Appian Technology PLC

News

Appian Technology PLC acquires ANPR business Genesis (UK) Limited

20 July 2006

Overview of the acquisition:

• Acquired ANPR developer and supplier Genesis (UK) Ltd for an initial consideration of £1.398 million of which £699,000 is payable in cash
• Deal expands market penetration both in UK and internationally and significantly strengthens the group's strategic customer base in the UK police market
• Increases Appian's product range and service offering in the policing, security, counter terrorism, traffic management and commercial markets
• Appian has raised £2.33 million before expenses through the issue of 26.7 million shares at 8.75p per share to fund the deal and for working capital

Appian Technology plc, the AIM-traded provider of Automatic Number Plate Recognition systems ('ANPR') and traffic management products and solutions, has acquired ANPR developer and supplier Genesis (UK) Limited ('Genesis') for an initial consideration of £1.398 million in cash and shares.

This acquisition strengthens Appian's commitment to the policing, security and counter terrorism markets in the UK and worldwide. It will increase the enlarged company's penetration into the security, traffic and commercial ANPR markets in the UK and internationally, broaden its ANPR technology and supporting product offerings to these markets and increase the scale of the combined businesses with benefits in sales, marketing, research and development.

In order to provide the cash element of the initial consideration and for working capital purposes generally, the Company's broker JM Finn & Co., has placed 26,670,744 new ordinary shares with institutional and private clients at 8.75p per share to raise £2.33 million before expenses.

The placing is conditional on the admission of the new shares to trading on AIM.

Genesis, established in 1999, supplies the "Shark" range of ANPR products including in car and back office systems. Customers include a number of police forces in the UK which are complementary to Appian's customer base. Genesis has also developed ANPR based products which it sells into the petrol forecourt and commercial access control markets. Internationally it is part of a consortium which recently won a congestion charging contract in Malta.

For the five months ended May 2006 and the year ended 31 December 2005, Genesis reported profits after taxation of £149,000 and £33,000 on sales of £1.140 million and £1.127 million respectively. Genesis had net assets of £28,000 at 31 December 2005 and £177,000 at 31 May 2006. The Company is committed to further the development of the "Talon" and the " Shark" range of ANPR products and maintaining its highest quality status.

Appian is also committed to maintaining a high level of service to its police and commercial customers. The combination of Appian and Genesis will significantly increase the scale of operations and with its enhanced financial strength, will enable the combined companies to further improve its product range and customer service.

Appian Chairman Pat Ryan said: "The acquisition of Genesis demonstrates Appian's commitment to the ANPR market and represents a significant step in confirming us as the leading ANPR supplier in the UK and worldwide. The deal particularly strengthens our position as a worldwide leader in the police market, broadens the range of products and services we can offer our existing customer base, while at the same time expanding that base into new commercial sectors. The fund raising underlines the commitment from our investors to our growth strategy and I hope we as a Board, can reward them by continuing the development of our business in the UK and internationally."

Appian is acquiring the entire issued share capital of Genesis, subject to admission of the placing shares and the initial consideration shares to AIM, for an initial consideration of £1.398 million, to be satisfied as to £699,000 in cash and the balance by the issue of 7,556,757 new ordinary shares, and a maximum deferred consideration of £1.625 million. At the discretion of the Company, up to 50 per cent of the deferred consideration is to be satisfied by the issue of new ordinary shares at the prevailing market price subject to a minimum price of 9.25p per new ordinary share, with the balance to be satisfied in cash or cash backed loan notes. The deferred consideration will be calculated on the following basis:

• For the year ending 31 December 2006 an additional consideration of up to £475,000 calculated as to 6.2 times profits before tax for that year (subject to a maximum profit before tax of £290,000 and a minimum profit before tax of £150,000) less £1,323,000; and
• For the year ending 31 December 2007 an additional consideration of up to £1.15 million calculated as to 6.7 times profits before tax for that year (subject to a maximum profit before tax of £440,000 and a minimum profit before tax of the greater of the profit before tax for the year ending December 2006 or £150,000) less £1,323,000 and any deferred consideration paid in respect of the year ended 31 December 2006. Application has been made for the admission of the 34,227,501 New Ordinary Shares to trading on the AIM market. The New Ordinary Shares will rank pari passu with the existing ordinary shares of 1p each in the Company and dealings in these New Ordinary Shares are expected to commence on 26 July 2006. Following Admission of the Consideration and Placing Shares to trading on AIM the Company will have 145,654,995 shares in issue.