Disposal

16 Feb 2012 07:00

AIM: STK 16 February 2012 SureTrack Monitoring plc ("SureTrack", the "Company" or the "Group") Disposal of Sure-Track Europe Limited

The Company announces that it has entered into a conditional share purchase agreement ("the Share Purchase Agreement") to dispose of one of its subsidiaries, Sure-Track Europe Limited ("STE"), to Will Hirons and Deborah Davis (together the "Buyers") (the "Disposal") for £188,062. In addition, the Company has entered into a call option with the Buyers to acquire their entire shareholding in the Company of 117,538,809 ordinary shares ("the Call Option Shares") for approximately £188,062, the equivalent of 0.16p per share being the middle market closing price on 15 February 2012, the last practicable date before the entry into the agreement.

The Buyers propose to acquire the entire issued share capital of STE, comprising 2,148 ordinary shares of 1p each, and will assume all assets, liabilities and TUPE obligations of STE. Prior to completion of the Disposal, an intercompany loan amounting to approximately £1.3 million owed by STE to SureTrack will be written off.

It is intended that the consideration arising on the sale of STE will be satisfied by the transfer of the Call Option Shares to the Company in accordance with the call option referred to above and their subsequent cancellation. The Share Purchase Agreement remains subject to certain conditions including shareholder approval at a general meeting.

Once the disposal has been approved by the shareholders the Company intends to undertake a capital reorganisation to enable it to exercise the call option to purchase the Call Option Shares and, in due course, to cancel these shares. Further details in relation to this are set out in the circular to Shareholders which will be posted to Shareholders today.

As part of the Disposal, Mr Hirons will resign as director of all of the Group's companies but will remain as a consultant to the Company to facilitate an orderly handover. No compensation will be paid to Mr Hirons. Following Mr Hirons' resignation, the Board intends to identify and appoint an executive director in due course which may or may not be from within the business.

Following completion of the Disposal, the Buyers will no longer have a shareholding in the Company. They will, however, retain options over 15 million ordinary shares in the Company which will be exercisable at 0.6p until the fourth anniversary of completion. In addition, STE will be given a loan facility of £23,000 from the Company which may be drawn down in certain circumstances to assist with an onerous contract that STE is a party to, which will be interest free and repayable annually over the next seven years.

Reasons for the Disposal

The Company was admitted to trading on AIM in August 2010 and has only recently seen an increase in its revenues. However, the Company has continued to generate losses with a substantial proportion of those losses attributable to STE. For the six months ended 31 July 2011 STE made a loss of £226,292. STE continues to be loss making and as a result the cash reserves of the Group continue to be depleted. The Directors believe that STE is more suited to being in private ownership and that the approach from Mr Hirons will enable the company to continue in a different format which will be more beneficial to all stakeholders.

The Company is excited by the development of the IBP Limited ("IBP") subsidiary as it continues to grow its customer base within the retail sector and has cemented its position as a widely respected supplier within the security industry. This was demonstrated recently by the announcement to supply a major European security and communications company with anti-raid protection systems for an Eastern European Post Office, the Directors will now concentrate fully on the opportunities that are becoming available to IBP.

The independent Directors (being the Directors of the Company other than Will Hirons) ("the Independent Directors") believe that the Company will benefit from divesting of STE and preserving the remaining cash resources, allowing the Company to focus on IBP as a source of sales and profit generation, thus in turn securing the future of the Company.

Related party and substantial property transaction

Under the AIM Rules, the sale of STE to the Buyers is classified as a related party transaction for the purposes of Rule 13 of the AIM Rules.

The Independent Directors, having consulted with the Company's Nominated Adviser, Merchant Securities Limited, consider the terms of the transaction to be fair and reasonable insofar as the Company's shareholders are concerned. In advising the Independent Directors, Merchant Securities Limited has taken into account the commercial judgement of the Independent Directors.

The transaction is also a substantial property transaction under the Companies Act 2006, which requires Shareholder approval before any assets above a certain value are sold to a Director.

In order to comply with the requirements of the Companies Act 2006, shareholders will be required to approve the Disposal at a General Meeting of the Company (the "GM"), to be held at 10.00 a.m. on 5 March 2012. Notice of the GM has been sent to shareholders today and will also be available on the Company's website.

Simon Barrell, Non-Executive Director and interim Chairman of SureTrack Monitoring plc, commented:

"This is a major step for the business which will allow us to concentrate on the part of the group that has most potential without jeopardising the cash resources of the group. We wish Will Hirons well with STE."

For further information contact:

SureTrack Monitoring plc Simon Barrell Tel: 07850 934204 Merchant Securities Limited (Nominated Adviser and Broker) Simon Clements Tel: 020 7628 2200

Catherine Miles