Servelec Group announces acquisition of Corelogic

15 December 2014

Servelec Group plc announces £23.5 million acquisition of Corelogic

Servelec Group plc, is pleased to announce the acquisition of the entire issued share capital of Corelogic Limited ("Corelogic" or the "Company") (the "Acquisition"). Corelogic is a high growth, UK market-leading provider of next generation adult and children's social care case management software, together with associated financial management modules.

Details of the Acquisition

The Acquisition is expected to be earnings enhancing in the first full year of ownership and the board of Servelec is confident in the market growth opportunities for the business.

The aggregate purchase consideration of £23,489,500 comprises:

· £14,489,500 in cash from internal balances held by Servelec Group

· £6,000,000 in Servelec loan notes payable in two tranches within 7 months attracting interest at 2% per annum

· £3,000,000 in Servelec shares based on the 5-day trading price of 283 pence resulting in 1,061,665 shares being issued which are to be held by Corelogic senior management and remain subject to a lock-in period of 12 months

Corelogic overview

The Acquisition is an excellent fit with the Servelec Group strategy to drive market share growth in existing areas and to expand into adjacent, complementary markets. The addition of Corelogic strongly positions Servelec to address the health and social care interoperability agenda and to offer a fully integrated solution as the market moves towards the Government's commitment to Converged Care for patients. Corelogic provides Servelec with a deep presence in the key social care market and its unique product set complements Servelec's existing RiO offering and market position in mental health and community trusts.

Primarily based in London and Edinburgh, with a development centre in India and an office in Australia, Corelogic has grown rapidly since it began trading in 1999. For the year ended 31st August 2014, Corelogic's latest audited financial statements show record year end results, with reported profit before tax of £1.4m, up over 40% year on year, revenue of £9.6m, up 25% and gross assets of £6.6m. The company has developed a modern, flexible and comprehensive social care software system which is unique in that it offers all three system components, namely, adult, child and finance in a single package ("Mosaic") together with an integrated, flexible reporting suite ("Corius").

In total, Corelogic has 75,000 end users and its products are used by 58 customers worldwide. Within the UK, the company already has over 20% market share in social care and is used by over 50% of Local Authorities in London. Corelogic is continuing to grow this market share year on year and in the financial year ending 31st August 2014 it won 9 out of 11 UK social care case management public tenders for which it competed, with key factors in its success being the quality of the product and strong market knowledge of the management team.

The Acquisition means that Servelec now has a strong position in both the health and the social care markets which is expected to be increasingly vital as ICT legislation and policy focuses on the integration of Local Authority and NHS site services.

Corelogic is currently owned by founders Kevin Moorhouse (65%), Iain Clark (29%) and a number of additional individual shareholders. Following the Acquisition, Kevin Moorhouse will continue as an Executive Director to facilitate an effective integration into the Servelec Group. Iain Clark, who currently holds a non-operational role, will cease to be involved with the company.

Alan Stubbs, CEO of Servelec Group said:

"I am delighted to welcome Corelogic to the Servelec Group. This acquisition provides us with opportunities to add good incremental value to the overall business and positions Servelec well to meet the Government's objective for 'Converged Care' by packaging Mosaic and Corius alongside Servelec's existing product portfolio. This purchase fits perfectly with our strategy of acquiring IP, market share and expanding into adjacent business sectors. We look forward to working with the management team to capitalise on the exciting growth opportunities ahead."

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Notes to Editors

Servelec Group plc is a UK-based technology group, with significant intellectual property, providing software, hardware and services predominantly to the UK healthcare, oil & gas, nuclear, power, water, utilities and broadcast sectors.

Servelec has two operating segments; Servelec Healthcare and Servelec Automation:

- Servelec Healthcare specialises in the design, development and implementation of Electronic Patient Record (EPR) and Patient Administration Systems (PAS) within secondary care settings and is a market leader in the Mental Health and Community Health sectors in England.

- Servelec Automation provides complex, mission-critical control systems to large blue-chip companies mainly in the UK, focusing on the oil & gas, nuclear, power, water, utilities and broadcast industries. Servelec Automation also provides services from consultancy through to design, implementation, delivery, installation and on-going customer support and maintenance.