10th Nov 2008 07:00
10 November 2008 RETEC DIGITAL PLC ("Retec" or "the Group") Acquisition of vending business
Retec Digital Plc, the multi-channel marketing services company and one of the UK's largest providers of guided selling solutions, is pleased to announce that it has acquired the contract to supply photo booths to Wm Morrison Supermarkets plc ("the Morrisons' Contract") from the Administrators of the Consolidated Vending Plc ("CVD") group.
On 15 September 2008, CVD was suspended from trading on AIM under the ticker code CVD and announced that it had appointed Tenon Recovery as Administrators under the terms of the Insolvency Act 1986. Retec, which counts Tesco, ASDA and Sainsbury's amongst its clients, has paid a consideration of ‚£450,000 in cash for the trading assets associated with the Morrisons' Contract.
CVD reported revenue for the year ending 31 December 2007 from continuing operations of ‚£3.4 million, which is segmented as ‚£3.0 million from photo booths and ‚£0.4 million from children's rides. The loss before taxation for the year ending 31 December 2007 was ‚£1.2 million.
The Morrison's Contract represents approximately 60% of the photo booth turnover of CVD. The Board believes that combining the Morrisons' Contract with Retec's existing retail activities will provide good opportunities for efficiency savings and enhanced customer support across the Group's nationwide network.
Financing Arrangements
The consideration, costs and working capital for the acquisition is being financed by a loan of ‚£400,000 from Meadowside Leasing Limited ("the Meadowside loan"), the issue of a further ‚£125,000 of Convertible Unsecured Loan Stock announced on 5 September 2008, and from a loan of ‚£225,000 from Trafalgar Capital Specialised Investment Fund ("the Trafalgar Loan").
The Meadowside loan is secured over the assets of Retec, bears interest at 9% per annum and is repayable in 12 months' time. The Trafalgar loan bears interest at 9% per annum, is unsecured over the assets of a new subsidiary, Media 4 Self Service Limited, formed to acquire the Morrison's Contract, and is repayable in 24 months' time.
Of the ‚£125,000 of Convertible Loan Stock to be issued in connection with the acquisition, ‚£20,000 will be issued to Sir Brian Ivory (Chairman), ‚£25,000 to John Cole (Chief Executive), ‚£20,000 to Charles McKay (Finance Director), ‚£ 15,000 to Bryan Ellis and ‚£5,000 to Ian Deste both Non-Executive Directors of the Company. The issue of the Convertible Loan Stock is a transaction with a related party. The terms of the issue of ‚£125,000 of Convertible Loan Stock to the Directors is on an arm's length basis and on the same terms as the Creation of ‚£650,000 Convertible Unsecured Loan Stock, as announced on 5 September 2008. The Directors consider the terms of the transaction to be fair and reasonable insofar as shareholders are concerned.
John Cole, CEO of Retec, stated: "We are delighted with the acquisition of the Morrisons' Contract, which will provide a number of synergies with our existing field engineering team. Through this transaction we are able to provide a more comprehensive and efficient field engineering service to all our customers across the UK."
Roger Owen, Property Director, Morrisons said: "We are pleased to have secured this agreement with Retec and look forward to exploring opportunities for growing the business we do together."
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For further information please contact:
Retec Digital PLC 01455 222260John Cole, Chief Executive Charles McKay, Finance Director Hogarth Partnership Ltd 020 7357 9477Fiona Noblet / Ian Payne Charles Stanley Securities Mark Taylor / Ben Johnston 020 7149 6000Notes for Editors:About Retec
Retec Digital PLC provides multi-channel marketing solutions to retailers designed to engage customers and increase sales.
It already has systems installed in major retail chains including Sainsbury's, Tesco, Boots and Argos.
Flexible and versatile, Retec's solution can incorporate a mixture of advanced products within its range. These include:
Entertainment Xtra - a communications channel incorporating the range of the company's system aimed at promoting home entertainment products such as music, films, games and books. Customers include Sainsbury's, Tesco and ASDA.
Product Finder - this is used to locate any product within a store and can be used in conjunction with other applications within the company's portfolio.
Guided Selling - a touch screen providing audio/visual information/instruction on products at the point of sale. This has a variety of applications including for example, wine and electrical goods.
Self Service - allows customers to perform a transaction using an in-store terminal. Retec's product suite has the ability to extend the range of product sold within a store, enable self check-out, top up a mobile phone, sell mobile phone content (games, logos etc), purchase of gift cards and interact with loyalty schemes. Current customers include Boots, Argos and Woolworths.
About Morrisons
Morrisons are the UK's fourth largest food retailer with 379 stores. Our business is mainly food and grocery - the weekly shop. Uniquely we source and process most of the fresh food that we sell though our own manufacturing facilities, giving us close control over provenance and quality; and we have more people preparing more food in store than any other retailer.
Every week ten million customers pass through our doors and 117,000 colleagues across the business work hard each day to deliver great service to them. With competitive prices and hundreds of special offers, we are proud to save our customers money every day.
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