Thruvision Grp Regulatory News (THRU)

21 October 2010

Digital Barriers plc

("Digital Barriers" or the "Company")

Acquisition of Waterfall Solutions Limited

Digital Barriers plc (AIM: DGB), the specialist provider of products and services to the homeland security market, is pleased to announce the acquisition of Waterfall Solutions Limited ("Waterfall") for a maximum consideration of £5.5 million in cash and loan notes (the "Acquisition").

Waterfall is a UK-based provider of advanced technology solutions and related consulting services, specialising in the areas of image processing, data fusion, modelling and simulation, and fits neatly with Digital Barriers' business strategy and existing acquired assets. Deploying sector-leading intellectual property and best-in-class specialist services and technology, Waterfall works directly with government and commercial clients in the defence and security sectors as well as through strategic partnerships with prime system integrators.

Rationale for the Acquisition

The Board of Digital Barriers (the "Board") believes that Waterfall represents a clear and strategic opportunity for Digital Barriers to make further progress in developing a leading mid-market homeland security business, as well as building upon Waterfall's strong presence in the defence market.

At present, the most significant threat to security comes not from state-to-state conflict, but from international and domestic terrorism. Digital Barriers works with its clients to advise on, and then to design and deploy, advanced solutions that enhance the physical and electronic security and resilience of high profile, high value potential targets such as ports, airports and public transport; secure government facilities; border crossings; critical national infrastructure and computer systems and networks.

The Board believes that the acquisition of Waterfall will enable Digital Barriers to develop in a number of key strategic areas. First, by combining Waterfall's best-in-class technology and services with existing Digital Barriers capabilities, the Company will be able to develop a wider range of compelling solutions for the international Homeland Security market. Second, in combination with Digital Barriers' current technology portfolio, Waterfall's technology will enable the Company to make further progress in developing key end-customer and partner relationships in both the UK and in international markets, such as Asia Pacific and the Middle East.

The Founder, Managing Director and majority shareholder of Waterfall, will remain with the business as Managing Director, and the current management team will also remain in place.

Terms of the Acquisition

The initial consideration of £3.9 million is payable in cash on completion and will be satisfied from Digital Barriers' existing cash reserves.

Deferred consideration of up to £0.85 million is payable in cash and loan notes on the completion of Waterfall's current financial year, ending on 30 September 2011, subject to the satisfaction of certain performance conditions and the continued employment of key management. An additional £0.75 million of deferred consideration is payable in cash and loan notes on completion of the subsequent financial year, ending on 30 September 2012, subject to the satisfaction of certain performance conditions.

Financial Information

Waterfall's latest audited accounts for the financial year ended 30 September 2010 reported turnover of £2.10 million, with EBIT of £0.48 million (EBIT is stated after contributions to an executive pension scheme that are to be discontinued following the Acquisition). At 30 September 2010, Waterfall had net assets of £0.74 million.

Tom Black, Executive Chairman of Digital Barriers commented:

"I am delighted to announce our acquisition of Waterfall and very pleased to be bringing such high calibre people and technology into the Digital Barriers fold. Waterfall's innovative and highly effective solutions are very well positioned in both the defence and security sectors. We believe that, as a part of Digital Barriers, there exists a real and compelling opportunity to apply Waterfall's capabilities more broadly, particularly in the growing and specialised Homeland Security sector in the UK and overseas."

Moira Smith, Founder, Managing Director and majority shareholder of Waterfall Solutions Limited commented:

"I strongly believe that this is a tremendous and exciting opportunity for Waterfall, its staff, and customers as we move to the next phase of our development. Over eleven years we have brought a fresh new business approach to the defence and security markets where we have consistently delivered cost-effective and innovative technology. I am delighted that we will now be able to build on that solid basis and offer even greater capabilities and infrastructure to our existing customers, whilst maintaining these core business values.

"Digital Barriers is an excellent "fit" for Waterfall in terms of technology, market sectors, business approach and shared vision, and will extend our reach to clients across the globe. I therefore very much look forward to our future as part of Digital Barriers and share Tom and his team's enthusiasm for what we can now achieve together for the benefit of our customers."

For further information please contact:

About Digital Barriers:

Founded by the leadership team behind Detica Group, Digital Barriers is focused on the provision of specialist products and services to the homeland security market where the threat of international and domestic terrorism represents a compelling commercial opportunity. Over time, the Company aims to become a mid-market specialist, working directly with end-customers and internationally through key partner organisations, to provide focused, proportionate and effective solutions for the protection of high-profile targets, crowded spaces and the critical national infrastructure.

www.digitalbarriers.com 

Disclaimer:

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", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Company considers these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules for Companies, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Company's expectations or to reflect events or circumstances after the date of this announcement.