Netcall Regulatory News (NET)

RNS Number : 8823M

Netcall PLC

01 June 2010

 

Not for release, publication or distribution, in whole or in part, in or into the United States, Canada, Australia, New Zealand, South Africa or Japan.

 

 

1 June 2010

 

FOR IMMEDIATE RELEASE

 

Netcall PLC

("Netcall")

 

Recommended proposed acquisition of Telephonetics plc ("Telephonetics") by Netcall by way of a scheme of arrangement

 

Proposed conditional placing to raise £4.25 million (before expenses)

 

Netcall plc (AIM:NET) and Telephonetics plc (AIM: TPH) today announce that the boards of Netcall and Telephonetics have agreed the terms of a recommended acquisition whereby Netcall will acquire the entire ordinary share capital of Telephonetics.

 

Netcall also announces a conditional placing to raise £4.25 million (before expenses) at 19 pence per Placing Share.

 

Evolution Securities is acting as financial adviser, nominated adviser and broker to Netcall. Brewin Dolphin is acting as financial adviser to Telephonetics.

 

Acquisition

·; Netcall is a UK-based provider of callback, auto-messaging and contact and workforce management solutions which it designs, develops and markets to organisations of a wide range of sizes and industry sectors including many blue-chip companies. Netcall has more than 250 customers to date

·; Telephonetics is a UK-based provider of speech automation and data integration solutions. Telephonetics has built a large customer base with over 500 deployments to date. This includes over 60 per cent. of the UK's NHS acute health trusts, more than 120 central government, local authority, police and education sites, over 80 per cent. of major UK multiplex cinemas and many blue chip companies. In addition, Telephonetics operates in the financial and legal sectors

·; The Netcall Directors believe that the Acquisition is synergistic and that the Enlarged Group will create a combined entity with an enhanced proposition for its target markets. This is expected to enable the Enlarged Group to broaden and improve its product offering through the addition of workforce management and callback products to Telephonetics' solution portfolio and by offering Telephonetics' speech automation and data integration solutions to Netcall's customers. The Acquisition is also expected tofacilitate cost savings

·; Under the terms of the Acquisition, Scheme Shareholders will be entitled to 0.3077 New Netcall Shares and 5 pence in cash for each Scheme Share held

·; The Offer represents a premium of approximately 27.32 per cent to the Closing Price of a Scheme Share of 7.25 pence on 28 May 2010 (the last Business Day prior to the date of this Announcement) based on Closing Price of a Netcall Share of 13.75 pence on 28 May 2010

·; It is envisaged that the Acquisition will be implemented by way of a Court sanctioned scheme of arrangement under Part 26 of the Act, involving a capital reduction under section 645 of the Act. Full details in relation to the Scheme will be set out in the Scheme Circular, which Telephonetics will publish in accordance with the Act and City Code

·; The Scheme is conditional upon the approval by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders at the Telephonetics Court Meeting proposed to be held on 8 July 2010, and the passing of certain resolutions by Telephonetics Shareholders at the Telephonetics General Meeting proposed to be held after the Telephonetics Court Meeting on that date

·; Netcall has received irrevocable undertakings to vote (or to procure the voting) from Telephonetics Shareholders in favour of the Scheme and the resolutions to be proposed at the Telephonetics Court Meeting and at the Telephonetics General Meeting in respect of a total of 62,671,628 Telephonetics Shares, representing in aggregate approximately 57.42 per cent. of the existing issued share capital of Telephonetics

·; Under Rule 14 of the AIM Rules, the Acquisition will constitute a reverse takeover for Netcall and, accordingly, is conditional upon the passing of certain resolutions by Netcall Shareholders at the Netcall General Meeting proposed to be held on 8 July 2010. Netcall will also publish an Admission Document in accordance with the AIM Rules in connection with the Acquisition

·; Netcall has received irrevocable undertakings to vote (or to procure the voting) from Netcall Shareholders in favour of the Acquisition at the Netcall General Meeting in respect of a total of 16,007,176 Netcall Shares, representing in aggregate approximately 24.93 per cent. of the existing issued share capital of Netcall

·; Netcall has also received a letter of intent from a Netcall Shareholder confirming its intention to vote (or procure the voting) in favour of the Acquisition at the Netcall General Meeting in respect of a total of 5,915,242 Netcall Shares, representing in aggregate approximately 9.21 per cent. of the existing issued Netcall Shares

·; The Acquisition is also conditional on the passing by Netcall Shareholders of certain resolutions in connection with the Placing (referred to below) and the admission of the Placing Shares to trading on AIM

·; Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders irrespective of whether they attended or voted, and if they voted, whether they voted for or against the Scheme, at the Telephonetics Court Meeting and/or the Telephonetics General Meeting

·; The Scheme Circular, the Admission Document and the forms of proxy for use by Telephonetics Shareholders and the form of proxy for use by Netcall Shareholders (as applicable) are expected to be posted to Telephonetics Shareholders and Netcall Shareholders on or around 14 June 2010 and, in any event, within 28 days of the date of this Announcement unless otherwise agreed with the Panel

·; The Telephonetics Directors, who have been so advised by Brewin Dolphin, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Telephonetics Directors, Brewin Dolphin has taken into account the Telephonetics Directors' commercial assessment

Placing

·; Netcall proposes to raise a total of £4.25 million (before expenses) by the issue of 22,368,420 Placing Shares at 19 pence per Placing Share, arranged on Netcall's behalf by Evolution Securities

·; Netcall intends to use the net proceeds of the Placing to part finance the Acquisition and for general working capital purposes

·; The Placing is conditional, inter alia, upon Netcall Shareholders approving the Acquisition and granting the authority to allot the Placing Shares on a non pre-emptive basis. It is also conditional upon Telephonetics Shareholders passing the resolutions necessary to approve the Scheme and implement the Acquisition, the grant of the First Court Order and admission of the Placing Shares to trading on AIM

Henrik Bang, CEO of Netcall, commented, "The board is delighted to announce the acquisition of Telephonetics which is a significant step forward in the transformation of Netcall. The acquisition will significantly enhance the company's market presence with a substantially larger customer base and broadened product portfolio. The board believes that there are significant cross selling opportunities within the combined customer bases and also believes the acquisition will deliver synergistic benefits."

"The enlarged group will have a solid financial footing and an established market position enabling it to take advantage of further opportunities as they may arise. The new Netcall board will continue to pursue an acquisitive growth strategy with a view to increasing the enlarged group's critical mass, achieving greater market penetration and delivering long term shareholder value."

Anthony McKay, CEO of Telephonetics commented, "Both my board and I are very excited about the prospects for the combined group. The significantly enlarged customer base both expands our core markets and provides cross-selling opportunities across the entire base to deliver interaction solutions for our customers. I also welcome the strengthening of the business both at board level and through the broadened base of institutional shareholders. I believe that the combined group has the ability to lead the consolidation in this sector and I look forward to continuing and accelerating our growth strategy in these exciting times."

For further enquiries, please contact:

 

Netcall plc	Tel. +44 (0) 1480 495300
Henrik Bang, CEO Michael Jackson, Chairman
Telephonetics plc	Tel. +44 (0) 1442 242 242
Mike Neville, Non-executive Chairman
James Ormondroyd, Finance Director
Evolution Securities Limited, financial adviser, nominated adviser and broker to Netcall	Tel. +44 (0) 20 7071 4300
Barry Saint / Robert Collins / Esther Lee - financial adviser and nominated adviser
Tim Redfern - Corporate Broking
Brewin Dolphin Corporate Advisory and Broking, nominated adviser and broker to Telephonetics	Tel. +44 (0) 845 213 4726
Neil Baldwin
Sean Wyndham-Quin
ICIS Limited	Tel. +44 (0) 20 7651 8688
Tom Moriarty / Caroline Evans-Jones / Hilary Millar

 

About Netcall

Netcall is a Cambridge based company and its ordinary shares are admitted to trading on AIM. Netcall designs, develops and markets a range of callback, auto messaging and contact and workforce management solutions to organisations of a wide range of sizes and industry sectors including many blue-chip companies. Netcall has more than 250 customers and generates revenue from software licences, plus support and maintenance and the provision of its products through a "Software as a Service" ("SaaS") model. The run rate aggregate revenue from support and maintenance and the SaaS model are of a recurring nature and exceed the Netcall Group's operating costs.

About Telephonetics

Telephonetics is a UK-based telecommunications company quoted on AIM that provides business solutions that enable its clients to streamline the interaction with their own customers. With its self-service, call steering, mobility, outbound messaging and business continuity solutions, Telephonetics has a large customer base including 60 per cent. of the UK's NHS Acute Health Trusts and over 80 per cent. of major UK multiplex cinemas, as well as a number of blue chip companies.

Important Information

This announcement is an announcement made by Netcall and Telephonetics pursuant to their obligations under the City Code. A copy of this announcement is available on the following websites www.netcall.com and www.telephoneticsvip.co.uk. This announcement has also been released through a regulatory information service.

This announcement is an advertisement and not a prospectus and neither Telephonetics Shareholders nor Netcall Shareholders should make any investment decision in relation to Telephonetics Shares or Netcall Shares except on the basis of the information in the Scheme Circular and the Admission Document which are proposed to be published in due course.

This summary should be read in conjunction with, and is subject to, the full text of the following Announcement. Appendix I to the Announcement contains the conditions and further terms of the Acquisition, Appendix II contains disclosures in relation to the Proposed Netcall Directors, Appendix III contains an expected timetable of principal events in connection with the Acquisition and the Placing, Appendix IV contains the definitions of certain terms used in this summary and the Announcement and Appendix V contains details of the sources and bases of certain information used in this summary and in the Announcement.

Evolution Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser, nominated adviser and broker exclusively for Netcall and no one else in connection with the matters referred to in this summary and the Announcement and will not be responsible to anyone other than Netcall for providing the protections afforded to clients of Evolution Securities nor for providing advice in relation to such matters or any other matter or arrangement referred to in this Announcement. The responsibilities of Evolution Securities as Netcall's nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to Netcall or to any Netcall Director or to any other person.

Brewin Dolphin, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively as financial adviser to Telephonetics and for no one else in relation to the Acquisition and will not be responsible to anyone other than Telephonetics for providing the protections afforded to clients of Brewin Dolphin nor for giving advice in relation to the Acquisition or any matter or arrangement referred to in this Announcement. The responsibilities of Brewin Dolphin as Telephonetics' nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to Telephonetics or to any Telephonetics Director or to any other person.

The Telephonetics Directors accept responsibility for the information contained in this Announcement relating to the Telephonetics Group, themselves and their immediate families and connected persons. The Netcall Directors accept responsibility for all of the other information contained in this Announcement. To the best of the knowledge and belief of the Telephonetics Directors and the Netcall Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Announcement for which they are respectively responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Neither the Acquisition nor the Placing will be made, directly or indirectly, in or into or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce, or any facility of a national securities exchange of any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Netcall and Telephonetics regard as unduly onerous and will not be capable of election by any such use, means or facility or from within any such jurisdiction. Accordingly, unless otherwise determined by Netcall and Telephonetics, copies of this summary and the Announcement and any documentation relating to the Acquisition or the Placing are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction other than the United Kingdom ("Overseas Jurisdiction") and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such documents in or into or from any such Overseas Jurisdiction, as doing so may invalidate any purported election of any offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intend to, or who may have a contractual or legal obligation to, forward this document and/or any other documentation relating to the Acquisition or the Placing to any Overseas Jurisdiction should inform themselves of, and observe, any applicable legal or regulatory requirements of that jurisdiction.

None of Netcall, Telephonetics or any of their respective directors, officers, agents and advisers is making any representation to any offeree or purchaser of the New Netcall Shares or the Placing Shares hereby regarding the legality of an investment by such offeree or purchaser under appropriate investment or similar laws. Each prospective investor should consult with his, her or its own advisers as to the legal, tax, business, financial and related aspects of purchase of or subscription for the New Netcall Shares and the Placing Shares.

The New Netcall Shares and the Placing Shares to be issued in connection with the Acquisition and the Placing respectively have not been, nor will they be, registered under the US Securities Act 1933 (as amended) or under the securities laws of any state of the United States; the relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the New Netcall Shares and the Placing Shares have been, nor will they be, registered under or offered in compliance with applicable securities laws of any state, province, territory or jurisdiction of Canada, Australia, New Zealand, South Africa or Japan. Accordingly, the New Netcall Shares and the Placing Shares are not being and may not be (unless an exemption under relevant securities laws is applicable) offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, South Africa or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereof in, such jurisdiction or to, or for the account or benefit of, any United States, Canadian, Australian or Japanese person.

Rule 8 Notice

Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Forward Looking Statements

This Announcement includes statements that are, or may be deemed to be, ''forward looking statements''. These forward looking statements can be identified by the use of forward looking terminology, including the terms ''believes'', ''projects'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''plans'', ''goal'', ''target'', ''aim'', ''may'', ''will'', ''would'', ''could'' ''should'' or ''continue'' or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding Netcall's, Telephonetics' and the Enlarged Group's intentions, beliefs or current expectations concerning, among other things, Netcall's Telephonetics' and the Enlarged Group's results of operations, financial condition, prospects, growth, strategies and the industries in which Netcall, Telephonetics and the Enlarged Group operate.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond Netcall's, Telephonetics' or the Enlarged Group's ability to control or predict. Forward looking statements are not guarantees of future performance. Netcall's, Telephonetics' or the Enlarged Group's actual results of operations, financial condition, dividend policy and the development of the industries in which they operate may differ materially from the impression created by the forward looking statements contained in this summary and the Announcement. In addition, even if the results of operations and dividend policy of Netcall, Telephonetics or the Enlarged Group (as the case may be), and the development of the industries in which they operate, are consistent with the forward looking statements contained in this summary and Announcement, those results or developments may not be indicative of results or developments in subsequent periods.

The forward looking statements contained in this summary and the Announcement speak only as of the date of this summary and the Announcement. Other than in accordance with their legal or regulatory obligations (including under the City Code, the Disclosure and Transparency Rules, the AIM Rules for Companies or the Financial Services and Markets Act 2000) and as required by the Financial Services Authority, the London Stock Exchange or the Panel on Takeovers and Mergers, neither Netcall nor Evolution Securities undertakes any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Netcall Group, the Telephonetics Group or the Enlarged Group or individuals acting on behalf of any of them are expressly qualified in their entirety by this paragraph.

 

Not for release, publication or distribution, in whole or in part, in or into the United States, Canada, Australia, New Zealand, South Africa or Japan.

 

1 June 2010

 

FOR IMMEDIATE RELEASE

 

RECOMMENDED PROPOSED ACQUISITION OF TELEPHONETICS BY NETCALL BY WAY OF A SCHEME OF ARRANGEMENT

PROPOSED CONDITIONAL PLACING TO RAISE £4.25 MILLION (BEFORE EXPENSES)

 

1. Introduction

The boards of Netcall and Telephonetics today announce that they have agreed the terms of a recommended acquisition whereby Netcall will acquire the entire ordinary share capital of Telephonetics.

Netcall also announces a conditional placing to raise £4.25 million (before expenses).

2. Summary of the terms of the Acquisition and the Placing

2.1 The Acquisition

The Acquisition involves the acquisition by Netcall of the entire ordinary share capital of Telephonetics and is proposed to be effected by way of a scheme of arrangement (including a reduction of capital) between Telephonetics and the Scheme Shareholders under Part 26 of the Act. Under the terms of the Scheme, which will be subject to satisfaction or (where appropriate) waiver of the Conditions set out in Appendix I of this Announcement, Scheme Shareholders who are on the register of members of Telephonetics at the Scheme Record Time will be entitled to receive consideration for their Scheme Shares under the Offer as described below.

The Telephonetics Directors, who have been so advised by Brewin Dolphin, consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Telephonetics Directors, Brewin Dolphin has taken into account the Telephonetics Directors' commercial assessments.

The Conditions include the approval (by a majority in number of the holders of Scheme Shares present and voting, either in person or by proxy, representing not less than three-fourths in value of the Scheme Shares) of a resolution to be proposed at the Telephonetics Court Meeting. The implementation of the Scheme will also require the passing of a special resolution by the Telephonetics Shareholders at the Telephonetics General Meeting, to be held immediately thereafter. Full details in relation to the Scheme together with notices convening the Telephonetics Court Meeting and the Telephonetics General Meeting will be set out in the Scheme Circular. It is expected that the Telephonetics Court Meeting and the Telephonetics General Meeting will be held on 8 July 2010.

Under the AIM Rules, the Acquisition will constitute a reverse takeover for Netcall and it will be necessary for Netcall Shareholders to vote in favour of a resolution to be proposed at the Netcall General Meeting to approve it for the purposes of Rule 14 of the AIM Rules and to grant the Netcall Directors authority to allot the New Netcall Shares to be issued pursuant to the Scheme. At the Netcall General Meeting, the Netcall Directors will also seek authority to allot the Placing Shares pursuant to the Placing. Authority will also be sought to disapply to the extent necessary the statutory pre-emption rights which would otherwise apply to the allotment of the Placing Shares. It is expected that the Netcall General Meeting will also be held on 8 July 2010.

Under the AIM Rules, Netcall will be required to publish an Admission Document in connection with the Acquisition.

It is expected that the Admission Document, which will contain a notice convening the Netcall General Meeting and the Scheme Circular and the related documentation for use by Telephonetics Shareholders and Netcall Shareholders, will be dispatched on or around 14 June 2010 and, in any event, within 28 days from the date of this Announcement unless otherwise agreed with the Panel. 

If the Scheme becomes effective, it will be binding on all Scheme Shareholders, including those who do not vote to approve the Scheme and those who vote against the Scheme at the Telephonetics Court Meeting and/or against the resolution to be proposed at the Telephonetics General Meeting.

2.1.1. The Offer

for each Scheme Share 0.3077 New Netcall Shares and 5 pence in cash

The Offer values each Scheme Share at 9.23 pence and values the fully diluted ordinary share capital of Telephonetics at approximately £10.58 million (based on the Closing Price of a Netcall Share of 13.75 pence on 28 May 2010, being the last Business Day prior to the date of this Announcement).

On that basis, the Offer represents a premium of approximately 27.32 per cent. to the Closing Price of a Scheme Share of 7.25 pence on 28 May 2010, the last Business Day prior to the date of this Announcement.

2.2 Placing

Netcall proposes to raise a total of £4.25 million (before expenses) by the issue of 22,368,420 Placing Shares at 19 pence per Placing Share. Evolution Securities has conditionally agreed to use its reasonable endeavours, as agent for Netcall, to place the Placing Shares in accordance with a Placing Agreement.

The Placing Agreement is conditional, amongst other things, upon Netcall Shareholders approving the Acquisition and granting authority to the Netcall Board to allot the Placing Shares and disapplying the statutory pre-emption rights necessary to allot the Placing Shares at the Netcall General Meeting. The Placing is also conditional on Telephonetics Shareholders passing the resolutions necessary to approve the Scheme and implement the Acquisition at the Telephonetics Court Meeting and the Telephonetics General Meeting, the grant of the First Court Order and the admission of the Placing Shares to trading on AIM. 

The placing price of 19 pence per Placing Share represents a premium of 38.18 per cent. to the closing middle market price of 13.75 pence per Netcall Share on 28 May 2010, being the last Business Day prior to the date of the Announcement.

2.3 New Netcall Shares and Placing Shares

The New Netcall Shares and the Placing Shares will be issued credited as fully paid, and on identical terms to and will rank pari passu with the existing Netcall Shares, including the right to receive and retain all dividends and other distributions declared, paid or made on Netcall Shares after the relevant date of allotment.

The Placing Shares will, on the date of allotment, represent approximately 25.84 per cent. of the issued share capital of Netcall as enlarged by the Placing (but excluding the Netcall Shares to be allotted pursuant to the Acquisition) or approximately 18.36 per cent. of the issued share capital of Netcall as enlarged by the Placing and the New Netcall Shares to be allotted pursuant to the Acquisition (assuming, in each case, all in-the-money options held under the Telephonetics 2005 Scheme and the Unapproved Options are exercised).

The New Netcall Shares to be issued pursuant to the Scheme will, on the Effective Date, represent approximately 28.94 per cent. of the issued ordinary share capital of the Enlarged Group (assuming all in-the-money options held under the Telephonetics 2005 Scheme and the Unapproved Options are exercised). 

2.4 Fractional entitlements

The aggregate number of New Netcall Shares to which a Scheme Shareholder is entitled shall in each case, be rounded down to the nearest whole number.

No fraction of a New Netcall Share shall be allotted to any Scheme Shareholder, but all fractions of New Netcall Shares to which Scheme Shareholders would otherwise have been entitled shall be aggregated and the aggregate of such fractions (rounded down to the nearest whole share) shall be allotted and issued to a person appointed by Netcall as nominee for such Scheme Shareholders on terms that the nominee shall be authorised to procure that such New Netcall Shares shall, as soon as possible after the Effective Date, be sold on behalf of the relevant Scheme Shareholders and the pro rata proceeds remitted to them (save that, to the extent the net proceeds of any such sale for a Scheme Shareholder shall be less than £3, such amount shall be retained for the benefit of the Enlarged Group).

3. Background to and reasons for the Acquisition and Placing

3.1 Acquisition

Netcall operates in a highly fragmented software and IT market place ranging from substantial providers offering a broad range of integrated services to a large number of smaller and niche players. The Netcall Board believes Netcall has a good position in its market niches within the call centre and contact solutions sectors and that Netcall is considered a trusted partner by its broad customer base. Netcall remains committed to its strategy of providing communication solutions which drive customer cost reductions and efficiency improvements while enhancing customer satisfaction. It delivers these solutions on both an initial licence fee model and Software as a Service ("SaaS") model. Netcall has, since a turnaround in 2004 by the current management team, been profitable and cash generative in every subsequent financial year. The Netcall Board has been encouraged by the strategic progress achieved so far, most recently the acquisition and successful integration of Q-Max, a UK-based provider of workforce management software to contact centres. As announced in its interim results in March 2010 for the period ended 31 December 2009, Netcall continues to pursue an acquisitive growth strategy with a view to increasing critical mass, achieving greater market penetration and delivering long term shareholder value.

The Netcall Board has been evaluating relevant acquisition opportunities as part of the strategy review to broaden its products portfolio. As part of this process, Netcall identified Telephonetics' product portfolio including its advanced speech automation solutions combined with its customer base as being complementary to Netcall. In 2009, Netcall commenced initial discussions with Telephonetics with a view to an acquisition of Telephonetics by Netcall. The boards of Netcall and Telephonetics have recently concluded the terms of the offer to be made by Netcall for Telephonetics.

The Netcall Board believes that the Acquisition is synergistic and the Enlarged Group:

·; will create a combined entity with an enhanced proposition for customer interaction solutions;

·; represents a broadened and improved product offering through the addition of workforce management and callback products to Telephonetics' solution portfolio;

·; will significantly increase the customer base and allow a greater opportunity for cross selling Netcall solutions into the Telephonetics base of important NHS and public sector customers (as well as cross selling of Telephonetics' speech automation and data integration solutions into Netcall's corporate customers);

·; will broaden the major telecommunication reseller channels available to each business for distribution and sale of each others' solutions;

·; will add further skilled engineering and technical expertise to create a group with in excess of 130 employees, thus providing an enhanced ability to deliver solutions to the customers of the Enlarged Group;

·; will benefit from cost synergies as a result of the removal of duplication of head office costs as well as the increased scale of the enlarged business; and

·; will increase the presence of the Enlarged Group in its fragmented markets.

3.2 Placing

Netcall proposes to utilise the net proceeds of the Placing to part finance the Acquisition and for general working capital requirements.

4. Financing and Cash Confirmation

The Cash Consideration will be financed by a £4.0 million bridging loan facility and Netcall's existing cash balances.

Assuming the Scheme becomes effective and all in-the-money options held under the Telephonetics 2005 Scheme and the Unapproved Options are exercised, the total Cash Consideration payable under the Offer would be approximately £5.7 million.

Evolution Securities, financial adviser to Netcall, is satisfied that the necessary financial resources are available to Netcall to meet the Cash Consideration payable under the Offer in full.

The Enlarged Group's working capital resources will be enhanced by the net proceeds of the Placing.

5. Information on Telephonetics

Telephonetics is a UK-based company quoted on AIM that provides business solutions that enable its client to streamline the interaction with their own customers, thereby enhancing service levels, increasing efficiency and reducing overall operating costs. These solutions are built upon its platforms: SEMAP+ communications platform (Speech Enabled Multi-Application Platform) which blends advanced speech recognition and voice automation and Eden which enables data integration.

Its platforms have been deployed over 500 times to date, notably in the health, local government, corporate and cinema industries.

The Telephonetics Board believes that it had made a good start in 2010 and that trading for the first five months of the financial calendar has been in line with expectations, with the rate of new customer acquisitions and sales orders greater than in the corresponding period last year.

6. Information on the Netcall Group

Netcall is a Cambridge based company and its ordinary shares are admitted to trading on AIM. Netcall designs, develops and markets a range of callback, auto messaging and contact and workforce management solutions to organisations of a wide range of sizes and industry sectors, including many blue-chip companies. Netcall generates revenue from software licences, plus support and maintenance and the provision of its products through a SaaS model. The run rate aggregate revenue from support and maintenance and the SaaS model are of a recurring nature and exceed the Netcall Group's operating costs.

 

The Netcall Board is pleased to report that trading in the second half of the financial year has progressed according to plan; revenues of a recurring nature and cash position have increased, Netcall has continued to win new business and has a healthy pipeline. Whilst market conditions remain challenging and recent economic turmoil add an element of uncertainty which may affect the timing of contracts, the Netcall Board remains confident of a successful outcome to the year.

 

In line with the treatment of acquisition costs under the currently applicable International Financial Reporting Standards whereby costs in relation to the Acquisition are recognised as incurred, it is expected that the majority of such costs will fall within the financial year ending 30 June 2010, despite the fact that completion of the Acquisition is not expected to occur until the next financial year. Consequently, the costs associated with the Acquisition are expected to have a material impact on Netcall's results for the financial year ending 30 June 2010.

 

Nothing in this announcement is intended to be a profit forecast and the statements in this announcement should not be interpreted to mean that the earnings per share for the current or future financial periods will necessarily be greater than those for the relevant preceding financial period.

 

7. Strategy for the Enlarged Group

The new Netcall Board aims to continue developing the existing businesses of Netcall and Telephonetics by providing to its enlarged customer base the wider range of solutions of the Enlarged Group portfolio. The strategy of the Enlarged Group is to continue increasing shareholder value as a result of increased market penetration combined with continuing cost control and the expected synergies and cost savings arising from the Acquisition.

The new Netcall Board also intends to grow the Enlarged Group revenue organically in its existingmarket segments, and take advantage of the acquisitive growth opportunities within its target markets.

8. Telephonetics Shareholder and Netcall Shareholder undertakings and letter of intent

8.1 Telephonetics Shareholders

Netcall has received irrevocable undertakings from the Telephonetics Directors who hold Telephonetic Shares to vote (or procure the voting) in favour of the Scheme at the Telephonetics Court Meeting and in favour of the special resolution to be proposed at the Telephonetics General Meeting in respect of their entire beneficial holdings of Telephonetics Shares (save in respect of an aggregate of 1,315,790 Telephonetics Shares held by Anthony McKay and William Burgar which are subject to options granted by them to a third party and 1,970,588 Telephonetics Shares held under Mark Brooks' pension funds) comprising, in total, 50,201,243 Telephonetics Shares, representing in aggregate approximately 46.00 per cent. of the existing issued Telephonetics Shares.

In addition, Netcall has received an irrevocable undertaking from a Telephonetics Shareholder to vote (or procure the voting) in favour of the Scheme at the Telephonetics Court Meeting and in favour of the special resolution to be proposed at the Telephonetics General Meeting in respect of 5,415,686 Telephonetics Shares, representing in aggregate approximately 4.96 per cent. of the existing issued Telephonetics Shares. These irrevocable undertakings will continue to be binding in the event of a higher competing offer for Telephonetics being announced, and cannot be withdrawn other than in the event of the Scheme lapsing or being withdrawn.

Netcall has also received irrevocable undertakings from certain Telephonetics Shareholders to vote (or procure the voting) in favour of the Scheme at the Telephonetics Court Meeting and in favour of the special resolution to be proposed at the Telephonetics General Meeting in respect of 7,054,699 Telephonetics Shares, representing in aggregate approximately 6.46 per cent. of the existing issued Telephonetics Shares. These irrevocable undertakings will lapse in the event that a "Higher Competing Offer" for Telephonetics is announced. "Higher Competing Offer" means an offer which exceeds 10 per cent. or more of the consideration per Scheme Share payable under the Acquisition.

Accordingly, Netcall has received in aggregate undertakings to vote in favour of the Scheme at the Telephonetics Court Meeting and in favour of the special resolution to be proposed at the Telephonetics General Meeting in respect of a total of 62,671,628 Telephonetics Shares, representing in aggregate approximately 57.42 per cent. of the existing issued Telephonetics Shares.

8.2 Netcall Shareholders

Netcall has received irrevocable undertakings from certain Netcall Shareholders to vote (or procure the voting) in favour of the Acquisition at the Netcall General Meeting in respect of 16,007,176 Netcall Shares, representing in aggregate approximately 24.93 per cent. of the existing issued Netcall Shares, of which approximately 4.64 per cent are beneficially held by the Netcall Directors. These irrevocable undertakings will continue to be binding in the event of a higher competing offer for Telephonetics being announced, and cannot be withdrawn other than in the event of the Scheme lapsing or being withdrawn.

Netcall has also received a letter of intent from a Netcall Shareholder confirming its intention to vote (or procure the voting) in favour of the Acquisition to be proposed at the Netcall General Meeting in respect of a total of 5,915,242 Netcall Shares, representing in aggregate approximately 9.21 per cent. of the existing issued Netcall Shares.

Further details of these irrevocable undertakings are set out in Appendix V of this Announcement.

9. Netcall Directors, Proposed Netcall Directors and employees

Assuming the Scheme becomes effective, James Ormondroyd, Michael Neville and Mark Brooks (the "Proposed Netcall Directors") will join the Enlarged Group's board. Each of them have entered into a service agreements or letter of appointment with Netcall ("Service Agreements"), which are conditional on the Scheme becoming effective. Anthony McKay and William Burgar have agreed to resign from the Telephonetics Board conditional upon and with effect from the Effective Date.

9.1 Present Netcall Directors

Michael Jackson, (Chairman) aged 60, joined the Netcall Board in March 2009. He founded Elderstreet Investments Limited in 1990 and is its Executive Chairman. For the past 25 years, he has specialised in raising finance and investing in smaller quoted and unquoted companies. Michael has been Chairman of two FTSE 100 companies and from 1997 until 2006 was the Chairman of The Sage Group plc.

Henrik Bang, (Chief Executive Officer) aged 52, joined Netcall in February 2004. He was previously Vice President in GN Netcom, part of the Danish OMX listed GN Great Nordic Group. Henrik also held a number of international management positions in IBM and A.P. Moller - Maersk Line.

Roger Allsop, (Non executive Director) aged 66, joined the Netcall Board in 1987. Roger is also a non-executive Director of Tricorn Group plc, is Chairman of Malvair Properties Ltd and was formerly Managing Director of Westwood Dawes plc.

9.2 Proposed Netcall Directors

James Ormondroyd, (Finance Director) aged 38, joined Telephonetics as a director in July 2005. He was previously the Finance Director and Company Secretary at World Television Group plc, an AIM quoted corporate communications company, and before that was a Finance Director of Virtue Broadcasting. James is also the Company Secretary of Telephonetics and is a member of the Institute of Chartered Accountants in England and Wales.

Michael Neville, (Non executive director) aged 54, was appointed to the Telephonetics Board as Non-Executive Chairman in July 2005. He has extensive experience in capital markets and serves as non-executive director for a number of AIM and private quoted companies. His background is in the telecommunications, technology and media arena, where he has worked for the last 18 years, specialising in strategy and mergers and acquisitions for public and private companies.

Mark Brooks, (Non executive director) aged 45, was appointed to the Telephonetics Board as a Non-Executive Director in March 2008. He co-founded Voice Integrated Products Ltd in 1991, which was acquired by Telephonetics in July 2006, serving as both Technical Director and Managing Director. His background combines software technology with strategic sales and marketing. Mark is a graduate of Exeter University with a combined degree in Physics and Mathematics, specialising in acoustics.

Further information about the Proposed Netcall Directors is set out in Appendix II.

9.3 Employees

The Netcall Board has informed the Telephonetics Directors that, following the Scheme becoming effective, the existing employment rights, including accrued pension rights (if any), of the Telephonetics Group's employees will be fully safeguarded. 

10. Telephonetics 2005 Scheme, Unapproved Options and Incentivisation Arrangements 

A small number of individuals hold options to acquire Telephonetics Shares pursuant to the Telephonetics 2005 Scheme and the Unapproved Options.

Any Telephonetics Shares issued pursuant to the exercise of options under the Telephonetics 2005 Scheme or the Unapproved Options prior to the Scheme Record Time will be subject to the terms of the Scheme.

Outstanding options granted pursuant to the Telephonetics 2005 Scheme and the Unapproved Scheme are fully vested and capable of exercise.

All Option Holders will receive a separate letter from the Telephonetics Board setting out the proposals to be made in relation to their options, and the mechanism for accepting or rejecting those proposals.

Upon the Scheme becoming effective, the Enlarged Group will consider the long-term incentivisation of its key staff which may include the award of new options over Netcall Shares.

Save as described above and as will be reflected in the Service Agreements, there have been no discussions between Netcall and Telephonetics in relation to incentivisation arrangements for Telephonetics' management.

11. Implementation Agreement, Inducement Fee Agreement and Lock-in Agreements

11.1 Implementation Agreement

Telephonetics and Netcall have entered into the Implementation Agreement in connection with the Acquisition, pursuant to which each of the parties has undertaken, amongst other things, and, as promptly as practicable, to co-operate and take or cause to be taken all such reasonable steps as are within their respective powers and necessary to implement the Scheme, subject always to their respective duties and obligations under applicable law and the City Code.

Each of Telephonetics and Netcall has agreed that prior to the Scheme becoming effective or the Implementation Agreement being terminated in accordance with its terms (whichever is earlier), each of Telephonetics and Netcall will conduct their respective businesses in the ordinary and normal course and not do or omit to take any action which will or would reasonably be expected to result in any of the Conditions not being satisfied. 

11.2 Inducement Fee Agreement

As an inducement and in consideration of Netcall completing its due diligence investigations into Telephonetics, Telephonetics has agreed to pay Netcall an inducement fee equal to one per cent. of the value of Telephonetics (inclusive of any VAT), calculated by reference to the value of the Offer as set out in this Announcement and by reference to the fully diluted ordinary share capital of Telephonetics if: (i) a Competing Proposal is announced and is successful; or (ii) the Telephonetics Board's recommendation is withdrawn, qualified or modified; or (iii) the Telephonetics Shareholders' resolutions required to implement the Acquisition are not passed; or (iv) there is a breach any of its exclusivity undertakings by Telephonetics.

As an inducement and in consideration of Telephonetics completing its due diligence investigations into Netcall, Netcall has agreed to pay Telephonetics an inducement fee equal to one per cent. of the value of Telephonetics (inclusive of any VAT), calculated by reference to the value of the Offer as set out in this Announcement and by reference to the fully diluted ordinary share capital of Telephonetics, if: (i) Netcall proposes that the board of directors of the Enlarged Group to be other than three current Telephonetics Directors and three current Netcall Directors; or (ii) the Netcall Shareholders resolutions necessary to implement the Acquisition at the Netcall General Meeting are not passed; or (iii) there is a breach any of its exclusivity undertakings by Netcall.

The first party which becomes liable to pay an inducement fee pursuant to the Inducement Fee Agreement shall pay to the other party the relevant inducement fee and the other party shall not be required to pay an inducement fee.

Nothing in the Inducement Fee Agreement shall oblige Telephonetics or Netcall to pay any amount which the Panel would determine would not be permitted by Rule 21.2 of the City Code or which is prohibited by law.

12. Lock-in Agreements

Each of Michael Neville, Mark Brooks, Anthony McKay and William Burgar who, upon the Scheme becoming effective, will hold New Netcall Shares have agreed not to dispose of any interest in those shares held by them or their associates at the date of Admission of the New Netcall Shares to trading on AIM for a period of twelve months following such date (subject to certain limited exceptions).

13. Dealings in the New Netcall Shares, Placing Shares and Admission

Applications will be made to the London Stock Exchange for the Placing Shares and the New Netcall Shares to be admitted to trading on AIM. It is expected that the admission of the Placing Shares will become effective and that dealings in all the Placing Shares will have commenced at 8.00 a.m. by 27 July 2010. It is expected that the admission of the New Netcall Shares will become effective and that dealings will commence at 8.00 a.m. on 30 July 2010.

14. Recommendation

The Telephonetics Directors, who have been so advised by Brewin Dolphin, consider the terms of the Acquisition to be fair and reasonable so far as Telephonetics Shareholders are concerned. In providing advice to the Telephonetics Directors, Brewin Dolphin has taken into account the Telephonetics Directors' commercial assessments.

The Telephonetics Directors believe that the terms of the Acquisition are in the best interests of the holders of Telephonetics Shares and unanimously recommend that Telephonetics Shareholders vote in favour of the resolution to be proposed at the Telephonetics Court Meeting and the special resolution to be proposed at the Telephonetics General Meeting, as they have irrevocably undertaken to do in respect of their entire respective beneficial holdings of Telephonetics Shares (save in respect of 1,315,790 Telephonetics Shares held by Anthony McKay and William Burgar which are subject to options granted by them and 1,970,588 Telephonetics Shares held under Mark Brooks' pension funds), which on 28 May 2010 (the latest practicable date before the publication of this Announcement) amounted in aggregate to 50,201,243 Telephonetics Shares representing approximately 46.00 per cent. of the total number of issued Telephonetics Shares.

15. General

Neither Netcall nor, so far as the Netcall Directors are aware, any person acting in concert with it, has any dealing arrangement in relation to Telephonetics Shares or Netcall Shares. For these purposes, a "dealing arrangement" includes any indemnity or option arrangement, any agreement or understanding, formal or informal, of whatever nature relating to Telephonetics Shares or Netcall Shares, which may be an inducement to deal or refrain from dealing in such shares.

Netcall and Telephonetics will today disclose the details required to be disclosed by them under Rule 8.1 of the City Code. 

There are no agreements or arrangements to which Netcall is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a Condition. APPENDIX I - CONDITIONS AND FURTHER TERMS OF THE ACQUISITION

1. The Acquisition is conditional upon the Scheme becoming unconditional and becoming effective by no later than 2 August 2010 or such later date (if any) as Netcall and Telephonetics may, with the consent of the Panel (if required) agree and the Court may allow.

2. The Scheme is conditional upon:

2.1 the approval of the Scheme by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders present and voting, either in person or by proxy, at the Telephonetics Court Meeting (or any adjournment of the Telephonetics Court Meeting);

2.2 all resolutions required to approve and implement the Scheme, to be set out in the notice of the Telephonetics General Meeting, being duly passed by the requisite majority at the Telephonetics General Meeting (or any adjournment of the General Meeting) and not being subsequently revoked; and

2.3 the sanction of the Scheme (and the confirmation of the Capital Reduction by the Court), (in either case with or without modification, any such modification being agreed by Netcall and Telephonetics) and office copies of the Court Orders and the Statement of Capital attached to the Second Court Order being delivered to the Registrar of Companies and the registration of the Second Court Order by the Registrar of Companies.

3. Telephonetics and Netcall have agreed that, subject to the provisions of paragraph 4 below, the Acquisition is also conditional upon, and accordingly the necessary action to make the Scheme effective, will only be taken upon, the satisfaction or waiver (if capable of waiver) of the following Conditions (as amended, if appropriate):

3.1 the passing at the Netcall General Meeting (or any adjournment thereof) of such resolution or resolutions as are necessary to approve, implement and effect the Acquisition and the Placing including a resolution approving the Acquisition pursuant to Rule 14 of the AIM Rules and a resolution or resolutions to authorise the creation and allotment of New Netcall Shares and the Placing Shares;

3.2 the admission of the New Netcall Shares and the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules or (if Netcall and Telephonetics so determine and subject to the consent of the Panel) the London Stock Exchange agreeing to admit such shares of trading on AIM, subject only to (i) the allotment of such shares and/or (ii) in the case of the New Netcall Shares the Acquisition becoming or being declared unconditional in all respects;

3.3 no central bank, government or governmental, quasi-governmental, supranational, statutory, administrative or regulatory body, or any court, institution, investigative body, association, trade agency or professional or environmental body or any other similar person or body in any jurisdiction (each, a "Relevant Authority'') having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or enacted, made or proposed any statute, regulation, decision or order or having taken any other step or done anything and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to (in each case to an extent which is material in the context of the Netcall Group or the Telephonetics Group):

(a) make the Acquisition or its implementation or the proposed acquisition by Netcall of any shares or other securities in Telephonetics or the acquisition or control of Telephonetics or any member of the Telephonetics Group, illegal, void or unenforceable in or under the laws of any jurisdiction or directly or indirectly restrict or materially delay, prohibit or otherwise interfere with the implementation of, or impose additional conditions or obligations with respect to, or otherwise challenge, the Acquisition or the acquisition of any shares in Telephonetics, or control of Telephonetics, by Netcall result in a delay in the ability of Netcall, or render Netcall unable, to acquire some or all of the Telephonetics Shares; (b) require, prevent or delay the divestiture (or materially alter the terms envisaged for such divestiture) by any member of the Netcall Group or any member of the Telephonetics Group of all or any portion of their respective businesses, assets or properties or impose any limitation on the ability of any of them to conduct their businesses or own their respective assets or properties or any material part thereof; (c) impose any material limitation on, or result in a material delay in, the ability of any member of the Netcall Group or the Telephonetics Group to acquire, hold or exercise effectively, directly or indirectly, all or any rights of ownership of shares or other securities or to exercise management control over any member of the Telephonetics Group or Netcall Group; (d) require any member of the Netcall Group or the Telephonetics Group to acquire any shares or other securities or rights thereover in any member of the Telephonetics Group owned by any third party; (e) make the Acquisition or its implementation or the proposed acquisition by Netcall of any shares or other securities in Telephonetics or the acquisition or control of Telephonetics or any member of the Telephonetics Group, illegal, void or unenforceable in or under the laws of any jurisdiction or directly or indirectly restrict or materially delay, prohibit or otherwise interfere with the implementation of, or impose additional conditions or obligations with respect to, or otherwise challenge, the Acquisition or the acquisition of any shares in Telephonetics, or control of Telephonetics, by Netcall; (f) result in any member of the Telephonetics Group ceasing to be able to carry on business under any name under which it presently does so, the consequences of which would be material in the context of the Telephonetics Group taken as a whole; (g) impose any limitation on the ability of any member of the Netcall Group or the Telephonetics Group to conduct or co-ordinate or integrate its business, or any part of it, with the business of any other member of the Netcall Group or the Telephonetics Group; or (h) otherwise adversely affect the business, assets, prospects or profits of any member of the Netcall Group or the Telephonetics Group in a manner which is adverse to and material in the context of the Netcall Group or the Telephonetics Group in either case taken as a whole,

and all applicable waiting and other time periods during which any such Relevant Authority could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or otherwise intervene having expired, lapsed or been terminated;

3.4 all authorisations, orders, grants, recognitions, consents, confirmations, clearances, licences, permissions and approvals ("authorisations'') required by law in any jurisdiction for or in respect of the Acquisition and the proposed acquisition of any shares or securities, directly or indirectly, in, or control of, Telephonetics and each member of the Telephonetics Group by any member of the Netcall Group having been obtained in terms and/or form reasonably satisfactory to Netcall from all appropriate Relevant Authorities or (without prejudice to the generality of the foregoing) from any persons or bodies with whom any member of the Netcall Group or the Telephonetics Group has entered into contractual arrangements and such authorisations together with all authorisations necessary for any member of the Telephonetics Group to carry on its business remaining in full force and effect and there being no notice or intimation of any intention to revoke, suspend, materially modify or not to renew the same and all necessary filings having been made, all appropriate waiting and other time periods (including extensions thereto) under any applicable legislation and regulations in any jurisdiction having expired, lapsed or been terminated and all necessary statutory or regulatory obligations in any jurisdiction in respect of the Acquisition or the proposed acquisition of Telephonetics by Netcall or of any Telephonetics Shares or any matters arising therefrom having been complied with;

3.5 save as Disclosed, there being no provision of any agreement, permit, lease, licence or other instrument to which any member of the Telephonetics Group or the Netcall Group is a party or by or to which it or any of its assets may be bound or subject which, as a consequence of the making or implementation of the Acquisition or the acquisition by Netcall directly or indirectly of Telephonetics or because of a change in the control or management of Telephonetics or Netcall or any member of the Telephonetics Group or Netcall Group, could or might reasonably be expected to (in each case to an extent which is material in the context of the Netcall Group or the Telephonetics Group) result in:

(a) any monies borrowed by, or other indebtedness (actual or contingent) of, or grant available to, any member of the Telephonetics Group or Netcall Group becoming repayable or capable of being declared repayable immediately or earlier than the stated maturity or repayment date or the ability of any member of the Telephonetics Group or Netcall Group to borrow moneys or incur indebtedness being or becoming capable of being withdrawn or inhibited; (b) any such agreement, arrangement, permit, lease, licence or other instrument or any right, interest, liability or obligation of any member of the Telephonetics Group or Netcall Group therein, being terminated or adversely modified or affected or any adverse action being taken or any onerous obligation or liability arising thereunder; (c) any mortgage, charge or other security interest being created over the whole or any part of the business, property or assets of any member of the Telephonetics Group or Netcall Group or any such security (whenever arising) becoming enforceable; (d) the value of any member of the Telephonetics Group or Netcall Group or its financial or trading position or prospects being prejudiced or adversely affected; (e) any assets or interests of any member of the Telephonetics Group or Netcall Group being or falling to be charged or disposed of 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; (f) the rights, liabilities, obligations or interests or business of any member of the Telephonetics Group or Netcall Group in or with any other person, firm or company (or any arrangement relating to such interest or business) being terminated or adversely modified or affected; (g) any member of the Telephonetics Group or Netcall Group ceasing to be able to carry on business under any name under which it currently does so; or (h) the creation of any liability, actual or contingent, by any member of the Telephonetics Group or Netcall Group;

3.6 since 28 May 2010, save as Disclosed, no member of the Telephonetics Group or Netcall Group having:

(a) (save for Telephonetics Shares issued pursuant to the exercise of options granted under the Telephonetics Share Option Schemes or the Unapproved Options or as between Telephonetics and wholly-owned subsidiaries of Telephonetics) issued or agreed to issue or authorised or proposed the issue of additional shares of any class or securities convertible into or rights, warrants or options to subscribe for or acquire any such shares or convertible securities; (b) other than to another member of the Telephonetics Group or Netcall Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any dividend, bonus or other distribution (whether payable in cash or otherwise) other than dividends lawfully paid to Telephonetics or wholly-owned subsidiaries of Telephonetics; (c) save for Intra-Telephonetics Group Transactions or Intra-Netcall Group Transactions, merged or demerged with or acquired any body corporate, partnership or business; (d) save for Intra-Telephonetics Group Transactions or Intra-Netcall Group Transactions, acquired, or (other than in the ordinary course of business) disposed of, transferred, mortgaged or charged or created any security interest over any asset or any right, title or interest in any asset (including shares and trade investments) or authorised, proposed or announced any intention to do so which, in any such case, is material in the context of the Telephonetics Group or Netcall Group taken as a whole; (e) save for Intra-Telephonetics Group Transactions, issued or authorised or proposed the issue of any debentures or incurred or increased any indebtedness or contingent liability or made, authorised, proposed or announced an intention to propose any change in its share or loan capital; (f) entered into or varied or announced its intention to enter into or vary any contract, transaction, commitment or arrangement (whether in respect of capital expenditure or otherwise) which is of a long term or unusual nature or which involves or could involve an obligation of a nature or magnitude which, in any such case, is material in the context of the Telephonetics Group or Netcall Group taken as a whole or which is or is likely to be restrictive in any material respect on the business of any member of the Telephonetics Group or the Netcall Group; (g) entered into, implemented, authorised or proposed any reconstruction, amalgamation, scheme of arrangement or other transaction or arrangement otherwise than in the ordinary course of business or announced any intention to do so to an extent which is materially adverse in the context of the Telephonetics Group; (h) entered into, or varied in any material respect the terms of, any contract or agreement with any of the directors or senior executives of Telephonetics or Netcall or any of their subsidiaries to an extent which is materially adverse in the context of the Telephonetics Group; (i) taken or proposed any corporate action or had any material legal proceedings started or threatened against it or had any petition presented for its winding-up (voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any of its assets and/or revenues or any analogous proceedings in any jurisdiction; (j) waived or compromised any claim other than in the ordinary course of business; (k) purchased, redeemed or repaid or proposed the purchase, redemption or repayment of any of its own shares or other securities or reduced or made any other change to any part of its share capital; (l) been unable or admitted 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 all or a substantial part of its business; and (m) made or agreed or consented to any significant change to the terms of the trust deeds constituting the pension schemes established for its directors, employees or their dependants or to the benefits which accrue; or to the pensions which are payable, thereunder, or to the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined or to the basis upon which the liabilities (including pensions) of such pension schemes are funded or made, or agreed or consented to any change to the trustees including the appointment of a trust corporation; or (n) entered into, varied or modified any contract, commitment or agreement with respect to any of the transactions, matters or events referred to in this Condition 3.6 or announced an intention to do so;

3.7 since 28 May 2010, save as Disclosed:

(a) no litigation, arbitration, prosecution or other legal proceedings having been instituted, announced or threatened or become pending or remaining outstanding by or against any member of the Telephonetics Group or Netcall Group to which any member of the Telephonetics Group or Netcall Group is or may become a party (whether as claimant, respondent or otherwise) and no enquiry or investigation by or complaint or reference to any Relevant Authority or other investigative body having been threatened, announced, implemented or instituted or remaining outstanding against or in respect of any member of the Telephonetics Group or Netcall Group which, in any such case, would or might reasonably be expected adversely to affect any member of the Telephonetics Group or Netcall Group to an extent which is material in the context of the Telephonetics Group or Netcall Group taken as a whole; (b) no material adverse change having occurred in the business, assets, financial or trading position, profits or prospects of the Telephonetics Group or Netcall Group taken as a whole; (c) no contingent or other liability having arisen which might reasonably be expected materially adversely to affect the Telephonetics Group or Netcall Group taken as a whole;

3.8 save as Disclosed, Netcall or Telephonetics not having discovered that:

(a) any business, financial or other information concerning any member of the Telephonetics Group or Netcall Group publicly disclosed or disclosed to Netcall or Telephonetics at any time by or on behalf of any member of the Telephonetics Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading which, in any such case, is material in the context of the Telephonetics Group or Netcall Group taken as a whole; (b) any member of the Telephonetics Group or Netcall Group is subject to any liability, actual or contingent which is material in the context of the Telephonetics Group or Netcall Group taken as a whole; or (c) there is, or is likely to be, any liability (whether actual or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the Telephonetics Group or Netcall Group or any controlled waters under any environmental legislation, regulation, notice, circular or order of any Relevant Authority or otherwise and which is material in the context of the Telephonetics Group or Netcall Group taken as a whole.

4. Subject to the requirements of the Panel or the Court, Netcall reserves the right to waive, in whole or in part, all or any of the Conditions so far as they relate to Telephonetics and Telephonetics reserves the right to waive in whole or in part all or any of the Conditions insofar as they relate to Netcall except, save for paragraphs 3.1 and 3.2 above and in the circumstances set out in paragraph 6 below. Netcall and Telephonetics shall be under no obligation to waive (if capable of waiver) or treat as fulfilled any of Conditions 2.1 to 2.3 by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such Conditions may not be capable of fulfilment.

5. If Netcall is required by the Panel to make an acquisition or acquisitions for the Ordinary Shares under the provisions of Rule 9 of the Code, Netcall may make such alterations to the terms and conditions of the Acquisition as may be necessary to comply with the provisions of that Rule.

6. The Acquisition will lapse and the Scheme will not proceed if, before the date of either of the Meetings, (i) the Acquisition, or any matter arising from it, is referred to the Competition Commission; or (ii) following a request to the European Commission under Article 22(3) of Council Regulation 139/2004/EC (the "Regulation") in relation to the Acquisition or any part of it, which request is accepted by the European Commission, the European Commission initiates proceedings under Article 6(1)(c) of the Regulation.

7. Netcall reserves the right, with the consent of the Panel, to elect to implement the Acquisition by way of a takeover offer. In such event, such Acquisition will be implemented on the same terms (subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent. (or such lesser percentage (being more than 50 per cent.) as Netcall may determine) of the shares to which the Acquisition relates), so far as applicable, as those which would apply to the Scheme.

8. The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

APPENDIX II - DISCLOSURES ON THE PROPOSED NETCALL DIRECTORS

1. Michael Neville

1.1 Michael holds or have held the following directorships in the following companies within five years prior to the date of this Announcement:

 

Current Directorships	Previous directorships
§ Telephonetics § Cellcast Plc § Besbury Limited § Minmet PLC	§ Felix Corporation Limited § World Television Group plc § Virtue Broadcasting (Holdings) Limited § World Television (Switzerland) Limited § Virtue Communications Limited § Kamera Interactive UK Limited § Crawshaw Group PLC § Atlas Interactive Holdings Limited § UCTX Limited § Virtue Broadcasting Limited § Virtue Corporate Services Limited § World Television Ltd § Green Symbol Limited § Alnwick Enterprises Limited § Besbury Consultancy Limited § Bring Back Limited § Aston Villa Investments Limited § Trade Sound Limited § P.S. Group (UK) Ltd § Reenergy Group plc § Atlas Interactive Group Limited § Atlas Interactive Management Limited § Telephonetics VIP Ltd

 

1.2 Michael Neville was a director at the time, or within twelve months, of the following companies that gone have into receivership, compulsory liquidation, creditors' or partnership voluntary liquidations, administrations, company voluntary arrangements or have entered into any composition or arrangement with its creditors generally or any class of its creditors:

1.2.1 Michael was a director of Oncue Telecommunications Limited until May 2001, and the company entered into a members' voluntary winding up on 28 June 2001.

 

1.2.2 Michael was a director of Integrated Media Technologies Plc until August 2001, and the company entered into a members' voluntary winding up on 31 October 2001.

 

1.2.3 Michael was a director of Crucial Plan plc when a winding up order was made against the company on 22 April 2009.

 

2. James Ormondroyd

2.1 James is also a director of Telephonetics, Telephonetics VIP Ltd, Voice Integrated Products Ltd and Datadialogs Limited. James has not held any other directorships within five years prior to the date of this Announcement.

2.2 On 26 June 2002, James was appointed a director of Tornado Entertainment Limited ("TEL"). TEL was then a subsidiary of Tornado Group plc which merged with Virtue Broadcasting Limited in June 2002 and was subsequently renamed Tornado Virtue plc. TEL had made pre-tax losses of £3.3m in the six months to 30 June 2002 and had continued to incur losses after that date. On 21 October 2002, Cable & Wireless UK Services Limited ("C&W") served a winding up petition on TEL to recover various amounts owed from TEL to C&W. On the same date, Tornado Virtue plc announced that it had withdrawn financial support to TEL. As a result, TEL became insolvent. A winding up order was made by the High Court on 27 November 2002. On 12 December 2002, a liquidator was appointed in respect of TEL.

 

Save as disclosed above, James has not been a director at the time, or within twelve months, of any companies that have gone into receivership, compulsory liquidation, creditors' or partnership voluntary liquidation, administration, company voluntary arrangement or have entered into any composition or arrangement with its creditors generally or any class of its creditors.

 

3. Mark Brooks

 

3.1 Mark holds or have held the following directorships in the following companies within five years prior to the date of this Announcement:

 

Current Directorships	Previous directorships
§ Telephonetics § Summit Funding Ltd	§ Total Therapy Limited § VIP Sales Ltd § VIP Managed Services Ltd § Voice Integrated Products Ltd § Silkware Limited § Telephonetics VIP Ltd

 

3.2 Mark has not been a director at the time, or within twelve months, of any companies that have gone into receivership, compulsory liquidation, creditors' or partnership voluntary liquidation, administration, company voluntary arrangement or have entered into any composition or arrangement with its creditors generally or any class of its creditors.

 

The Proposed Netcall Directors have confirmed that there are no other disclosures required in accordance with Schedule Two (g) of the AIM Rules in relation to their respective appointments to the Netcall Board.

APPENDIX III - EXPECTED TIMETABLE OF PRINCIPAL EVENTS

EVENT

	2010
Latest time and date for lodging Forms of Proxy for the Telephonetics Court Meeting	11.00 a.m. on 6 July(1)
Latest time and date for lodging Forms of Proxy for the Telephonetics General Meeting	11.15 a.m. on 6 July(2)
Latest time and date for lodging Forms of Proxy for the Netcall General Meeting	2.00 p.m. on 6 July
Scheme Voting Record Time	6.00 p.m. on 6 July(3)
Telephonetics Court Meeting	11.00 a.m. on 8 July
Telephonetics General Meeting	11.15 a.m. on 8 July(4)
Netcall General Meeting	2.00 p.m. on 8 July
First Court Hearing	23 July(5)
Scheme Record Time	6.00 p.m. on 27 July(5)
Admission of all of the Placing Shares	to have been effected by 8.00 a.m. on 27 July(5)
Crediting of CREST accounts in respect of the Placing Shares	27 July(5)
Suspension of trading of Telephonetics Shares/Registration of transfers of Telephonetics Shares	7.00 a.m. on 28 July(5)
Second Court Hearing	28 July(5)
Effective Date of the Scheme	29 July(5)
Cancellation of admission to trading and dealing of Telephonetics Shares on AIM	7.00 a.m. on 30 July(5)
Admission of New Netcall Shares	8.00 a.m. on 30 July(5)
Latest date for despatch of share certificates in respect of the New Netcall Shares to be held in certificated form, for cheques in respect of Cash Consideration and settlement through CREST in respect of the New Netcall Shares	within 14 days of the Effective Date

Notes:

(1) If the Form of Proxy is not returned by the above time, it may be handed to the Chairman of the Telephonetics Court Meeting at the Telephonetics Court Meeting, before the taking of the poll.

(2) Forms of Proxy for the Telephonetics General Meeting must be lodged not later than 48 hours prior to the time appointed for the Telephonetics General Meeting.

(3) If either the Telephonetics Court Meeting or the Telephonetics General Meeting is adjourned, the Scheme Voting Record Time for the relevant adjourned meeting will be 6.00 p.m. on the day two days before the date of the adjourned meeting.

(4) The Telephonetics General Meeting will commence at 11.15 a.m. or, if later, immediately after the conclusion or adjournment of the Telephonetics Court Meeting.

(5) These dates are indicative only and will depend, among other things, on the date upon which the conditions are satisfied or (if capable of waiver) waived and the dates upon which the Court sanctions the Scheme and confirms the Capital Reduction and the dates on which the Court Orders are delivered to the Registrar of Companies and, in respect of the Capital Reduction, the Second Court Order is registered by the Registrar of Companies.

 

APPENDIX IV - DEFINITIONS

The following definitions apply throughout this Announcement (and in the summary of it) unless the context otherwise requires.

"Act"	the Companies Act 2006, as amended and for the time being in force;
"Acquisition"	the proposed recommended acquisition of the entire ordinary share capital of Telephonetics by Netcall to be implemented by way of the Scheme on the terms and subject to the Conditions set out in this Announcement and any subsequent revision, variation extension or renewal thereof;
"Admission"	the admission of the New Netcall Shares and, where the context requires, the Placing Shares (and the re-admission of the existing Netcall Shares) to trading on AIM;
"Admission Document"	the admission document to be prepared by Netcall in accordance with the AIM Rules and to be published in relation, amongst other things, to the Enlarged Group, the New Netcall Shares and the Placing Shares;
"AIM"	AIM, a market operated by the London Stock Exchange;
"AIM Rules"	the AIM Rules for Companies published by the London Stock Exchange (as amended from time to time) which govern the admission to trading on and the regulation of AIM;
"Announcement"	this announcement (including, where the context requires, the summary of this announcement);
"Brewin Dolphin"	Brewin Dolphin Corporate Advisory and Broking, a trading name of Brewin Dolphin Limited, a company incorporated under the laws of England and Wales with registered number 2135876;
"Business Day"	a day (other than a Saturday or Sunday or public holiday) on which banks are open for business in London;
"Capital Reduction"	the proposed reduction of Telephonetics' share capital involving the cancellation and extinguishing of the Scheme Shares under section 645 of the Act;
"Cash Consideration"	5 pence in cash per Scheme Share payable to a Scheme Shareholder under the Offer;
"certificated" or "in certificated form"	a share or other security which is not in uncertificated form (that is, not in CREST);
"City Code"	the City Code on Takeovers and Mergers;
"Closing Price"	the closing middle market quotation of a relevant share as derived from the AIM Appendix of the Daily Official List;
"Competing Proposal"	a general offer (or scheme of arrangement) for (or in respect of) the entire issued and to be issued ordinary share capital of Telephonetics pursuant to which a third party seeks to acquire the entire issued and to be issued ordinary share capital of Telephonetics;
"Conditions"	the conditions to the Acquisition (including the Scheme) set out in Appendix I of this Announcement, and the term "Condition" means any one of them;
"Court"	the High Court of Justice in England and Wales;
"Court Hearings"	together, the First Court Hearing and the Second Court Hearing;
"Court Orders"	the First Court Order and the Second Court Order;
"CREST"	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in the CREST Regulations);
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended;
"Daily Official List"	the Daily Official List of the London Stock Exchange;
"Disclosed"	disclosed in: (a) the annual report and accounts of Netcall for the financial year ended June 2009 or the unaudited interim results for Netcall for the financial period ended 31 December 2009; (b) any documents delivered to any director, officer or employee of Telephonetics or any professional adviser engaged by Telephonetics in connection with the Acquisition by or on behalf of Netcall at any time prior to 6.00 p.m on 28 May 2010; (c) the annual report and accounts of Telephonetics for the financial years ended 30 November 2008 and 30 November 2009; (d) any documents delivered to any director, officer or employee of Netcall or any professional adviser engaged by Netcall in connection with the Acquisition by or on behalf of Telephonetics at any time prior to 6.00 p.m. on 28 May 2010; and (e) any public announcement released by or on behalf of Netcall or, as the case may be, Telephonetics to a Regulatory Information Service at any time prior to 6.00 p.m. on 28 May 2010;
"Effective Date"	the date on which the Scheme becomes effective in accordance with its terms;
"Enlarged Group"	with effect from the Effective Date, the Netcall Group as enlarged by the acquisition of the Telephonetics Group;
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST;
"Evolution Securities"	Evolution Securities Limited, the financial adviser to Netcall in connection with the Acquisition, and nominated adviser and broker to Netcall
"Excluded Shares"	any Telephonetics Shares which are registered in the name of or beneficially owned by Netcall or its nominee(s);
"First Court Hearing"	the hearing of the Court to sanction the Scheme;
"First Court Order"	the order of the Court sanctioning the Scheme under section 899 of the Act;
"HMRC"	HM Revenue and Customs;
"Implementation Agreement"	the implementation agreement entered into by Netcall and Telephonetics on 1 June 2010, governing the implementation of the Acquisition, further details of which are set out in this Announcement;
"Inducement Fee Agreement"	the inducement and exclusivity agreement entered into by Netcall and Telephonetics on 18 May 2010, further details of which are set out in this Announcement;
"Intra-Netcall Group Transactions"	transactions between Netcall and its wholly-owned subsidiaries;
"Intra-Telephonetics Group Transactions"	transactions between Telephonetics and its wholly-owned subsidiaries;
"London Stock Exchange"	London Stock Exchange plc;
"Meetings"	the Telephonetics Court Meeting and the Telephonetics General Meeting;
"Netcall"	Netcall plc, incorporated in England and Wales with registered number 01812912;
"Netcall Board"	the board of directors of Netcall;
"Netcall Directors"	the directors of Netcall;
"Netcall General Meeting"	the general meeting of Netcall to be convened ,amongst other things, to consider and, if thought fit to approve, the Acquisition and the Placing;
"Netcall Group"	Netcall, its subsidiaries and subsidiary undertakings;
"Netcall Shareholders"	holders of Netcall Shares as appearing on the register of members of Netcall from time to time;
"Netcall Shares"	the ordinary shares of 5 pence each in the capital of Netcall;
"Netcall Unapproved Scheme"	the Unapproved Share Option Scheme of Netcall;
"New Netcall Shares"	the ordinary shares of 5 pence each in the capital of Netcall proposed to be issued and credited as fully paid to Scheme Shareholders pursuant to the terms of the Acquisition;
" Offer"	the share and cash offer to be provided for under the Scheme pursuant to which Scheme Shareholders will (subject to the terms of the Scheme) receive New Netcall Shares and Cash Consideration on the basis set out in this Announcement;
"Option Holders"	the holder of options over Telephonetics Shares under the Telephonetics 2005 Scheme and the Unapproved Options;
"Panel"	the Panel on Takeovers and Mergers;
"Placing"	the proposed conditional placing by Evolution Securities of the Placing Shares pursuant to the Placing Agreement;
"Placing Agreement"	the placing agreement entered into by Netcall and Evolution Securities on 1 June 2010 in relation to the Placing;
"Placing Shares"	the 22,368,420 Netcall Shares to be placed pursuant to the Placing;
"Scheme" or "Scheme of Arrangement"	the proposed scheme of arrangement under Part 26 of the Act to be set out in the Scheme Circular, with or subject to any modification, addition or condition approved or imposed by the Court and agreed by Telephonetics and Netcall;
"Scheme Circular"	the document to be sent to Telephonetics Shareholders containing, amongst other things, the Scheme and the explanatory statement required by section 897 of the Act;
"Scheme Record Time"	6.00 p.m. on the Business Day immediately preceding the date of the Second Court Hearing;
"Scheme Shareholder"	a holder of Scheme Shares;
"Scheme Shares"	Telephonetics Shares: (a) in issue at the date of this Announcement; (b) in issue after the date of this Announcement and prior to the Scheme Voting Record Time; and (c) in issue at or after the Scheme Voting Record Time and at or prior to the Scheme Record Time either on terms that the original or any subsequent holders of such shares are or shall have agreed in writing to be, bound by this Scheme, in each case but excluding the Excluded Shares;
"Scheme Voting Record Time"	6.00 p.m. (London time) on 6 July 2010 or, if the Telephonetics Court Meetingis adjourned, 6.00 p.m. (London time) on the day two days before the date of the adjourned meeting;
"Second Court Hearing"	the hearing by the Court to confirm the Capital Reduction;
"Second Court Order"	the order of the Court confirming the Capital Reduction under section 648 of the Act;
"subsidiary undertaking"	has the meaning given in section 1162 of the Act;
"Telephonetics"	Telephonetics plc, incorporated in England and Wales with registered number 05256558;
"Telephonetics 2005 Scheme"	the 2005 EMI Share Option Scheme of Telephonetics;
"Telephonetics Board"	the board of directors of Telephonetics;
"Telephonetics Court Meeting"	the meeting of the holders of Scheme Shares to be convened by the Court in order to approve the terms of the Scheme and any adjournment of such meeting;
"Telephonetics Directors"	the directors of Telephonetics;
"Telephonetics General Meeting"	the general meeting of Telephonetics to be convened, amongst other things, to consider and, if thought fit, certain resolutions to implement the Scheme and the Capital Reduction;
"Telephonetics Group"	Telephonetics, its subsidiaries and subsidiary undertakings;
"Telephonetics Shareholders"	holders of Telephonetics Shares as appearing on the register of members of Telephonetics from time to time;
"Telephonetics Shares"	ordinary shares of 1 pence each in the capital of Telephonetics;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"Unapproved Options"	the options granted by Telephonetics to Brian Smith on 4 July 2006, Michael Neville on 7 July 2005 and James Ormondroyd on 7 July 2005 over 1,404,769, 654,514 and 611,110 Telephonetics Shares respectively;
"uncertificated" or "in uncertificated form"	a share or other security recorded on the relevant register as being held in uncertificated form, in CREST, and title to which, by virtue of the Regulations, may be transferred by means of CREST;
"US" or "United States"	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.

 

APPENDIX V - BASES AND SOURCES OF FINANCIAL INFORMATION AND IRREVOCABLE UNDERTAKINGS

1. Save as otherwise stated in this Announcement, the following constitute the bases and sources of certain information referred to in this Announcement:

1.1 Historic financial information relating to Telephonetics has been extracted without material adjustment from the relevant published audited reports and accounts of Telephonetics and the published audited financial statements of Telephonetics for the year ended 30 November 2009

1.2 Historic financial information relating to Netcall has been extracted without material adjustment from the relevant published audited reports and accounts of Netcall for the year ended 30 June 2009 and the published unaudited interim results of Netcall for the period ended 31 December 2009

1.3 The value of the fully diluted share capital of Telephonetics is calculated on the basis of:

(a) 109,138,806 Telephonetics Shares in issue on 28 May 2010 (being the last business day prior to the publication of this document); and (b) unissued Telephonetics Shares reserved for issue pursuant to options and awards outstanding under the Telephonetics 2005 Scheme and the Unapproved Options on 28 May 2010 (being the last Business Day prior to the publication of this Announcement) which are, or will be upon the Scheme becoming effective, capable of exercise

1.4 The aggregate amount of the Cash Consideration and the number of New Netcall Shares to be issued in respect of the Acquisition is calculated based upon the number of Telephonetics Shares in issue (as described in sub-paragraph 1.3 above) resulting in the issue of up to 35,256,184 New Netcall Shares and a cash payment of approximately £5.73 million

1.5 All share prices for Telephonetics Shares are derived from the AIM Appendix of the Daily Official List

1.6 All share prices for Netcall Shares are derived from the AIM Appendix of the Daily Official List;

1.7 Unless otherwise stated, all prices quoted for shares are mid market Closing Prices.

1.8 Netcall confirms that it has 64,197,689 ordinary shares of 5 pence each in issue and admitted to trading on AIM under the UK ISIN Code GB0000060532.

1.9 Telephonetics confirms that it has 109,138,806 ordinary shares of 1 pence each in issue and admitted to trading on AIM under the UK ISIN Code GB00B0391584.

2. Irrevocable undertakings to vote in favour of the resolutions to be proposed at the Telephonetics Court Meeting and the Telephonetics General Meeting have been received by Netcall from the following persons in respect of the following interests in Telephonetics Shares:

Name	Number of Telephonetics Shares committed	Percentage of entire existing issued share capital of Telephonetics
Mr M Neville	150,000	0.14
Mr A McKay3	19,630,994	17.99
Mr M Brooks4	10,939,255	10.02
Mr J Sandon-Allum5	5,415,686	4.96
Mr W Burgar6	19,480,994	17.85
Octopus AIM VCT7	4,100,000	3.76
Octopus IHT AIM VCT7	1,523,432	1.39
Octopus Second AIM VCT7	1,431,267	1.31

Notes:

1. These irrevocable undertakings remain binding, even if a higher competing offer is announced by a third party, unless the Scheme lapses or is withdrawn other than as specified below

2. The irrevocable undertakings also cover options over Telephonetics Shares granted under the Telephonetics 2005 Scheme and the Unapproved Options. Pursuant to such undertakings, the Telephonetics Directors concerned have irrevocably agreed to either (i) accept, when made, the proposals to Option Holders; or (ii) exercise in full the relevant options prior to the Scheme Record Date. The number of Telephonetics Shares stated as being irrevocably committed excludes any Telephonetics Shares arising from the exercise of options over Telephonetics Shares

3 The number of Telephonetics Shares irrevocably committed does not include options over 657,895 Telephonetics Shares granted by Anthony McKay to Cineworld Cinemas Limited which expire on or around 7 May 2012

4 The number of Telephonetics Shares irrevocably committed does not include 1,970,588 Telephonetics Shares held under his pension fund

5 The number of Telephonetics Shares irrevocably committed does not include 917,647 Telephonetics Shares held under his pension funds

6 The number of Telephonetics Shares irrevocably committed does not include options over 657,895 Telephonetics Shares granted by William Burgar to Cineworld Cinemas Limited which expire on or around 7 May 2012

7 These irrevocable undertakings will lapse in the event that a "Higher Competing Offer" for Telephonetics is announced. "Higher Competing Offer" means an offer which exceeds 10 per cent. or more of the consideration per Scheme Share payable under the Acquisition

3. Irrevocable undertakings to vote in favour of the resolutions to be proposed at the Netcall General Meeting have been received by Netcall from the following persons in respect of the following interests in Netcall Shares:

Name	Number of Netcall Shares committed	Percentage of entire existing issued share capital of Netcall
Mr R Allsop	1,250,000	1.95
Mr H Bang	930,000	1.45
Mr M Jackson	800,000	1.24
Gartmore UK & Irish Smaller Companies Fund	250,000	0.39
Tartan Investment Partners, L.P.	12,777,176	19.90

Notes:

1. These irrevocable undertakings remain binding, even if a higher competing offer is announced by a third party, unless the Scheme lapses or is withdrawn other than as specified below

4. Netcall has also received a letter of intent from Bluehone Investors LLP confirming its intention to vote (or procure to voting) in favour of the Acquisition at the Netcall General Meeting in respect of a total of 5,915,242 Netcall Shares held on behalf of the beneficiaries, representing approximately 9.21 per cent. of the existing issued Netcall Shares

 

Important Information

This announcement is an announcement made by Netcall and Telephonetics pursuant to their obligations under the City Code. A copy of this announcement is available on the following websites www.netcall.com and www.telephoneticsvip.co.uk. This announcement has also been released through a regulatory information service.

This announcement is an advertisement and not a prospectus and neither Telephonetics Shareholders nor Netcall Shareholders should make any investment decision in relation to Telephonetics Shares or Netcall Shares except on the basis of the information in the Scheme Circular and the Admission Document which are proposed to be published in due course.

Evolution Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as financial adviser, nominated adviser and broker exclusively for Netcall and no one else in connection with the matters referred to in this summary and the Announcement and will not be responsible to anyone other than Netcall for providing the protections afforded to clients of Evolution Securities nor for providing advice in relation to such matters or any other matter or arrangement referred to in this Announcement. The responsibilities of Evolution Securities as Netcall's nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to Netcall or to any Netcall Director or to any other person.

Brewin Dolphin, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively as financial adviser to Telephonetics and for no one else in relation to the Acquisition and will not be responsible to anyone other than Telephonetics for providing the protections afforded to clients of Brewin Dolphin nor for giving advice in relation to the Acquisition or any matter or arrangement referred to in this Announcement. The responsibilities of Brewin Dolphin as Telephonetics' nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to Telephonetics or to any Telephonetics Director or to any other person.

The Telephonetics Directors accept responsibility for the information contained in this Announcement relating to the Telephonetics Group, themselves and their immediate families and connected persons. The Netcall Directors accept responsibility for all of the other information contained in this Announcement. To the best of the knowledge and belief of the Telephonetics Directors and the Netcall Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Announcement for which they are respectively responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Neither the Acquisition nor the Placing will be made, directly or indirectly, in or into or by the use of the mails of, or by any other means (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce, or any facility of a national securities exchange of any jurisdiction where the relevant action would constitute a violation of the relevant laws and regulations of such jurisdiction or would result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which Netcall and Telephonetics regard as unduly onerous and will not be capable of election by any such use, means or facility or from within any such jurisdiction. Accordingly, unless otherwise determined by Netcall and Telephonetics, copies of this document and any documentation relating to the Acquisition or the Placing are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction other than the United Kingdom ("Overseas Jurisdiction") and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send any such documents in or into or from any such Overseas Jurisdiction, as doing so may invalidate any purported election of any offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intend to, or who may have a contractual or legal obligation to, forward this document and/or any other documentation relating to the Acquisition or the Placing to any Overseas Jurisdiction should inform themselves of, and observe, any applicable legal or regulatory requirements of that jurisdiction.

None of Netcall, Telephonetics or any of their respective directors, officers, agents and advisers is making any representation to any offeree or purchaser of the New Netcall Shares or the Placing Shares hereby regarding the legality of an investment by such offeree or purchaser under appropriate investment or similar laws. Each prospective investor should consult with his, her or its own advisers as to the legal, tax, business, financial and related aspects of purchase of or subscription for the New Netcall Shares and the Placing Shares.

The New Netcall Shares and the Placing Shares to be issued in connection with the Acquisition and the Placing respectively have not been, nor will they be, registered under the US Securities Act 1933 (as amended) or under the securities laws of any state of the United States; the relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the New Netcall Shares and the Placing Shares have been, nor will they be, registered under or offered in compliance with applicable securities laws of any state, province, territory or jurisdiction of Canada, Australia or Japan. Accordingly, the New Netcall Shares and the Placing Shares are not being and may not be (unless an exemption under relevant securities laws is applicable) offered, sold, resold or delivered, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, South Africa or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereof in, such jurisdiction or to, or for the account or benefit of, any United States, Canadian, Australian or Japanese person.

Market and Financial Information

The data, statistics and information and other statements in this Announcement regarding the markets in which the Telephonetics Group and the Netcall Group operate, or their respective positions therein, are based on the Telephonetics Group's and Netcall Group records or are taken or derived from statistical data and information derived from the sources described in this Announcement.

In relation to these sources, such information has been accurately reproduced from the published information, and, so far as the Netcall Directors and the Telephonetics Directors are aware and are able to ascertain from the informationprovided by the suppliers of these sources, no facts have been omitted which would render such information inaccurate or misleading.

All times referred to in this Announcement are, unless otherwise states, references to London time.

Rule 8 Notice

Under Rule 8.3(a) of the City Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129."

Forward Looking Statements

This Announcement includes statements that are, or may be deemed to be, ''forward looking statements''. These forward looking statements can be identified by the use of forward looking terminology, including the terms ''believes'', ''projects'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''plans'', ''goal'', ''target'', ''aim'', ''may'', ''will'', ''would'', ''could'' ''should'' or ''continue'' or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. They appear in a number of places throughout this Announcement and include statements regarding Netcall's, Telephonetics' and the Enlarged Group's intentions, beliefs or current expectations concerning, among other things, Netcall's Telephonetics' and the Enlarged Group's results of operations, financial condition, prospects, growth, strategies and the industries in which Netcall, Telephonetics and the Enlarged Group operate.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond Netcall's, Telephonetics' or the Enlarged Group's ability to control or predict. Forward looking statements are not guarantees of future performance. Netcall's, Telephonetics' or the Enlarged Group's actual results of operations, financial condition, dividend policy and the development of the industries in which they operate may differ materially from the impression created by the forward looking statements contained in this Announcement. In addition, even if the results of operations and dividend policy of Netcall, Telephonetics or the Enlarged Group (as the case may be), and the development of the industries in which they operate, are consistent with the forward looking statements contained in this Announcement, those results or developments may not be indicative of results or developments in subsequent periods.

The forward looking statements contained in this Announcement speak only as of the date of this Announcement. Other than in accordance with their legal or regulatory obligations (including under the City Code, the Disclosure and Transparency Rules, the AIM Rules for Companies or the Financial Services and Markets Act 2000) and as required by the Financial Services Authority, the London Stock Exchange or the Panel on Takeovers and Mergers, neither Netcall nor Evolution Securities undertakes any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Netcall Group, the Telephonetics Group or the Enlarged Group or individuals acting on behalf of any of them are expressly qualified in their entirety by this paragraph.

 

 

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