Calculus Vct Regulatory News (CLC)

18 Feb 2008 07:00

Clinical Computing PLC18 February 2008 Clinical Computing plc (the "Company" or "Clinical") Acquisition, Related Party Transactions and Placing Introduction Clinical Computing plc, the international developer of clinical informationsystems for the healthcare market, announces that on 15 February 2008, itentered into an agreement to acquire (through its wholly owned subsidiary,Datanet Research Limited) the business and certain assets of Program ManagementGroup plc ("PMG") and its subsidiary undertakings (together the "PMG Business"),all of which are in administration. The assets include work in progress,intellectual property rights and approximately 50 customer contracts. Inaddition, 14 PMG employees will transfer with the business on completion of theAcquisition which is due to occur on 22 February 2008. Howard Kitchner, chairman of Clinical, is also a director of PMG. Mr Kitchner(directly or through his connected persons) is interested in ordinary shares ofPMG representing approximately 19.15 per cent. of PMG's issued share capital,and a connected entity of his is a secured creditor of PMG. The initial consideration for the fixed assets and stock of £16,000, payableupon completion, will be satisfied in cash. Deferred consideration up to amaximum of £2.5 million, based on the future performance of the business, willbe payable on publication of the audited accounts for the year ended 31 December2015, or earlier if the PMG Business is re-sold. The deferred consideration maybe satisfied in cash or, by the issue of new ordinary shares, at the Company'soption. The right to the deferred consideration is assignable but theadministrators have indicated that they will not assign such right until early2009 when they will be in a better position to assess whether there is any valuefor unsecured creditors and shareholders. The Company also announces that it has today raised £545,000 (before expenses)by the issue of 17,440,000 new ordinary shares at 3.125p per share, conditionalupon admission of the new ordinary shares to trading on AIM. Acquisition The PMG Business provides project management and resource planning software forpredominately blue chip customers across general industry and the public sector.The software enables customers to undertake a strategic analysis of current andplanned projects, manage project risk and implement controls to improve theirorganisations' decision making and resource efficiency. The business has been inexistence for 15 years but has run into financial difficulties as a result ofover expanding its cost-base and an administrator was appointed on 15 February2008. The operations of the business are based in Leeds from where it will continue todevelop and support its current portfolio of software products. The majority ofthe PMG Business's customers are based in the UK, but it also has customers inthe USA, Europe and South Africa. The turnover of PMG for the year ended 31 December 2007, as extracted from themanagement accounts, was £1.3 million and the loss before tax was £1.1 million.The carrying value of the assets being acquired in the balance sheet of PMG asat 31 December 2007, as extracted from the management accounts, was £33,504. Deferred consideration will be payable, in cash or shares, at the Company'soption, equal to 2.5 times the average annual audited earnings before interestand taxation of the PMG Business for the three years ended 31 December 2015. Ifthe business is sold before the publication of the audited accounts for the yearto 31 December 2015, the deferred consideration will be 50 per cent. of thetotal consideration received, less certain costs relating, inter alia, to thesale of the business. If the business is sold prior to 28 February 2011, anadditional amount will be deducted equal to the amount that the cumulativeearnings before interest and tax of the business from the date of acquisitionuntil the date of sale ("Cumulative EBIT"), if positive, falls below thefollowing thresholds. If the sale is made: • before 28 February 2009, the Cumulative EBIT threshold is £200,000• thereafter but before 28 February 2010, the threshold is £400,000• thereafter but before 28 February 2011, the threshold is £600,000 If the business is sold prior to 28 February 2011 and the Cumulative EBIT isnegative ("Cumulative Loss"), then the deferred consideration will instead bereduced by the amount of the Cumulative Loss and up to a further £250,000. The cap on the deferred consideration of £2.5 million has been established forcommercial reasons, taking into account the Directors' assessment of theopportunity which the acquisition brings to Clinical. Placing The Company has today, conditional upon admission, raised approximately £545,000(before expenses) through a placing of 17,440,000 new ordinary shares of 1p eachin the capital of the Company with both existing and new shareholders at 3.125pper share. Application has been made for these new ordinary shares to beadmitted to trading on AIM and admission is expected to become effective on 21February 2008. These new ordinary shares will, upon admission, rank pari passuin all respects with the Company's existing issued ordinary shares. The funds raised pursuant to the Placing will principally be used to fundcertain one-off costs associated with the acquisition and transitioning the PMGbusiness from administration to Clinical's group and to provide general workingcapital to the enlarged group. Related Party Transactions Howard Kitchner, the chairman of the Company, is also a director of PMG. MrKitchner (directly or through his connected persons) is interested in ordinaryshares of PMG representing approximately 19.15 per cent. of PMG's issued sharecapital, and a connected entity of his is a secured creditor of PMG. Theagreement with the administrator is therefore being treated as a related partytransaction under the AIM Rules. The independent directors in respect of thistransaction are Prof Stan Newman and Joe Marlovits (the "Independent Directors"). Under the placing, Emanuel Mond, an existing shareholder, will increase hisbeneficial interest in Clinical's ordinary shares from 7,505,000 ordinary sharesto 13,905,000 ordinary shares (representing 12.54 per cent. of the issued sharecapital of the Company as enlarged by the Placing). The subscription istherefore being treated as a related party transaction under the AIM Rules. When an AIM company enters into a related party transaction, the AIM Rulesrequire that the directors who are independent of the transaction make astatement that they consider, having consulted with the company's nominatedadviser, that the terms of the transaction are fair and reasonable insofar asits shareholders are concerned. The Independent Directors, having consulted with City Financial AssociatesLimited, the Company's nominated adviser, consider that the terms of theAcquisition are fair and reasonable insofar as its shareholders are concerned. The Directors, having consulted with City Financial Associates Limited, theCompany's nominated adviser considers that the terms of Emanuel Mond'ssubscription under the Placing are fair and reasonable insofar as itsshareholders are concerned. Total Voting Rights Following the Placing, the Company's issued share capital will consist of110,883,694 ordinary shares with a nominal value of 1p per share, with votingrights (one vote per ordinary share). The Company does not hold any ordinaryshares in treasury. The figure of 110,883,694 ordinary shares may be used by shareholders as thedenominator for the calculations by which they will determine if they arerequired to notify their interest in, or a change to their interest in, theCompany under the Financial Services Authority's Disclosure and TransparencyRules. Commenting on the acquisition and placing Joe Marlovits, Chief Executive,stated: "This acquisition adds a proven portfolio of software products and approximately50 customer contracts with associated revenue opportunities. Having identifiedcertain synergies between the traditional Clinical business and the PMGbusinesses we believe that the enlarged Group will provide new opportunities forboth businesses." Contact: Clinical Computing plcJoe Marlovits, Chief ExecutiveTel: 020 8747 8744 City Financial Associates LimitedRoss Andrews, Nominated AdvisorTel: 020 7492 4777 www.ccl.com This information is provided by RNS The company news service from the London Stock Exchange