Eleco PLC 13 December 2006 Eleco plc Conditional acquisition of Asta Group Limited and vendor placing of 3,750,000 new ordinary shares at 80 pence per share The Board of Eleco plc ("Eleco" or the "Company") today announces the conditional acquisition of Asta Group Limited ("Asta") (the "Acquisition"). The consideration of £7.65 million comprises the payment of £3,229,871 in cash, to be satisfied from the Company's existing resources, the issue to the vendors of £1,420,129 of new ordinary shares and the issue of 3,750,000 of new ordinary shares which have been conditionally placed on behalf of the vendors to realise £3.0 million (together "New Eleco Shares"). Charles Stanley Securities ("Charles Stanley") has undertaken the vendor placing of 3,750,000 of the New Eleco Shares ("Vendor Placing Shares") at a price of 80 pence per share to raise £3.0 million (the "Vendor Placing"). The Acquisition and the Vendor Placing are conditional upon admission to trading of the New Eleco Shares ("Admission") and further details are set out below. The balance of £1,420,129 of New Eleco Shares (the "Retained Consideration Shares") will be retained by certain vendors, of which £898,165 will be retained by senior management of Asta. Information regarding Asta Business Asta is a leading provider of project and resource management software applications and support services principally to the UK Construction and Engineering industry and also to Information Technology and Professional Services organisations. Asta's project management software is used by 43 out of the top 50 main contractors in the UK by turnover and by 9 out of the top 10 UK house builders by turnover. Asta is also active in Germany, Holland and Sweden. Financial Asta's financial year end is 31 December and a summary of its audited financial results for the two years ended 31 December 2005 is set out below together with unaudited results for the nine months ended 30 September 2006: 9 months ended 30 September Year ended 31 December 2005 Year ended 31 December 2006 2004 £000 £000 £000 Turnover 3,108 3,782 3,091 Profit before tax 589 602 233 As at 30 September 2006, Asta had net cash balances of £1.11 million and net assets of £0.91 million. Management and Employees Asta has 54 full time employees. It is headed by Michael McCullen, Managing Director, who was one of the original founders in 1986. The senior management team intend to remain with Asta following it becoming part of Eleco. The Board of Eleco (the "Board") intends to invite Michael McCullen to join the Board in due course. It is proposed that he will have responsibility for the enlarged Construction Software activities of Eleco. Background to and Reasons for the Acquisition Asta is a leading provider to the UK construction market of project and resource management software. Consultec, Eleco's Swedish software subsidiary, has a leading position in the Swedish estimating and project management software market. Asta and Eleco are also both active in the German and Dutch markets. The Board believe that the acquisition of Asta, with its strong presence in the UK, will complement Eleco Construction Software's construction, plant management and estimating software product portfolio, improve Eleco's geographic representation and provide a variety of cross-selling opportunities. Asta operates well controlled software development procedures and has an effective marketing strategy. The Board believes that the business development practices and strong management within Asta will assist Eleco in its drive to enhance the performance of its existing Construction Software activities. The Boards of Eleco and Asta have identified significant growth opportunities and operational synergies that can be realised by combining Eleco's Construction Software activities with those of Asta. The Board anticipates that the Acquisition will be earnings enhancing in Eleco's current financial year ending 30 June 2007. Terms of the Acquisition The consideration of £7.65 million comprises the payment of £3,229,871 in cash, to be satisfied from the Company's existing resources, the issue to the vendors of £1,420,129 of Retained Consideration Shares and the issue of 3,750,000 Vendor Placing Shares which have been conditionally placed on behalf of the vendors to realise £3.0 million. The consideration is to be satisfied at Completion, which will be on Admission, which is anticipated to be on 15 December 2006. Charles Stanley has undertaken a conditional vendor placing of the Vendor Placing Shares at a price of 80 pence per share to raise £3.0 million. The Retained Consideration Shares will be retained by certain of the vendors, subject to lock-in arrangements. The number of Retained Consideration Shares will be calculated by reference to the average of the mid-market price of the Company's ordinary shares on the 5 business days prior to Admission. These dates are expected to be 8 December to 13 December inclusive (closing mid-market price) and 14 December (3:00 p.m.). The vendors have waived their entitlement on the Retained Consideration Shares to any interim dividend declared in respect of the year ending 30 June 2007. If Asta's EBITDA for the year ending 31 December 2006 is less than £977,000 (equivalent to profit before tax of approximately £900,000), then the consideration paid to certain of the vendors (the "Primary Vendors") will be repaid in proportion to the shortfall, the maximum repayment being £650,000, to be effected on a proportional basis. Under the share purchase agreement certain of the vendors have given certain warranties and indemnities in relation to Asta and its business (including a covenant in relation to taxation). These are subject to certain financial and other limitations. Current Trading and Prospects At Eleco's Annual General Meeting held on 29 November 2006, John Ketteley, Executive Chairman, stated that the Company had "again made a good start to the year, with the performance for the first quarter ahead of the same period last year. We continue to trade well and I remain confident about the ongoing prospects for the Group". The Terms of the Vendor Placing Eleco and certain of the vendors have today entered into the Vendor Placing Agreement with Charles Stanley. The Vendor Placing is conditional, inter alia, upon Admission. Charles Stanley has the right, at any time prior to Admission, to terminate its obligations under the Vendor Placing Agreement in certain limited circumstances. All the New Eleco Shares will, when issued and fully paid, rank pari passu in all respects with the existing issued ordinary shares of the Company. Application has been made for all the New Eleco Shares to be admitted to trading on AIM and trading is expected to commence on 15 December 2006. Lock - in Arrangements Each of the vendors who will hold Retained Consideration Shares are subject to the lock-in arrangements described below. The Primary Vendors cannot, (1) prior to the publication of the annual accounts of Eleco for the period ending 30 June 2007, dispose of any of the Retained Consideration Shares, (2) for a period of 24 months after the Retained Consideration Shares are issued, dispose of any more than £173,000 Retained Consideration Shares (calculated at the issue price) and (3) for 36 months after the issue of the Retained Consideration Shares, dispose of any of the Retained Consideration Shares otherwise than through the Buyer's principal stockbrokers. The other vendors (other than the Primary Vendors) cannot, (A) within the first 6 months after the Retained Consideration Shares are issued, dispose of any of the Retained Consideration Shares and (B) for 12 months after the expiry of the period in (A), dispose of any of the Retained Consideration Shares otherwise than through the Buyer's principal stockbrokers. John Ketteley, Executive Chairman of Eleco, commented: "The acquisition of Asta represents a significant strategic move for Eleco's Construction Software activities. At a stroke, it strengthens our software management and development capability, it dramatically increases our construction software product portfolio and market footprint and provides significant marketing, cross selling and product combination opportunities, particularly in international markets. I am delighted to welcome Asta into the Eleco Group." Michael McCullen, Managing Director of Asta, commented: "Employing a tight software development discipline and strong customer focus has enabled Asta to increase turnover and profitability significantly over the last 3 years. I am excited about Asta becoming part of Eleco's Construction Software division which represents the next step in the development of Asta's business and will enable us to exploit more fully the international potential for Asta's products. On a personal level, I am also looking forward to having a leading role in the combined software operations." Advisers and Brokers The Board of Eleco has been advised by Hawkpoint Partners Limited. Charles Stanley acted as Nominated Adviser and Broker to Eleco. 13 December 2006 For further information please contact: Eleco plc John Ketteley 01920 443830 Executive Chairman David Dannhauser Finance Director 01920 443830 Charles Stanley Securities Rick Thompson/Philip Davies 020 7149 6457 (Nominated Adviser and Broker to Eleco) Hawkpoint Partners Limited Patrick Wilson / Jeremy Millard 020 7665 4500 (Financial Adviser to Eleco) Adventis Financial PR Tarquin Edwards / Chris Steele 020 7034 4758 (PR Adviser to Eleco) 020 7034 4759 This announcement does not constitute an offer or invitation to purchase or subscribe for securities. Hawkpoint Partners Limited is acting exclusively for Eleco and for no one else in relation to the Acquisition and will not regard any other person as its client nor be responsible to anyone other than Eleco for providing the protections afforded to clients of Hawkpoint Partners Limited, nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. Hawkpoint Partners Limited is authorised and regulated by the Financial Services Authority. Charles Stanley Securities is acting exclusively for Eleco and for no one else in relation to the Acquisition and will not regard any other person as its client nor be responsible to anyone other than Eleco for providing the protections afforded to clients of Charles Stanley Securities, nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. Charles Stanley Securities, a division of Charles Stanley & Co. Limited, is authorised and regulated by the Financial Services Authority. Notes To Editors: Asta Products Asta offers a range of project management software, headed by Asta Powerproject, which it sells to main contractors, house builders and trade contractors. Annual maintenance contracts together with support and training services account for in excess of 60 per cent. of its UK turnover. Asta Powerproject is an easy to use, full-featured, project and resource management software application that helps users deliver projects on time and within budget. It is equally applicable for use on large projects (for example it was used on the construction of the London Eye) and for managing multiple simultaneous projects, such as that of a house builder. Extensive functionality is provided in scheduling, resource management, cost management, progress monitoring, and portfolio management. Companion products to Asta Powerproject include: Asta Site Progress - Uses web and PDA technology to enable quick and accurate progress reporting from multiple sites. The data collected automatically updates the master plan in Asta Powerproject. Asta Easyplan - Allows sub-contractors and trade contractors to share project data with main contractors using Asta Powerproject. Asta Client Reporter - A web based reporting tool for project status and key performance indicators. Asta sells Asta Powerproject both separately and as the core of an integrated solutions package that encompasses the functionality of all the other products outlined above. In servicing small to medium sized IT and Professional Services organisations, Asta offers a project, portfolio and resource management solution. Asta's principal product in this market is Asta Teamplan which is a real-time collaborative multi-user system for managing multiple projects, resources and costs with integrated time and expense management. It provides the tools to optimise staff utilisation rates, improve project collaboration and align projects with organisational objectives. Asta Teamplan is a client/server solution with web-based tools that make timesheets, management reports and project schedules available to both occasional users and project stakeholders. Companion products to Asta Teamplan include: Asta Timesheet - A flexible, project-orientated, web-based timesheet and expense management software tool that integrates with Asta Teamplan. Asta Project Browser - Provides instant access to project data directly from a web browser. Asta Portfolio Reporter - A web-based reporting tool for dissemination of key performance reports with drill down capability related to projects, resources, and costs. Asta Teamplan is scalable and allows secure, multi-user access to the shared project database in real-time, thus enhancing collaboration. This information is provided by RNS The company news service from the London Stock Exchange