of this announcement and the Effective Date, existing 2 ergo Shares will constitute approximately 91.23 per cent. of the issued ordinary share capital of 2 ergo as enlarged by the Acquisition with the New 2 ergo Shares issued to Broca Shareholders constituting approximately 8.77 per cent.

The Acquisition will be effected by means of a scheme of arrangement under Part 26 of the 2006 Act, conditional, amongst other things, upon the approval of the Scheme at the Court Meeting and passing of the Special Resolution at the General Meeting of Broca Shareholders. The Acquisition is also conditional on the passing of a resolution at the 2 ergo AGM to approve the acquisition of New 2 ergo Shares by Barry Sharples, Neale Graham and Keith Seeley for the purposes of section 190 of the 2006 Act pursuant to the implementation of the Scheme.

It is expected that the Court Meeting and the General Meeting will be held on or around 13 March 2009 and the Scheme will become effective on or around 7 April 2009.

It is expected that the Scheme Document will be posted to Broca Shareholders as soon as is reasonably practicable.

Commenting on the Acquisition, Barry Sharples, Joint CEO of 2 ergo, said:

"The 2 ergo Board believes that Broca's technology has significant potential to generate future earnings as part of the 2 ergo Group and to provide added value to our customers by enhancing our range of products and services. Whilst we believe that this technology could provide security solutions for most mobile phone networks globally, it has particularly strong potential in emerging markets such as Asia, Africa and South America and should see significant opportunities emerging from the recent partnership that we announced with ActiveMedia Technologies in India. Broca was originally demerged from 2 ergo in March 2007 as we felt its value was not fully recognised as part of the 2 ergo Group, and felt, at the time, that it would be better placed to achieve its goals as a separate entity. However, in the current market environment, we believe that we can better enhance Broca's prospects and value as part of the Enlarged Group."

Commenting on the Acquisition on behalf of the Broca Independent Directors, Peter Harvey, Non-Executive Chairman of Broca said:

"As announced towards the end of last year, although we have seen growing interest in, and market readiness for, our patented technology, we have experienced delays in the completion of a number of key licence contracts. In the current environment, we believe that being part of the Enlarged Group should ease the development constraints that we have experienced and provide the best vehicle to fully exploit Broca's technology going forward. This should allow Broca Shareholders to benefit from taking our technology to the next stage of commercialisation. We believe the terms of the Acquisition to be fair and reasonable and recommend Broca Shareholders to vote in favour of the Resolutions."

Numis and RSM Bentley Jennison are acting as financial advisers to 2 ergo and Grant Thornton UK LLP and Littlejohn are acting as financial advisers to Broca.

This summary and the Appendices should be read in conjunction with the accompanying full text of the following announcement which sets out further details of the Acquisition and which forms an integral part of this announcement. The Acquisition will be subject to the conditions set out in Appendix A to this announcement and the further terms, which will be set out in the Scheme Document. Appendix B contains further details of the Broca Shareholders which have given irrevocable undertakings to vote in favour of the Scheme and the Resolutions at the Court Meeting and the General Meeting. Appendix C contains a description of the bases of calculation and sources of information used in this announcement. Appendix D contains details of relevant securities of Broca and 2 ergo in which 2 ergo, 2 ergo Directors and their related parties have an interest or right to subscribe. Appendix E contains definitions of certain expressions used in this summary and the following announcement.

Enquiries:

2 ergo Group plc	Tel: +44 (0) 1706 221 777
Neale Graham, Joint Chief Executive
Barry Sharples, Joint Chief Executive

Numis Securities Limited (financial adviser, nominated adviser and broker to 2 ergo)	Tel: +44 (0) 20 7260 1000
Stuart Skinner (as Nominated Adviser) David Poutney (as Corporate Broker)

RSM Bentley Jennison (financial adviser to 2 ergo)	Tel: +44 (0) 161 819 3030
David Simmons

Broca plc	Tel: +44 (0) 845 006 6661
Ian Price, Chief Executive

Grant Thornton UK LLP (financial adviser and nominated adviser to Broca)	Tel: +44 (0) 20 7383 5100
Fiona Owen

Littlejohn LLP (financial adviser to Broca)	Tel: +44 (0) 20 7516 2210
Claire Palmer

In accordance with Rule 2.10 of the City Code, Broca confirms that it has 39,093,108 ordinary shares of 1 pence each in issue. The International Securities Identification Number (ISIN) for Broca's ordinary shares is GB00B1R2V686.

In accordance with Rule 2.10 of the City Code, 2 ergo confirms that is has 29,883,838 ordinary shares of 1 pence each in issue. The International Securities Identification Number (ISIN) for 2 ergo's ordinary shares is GB0034312214.

Numis, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for 2 ergo and no-one else in connection with the Acquisition and will not be responsible to anyone other than 2 ergo for providing the protections afforded to clients of Numis, nor for providing advice in relation to the Acquisition, the content of this announcement, or any matter referred to herein. Numis is 2 ergo's nominated adviser for the purposes of the AIM Rules and as nominated adviser, its responsibilities are owed solely to the London Stock Exchange and are not owed to 2 ergo or any 2 ergo Director or any other entity or person.

RSM Bentley Jennison, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for 2 ergo and no one else in connection with the Acquisition and will not be responsible to anyone other than 2 ergo for providing the protections afforded to clients of RSM Bentley Jennison nor for providing advice in relation to the Acquisition, the contents of this announcement, or any matter referred to herein.

Grant Thornton UK LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Broca and no-one else in connection with the Acquisition and will not be responsible to anyone other than Broca for providing the protections afforded to clients of Grant Thornton UK LLP nor for providing advice in relation to the Acquisition, the content of this announcement, or any matter referred to herein. Grant Thornton UK LLP is Broca's nominated adviser for the purposes of the AIM Rules and as nominated adviser, its responsibilities are owed solely to the London Stock Exchange and are not owed to Broca or any Director or any other entity or person.

Littlejohn is acting exclusively for Broca and no-one else in connection with the Acquisition and will not be responsible to anyone other than Broca for providing the protections afforded to clients of Littlejohn nor for providing advice in relation to the Acquisition, the contents of this announcement or any matter referred to herein.

This announcement is not intended to and does not constitute or form any part of, an offer to sell or an invitation to purchase or the solicitation of an offer to subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise.

The distribution of this announcement in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe any applicable requirements. In particular, the Offer is not being made, directly or indirectly, in the United States, Canada, Australia, the Republic of South Africa or Japan. 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 England.

Dealing disclosure requirements

Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes "interested" (directly or indirectly) in one per cent. or more of any class of "relevant securities" of Broca or 2 ergo, all dealings in any "relevant securities" of that company (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 Effective Date or until the date on which the Scheme 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 Broca or 2 ergo, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant securities" of 2 ergo or Broca by 2 ergo or Broca or by any of their respective "associates" must also 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, you should consult the Panel.

Forward-looking statements

This announcement contains statements about 2 ergo, Broca and the Enlarged Group that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Forward looking statements often use words such as "target", "plan", "believe", "expect", "aim", "intend", "will", "should", "could", "would", "may", "consider", "anticipate", "estimate", "synergy", "cost saving", "project", "goal" or "strategy" or words or terms of similar substance or the negative thereof. Forward looking statements include statements relating to the following: (i) the expected timetable for implementing the Acquisition, future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects of 2 ergo, Broca or the Enlarged Group; (ii) business and management strategies and the expansion and growth of 2 ergo's, Broca's or the Enlarged Group's operations and potential synergies resulting from the acquisition of Broca by 2 ergo; and (iii) the effects of government regulation on 2 ergo's, Broca's or the Enlarged Group's business.

These forward looking statements are not guarantees of future performance. They have not been reviewed by the auditors of 2 ergo or Broca. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause them to differ from the actual 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. Investors are cautioned not to place undue reliance on the forward looking statements, which speak only as of the date they were made. All subsequent oral or written forward looking statements attributable to 2 ergo, Broca or the Enlarged Group or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward looking statements included in this announcement are based on information available to 2 ergo and Broca on the date hereof. Undue reliance should not be placed on such forward looking statements. Subject to compliance with the City Code, neither Broca nor 2 ergo intends, or undertakes any obligation, to update any information contained in this announcement.

RECOMMENDED PROPOSAL FOR THE ALL SHARE ACQUISITION

2 ergo Group plc

Broca plc

(to be effected by means of a scheme of arrangement)

1 Introduction

The 2 ergo Independent Directors and the Broca Independent Directors are pleased to announce that they have reached agreement on the terms of a recommended all share acquisition of Broca by 2 ergo, to be effected by means of a scheme of arrangement under Part 26 of the 2006 Act.

In view of the involvement of Barry Sharples and Neale Graham as Non-Executive Directors of Broca and Executive Directors of 2 ergo, and the resulting conflicts or potential conflicts of interest, a committee of the Board comprising the Broca Independent Directors has been formed to consider the terms of the Acquisition on behalf of Broca Shareholders.

2 Recommendation

The Broca Independent Directors, who have been so advised by Littlejohn, consider the terms of the Acquisition to be fair and reasonable for Scheme Shareholders.

Littlejohn is acting as the independent financial adviser to Broca pursuant to Rule 3.1 of the City Code. Grant Thornton UK LLP is also acting as financial adviser to Broca. Grant Thornton UK LLP has an audit relationship with Broca and 2 ergo and, as a consequence, with respect to the Acquisition, is not an independent adviser in accordance with Rule 3.1 of the City Code. In providing advice to the Broca Independent Directors, Littlejohn and Grant Thornton UK LLP have taken into account the Broca Independent Directors' commercial assessments.

Accordingly, the Broca Independent Directors unanimously recommend all Scheme Shareholders to vote in favour of the Resolutions to be proposed at the Court Meeting and the General Meeting as each of the Broca Independent Directors has irrevocably undertaken to do in respect of their entire beneficial holdings of 766,706 Ordinary Shares, representing approximately 1.96 per cent. of Broca's issued share capital (and 3.65 per cent. of Broca's issued share capital expected to be in issue and entitled to vote at the Court Meeting and the General Meeting).

3 Summary of the terms of the Acquisition and the Scheme

The Acquisition is proposed to be implemented by means of a scheme of arrangement between Broca and Scheme Shareholders under Part 26 of the 2006 Act (although 2 ergo may, with the consent of the Panel, elect to effect the Acquisition by way of an Offer). The Acquisition will not be completed unless all the Conditions have been satisfied, or, if permitted, waived by close of business on 5 May 2009, or such later date as (subject to the City Code) Broca and 2 ergo may agree and, if required, the Court may approve. 2 ergo has agreed to undertake to the Court to be bound by the terms of the Scheme.

Under the terms of the Scheme, and subject to the satisfaction or (where permitted) waiver of the Conditions, Scheme Shareholders will be entitled to receive New 2 ergo Shares in exchange for the cancellation of their Ordinary Shares on the following basis:

for each Scheme Share

0.0909 of a New 2 ergo Share

Based on the Closing Price of 137.5p per 2 ergo Share on 4 February 2009 (being the last practicable date prior to this announcement), the Acquisition values each Ordinary Share at approximately 12.5p and the existing issued ordinary share capital of Broca at approximately £4.9 million. The consideration represents a premium of:

approximately 25.0 per cent. to 10.0p per Ordinary Share, being the Closing Price on 14 January 2009, the last dealing day prior to commencement of the Offer Period; and

approximately 3.3 per cent. to 12.1p per Ordinary Share, being the average Closing Price for the three months prior to 14 January 2009, the last dealing day prior to commencement of the Offer Period.

Based on the number of Ordinary Shares and 2 ergo Shares in issue as at 4 February 2009 (being the last practicable date prior to the posting of this announcement), it is assumed that existing 2 ergo Shares will represent approximately 91.23 per cent. of the issued ordinary share capital of 2 ergo as enlarged by the Acquisition with the New 2 ergo Shares to be issued pursuant to the Scheme representing approximately 8.77 per cent.

These exchange ratios assume that Broca has not undertaken a Broca Share Capital Change and that 2 ergo has not undertaken a 2 ergo Share Capital Change since the date of this announcement. In the event of a 2 ergo Share Capital Change and/or a Broca Share Capital Change (as the case may be) after the date of this announcement but before the Effective Date, such adjustments shall be made to the Exchange Ratio as RSM Bentley Jennison, on behalf of 2 ergo, and Littlejohn on behalf of Broca, agree are fair and reasonable (and, if required, the Court may approve) such that the Exchange Ratio is the same as it would have been had the relevant 2 ergo Share Capital Change and/or the relevant Broca Share Capital Change (as the case may be) occurred immediately prior to the date of the Scheme Document.

No fractions of a New 2 ergo Share will be allotted to Broca Shareholders. Fractional entitlements to New 2 ergo Shares will not be allotted or issued and will be rounded down to the nearest whole number.

4 Background to and reasons for the recommendation

The Broca Independent Directors believe that a combination of 2 ergo and Broca will benefit Broca's Business for the following reasons:

(a) Opportunity to expand internationally and improved credibility

While Broca has had tangible success with substantial brands such as T-Mobile and Sony Ericsson, it has been constrained by the limited size of its sales team and their network. As an independent entity, it has also lacked stature in competitive bids where trading history and financials have been a factor in decisions by customers. The Broca Independent Directors believe that the most fertile market for Broca's technology is outside the UK and have therefore pursued international partnerships. The Acquisition will deliver greater scale to sales activity and will also provide a significantly more credible profile in bid situations. The 2 ergo Independent Directors expect 2 ergo's existing and developing partnerships to help accelerate the technology's uptake in key developing markets. 2 ergo has built significant mobile operator relationships and has expanded its reach geographically, most recently into India, where Broca has also been developing new business opportunities. The Broca Independent Directors believe that leveraging 2 ergo's sales expertise and relationships with an integrated hierarchy of messaging solutions will accelerate the monetisation of Broca's technology.

The Broca Independent Directors believe that given 2 ergo's recent track record in winning significant bids along with its larger marketing and PR presence, the Enlarged Group will be able to present a highly credible and established platform from which to market and sell Broca's products and services.

(b) Highly complementary markets

The business logic for the Acquisition of Broca by 2 ergo is evident in a number of areas. 2 ergo's current target markets, customer segmentation and the development of its solutions sales capability all suggest a closer fit with Broca's portfolio than was the case at the time of demerger in March 2007.

It is the belief of the Broca Independent Directors that 2 ergo's emphasis on and success in generating sales in sectors such as financial services, entertainment and customer relationship management all suggest a strong fit with Broca's target market.

The Broca Independent Directors believe that, while the integrated Broca team will continue ongoing development of the technology, better integration with 2 ergo's products and services will be achieved within a combined business, since experience and expertise will be shared more closely than is the case with separate entities.

In terms of infrastructure, there is a significant amount of existing commonality between the two companies both in terms of technological infrastructure and facilities. While there will be little change in activities as a function of the Acquisition, there will be cost savings as a result of the reduction in administration and simplification of processes, including the elimination of certain central costs associated with Broca's listing on AIM.

(d) Opportunity to hold shares in a larger company

The Acquisition provides Broca Shareholders with an opportunity to hold shares in a quoted company with a significantly greater market capitalisation. The Broca Independent Directors believe this will afford Broca Shareholders a better opportunity to realise their investment or to continue their involvement in the mobile communication sector and the patented Broca technology through an investment in 2 ergo.

In line with Broca's trading update of 22 December 2008 stating an anticipated requirement for further cash by March 2009, the Acquisition by 2 ergo constitutes Broca's only realistic opportunity to continue as a going concern. If the Scheme is not implemented, and notwithstanding the extension of the 2 ergo Facility, capital will be required in the short term. On the basis of the Directors' recent efforts to secure additional funds through a range of sources, this is not something that can be readily achieved given the current market conditions.

Accordingly, after full consideration of all the relevant factors, the Broca Independent Directors have come to the unanimous conclusion that the Scheme should be recommended to Broca Shareholders.

5 Effect of the Scheme on the interests of the Directors

The Broca Independent Directors have confirmed that they intend to vote in favour of the Scheme and the Resolutions at the Court Meeting and the General Meeting in respect of their entire beneficial holdings of 766,706 Ordinary Shares representing at the date of this announcement approximately 1.96 per cent. of Broca's issued share capital. The Directors who are not Independent Directors will not vote to approve the Scheme and the Resolutions at the Court Meeting and the General Meeting (but have consented to be bound by the Scheme).

The effect of the Scheme on the interests of the Directors does not differ from its effect on the like interests of any other Scheme Shareholder.

6 2 ergo Facility

Further to Broca's trading update of 22 December 2008, in which it stated an anticipated requirement for additional funding by March 2009, Broca Communications Limited has entered into an agreement on 4 February 2009 with 2 ergo Limited to extend its current loan facility from £1 million to £1.3 million. This extended facility is repayable on the date 18 months following 28 July 2008 (the date of the original loan agreement), or, if earlier, on the first written demand made by 2 ergo Limited, being the same terms which apply to the original loan agreement details of which were announced by Broca on 30 July 2008. The additional facility of £300,000 may be drawn down in instalments as may be requested by Broca Communications Limited and agreed with 2 ergo Limited.

Neale Graham and Barry Sharples, Non-Executive Directors of Broca, are also 2 ergo Directors. 2 ergo currently holds in excess of 10 per cent. of the issued share capital of Broca and is considered to be a substantial shareholder for the purposes of the AIM Rules. The extension of the 2 ergo Facility is therefore classified as a related party transaction for the purposes of the AIM Rules. Accordingly, the Broca Independent Directors, having consulted with Grant Thornton UK LLP (in its capacity as the Company's nominated adviser), confirm that they are satisfied that the terms of the extension of the 2 ergo Facility are fair and reasonable insofar as Broca Shareholders are concerned.

7 Broca management and employees

2 ergo has confirmed that it has no current plans to change the operations or strategy of Broca or its fixed assets although these matters may be reviewed in the future. 2 ergo and Broca's businesses are re-locating in early 2009 to elsewhere in the Manchester area.

The 2 ergo Board has given assurances to the Broca Independent Directors that the existing contractual employment rights, including pension rights, of all employees of the Broca Group will continue to be safeguarded. Save as set out below, it is not envisaged that redundancies or other changes to employment will result from implementation of the Scheme.

It is proposed that, upon the Scheme becoming Effective, each of Peter Harvey and Roger Alexander, who are current Non-Executive Directors of Broca, and Ian Price, who is the current Chief Executive of Broca, will resign from the Board. However, Ian Price will continue to be employed by Broca until the business is integrated into 2 ergo, and each of Neale Graham, Barry Sharples and Michael Hawkes, who are currently Broca Directors, will remain appointed to the Board.

Save as set out above, the 2 ergo Board does not intend to change the terms and conditions of employment of the Broca Directors.

Michael Hawkes has agreed to sign a lock-in and orderly market agreement in respect of the New 2 ergo Shares to be allotted to him on completion of the Acquisition. The lock-in provisions will expire on 1 August 2010 and the orderly market provisions will expire 1 August 2011. Further details of these agreements will be set out in the Scheme Document.

8 Irrevocable undertakings

2 ergo has received irrevocable undertakings to vote in favour of the Scheme and the Resolutions at the Court Meeting and the General Meeting from:

each of the Broca Independent Directors in respect of their entire beneficial holdings of 766,706 Ordinary Shares representing at the date of the announcement approximately 1.96 per cent. of Broca's issued share capital (and 3.65 per cent. of Broca's issued share capital expected to be in issue and entitled to vote at the Court Meeting and the General Meeting);

an institutional Broca Shareholder, in respect of its entire holding of 2,920,000 Ordinary Shares to which it has been granted voting authority over representing at the date of the announcement approximately 7.47 per cent. of Broca's issued share capital (and 13.90 per cent. of Broca's issued share capital expected to be in issue and entitled to vote at the Court Meeting and the General Meeting).

In aggregate, therefore, 2 ergo has received irrevocable undertakings to vote in favour of the Scheme and the Resolutions in respect of a total of 3,686,706 Ordinary Shares representing at the date of this announcement approximately 9.43 per cent. of the issued share capital of Broca (and 17.56 per cent. of Broca's issued share capital expected to be in issue and entitled to vote at the Court Meeting and the General Meeting). Further details of these irrevocable undertakings are set out in Appendix B to this announcement.

9 Information on Broca and current trading

Broca completed its demerger from 2 ergo and listed on AIM on 6 March 2007. Broca's business is the development and exploitation of technology with the intention of enabling M-commerce to be carried out securely via digital services, principally by extending conventional SMS messaging from existing mobile telecommunications equipment. The technology is based upon Broca's innovative, patented key-cycling protocol.

The Directors believe that the technology is capable of securing mobile data through message encryption, PIN protection and recorded delivery. This level of security is not currently available to mobile device users in connection with M-payments. Additional benefits include the user-friendly data capture facility that has been used successfully in market research programmes with Sony Ericsson and T-Mobile (UK).

Furthermore, the ability to update message formats using Broca's Studio tool ensures that the technology is particularly relevant for high-growth markets in developing economies that do not have widespread or reliable GPRS coverage. Whilst the initial technology has been optimised for use with SMS, the Directors believe the Protocol should ultimately be applicable to other forms of digital messaging and also E-commerce.

As set out in Broca's trading statement of 22 December 2008, Broca continues to negotiate new project opportunities with significant potential. However, despite securing additional revenues from pilot activity for mobile banking services in partnership with Telnet in Africa, and growing interest in, and market readiness for, Broca's technology, there has been slippage in the completion of a number of key licence contracts. Notwithstanding this slippage, Broca has observed an accelerating market readiness for its technology. With specific regard to security of data in mobile communications, there is an increasing awareness of the risks of data interception among police forces, Governments, and regulatory bodies. The market for systems dealing with the security and management of privacy of information, particularly with respect to mobile communications, is set to increase globally.

The Directors also believe that there is a growing trend towards 'paperless' integrated payment, transportation and ticketing systems via mobile telephones. This is particularly prevalent in the UK where there is a drive to make events such as the 2012 Olympics paperless. Broca's technology is well positioned to address the security concerns inherent in 'paperless' systems, as evidenced by a number of pipeline opportunities in various parts of the world. However, whilst the economic environment continues to be uncertain, Broca remains cautious in its outlook.

10 Information on 2 ergo and current trading

(a) Overview

2 ergo is a leading provider of integrated and converged mobile products and services. 2 ergo employs 'Multiserve', its proprietary core technology platform which integrates voice, data, text, email, video and mobile internet channels to form the intelligence layer between network operators, the internet and customer-facing applications.

Through its product suite, 2 ergo enables its customer base of multinational businesses, mobile network operators and marketing agencies to take advantage of integrated mobile communications to mobilise their business processes, reduce costs, increase sales and enhance their customer experience.

While 2 ergo's growth has principally been organic, it has made selected acquisitions including 2 ergo Americas Inc, formerly Proteus Inc, which was acquired in September 2006, and has developed the scale of the business in North America, as well as expanding activities into Latin America. The Broca Business was established through the acquisition of certain intellectual property from Sure on Sight Limited in June 2005. The demerger of Broca was completed in March 2007.

Since the demerger with Broca, 2 ergo has continued to enjoy growth in its business and has successfully increased its operating margins from 7.2 per cent. to 9.2 per cent. 2 ergo has also announced an intention to grow by the acquisition of other businesses within its wider market place as and when such opportunities arise.

(b) Rationale for the Acquisition

The 2 ergo Independent Directors believe that the intellectual property assets of Broca can be exploited more effectively by the business becoming part of the Enlarged Group. The existing routes to market, sales networks and geography of the 2 ergo Group will, in addition to the existing sales network of Broca, enable Broca's products to be marketed more effectively across Europe, the Americas and (following 2 ergo's partnership announcement on 26 January 2009) Asia.

The 2 ergo Independent Directors consider the technology developed within Broca to have significant potential to generate future earnings as part of the 2 ergo Group and to complement, and further differentiate, the existing suite of services that 2 ergo currently offers to its customer base. The 2 ergo Independent Directors believe that in the current economic climate the development constraints experienced by Broca will be eased within the Enlarged Group.

In addition, whilst the 2 ergo Board believe that Broca's patented technology could provide security solutions for most mobile phone networks globally, it has recognised demand and feels that there is particularly strong potential in emerging markets such as Asia, Africa and South America. For example, in Asia the 2 ergo Independent Directors believe these opportunities will be best exploited via 2 ergo's partnership with ActiveMedia Technologies, a partner with direct connectivity to the Indian mobile network operators, which opens access for 2 ergo to over 300 million subscribers, a number which is increasing by up to 10 million subscribers per month.

The Acquisition is also expected to enable material cost savings to be made in the operation of Broca's existing business, including the elimination of certain central costs associated with Broca's listing on AIM.

The 2 ergo Independent Directors expect further acquisitions to be made pursuant to 2 ergo's stated acquisition strategy, the execution of which should bring further complementary benefits to the Broca product suite.

On 19 November 2008, 2 ergo announced its preliminary results for the year ended 31 August 2008, reporting turnover of £32.6m (2007: £33.3m) and gross profit of £9.8m (2007: £8.6m). The reduction in turnover and increase in gross profit was due to a focus on higher margin business. Overall, 2 ergo made a pre-tax profit of £3.4m (2007: £2.6m). This equated to an adjusted earnings per share (applying 2008 tax rates to the historic 2007 figure to exclude one off tax benefits enjoyed in 2007) of 8.5p (2007: 6.7p). Net cash as at 31 August 2008 was £9.1m with a net cash inflow from operating activities of £1.2m. 2 ergo remains cash generative and debt free.

2 ergo's trading for the first half of the current year is in line with the 2 ergo Board's expectations for the year.

11 Structure of the Acquisition and the Scheme

The Acquisition is being effected by means of a scheme of arrangement between Broca and Scheme Shareholders under Part 26 of the 2006 Act (although 2 ergo may, with the consent of the Panel, elect to effect the Acquisition by way of an Offer). The procedure involves an application by Broca to the Court to sanction the Scheme and to confirm the cancellation of the Scheme Shares. The reserve arising on cancellation of the Scheme Shares will be applied in paying up the New Broca Shares to be issued to 2 ergo with the result that 2 ergo will own the entire issued share capital of Broca.

In consideration of the cancellation of their Scheme Shares, on terms that the reserve arising on such cancellation is applied in paying up the New Broca Shares to be issued to 2 ergo, Scheme Shareholders who are on the Register of Members at the Scheme Record Time will receive New 2 ergo Shares from 2 ergo credited as fully paid.

The Acquisition will only be implemented if all the Conditions have been satisfied or, if permitted, waived. In summary, the implementation of the Scheme, and therefore the Acquisition, is conditional upon, inter alia:

the Scheme becoming Effective by not later than the Long Stop Date, or such later (if any) as, subject to the City Code, 2 ergo and Broca may agree and, if required, the Court may allow;

approval of the Scheme by a majority in number representing 75 per cent. or more in value of the Scheme Shareholders present and voting, either in person or by proxy, at the Court Meeting, or at any adjournment thereof;

the Special Resolution being duly passed by the requisite majority at the General Meeting, or at any adjournment thereof;

the passing at the 2 ergo AGM, or at any adjournment thereof, of such resolutions as may be necessary to approve and effect the Acquisition and implement the Scheme;

the other Conditions to the implementation of the Scheme set out in Part 1 of Appendix A to this announcement, being satisfied or, where permitted, waived; and

the sanction (with or without modification agreed by Broca and 2 ergo) of the Scheme and the confirmation of the associated reduction of the share capital of Broca by the Court and the delivery of certified copies of the Court Orders together with the minute of the Capital Reduction of Broca approved by the Court to, and the registration of the Reduction Court Order by, the Registrar of Companies.

It is expected that dealings in Ordinary Shares will be suspended with effect from 6 April 2009 (the business day before the Scheme Record Time) and that cancellation of admission of the Ordinary Shares trading on AIM will occur at 7.00 a.m. on the business day following the Effective Date.

On the Effective Date, share certificates in respect of Ordinary Shares will cease to be valid and should, if so requested by Broca, be sent to Broca for cancellation. In addition, on the Effective Date, entitlements to Ordinary Shares held within CREST will be cancelled. It is also proposed that, following the Effective Date and after the Ordinary Shares are delisted, Broca will be re-registered as a private company.

Further details of the Scheme will be contained in the Scheme Document.

The Scheme will require the approval of Scheme Shareholders at the Court Meeting and the passing of the Special Resolution at the separate General Meeting, both of which are expected to be held at the offices of Halliwells LLP, 3 Hardman Square, Spinningfields, Manchester, M3 3EB on 13 March 2009. The Acquisition is also conditional on the of passing a resolution at the 2 ergo AGM to approve the acquisition of New 2 ergo Shares by Barry Sharples, Neale Graham and Keith Seeley for the purposes of section 190 of the 2006 Act pursuant to the implementation of the Scheme.

12 Broca Share Options

The Broca Share Options have an exercise price in excess of the price offered by 2 ergo for each Scheme Share, such that exercise of these options would be uneconomical. The relevant holders of these options will be informed in writing of the effect of the Scheme on their rights under the Broca Share Options. Although these options will continue to be exercisable in accordance with their terms and holders of such options will be given the opportunity to exercise their options which have vested, it is not expected that such holders will wish to exercise them. No further or additional proposals will therefore be made to holders of options under the Broca Share Options.

13 Alternative implementation of the Acquisition by way of an Offer

2 ergo reserves the right, with the consent of the Panel, to elect to implement the Acquisition by way of an Offer. Any such Offer will be implemented on substantially the same terms (subject to appropriate amendments) as those which would apply to the Scheme and will represent no diminution in the value of the offer. Any such Offer will be subject to a 90 per cent. acceptance condition or such lower percentage, being more than 50 per cent., as 2 ergo may decide with the consent of the Panel. Furthermore, if sufficient acceptances of such Offer are received and/or sufficient Ordinary Shares are otherwise acquired, it is the intention of 2 ergo to apply the provisions of sections 979 to 982 (inclusive) of the 2006 Act to acquire compulsorily any outstanding Ordinary Shares to which the Offer relates.

14 Implementation Agreement

Broca and 2 ergo have agreed the terms on which they will co-operate with regard to the implementation of the Scheme and pursuant to which Broca has undertaken to implement the Scheme as a scheme of arrangement under Part 26 of the 2006 Act.

Broca has undertaken to 2 ergo to convene the Court Meeting and the General Meeting. Further details of the Implementation Agreement will be set out in the Scheme Document.

15 Description of New 2 ergo Shares

The New 2 ergo Shares to be issued and delivered as consideration under the Acquisition will be fully paid, will rank pari passu for any dividend declared or paid by 2 ergo by reference to a record date on or after the Effective Date and will otherwise rank pari passu in all respects with 2 ergo Shares in issue at the time the New 2 ergo Shares are delivered under the Acquisition. The New 2 ergo Shares will be issued free from all liens, right of set-off, counterclaim, charges, equitable interests, encumbrances and other third party rights and interests of any nature whatsoever which 2 ergo may otherwise be, or claim to be, entitled against such Broca Shareholder.

Application will be made by 2 ergo for the New 2 ergo Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings, for normal settlement, will commence at 8.00 a.m. on the business day after the Effective Date which, subject to the sanction of the Scheme, the delivery of the Scheme Court Order to the Registrar of Companies and the satisfaction (or waiver, if permitted) of the Conditions, is expected to be on 8 April 2009.

16 Overseas Shareholders

As regards Overseas Shareholders, the Acquisition may be effected by the laws of their relevant jurisdiction. Such Overseas Shareholders should inform themselves about and observe any applicable legal requirements. It is the responsibility of each Overseas Shareholder to satisfy himself as to the full observance of the laws of the relevant jurisdiction in connection with the Acquisition, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities which are required to be observed, and the payment of any issue, transfer or other taxes due in such jurisdiction.

The Acquisition does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for shares in any jurisdiction in which such offer or solicitation is or would be unlawful.

This announcement has been prepared for the purposes of complying with English law, the City Code and the AIM Rules 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. Overseas Shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme in their particular circumstances.

17 Rule 3.2 of the City Code

Barry Sharples and Neale Graham are Non-Executive Directors of Broca. Barry Sharples, Neale Graham and Keith Seeley also have material shareholdings in Broca. There are also significant other cross-shareholdings in 2 ergo and Broca. In such circumstances, Rule 3.2 of the City Code requires that the 2 ergo Independent Directors obtain independent advice as to whether or not the Acquisition is in the interests of the 2 ergo Shareholders. Numis is acting as financial adviser to 2 ergo in relation to the Acquisition but as Numis also has a broking relationship with Broca, it is not deemed to be an independent adviser in accordance with the City Code. RSM Bentley Jennison is therefore acting as the independent financial adviser to 2 ergo in relation to the Acquisition pursuant to Rule 3.2 of the City Code. The 2 ergo Independent Directors, having been so advised by RSM Bentley Jennison, consider the terms of the Acquisition to be fair and reasonable and in the best interests of 2 ergo Shareholders. In providing advice to the 2 ergo Independent Directors, RSM Bentley Jennison has taken into account the commercial assessments of the 2 ergo Independent Directors.

Enquiries:

2 ergo Group plc	Tel: +44 (0) 1706 221 777
Neale Graham, Joint Chief Executive
Barry Sharples, Joint Chief Executive

Numis Securities Limited (financial adviser, nominated adviser and broker to 2 ergo)	Tel: +44 (0) 20 7260 1000
Stuart Skinner (as Nominated Adviser) David Poutney (as Corporate Broker)

RSM Bentley Jennison (financial adviser to 2 ergo)	Tel: +44 (0) 161 819 3030
David Simmons

Broca plc	Tel: +44 (0) 845 006 6661
Ian Price, Chief Executive

Grant Thornton UK LLP (financial adviser and nominated adviser to Broca)	Tel: +44 (0) 20 7383 5100
Fiona Owen

Littlejohn (financial adviser to Broca)	Tel: +44 (0) 20 7516 2210
Claire Palmer

Dealing disclosure requirements

Forward-looking statements

This announcement contains statements about 2 ergo, Broca and the Enlarged Group that are or may be forward looking statements. All statements other than statements of historical facts included in this announcement may be forward looking statements. Forward looking statements often use words such as "target", "plan", "believe", "expect", "aim", "intend", "will", "should", "could", "would", "may", "consider", "anticipate", "estimate", "synergy", "cost saving", "project", "goal" or "strategy" or words or terms of similar substance or the negative thereof. Forward looking statements include statements relating to the following: (i) the expected timetable for implementing the Offer, future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects of 2 ergo, Broca or the Enlarged Group; (ii) business and management strategies and the expansion and growth of 2 ergo's, Broca's or the Enlarged Group's operations and potential synergies resulting from the acquisition of Broca by 2 ergo; and (iii) the effects of government regulation on 2 ergo's, Broca's or the Enlarged Group's business.

APPENDIX A: CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE ACQUISITION

Part 1: Conditions to the Acquisition

The Acquisition is conditional upon the Scheme becoming unconditional and effective by no later than the Long Stop Date, or such later date (if any) as, subject to the requirements of the City Code, 2 ergo and Broca may agree and, if required, the Court may allow.

1 The Scheme is subject to the following conditions:

(a) the Scheme is approved by a majority in number representing 75 per cent. or more in value of the holders of Scheme Shares present and voting, either in person or by proxy, at the Court Meeting or at any adjournment thereof;

(b) the resolutions required to approve and implement the Scheme being duly passed by the requisite majority at the General Meeting or at any adjournment thereof;

(c) the sanction (with or without modification, but subject to any modification being on terms acceptable to Broca and 2 ergo) of the Scheme and the confirmation of any reduction of capital involved therein by the Court and the minute book of such reduction attached thereto being delivered to the Registrar of Companies and, in relation to the reduction of capital, being registered by him; and

(d) the passing at the 2 ergo AGM (or at any adjournment of such meeting) of such resolutions as may be necessary to approve and effect the Acquisition and implement the Scheme.

2 2 ergo and Broca have agreed that, subject to the provisions of paragraph 4 below, the Scheme is also conditional upon, and, accordingly, the necessary actions to give effect to the Scheme will only be taken on, the satisfaction or waiver of the following conditions:

(a) Admission of the New 2 ergo Shares becoming effective in accordance with the AIM Rules or, if 2 ergo and Broca so determine and subject to the consent of the Panel (if required), the London Stock Exchange agreeing to admit the New 2 ergo Shares to AIM subject only to (i) the allotment of such shares and/or (ii) the Scheme becoming effective;

(b) except as Disclosed, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the wider Broca Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which in consequence of the Acquisition or the proposed acquisition of any shares or other securities in Broca by 2 ergo or because of a change in the control or management of Broca or otherwise, could reasonably be expected to result (in each case to an extent which is material in the context of the wider Broca Group taken as a whole) in:

(i) any moneys borrowed by or any other indebtedness (actual or contingent) of, or grant available to any member of the wider Broca Group, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any member of the wider Broca Group thereunder being terminated or adversely modified or affected or any obligation or liability arising or any adverse action being taken thereunder;

(iii) any assets or interests of any member of the wider Broca Group being or falling to be disposed of or charged or ceasing to be available to such member or any right arising under which any such asset or interest could be required to be disposed of or charged otherwise than in the ordinary course of business;

(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the wider Broca Group;

(v) the rights, liabilities, obligations or interests of any member of the wider Broca Group in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or adversely affected;

(vi) the value of any member of the wider Broca Group or its financial or trading position or prospects being materially prejudiced or materially adversely affected;

(vii) any member of the wider Broca Group ceasing to be able to carry on business under any name under which it presently does so; or

(viii) the creation of any liability, actual or contingent, by any member of the wider Broca Group other than in the ordinary course of business,

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 Broca Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would result in or could reasonably be expected to result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this condition 2(b) (in each case to an extent which is material in the context of the wider Broca Group as a whole);

(c) no government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, 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 or made any statute, regulation, decision or order, or having taken any other steps which would or could reasonably be expected to (in each case to an extent which is material in the context of the wider Broca Group as a whole):

(i) require, prevent or delay the divestiture, or alter the terms envisaged for any proposed divestiture by any member of the wider 2 ergo Group or any member of the wider Broca Group of all or any portion of their respective businesses, assets or property 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 material part thereof;

(ii) require, prevent or delay the divestiture by any member of the wider 2 ergo Group of any shares or other securities in Broca;

(iii) impose any limitation on, or result in a delay in, the ability of any member of the wider 2 ergo 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 Broca Group or the wider 2 ergo Group or to exercise management control over any such member;

(iv) impose any limitation on the ability of any member of the wider Broca Group or the wider 2 ergo Group to integrate or co-ordinate the business of any member of the wider 2 ergo Group, or any part of it, with that member of the wider Broca Group and/or any other member of the wider 2 ergo Group;

(v) otherwise adversely affect the business, assets or profits of any member of the wider Broca Group;

(vi) make the Acquisition or the Scheme or their implementation or the acquisition or proposed acquisition by 2 ergo or any member of the wider 2 ergo Group of any shares or other securities in, or control of, Broca void, illegal, and/or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, delay or otherwise interfere with the same, or impose additional conditions or obligations with respect thereto, or otherwise challenge or interfere therewith; or

(vii) other than pursuant to the implementation of the Acquisition require any member of the wider 2 ergo Group or the wider Broca Group to offer to acquire any shares or other securities or interest in any member of the wider Broca Group or the wider 2 ergo Group owned by any third party,

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 having expired, lapsed or been terminated;

(d) all necessary filings or applications having been made in connection with the Acquisition and the Scheme and all statutory or regulatory obligations in any jurisdiction having been complied with in all material respects in connection with the Acquisition and the Scheme or the acquisition by any member of the wider 2 ergo Group of any shares or other securities in, or control of, Broca and all authorisations, orders, grants, consents, licences, confirmations, clearances, permissions and approvals (collectively "Consents") reasonably deemed necessary by 2 ergo for or in respect of, the Acquisition and the Scheme or the proposed acquisition of any shares or other securities in, or control of, Broca by any member of the wider 2 ergo Group having been obtained in terms and in a form reasonably satisfactory to 2 ergo from all appropriate Third Parties or persons with whom any member of the wider Broca Group has entered into contractual arrangements in each case where the absence of such Consent would have a material adverse effect on the wider Broca Group taken as a whole and all such Consents together with all material Consents reasonably necessary to carry on the business of any member of the wider Broca Group which is material remaining in full force and effect and all filings reasonably necessary for such purpose having 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 and the Scheme otherwise become Effective and all necessary statutory or regulatory obligations in any jurisdiction having been complied with in all material respects;

(e) except as Disclosed, no member of the wider Broca Group having since 31 August 2008:

(i) save as between Broca and wholly-owned subsidiaries of Broca, issued, authorised or proposed the issue of additional shares of any class;

(ii) save as between Broca and wholly-owned subsidiaries of Broca, issued or agreed to issue, authorised or proposed the issue of securities convertible or exchangeable into shares of any class or rights, warrants or options to subscribe for, or acquire, any shares or such convertible securities;

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

(iv) save for intra-Broca Group transactions, 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 and to an extent which is material in the context of the Broca Group taken as a whole;

(v) save for intra-Broca Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital or issued, authorised or proposed the issue of any debentures;

(vi) save for intra-Broca Group transactions and save in the ordinary course of business, become subject to any guarantee or contingent liability;

(vii) save for intra-Broca Group transactions, purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the reorganisation of Broca's share capital in connection with the Scheme, made any other change to its share capital;

(viii) entered into, implemented, 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 and otherwise than in respect of this Scheme which in each case is material in the context of the Broca Group taken as a whole;

(ix) save in the ordinary course of business entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction 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 reasonably likely to be materially restrictive on the businesses of the wider Broca Group taken as a whole or the wider 2 ergo Group taken as a whole or which involves or could involve an obligation of such a nature or magnitude, and in each such case is or would be reasonably likely to be material in the context of the Broca Group taken as a whole;

(x) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract with any of the Directors, and in each such case is or would be reasonably likely to be material in the context of the Broca Group taken as a whole;

(xi) other than in respect of a member which is dormant and was solvent at the relevant time, taken or proposed any corporate action or had any legal proceedings started or threatened against it 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 which in each case is material in the context of the Broca Group taken as a whole;

(xii) been unable or admitted in writing that it is unable to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased (or threatened to cease) carrying on the whole or a substantial part of its business or entered into or proposed any composition or voluntary arrangement with its creditors (or any class of them) or filed at court any documentation in order to obtain a moratorium prior to any such voluntary arrangement or, by reason of actual or anticipated financial difficulties, commenced negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness;

(xiii) made, or announced any proposal to make, any material favourable change or addition to any retirement, death or disability benefit or any other employment related benefit of or in respect of any of its directors, employees, former directors or former employees;

(xiv) other than in connection with the Scheme made any amendment to its memorandum or articles of association;

(xv) waived or compromised any claim, or authorised any such waiver or compromise, otherwise than in the ordinary course of business which in each case is material in the context of the Broca Group as a whole; or

(xvi) entered into any 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, effect any of the transactions, matters or events referred to in this condition 2(e),

and, for the purposes of sub-paragraphs (iii), (iv), (v), (vi), and (vii) of this condition 2(e), the term "Broca Group" shall mean Broca and its wholly-owned subsidiaries.

3 For the purposes of these conditions, the "wider Broca Group" means Broca and its subsidiary undertakings, associated undertakings and any other undertaking in which Broca and/or such undertakings (aggregating their interests) have a significant interest and the "wider 2 ergo Group" means 2 ergo and its subsidiary undertakings, associated undertakings and any other undertaking in which 2 ergo 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 2006 Act, and "associated undertaking" has the meaning given by the 1985 Act, other than paragraph 20(1)(b) of Schedule 4A to the 1985 Act which shall be excluded for this purpose, and "significant interest" means a direct or indirect interest in 10 per cent. or more of the equity share capital (as defined in that Act).

4 Subject to the requirements of the Panel or the Court, 2 ergo reserves the right to waive, in whole or in part, all or any of the above conditions except, save in the circumstances set out in Part 2 of Appendix A below, the conditions in paragraph 1.

Part 2: Certain further terms of the Acquisition

1 The Acquisition and the Scheme are governed by English law and are subject to the jurisdiction of the English courts and to the terms and conditions set out in this Appendix A.

2 Subject to the consent of the Panel, 2 ergo reserves the right to elect to implement the Acquisition by way of a contractual offer. In such event, such offer will be implemented on the same terms (subject to appropriate amendments including (without limitation) an acceptance condition set at 90 per cent. (or such lower percentage not being less than 50 per cent. as 2 ergo may decide with the consent of the Panel) of the shares to which the offer relates) so far as applicable as those which would apply to the Scheme.

3 Persons resident in, or citizens or nationals of, jurisdictions outside the UK, or persons or custodians, nominees or trustees for citizens or nationals or residents of jurisdictions outside the UK ("overseas persons") may be subject to certain prohibitions or may be affected by the laws of the relevant overseas jurisdiction. Such overseas persons should inform themselves about and observe any applicable requirements.

APPENDIX B: IRREVOCABLE UNDERTAKINGS

The following Broca Independent Directors have given irrevocable undertakings to vote in favour of the Scheme and the Resolutions at the Court Meeting and the General Meeting.

Directors
Name	No. of Ordinary Shares	% of Broca's issued share capital	% of Broca's issued share capital expected to be in issue and entitled to vote at the Court Meeting and General Meeting
Peter Harvey	25,000	0.06%	0.12%
Roger Alexander	10,000	0.03%	0.05%
Michael Hawkes	731,706	1.87%	3.48%
Total	766,706	1.96%	3.65%

These irrevocable undertakings will remain binding in the event of a higher competing offer being made for Broca, unless the Scheme lapses or is withdrawn.

The Broca Shareholder listed below has given an irrevocable undertaking to vote in favour of the Scheme and the Resolutions at the Court Meeting and the General Meeting.

Institutional shareholder

Irrevocable Undertaking
Name	No. of Ordinary Shares	% of Broca's issued share capital	% of Broca's issued share capital expected to be in issue and entitled to vote at the Court Meeting and General Meeting
Majedie Investments plc	2,920,000	7.47%	13.90%

This undertaking will lapse on the Scheme being withdrawn or lapsing or if the Scheme does not proceed if, after release of this Announcement, either: the Panel consents to 2 ergo not implementing the Scheme; an event occurs which means that 2 ergo is no longer required by the City Code to implement the Scheme; or 2 ergo becomes aware that any term or condition of the Scheme as set out in this Announcement has or may become incapable of being fulfilled or satisfied. In addition, if at any time prior to the Scheme becoming effective, lapsing or being withdrawn, a third party makes a materially higher competing offer to acquire the entire issued and to be issued share capital of Broca, where material in respect of a higher competing offer means an offer which exceeds the price per Broca Share offered under the Scheme by more than 10%, this undertaking may be revoked by the above institutional shareholder serving written notice on 2 ergo.

APPENDIX C: BASES OF CALCULATION AND SOURCES OF INFORMATION

(a) The value attributed to the entire issued share capital of Broca is based upon the 39,093,108 Broca Shares in issue as at the date of this announcement.

(b) Unless otherwise stated, all prices for Broca Shares and 2 ergo Shares have been derived from the AIM Appendix to the Daily Official List and represent the Closing Prices on the relevant date.

(c) The financial information relating to 2 ergo is extracted from the announcement by 2 ergo of its preliminary results for the year ended 31 August 2008, prepared in accordance with IFRS, announced on 19 November 2008.

APPENDIX D: RELEVANT SECURITIES OF BROCA AND 2 ERGO IN WHICH 2 ERGO, 2 ERGO DIRECTORS AND THEIR RELATED PARTIES HAVE AN INTEREST OR RIGHT TO SUBSCRIBE

					Legal		Beneficial
	Broca Shares	% of Broca's issued share capital	Broca share options	Exercise price (£)	2 ergo Shares	% of 2 ergo's issued share capital (net of treasury)	2 ergo Shares	% of 2 ergo's issued share capital (net of treasury)
2 ergo	7,487,542	19.15%	-	-	-	-	-	-
Neale Graham	4,797,711	12.27%	500,000	0.52	4,797,711	16.05%	2,597,711	8.69%
Barry Sharples	4,797,711	12.27%	500,000	0.52	4,797,711	16.05%	2,597,711	8.69%
Lammtara Industries EBT Trustees Limited	862,426	2.21%	-	-	705,861	2.36%	1,005,861	3.37%
Keith Seeley	798,725	2.04%	-	-	798,725	2.67%	798,725	2.67%
Martin Caller	120,000	0.31%	-	-	120,000	0.40%	120,000	0.40%
Jill Collighan	90,858	0.23%	500,000	0.52	90,858	0.30%	1,090,858	3.65%
Total	18,954,973	48.49%	1,500,000		11,310,866	37.85%	8,210,866	27.48%

Number of Ordinary Shares in issue	39,093,108
Number of 2 ergo shares in issue	29,883,838

APPENDIX E: DEFINITIONS

The following definitions apply throughout this announcement unless the context require otherwise:

"1985 Act"	the Companies Act 1985, as amended;
"2006 Act"	the Companies Act 2006, as amended;
"2 ergo"	2 ergo Group plc, a public limited company incorporated in England and Wales under registered number 05010663 whose registered office is situated at St Mary's Chambers, Haslingden Road, Rawtenstall, Lancashire BB4 6QX;
"2 ergo AGM"	the annual general meeting of 2 ergo to be held at 10 a.m. on 3 March 2009 (or any adjournment thereof) convened to consider and, if thought fit, approve such resolutions as may be necessary to approve and effect the Acquisition and implement the Scheme;
"2 ergo Board" or "2 ergo Directors"	the directors of 2 ergo at the date of this announcement;
"2 ergo Facility"	the loan made by 2 ergo Limited to Broca Communications Limited;
"2 ergo Group"	2 ergo and its subsidiaries and subsidiary undertakings from time to time, or any of them, as the context requires;
"2 ergo Independent Directors"	the independent directors of 2 ergo: Martin Caller, Keith Seeley and Jill Collighan;
"2 ergo Share Capital Change"	(i) any change to 2 ergo's share capital other than any 2 ergo Shares purchased and cancelled pursuant to any existing repurchase facility, any 2 ergo Shares issued pursuant to 2 ergo share option schemes or any 2 ergo Shares issued following the conversion of securities convertible into 2 ergo Shares which are outstanding as at the date of the Scheme Document, or (ii) the making of an extraordinary distribution by 2 ergo (but excluding, for the avoidance of doubt, any dividends made in the ordinary course) in cash or specie other than in exchange for fair value in cash or specie;
"2 ergo Shareholders"	registered holders of 2 ergo Shares and "2 ergo Shareholder" means any one of them;
"2 ergo Shares"	ordinary shares of 1p each in the capital of 2 ergo and "2 ergo Share" means any one of them;
"Acquisition"	the proposed acquisition by 2 ergo of Broca by means of the Scheme;
"Admission"	the admission of the New 2 ergo Shares to trading on AIM in accordance with the AIM Rules;
"AIM"	the market of that name operated and regulated by the London Stock Exchange;
"AIM Rules"	the AIM rules for companies whose shares are admitted to trading on AIM published by the London Stock Exchange;
"Board" or "Directors"	the directors of Broca at the date of this announcement;
"Broca"	Broca plc, a public limited company incorporated in England and Wales under registered number 06079040 whose registered office is situated at St Mary's Chambers, Haslingden Road, Rawtenstall, Lancashire BB4 6QX;
"Broca Articles"	the articles of association of Broca in force from time to time;
"Broca Business"	inter alia the SMS/MMS, M-commerce and M-payment business carried on by the Broca Group as at the date of admission to trading on AIM;
"Broca Group"	Broca and its subsidiaries and subsidiary undertakings from time to time, or any of them, as the context requires;
"Broca Independent Directors"	the independent directors of Broca: Peter Harvey, Roger Alexander, Ian Price and Michael Hawkes;
"Broca Share Capital Change"	(i) any change to Broca's share capital other than any Ordinary Shares issued pursuant to any Broca Share Scheme, or (ii) the making of any distribution by Broca whether in cash or otherwise;
"Broca Share Options"	options over Ordinary Shares granted pursuant to the Broca Share Schemes;
"Broca Share Schemes"	the Broca plc Executive Share Option Scheme and the Broca plc EMI Scheme;
"Broca Shareholders"	the registered holders of Ordinary Shares and "Broca Shareholder" means any one of them;
"Capital Reduction"	the proposed reduction of share capital of Broca pursuant to the Scheme;
"City Code"	the City Code on Takeovers and Mergers;
"Closing Price"	the closing middle market quotations of an Ordinary Share or a 2 ergo Share as derived from the AIM Appendix of the Daily Official List (as the context requires);
"Conditions"	the conditions to the implementation of the Scheme and the Acquisition set out in Part 1 of Appendix A to this announcement and "Condition" means any one of them;
"Court"	the High Court of Justice in England and Wales;
"Court Meeting"	the meeting (including any adjournment thereof) of the Broca Shareholders convened by an order of the Court under section 896 of the 2006 Act, to consider, and if thought fit, vote on the Scheme, with or without notification;
"Court Orders"	the Scheme Court Order and the Reduction Court Order;
"CREST Regulations"	the Uncertified Securities Regulations 2001 (SI 2001) No. 3755);
"CREST"	a relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is operator (as defined in the CREST Regulations);
"Daily Official List"	the Daily Official List of the London Stock Exchange;
"Disclosed"	(i) disclosed in any public announcement by Broca to a Regulatory Information Service prior to 5 February 2009, (ii) disclosed in the annual report and accounts of Broca for the financial year ended 31 August 2008, or (iii) fairly disclosed in writing or in any documents delivered by or on behalf of Broca to 2 ergo or its advisers prior to 5 February 2009;
"Enlarged Group"	the 2 ergo Group as enlarged by the Acquisition;
"Effective"	the Scheme having become effective in accordance with its terms;
"Effective Date"	the date on which the Scheme becomes Effective (which is expected to be on 7 April 2009);
"Exchange Ratio"	the ratio of 0.0909 of a New 2 ergo Share for every 1 Scheme Share;
"Financial Services Authority" or "FSA"	the Financial Services Authority of the United Kingdom;
"General Meeting"	the general meeting of Broca (including any adjournment thereof) convened to consider and, if thought fit, approve the Special Resolution;
"Grant Thornton International"	a non-practicing, non-trading international umbrella organisation comprising a network of independent member and correspondent firms throughout the world. Grant Thornton International is not an international/global/worldwide partnership either in relation to all of the members collectively or any two or more members together. In particular, Grant Thornton UK LLP does not carry on business in the United States of America or Canada and is a separately owned and managed business from entities known as Grant Thornton LLP carrying on business in those territories;
"Grant Thornton UK LLP"	Grant Thornton UK LLP, limited liability partnership incorporated under registered number OC307742 whose registered office is situated at Grant Thornton House, Melton Street, Euston Square, London NW1 2EP and which is the UK member firm of Grant Thornton International;
"IFRS"	International Financial Reporting Standards as issued by the International Accounting Standard Board;
"Implementation Agreement"	the agreement entered into between Broca and 2 ergo dated 4 February 2009 in relation to the Acquisition;
"Littlejohn"	Littlejohn LLP, a limited liability partnership incorporated under registered number OC342572 whose registered office is situated at 1 Westferry Circus, Canary Wharf, London E14 4HD;
"London Stock Exchange"	London Stock Exchange plc;
"Long Stop Date"	5 May 2009;
"M-payments"	mobile payments;
"Meetings"	together the Court Meeting and the General Meeting;
"New 2 ergo Shares"	the 2 ergo Shares proposed to be issued and credited as fully paid pursuant to the Acquisition and "New 2 ergo Share" means any one of them;
"New Broca Shares"	the new ordinary shares of 1p each in the capital of Broca to be issued in accordance the Scheme and ''New Broca Share'' means any one of them;
"Numis"	Numis Securities Limited, a private limited company incorporated in England and Wales under registered number 02285918 whose registered office is situated at 10 Paternoster Square, London, EC4M 7LT;
"Offer"	should 2 ergo elect to make the Acquisition by way of a contractual offer, that contractual offer for the shares in Broca made by 2 ergo, and where the context admits, any subsequent revision or variation of such offer which represents no diminution in the value of such offer;
"Offer Period"	the period commencing on 15 January 2008 until the later of the date of announcement that the Scheme has become Effective or that the Scheme has lapsed or been withdrawn;
"Ordinary Shares"	issued ordinary shares of 1p each in the capital of Broca and "Ordinary Share" means any one of them;
"Overseas Shareholders"	Broca Shareholders who have registered addresses outside the UK and "Overseas Shareholder" means any one of them;
"Panel"	The Panel on Takeovers and Mergers;
"pounds Sterling", "£", "pence" or "p"	the lawful currency of the United Kingdom;
"Protocol"	the Broca Group's communications standard (being the Broca Group's set of techniques for the transmission of data) which is intended to deliver secure guaranteed messaging between digital devices;
"Reduction Court Hearing"	the hearing at which the Court's confirmation of the reduction of capital provided for by the Scheme will be sought under section 137 of the 1985 Act;
"Reduction Court Order"	the order of the Court confirming under section 137 of the 1985 Act the reduction of capital provided for by the Scheme;
"Register of Members"	the register of members of Broca maintained by the Registrar on behalf of the Company;
"Registrar"	Computershare Investor Services PLC, a public limited company incorporated in England and Wales under registered number 3498808 whose registered office is situated at PO Box 1075, The Pavilion, Bridgwater Road, Bristol BS99 3FA;
"Registrar of Companies"	the Registrar of Companies in England and Wales;
"Regulatory Information Service" or "RIS"	any of the services authorised from time to time by the FSA for the purposes of disseminating regulatory announcements;
"Reorganisation Record Time"	the time at which a certified copy of the Scheme Court Order is delivered to the Registrar of Companies;
"Resolutions"	the resolution to be proposed at the Court Meeting to approve the Scheme and the Special Resolution;
"Scheme" or "Scheme of Arrangement"	the proposed scheme of arrangement under Part 26 of the 2006 Act between Broca and the Scheme Shareholders with any modification, addition or condition agreed by Broca and 2 ergo and which the Court may think fit to approve or impose;
"Scheme Court Hearing"	the hearing by the Court of the application to sanction the Scheme;
"Scheme Court Order"	the order of the Court sanctioning the Scheme under section 899 of the 2006 Act;
"Scheme Document"	the document to be sent to the Broca Shareholders containing and setting out the Scheme and the notices convening the Court Meeting and General Meeting;
"Scheme Record Time"	6.00 p.m. on the business day immediately preceding the Reduction Court Hearing;
"Scheme Shareholders"	holders of Scheme Shares and "Scheme Shareholder" means any one of them;
"Scheme Shares"	the Ordinary Shares: (i) in issue at the date of the Scheme; (ii) issued after the date of the Scheme Document and prior to the Voting Record Time; and (iii) issued at or after the Voting Record Time but before the Scheme Record Time either on terms that the original or any subsequent holder thereof shall be bound by the Scheme or, in the case of any such shares issued prior to the adoption of the amendment to the Broca Articles to be adopted at the General Meeting, in respect of which the original or any subsequent holder thereof is, or shall have agreed in writing to be, bound by the Scheme, and "Scheme Share" means any one of them;
"SDRT"	Stamp Duty Reserve Tax;
"SMS"	Short Message Service;
"Special Resolution"	the special resolution to be proposed at the General Meeting to approve certain matters related to the Scheme;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland and its dependent territories; and
"Voting Record Time"	6.00 p.m. on 11 March 2009 being the day which is two days before the date of the Court Meeting or, if such Court Meeting is adjourned, 6.00 p.m. on the day which is two days before such adjourned meeting.

This information is provided by RNS

The company news service from the London Stock Exchange

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