Offer for Compass Software

RNS Number:7150N
Alphameric PLC
18 July 2003



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE
                   UNITED STATES, CANADA, AUSTRALIA OR JAPAN

        ALPHAMERIC PLC RECOMMENDED OFFER FOR COMPASS SOFTWARE GROUP PLC


Summary



The boards of Alphameric and Compass announce that they have reached agreement
on the terms of a recommended offer to be made by Investec Investment Banking on
behalf of Alphameric, to acquire the entire issued and to be issued ordinary
share capital of Compass.




  * The Offer is 41.25 pence in cash and 0.5973 Offer Shares per Compass Share




  * The Offer values each Compass Share at 76.79 pence and the entire issued
    ordinary share capital of Compass at approximately #9.1 million as at 17
    July 2003, the latest dealing day prior to the announcement of the Offer




  * Alphameric has received irrevocable undertakings and a non-binding letter
    of intent to accept the Offer in respect of, in aggregate, 8,321,439 Compass
    Shares, representing, in aggregate, approximately 70.42 per cent. of the
    existing issued ordinary share capital of Compass




  * Alphameric Group is a software company providing a range of solutions to
    clients specialising in the retail, leisure and finance sectors in the UK,
    Europe and the US. The Alphameric Group has over 650 employees based
    principally in the United Kingdom and a market capitalisation of
    approximately #62 million




  * Compass is an AIM listed supplier of merchandise planning and decision
    support solutions to the retail sector



Commenting on the Offer, Rodney Hornstein, Chairman of Alphameric said:



"I am delighted that we will be adding Compass's valuable people, products and
customers to our already strong presence in retail. By bringing the two
businesses together we can add significant value to both."



It is intended that the formal Offer Document relating to the Offer will be
despatched to Compass Shareholders shortly.



This summary should be read in conjunction with the full text of this
announcement. Appendix II to this announcement contains definitions of certain
expressions used in this summary and the announcement.

Enquiries                                                      Telephone


Alphameric plc                                                 01483 293986

Alan Morcombe, Group Chief Executive

Mike McLaren, Group Managing Director
Investec Investment Banking Gareth Thomas, Director of         020 7597 5970
Corporate Finance

Patrick Robb, Director of Corporate Broking
Weber Shandwick Square Mile                                    020 7067 0700

Nick Oborne

Susanne Walker

Introduction

The boards of Alphameric and Compass announce the terms of a recommended Offer
to be made by Investec Investment Banking on behalf of Alphameric, to acquire
the entire issued and to be issued ordinary share capital of Compass.


The Offer values each Compass Share at 76.79 pence and the whole of the issued
ordinary share capital of Compass at approximately #9.1 million as at 17 July
2003, the last dealing day prior to this announcement.



Recommendation


The Compass Directors, who have been so advised by Williams de Broe, consider
the terms of the Offer to be fair and reasonable so far as Compass Shareholders
are concerned. In providing advice to the Compass Directors, Williams de Broe
has taken into account the commercial assessments of the Compass Directors.
Accordingly, the Compass Directors are unanimously recommending that Compass
Shareholders accept the Offer. The Compass Directors have irrevocably undertaken
to accept the Offer in respect of their own registered holdings of Compass
Shares, which in aggregate amount to 4,779,466 Compass Shares, representing
approximately 40.44 per cent. of Compass's entire issued ordinary share capital.


The Offer


On behalf of Alphameric, Investec Investment Banking will offer to acquire, on
the terms and subject to the conditions set out in Appendix I to this
announcement and the further terms and conditions to be set out in the Offer
Document and in the Form of Acceptance, the entire issued and to be issued
ordinary share capital of Compass on the following basis:


for each Compass Share           41.25 pence in cash and 0.5973 Offer Shares


and so in proportion for any other number of Compass Shares held.


The Offer values each Compass Share at 76.79 pence based on the closing middle
market price of 59.5 pence per Alphameric Share on 17 July 2003 (the last
dealing day prior to the announcement of the Offer), compared to the closing
middle market price of 75 pence per Compass Share on 17 July (being the last
dealing day prior to the announcement of the Offer, and values the entire issued
share capital of Compass at approximately #9.1 million). The value of the Offer
represents a premium of approximately 10.6 per cent. to the average closing
middle market price of 69.4 pence per Compass Share during the six months prior
to 17 July 2003.


The Offer will be subject to a number of conditions, including valid acceptances
being received by 3.00 p.m. on the First Closing Date (or such later time(s) and
/or date(s) as Alphameric may, subject to the Code, decide) in respect of not
less than 90 per cent. (or such lower percentage as Alphameric may decide), but
in excess of 50 per cent. in nominal value of the Compass Shares to which the
Offer relates.


The Offer will extend to any Compass Shares unconditionally allotted or issued
fully paid (or credited as fully paid) whilst the Offer remains open for
acceptance (or by such earlier date as Alphameric may, subject to the Code,
determine, such earlier date not (without the consent of the Panel) being
earlier than the date on which the Offer becomes unconditional or, if later, the
First Closing Date) as a result of the exercise of options granted under the
Compass Share Schemes or otherwise.


The Compass Shares will be acquired pursuant to the Offer fully paid up and free
from all liens, equitable interests, charges, encumbrances, rights of
pre-emption and other interests and together with all rights now or hereafter
attaching, including, without limitation, the right to receive and retain all
dividends and other distributions declared, made or paid on or after 18 July
2003.


The Offer Shares will be issued, credited as fully paid up and free from all
liens, equitable interests, charges, encumbrances, rights of pre-emption and
other interests and will rank pari passu in all respects with the existing
Alphameric Shares including, without limitation, the right to receive and retain
all dividends and other distributions declared, made or paid on or after 18 July
2003, save for the interim dividend of 0.65 pence per share payable on 14 August
2003.


Full acceptance of the Offer assuming the full exercise of outstanding Compass
Options would result in the issue of approximately 7.1 million Offer Shares
(representing approximately 6.07 per cent. of the Enlarged Share Capital).


Application will be made to the UK Listing Authority for the Offer Shares to be
admitted to the Official List and to the London Stock Exchange for the Offer
Shares to be admitted to trading on its market for listed securities. It is
expected that Admission will become effective and that dealings, for normal
settlement, will commence in the Offer Shares on the first dealing day following
the day on which the Offer becomes or is declared wholly unconditional.


Shareholder support


Alphameric has received:


  * irrevocable undertakings to accept the Offer from the Compass Directors in
    respect of an aggregate of 4,779,466 Compass Shares, representing
    approximately 40.44 per cent. of the existing issued share capital of
    Compass. Such undertakings will cease to be binding only if the Offer lapses
    or is withdrawn;


  * irrevocable undertakings to accept the Offer from certain other Compass
    Shareholders in respect of an aggregate of 1,426,836 Compass Shares,
    representing approximately 12.07 per cent. of the existing issued share
    capital of Compass. Such undertakings will cease to be binding only if the
    Offer lapses or is withdrawn;


  * an irrevocable undertaking to accept the Offer from another Compass
    Shareholder in respect of 349,732 Compass Shares representing approximately
    2.96 per cent. of the existing issued share capital of Compass. If a
    competing offer is announced by 5:00p.m. on the tenth day after the date of
    despatch of the Offer Document with a value attributed to each Compass Share
    of at least 84 pence, this undertaking will lapse; and


  * a letter of intent to accept the Offer from a Compass Shareholder in
    respect of 1,765,405 Compass Shares, representing approximately 14.94 per
    cent. of Compass's existing issued share capital.


Accordingly, Alphameric has received irrevocable undertakings and a letter of
intent to accept the Offer in respect of, in aggregate, 8,321,439 Compass Shares
representing, in aggregate, approximately 70.42 per cent. of the existing issued
share capital of Compass.


Information on Alphameric


Alphameric Group is a software company providing a range of solutions to clients
specialising in the retail, leisure and finance sectors in the UK, Europe and
the US. The Alphameric Group has over 650 employees based principally in the
United Kingdom and a market capitalisation of approximately #62 million, based
on the closing middle market price of 59.5 pence per Alphameric Share on 17 July
2003 (the last dealing day prior to announcement of the Offer).


The Alphameric Group comprises three main divisions:


Alphameric Retail

This business is a provider of end-to-end solutions for non-food retailers in
the UK. It includes the provision of EPoS (tilling) solutions, back office and
head office solutions and central merchandising solutions.


Alphameric Red Onion

Alphameric Red Onion is a leading provider of information display and bet
capture and settling solutions to UK high street bookmakers. In addition it
provides alternative gaming devices to UK bookmakers including fixed odds
betting terminals and customer input terminals.


Alphameric Hospitality

Alphameric's Hospitality division provides end-to-end solutions for a range of
hospitality venues including restaurants, coffee shops and pubs. Its suite of
solutions includes EPoS hardware and software, back office and head office
solutions and the provision of a web-based ERP software suite where it collects,
collates and processes the transactional data from the customer's sites and
reports the following day on the business's performance.


Set out below is summary audited financial information on Alphameric for the
three years ended 30 November 2002 and summary unaudited financial information
for the six months ended 31 May 2003.


                                                Year ended            Year ended         Year ended     Six month period
                                               30 November           30 November        30 November         ended 31 May
                                                      2000                  2001               2002                 2003
                                                     #'000                 #'000              #'000                #'000
Turnover                                            54,408                56,848             61,928               27,254
Operating profit before                              8,009                 3,560              8,761                   40

amortisation of goodwill and

exceptional administrative

expenses
Profit/(loss) before tax                             3,891               (1,677)              2,486              (2,704)
Net assets                                         114,016               108,642            107,302              103,988


Background to and reasons for the Offer


As mentioned above, Alphameric Retail ("ARL"), a division within the Alphameric
Group, provides software systems to a number of UK retailers. ARL's offering
currently comprises EPoS hardware and software, a range of back office and head
office software solutions, a central merchandising suite of applications,
together with a range of financial packages and other complementary applications
marketed and sold on a turnkey basis.


The range of merchandise planning and decision support solutions which Compass
sells into the retail sector, is complementary to the ARL solutions and has a
good percentage of first tier users. Compass also has the consultancy skills
required to tailor the solutions to meet the needs of the customer. It is
expected that the cross-selling opportunities created by bringing the two
businesses together should be significant. In addition, the Alphameric Directors
believe that Compass Group employees should benefit from being part of an
enlarged organisation with increased operational and financial resources, whilst
Compass's experienced management team will assist the development of new
products and services for the Enlarged Group's customers.


Information on Compass


Compass was established in 1995 to exploit an opportunity in the retail sector
for the provision of merchandise planning solutions that improve retailers'
operating efficiency by:


  * growing sales through better targeted ranges;

  * enhancing stock management;

  * realising purchasing efficiencies; and

  * reducing the incidence of markdowns.


By 1998, a suite of software products had been developed and Compass had
positioned itself as a provider of software and associated consultancy and
implementation services. The admission of Compass's Shares to AIM in 2000
enabled Compass both to raise additional funding for the further expansion of
the business and to develop its profile and credibility within its target
market, which, at that time, principally comprised first tier multiple clothing
retailers.


Since flotation, the business has achieved progressive growth in both turnover
and profitability. Compass has consolidated its position as a provider of
merchandise planning solutions to first tier retailers, developing a customer
list that includes a number of the most prominent clothing retailers in the UK.
Additionally, by adapting its solutions, its products are now appropriate to all
but small independent retailers.


Compass's solutions can also be applied to meet the needs of retailers outside
the clothing sector. New clients have been gained in the department store and
variety sectors, providing experience of a broader supply chain including
merchandise such as electrical, hard goods, stationery and homewares.
Furthermore, Compass is serving retailers overseas having won a number of
contracts in Europe. Through a local agent, the solutions have also been sold to
a clothing retailer in the US and the Compass Directors believe that this will
provide a reference site that will lead to further sales in that territory.


Underpinning this increasing market penetration has been the continuing
development of Compass's merchandise planning software. Internally, this work
has focussed on the extension of the functionality of the solution, whilst
Compass has also collaborated with clients to develop its software on the
Microsoft .NET platform which, the Compass Directors believe, will lead to
future core products. Through acquisitions, Compass has also acquired
complementary products which enhance the functionality of the solutions by
adding report generation and visualisation capabilities.


Set out below is summary audited financial information on Compass for the three
years ended 30 November 2002 and summary unaudited financial information for the
six months ended 31 May 2003.



                                                Year ended            Year ended         Year ended     Six month period
                                               30 November           30 November        30 November         ended 31 May
                                                      2000                  2001               2002                 2003
                                                     #'000                 #'000              #'000                #'000
Turnover                                             2,383                 4,267              4,830                1,584
Operating profit/(loss) before                         298                   505                835                (579)
amortisation of goodwill and
exceptional administrative expenses
Profit/(loss) before tax                               443                   356                399                (763)
Net assets                                           2,667                 4,400              4,510                3,916


The Placing


Alphameric has today entered into arrangements, conditional, inter alia, on
Admission of the Placing Shares, for Investec Investment Banking to use its
reasonable endeavours to place up to 5,229,000 Placing Shares at 56.5 pence per
share with institutional investors. The Placing Shares represent approximately 5
per cent. of the existing issued share capital of Alphameric. The Placing will
raise approximately #2.95 million (gross) for Alphameric. The proceeds of the
Placing will be used, inter alia, for providing additional working capital and
further acquisition finance for Alphameric.


The Placing is not conditional on the Offer becoming or being declared
unconditional and the Offer is not conditional upon the Placing.




Inducement fee


As an inducement to Alphameric to commit the time and resource necessary to make
the Offer, Compass has entered into an agreement with Alphameric pursuant to
which Compass agreed to pay to Alphameric the sum of #82,722 or such lower
amount as represents 1 per cent. of the value of the Offer (such amount to be
inclusive of any attributable VAT) if:


  * having recommended the Offer, the Compass Directors subsequently withdraw
    or adversely modify their recommendation; or


  * prior to the Offer lapsing or being withdrawn or a declaration by
    Alphameric that the Offer has become wholly unconditional, a competing
    offer, scheme of arrangement, recapitalisation or disposal of the entire
    assets of Compass is announced (whether or not subject to any pre-condition)
    or is declared by any party which is not an associate of Alphameric and that
    competing offer or arrangement becomes unconditional in all respects.






This announcement is not intended to, and does not constitute, or form part of,
an offer or an invitation to purchase any securities.



The Offer will not be made, directly or indirectly, in or into, or by the use of
the mails, or by any means of instrumentality (including without limitation,
facsimile transmission, electronic mail, telex or telephone) of interstate or
foreign commerce, or of any facility of a national securities exchange, of the
United States, Canada, Australia or Japan. Accordingly, copies of this
announcement and other documents relating to the Offer are not being, and must
not be, mailed or otherwise distributed or sent in or into or from the United
States, Canada, Australia or Japan and persons receiving such documents
(including custodians, nominees and trustees) must not distribute or send them
in or into or from such jurisdictions.


Investec Investment Banking, a division of Investec Bank (UK) Limited, which is
regulated in the United Kingdom by the Financial Services Authority, is acting
exclusively for Alphameric as financial adviser in relation to the Offer and is
not acting for any other person in relation to such Offer. Investec Investment
Banking will not be responsible to anyone other than Alphameric for providing
the protections afforded to its clients or for providing advice in relation to
the contents of this announcement or any arrangement referred to herein.



Williams de Broe Plc, which is regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for Compass as financial adviser in
relation to the Offer and is not acting for any other person in relation to such
Offer. Williams de Broe will not be responsible to anyone other than Compass for
providing the protections afforded to its clients or for providing advice in
relation to the contents of this announcement or any arrangement referred to
herein.




                                   APPENDIX I


    Conditions and certain further terms of the Offer and Form of Acceptance

The Offer, which will be made by Investec Investment Banking on behalf of
Alphameric, will comply with the Listing Rules of the UK Listing Authority, the
rules and regulations of the London Stock Exchange and the Code, is governed by
English law and is subject to jurisdiction of the courts of England.

Conditions of the Offer

The Offer will be subject to the following conditions:


        (i)     valid acceptances of the Offer being received (and not, where
        permitted, withdrawn) by not later than 3.00 p.m. on the First Closing
        Date (or such later time(s) and/or date(s) as Alphameric may, subject to
        the Rules of the Code decide) in respect of not less than 90 per cent.
        (or such lesser percentage as Alphameric may decide) in nominal value of
        the Compass Shares to which the Offer relates, provided that this
        condition will not be satisfied unless Alphameric has acquired or agreed
        to acquire (either pursuant to the Offer or otherwise) Compass Shares
        carrying in aggregate over 50 per cent. of the voting rights normally
        exercisable at general meetings of Compass, including for this purpose,
        to the extent (if any) required by the Panel, any voting rights
        attaching to any Compass Shares which may be unconditionally allotted or
        issued before the Offer becomes or is declared unconditional as to
        acceptances (whether pursuant to the exercise of outstanding conversion
        or subscription rights or otherwise), and for this purpose:


                (a)     the expression "Compass Shares to which the Offer
                relates'' shall be construed in accordance with sections
                428-430F (inclusive) of the Act; and


                (b)     Compass Shares which have been unconditionally allotted
                but not issued before the Offer becomes or is declared
                unconditional as to acceptances (whether pursuant to the
                exercise of any outstanding conversion or subscription rights or
                otherwise) shall be deemed to carry the voting rights which they
                will carry upon issue;


        (ii)     if the European Commission refers the proposed acquisition of
        Compass by Alphameric, or any matters arising therefrom, to the Office
        of Fair Trading under Article 9(1) of the EC Merger Regulation, the
        Office of Fair Trading indicating, in terms satisfactory to Alphameric,
        that it is not the intention of the Secretary of State for Trade and
        Industry to refer the proposed acquisition of Compass by Alphameric, or
        any matters arising therefrom, to the Competition Commission;


        (iii)     the UK Listing Authority announcing, in accordance with
        paragraph 7.1 of the Listing Rules, its decision to admit the Offer
        Shares to the Official List or (if Alphameric so determines and subject
        to the consent of the Panel) agreeing to admit such shares to the
        Official List and the London Stock Exchange announcing, in accordance
        with paragraph 2.1 of the Admission and Disclosure Standards, to admit
        the Offer Shares to trading on its markets for listed securities or (if
        Alphameric so determines and subject to the consent of the Panel)
        agreeing to admit such shares to trading subject to the allotment in
        each case of such Offer Shares and/or the Offer becoming or being
        declared unconditional in all other respects;


        (iv)     the Office of Fair Trading not having indicated, prior to the
        date when the Offer would otherwise have become unconditional in all
        respects, that it is the intention of the Secretary of State for Trade
        and Industry to refer the proposed acquisition of Compass Shares by
        Alphameric or any matters arising therefrom to the Competition
        Commission;


        (v)     all material and necessary filings having been made, all
        appropriate waiting and other time periods (including any extension to
        them) under any applicable legislation or regulations in any
        jurisdiction having expired, lapsed or been terminated and all
        authorisations, orders, recognitions, grants, consents, licenses,
        confirmations, clearances, certificates, permissions and approvals (each
        an "Authorisation'') necessary for or in respect of the Offer, its
        implementation or any acquisition of any shares in, or control of,
        Compass or any member of the Wider Compass Group by any member of the
        Wider Alphameric Group or to carry on the business of any member of the
        Wider Compass Group, having been obtained in terms and in a form
        reasonably satisfactory to Alphameric from all appropriate government or
        governmental, quasi-governmental, supranational, statutory, regulatory,
        environmental or investigative body or authority or any court in any
        jurisdiction (each a "Relevant Authority'') and all such Authorisations
        remaining in full force and effect at the time when the Offer would
        otherwise become unconditional in all respects and there being no
        intimation of any intention to revoke or not to renew, withdraw,
        suspend, withhold, modify or amend the same in consequence of the Offer
        becoming unconditional in all respects, and all material and necessary
        statutory or regulatory obligations in any jurisdiction having been
        complied with;


        (vi)     no Relevant Authority having taken, instituted, implemented or
        threatened any action, suit, proceedings, investigation, reference or
        enquiry, or having required any action to be taken or otherwise having
        done anything or having enacted, made or proposed any statute,
        regulation, order or decision, or having taken any other steps or
        measures that would or is reasonably expected to:


                     (a)     make the Offer, its implementation or the
                acquisition or proposed acquisition of any shares in, or control
                of Compass or any member of the Wider Compass Group by
                Alphameric illegal, void or unenforceable under the laws of any
                jurisdiction or otherwise directly or indirectly restrict,
                restrain, prohibit, delay, frustrate or materially interfere in
                the implementation of or impose additional material conditions
                or obligations with respect to or otherwise challenge the Offer
                or the proposed acquisition of Compass by Alphameric or any
                acquisition of Compass Shares by Alphameric (including without
                limitation, taking any steps which would entitle the Relevant
                Authority to require Alphameric to dispose of all or some of its
                Compass Shares or restrict the ability of Alphameric to exercise
                voting rights in respect of some or all of such Compass Shares);
                or


                     (b)     result directly or indirectly in a material delay
                in the ability of Alphameric, or render Alphameric unable, to
                acquire all or a material nominal amount of the Compass Shares
                or control of Compass or the Wider Compass Group; or


                     (c)     impose any material limitation on, or result in a
                material delay in, the ability of any member of the Wider
                Alphameric Group or Compass to acquire or hold or exercise
                effectively, directly or indirectly, all or any rights of
                ownership of shares or other securities or the equivalent in any
                member of the Wider Compass Group or to exercise management
                control over any member of the Wider Compass Group; or


                     (d)     require, prevent, delay or affect the divestiture
                (or alter the terms of such divestiture) by any member of the
                Wider Alphameric Group or the Wider Compass Group of all or any
                material portion of their respective businesses, assets or
                properties or impose any limitation on the ability of any of
                them to conduct their respective businesses or to own any of
                their respective assets or properties which in any such case is
                material in the context of the Wider Alphameric Group or the
                Wider Compass Group, as the case may be, and which, in the case
                of the Wider Alphameric Group, arises as a result of the making
                of the Offer; or


                     (e)     otherwise (and in the case of the Wider Alphameric
                Group, as a result of the making of the Offer) adversely affect
                any or all of the businesses, assets, liabilities or profits of
                any member of the Wider Alphameric Group or any member of the
                Wider Compass Group in a manner which would be material in the
                context of the Wider Compass Group taken as a whole; or


                     (f)     require any member of the Wider Alphameric Group or
                any member of the Wider Compass Group to offer to acquire any
                shares or other securities (or the equivalent) owned by any
                third party in any member of the Wider Alphameric Group or Wider
                Compass Group (as the case may be); or



     a. result in any member of the Wider Alphameric Group or the Wider Compass
        Group ceasing to be able to carry on business under any name under which
        it does so at present where such cessation would have a material adverse
        effect on the Wider Alphameric Group or the Wider Compass Group (as the
        case may be) taken as a whole and, in the case of the Wider Alphameric
        Group, where the requirement for such cessation arises as a result of
        the making of the Offer


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


        (vii)     except as correctly and fairly disclosed in Compass's annual
        report and accounts for the financial year ended 30 November 2002 or in
        its interim statement dated 18 July 2003 or as publicly announced
        through the Company Announcements Office of the London Stock Exchange by
        or on behalf of Compass prior to the date of this announcement pursuant
        to Rule 2.5 of the Code (such disclosure or announcement being termed as
        "publicly announced") or as disclosed in writing to Alphameric prior to
        18 July 2003 there being no provision of any Authorisation, arrangement,
        agreement, or other instrument to which any member of the Wider Compass
        Group is a party, or by or to which any such member, or any part of its
        assets, may be bound, entitled or subject, which, as a consequence of
        the Offer or of the proposed acquisition by Alphameric of all or any
        part of the issued share capital of, or control of, Compass would result
        in (which is, or in a manner which would be, in all cases material in
        the context of the Compass Group as a whole):


                     (a)     any assets or interests of any member of the Wider
                Compass Group being, or failing to be, disposed of or charged or
                any right arising under which any such asset or interest could
                be required to be disposed of or charged in each case other than
                in the ordinary course of business; or


                     (b)     any monies borrowed by or other indebtedness or
                liabilities (actual or contingent) of any member of the Wider
                Compass Group being declared or becoming repayable or being
                capable of being declared repayable immediately or earlier than
                the repayment date stated in such Authorisation, arrangement,
                agreement or other instrument or the ability of such member of
                the Wider Compass Group to borrow monies or incur any
                indebtedness becoming or being capable of being or becoming
                withdrawn, prohibited, inhibited or adversely modified or
                affected; or


                     (c)     any such Authorisation, arrangement, agreement, or
                other instrument being terminated or modified, affected, amended
                or varied or any action being taken or any onerous obligation or
                liability arising thereunder; or


                     (d)     the rights, liabilities, obligations or business or
                interests of any member of the Wider Compass Group with any
                firm, body or person or any arrangements relating to such
                business, being terminated, modified, affected, amended or
                varied or its or their financial or trading position or its or
                their value being prejudiced or affected in any adverse manner;
                or


                     (e)     the business, interests or financial or trading
                position of any member of the Wider Compass Group being
                prejudiced or affected; or


                     (f)     the creation of any mortgage, charge or other
                security interest over the whole or any part of the business,
                property or assets of any member of the Wider Compass Group or
                any such security (whenever arising or having arisen) becoming
                enforceable or being enforced; or



     a. any member of the Wider Compass Group ceasing to be able to carry on
        business under any name under which it currently does so


        or no event having occurred which, under any provision of any
        Authorisation, arrangement, or other instrument to which any member of
        the Wider Compass Group is a party, or by or to which any such member,
        or any of its assets, may be bound, entitled or subject, could result in
        any of the events or circumstances as are referred to in items (a) to
        (g) inclusive of this condition;


        (viii)     since 30 November 2002 and except as publicly announced (as
        defined in condition (vii) above):


                     (a)     no litigation, arbitration proceedings, mediation
                proceedings, prosecution or other legal proceedings having been
                instituted or threatened and which remains outstanding against
                any member of the Wider Compass Group, or to which any member of
                the Wider Compass Group is or may become a party, which, in any
                case materially and adversely affects the Wider Compass Group
                taken as a whole;


                     (b)     no material adverse change or deterioration having
                occurred in the business or financial or trading position or
                prospects or profits of the Wider Compass Group which is
                material in the context of the Wider Compass Group taken as a
                whole;


                (c)     no contingent or other liability having arisen which
                materially and adversely affects or which is reasonably expected
                to materially and adversely affect the Wider Compass Group taken
                as a whole; and


                (d)     no investigation by any Relevant Authority against or in
                respect of any member of the Wider Compass Group having been
                threatened in writing, announced or instituted or remaining
                outstanding by, against, or in respect of any member of the
                Wider Compass Group;


        (ix)     except as publicly announced by Compass (as defined in
        condition (vii) above) since 30 November 2002 and except between members
        of the Wider Compass Group, neither Compass nor any other member of the
        Wider Compass Group having:


                (a)     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 or
                redeemed, purchased or reduced or proposed the redemption,
                purchase or reduction of any part of its share capital (save
                pursuant to the Compass Share Schemes);


                (b)     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 to
                another member of the Wider Compass Group;


                (c)     authorised or proposed or announced its intention to
                propose or entered into any merger or demerger or
                reconstruction, amalgamation, scheme of arrangement, commitment
                or acquisition or disposal of assets or shares in any
                undertaking other than in the ordinary business of the Wider
                Compass Group taken as whole;


                (d)     made, authorised or proposed or announced any intention
                to make authorise or propose any change in its share or loan
                capital;


                (e)     issued, authorised or proposed the issue of any
                debentures or, except in the ordinary course of business,
                incurred or increased any indebtedness or liability or become
                subject to a contingent liability in any such case;


                (f)     entered into any arrangement, contract or commitment
                (other than in the ordinary course of business and 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 and magnitude which is material in the
                context of the Wider Compass Group taken as a whole;


                (g)     entered into or varied or terminated, or authorised,
                proposed or announced its intention to enter into or vary or
                terminate any contract, transaction, arrangement or commitment
                otherwise than in the ordinary course of business and which
                would have a material effect on the Wider Compass Group taken as
                a whole;


                (h)     waived or compromised any claim which is material in the
                context of the Wider Compass Group taken as a whole;


                (i)     taken any corporate action or proposed any voluntary
                winding-up or had any legal proceedings started or threatened
                against it for its winding-up (whether voluntary or otherwise),
                dissolution or reorganisation or for the appointment of a
                receiver, trustee, administrator, administrative receiver or
                similar officer of all or any of its assets and revenues or had
                any such person appointed or any analogous proceedings in any
                jurisdiction or appointed any analogous person in any
                jurisdiction or been unable to pay its debts generally or having
                stopped or suspended (or threatened to do so) payments of any
                debts generally or ceased or threatened to cease carrying on all
                or any part of its business;


                (j)     entered into any agreement, contract, commitment or
                arrangement which consents to or results or is reasonably likely
                to result in the restriction of the scope of the business of any
                member of the Wider Compass Group and which is material in the
                context of the Wider Compass Group taken as a whole;


                (k)     entered into or varied in any material respect the terms
                of any service, consultancy or other agreement with or relating
                to any of the Compass Directors;


                (l)     made or agreed or consented to any change to the terms
                of the pension schemes established for its directors and/or
                employees and/or their dependants or to the benefits which
                accrue, or to the pensions that are payable thereunder, or to
                the basis on which qualification for or accrual of or
                entitlement to such benefits or pensions is calculated or
                determined or to the basis on which the liabilities (including
                pensions) of such pension schemes are funded or made, or agreed
                or consented to and which would have a material affect on the
                Wider Compass Group taken as a whole;


                (m)     entered into or made an offer to enter into any legally
                binding agreement, contract or commitment or passed any
                resolution with respect to any of the transactions or events
                referred to in this condition; or


                (n)     made any material alteration to its memorandum or
                articles of association or other constitutional documents;


        (x)     except as publicly announced (as defined in condition (vii)
        above), Alphameric not having discovered that:


                        (a)     any member of the Wider Compass Group is subject
                        to any liability incurred otherwise than in the ordinary
                        course of business, contingent or otherwise, which is
                        material in the context of the Wider Compass Group taken
                        as a whole;


                        (b)      any financial, business or other information
                        concerning the Wider Compass Group publicly announced
                        (as defined in condition (vii) above) at any time since
                        30 November 2002, or disclosed in writing to any member
                        of the Wider Alphameric Group or its advisers by any
                        member of the Wider Compass Group prior to 18 July 2003,
                        either is misleading, contains a misrepresentation of
                        fact or omits to state a fact necessary to make the
                        information therein not misleading and which is material
                        in the context of the Wider Compass Group taken as a
                        whole;


                        (c)     any member of the Wider Compass Group has not
                        complied with any applicable legislation or regulations
                        of any jurisdiction with regard to the treatment,
                        keeping, disposal, discharge, spillage, leak or emission
                        of any waste or hazardous substance or any substance
                        likely to impair the environment or harm human health,
                        or environmental matters which non-compliance would be
                        likely to give rise to any liability or cost (whether
                        actual or contingent) on the part of any member of the
                        Wider Compass Group which is material in the context of
                        the Wider Compass Group taken as whole;


                        (d)     there has been an emission, discharge, disposal,
                        spillage or leak of waste or hazardous substance or any
                        substance likely to impair the environment or harm human
                        health on or from any land or other asset now or
                        previously owned, occupied or made use of by any past or
                        present member of the Wider Compass Group which would be
                        likely to give rise to any liability or cost (whether
                        actual or contingent) on the part of any member of the
                        Wider Compass Group which is material in the context of
                        the Wider Compass Group taken as a whole;


                        (e)     circumstances exist whereby a person or class of
                        person would be likely to have any material claim or
                        claims in respect of any product or process of
                        manufacture or materials used therein now or previously
                        manufactured, sold or carried out by any past or present
                        member of the Wider Compass Group such claim or claims
                        being material in the context of the Wider Compass Group
                        taken as a whole.


For the purpose of these conditions:


        (a)     the "Wider Compass Group'' means Compass and its subsidiaries,
        subsidiary undertakings, associated companies and any partnership, joint
        venture, firm or company in which any member of the Compass Group has an
        interest in 20 per cent. or more of the voting capital or equivalent;
        and


        (b)     the "Wider Alphameric Group'' means Alphameric and its
        subsidiaries, subsidiary undertakings, associated companies and any
        partnership, joint venture, firm or company in which any member of the
        Alphameric Group has an interest in 20 per cent. or more of the voting
        capital or equivalent.




Alphameric reserves the right to waive in whole or in part all or any of the
conditions (ii) to (x) inclusive. Conditions (ii) to (x) inclusive if not waived
(where permitted) must be fulfilled within 21 days after the later of the First
Closing Date and the date on which condition (i) is fulfilled (or in each case
such later time(s) and/or date(s) as Alphameric may, with the consent of the
Panel, decide) failing which the Offer will lapse. Alphameric shall be under no
obligation to waive or treat as fulfilled any of the conditions (ii) to (x)
inclusive by a date earlier than the date specified above for the fulfillment
thereof notwithstanding that the other conditions of the Offer may at such
earlier date have been fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfillment.


Each of conditions (i) to (x) shall be regarded as a separate condition and
shall not be limited to reference to any other condition.


If Alphameric is required by the Panel to make an offer for the Compass Shares
under the provisions of Rule 9 of the Code, Alphameric may make such alterations
to the conditions as are necessary to comply with the provisions of that Rule.



It will be a term of the Offer that unless otherwise agreed, the Offer will
lapse if it or any matter arising therefrom is referred to the Competition
Commission before 3.00 p.m. on the First Closing Date or, if later, the date on
which the Offer becomes or is declared unconditional.



Alphameric shall be under no obligation to waive or treat as fulfilled any of
conditions (ii) and (iv) to (x) (inclusive) by a date earlier than the date
specified above for the fulfillment thereof notwithstanding that the other
conditions of the Offer may at such earlier date have been fulfilled and that
there are at such earlier date no circumstances indicating that any of such
conditions may not be capable of fulfillment.




                                  APPENDIX II


                                  Definitions

The following definitions apply throughout this announcement unless the context otherwise requires:
"Acquisition"                            the proposed acquisition of the entire issued and to be issued ordinary share
                                         capital of Compass by Alphameric pursuant to the Offer

"Admission"                              the admission of shares to the Official List in accordance with paragraph 7.1
                                         of the Listing Rules and to trading on the London Stock Exchange becoming
                                         effective in accordance with the Listing Rules and the London Stock Exchange's
                                         Admission and Disclosure Standards in relation to any Offer Shares

"Admission and Disclosure Standards"     the rules issued by the London Stock Exchange in relation to the admission and
                                         trading of, and continuing requirements for, securities on the London Stock
                                         Exchange

"AIM"                                    the Alternative Investment Market of the London Stock Exchange

"AIM Rules"                              the AIM Rules for companies as published by the London Stock Exchange

"Alphameric"                             Alphameric plc

"Alphameric Directors"                   the board of directors of Alphameric

"Alphameric Group"                       Alphameric, its subsidiaries and subsidiary undertakings

"Alphameric Share Option Schemes"        the Alphameric plc 1997 Executive Share Option Scheme and Alphameric plc 1999
                                         Senior Executive Share Option Scheme

"Alphameric Shares"                      ordinary shares of 2.5 pence each in the capital of Alphameric

"Australia"                              the Commonwealth of Australia, its possessions and territories and all areas
                                         subject to its jurisdiction and any political sub-divisions thereof

"Board" or "Compass Directors"           the board of directors of Compass

"business day"                           a day, not being a Saturday or Sunday, on which banks in the City of London are
                                         open for business

"Canada"                                 Canada, its provinces, possessions and territories and all areas subject to its
                                         jurisdiction and any political sub-division thereof

"Compass"                                Compass Software Group Plc

"Compass Group"                          Compass, its subsidiaries and subsidiary undertakings

"Compass Options"                        options under the Compass Share Schemes or otherwise

"Compass Shares"                         the existing unconditionally allotted or issued and fully paid ordinary shares
                                         of 1 pence each in the capital of Compass and any further such shares which are
                                         issued or unconditionally allotted whilst the Offer remains open for acceptance
                                         (or such earlier date as Alphameric may, subject to the Code, determine, such
                                         earlier date not, without the consent of the Panel, being earlier than the date
                                         on which the Offer becomes unconditional as to acceptances or, if later, the
                                         First Closing Date) including any such shares allotted or issued pursuant to
                                         the exercise of options granted under the Compass Share Schemes or otherwise

"Compass Shareholders"                   holders of Compass Shares

"Compass Share Schemes"                  the Compass Software Limited Share Option Scheme, the Compass Software Group
                                         Plc Approved Share Option Scheme, the Compass Software Group Plc Unapproved
                                         Share Option Scheme and the Compass Software Group Plc Savings Related Share
                                         Option Scheme

"closing middle market price"            in respect of a Compass Share, the closing middle market quotation of a Compass
                                         Share as derived from the AIM Appendix to the Daily Official List and, in
                                         respect of an Alphameric Share, the closing middle market quotation of an
                                         Alphameric Share as derived from the Daily Official List

"Code"                                   The City Code on Takeovers and Mergers

"Companies Act" or the "Act"             the Companies Act 1985 (as amended)

"Daily Official List"                    the Daily Official List of the London Stock Exchange

"dealing day"                            a day on which dealings in domestic securities may take place on, and with the
                                         authority of, the London Stock Exchange

"Enlarged Group"                         means the Alphameric Group following completion of the Acquisition

"Enlarged Share Capital"                 the issued ordinary share capital of Alphameric following both (i) the Placing
                                         and (ii) the closing of the Offer calculated on the assumption that all
                                         outstanding Compass Options are exercised in full, that no new shares are
                                         issued by Alphameric (other than to satisfy the terms of the Offer) and that
                                         the Placing is accepted in full

"First Closing Date"                     the date which is 21 days after the posting of the Offer Document

"Form of Acceptance"                     the form of acceptance, authority and election relating to the Offer (to be
                                         despatched to Compass Shareholders with the Offer Document)

"FSA"                                    the Financial Services Authority

"FSMA"                                   the Financial Services and Markets Act 2000

"Investec Investment Banking"            Investec Investment Banking, a division of Investec Bank (UK) Limited, sole
                                         financial adviser to Alphameric

"Japan"                                  Japan, its cities and prefectures, territories and possessions

"Listing Rules"                          the rules and regulations made by the UK Listing Authority under Part VI of The
                                         Financial Services and Markets Act 2000, as amended

"London Stock Exchange"                  London Stock Exchange plc

"New Alphameric Shares"                  the Offer Shares and the Placing Shares

"Offer"                                  the recommended offer to be made by Alphameric to acquire the entire issued and
                                         to be issued ordinary share capital of Compass on the terms and subject to the
                                         conditions to be set out in the Offer Document and the Form of Acceptance
                                         including, where the context permits or requires, any subsequent revision,
                                         variation, extension or renewal thereof

"Offer Document"                         the document to be issued to Compass Shareholders making the Offer

"Official List"                          the Official List of the UK Listing Authority

"Offer Shares"                           the Alphameric Shares proposed to be issued pursuant to the Offer

"Overseas Shareholders"                  Compass Shareholders with registered addresses outside the UK or who are
                                         resident in or nationals or citizens of jurisdictions outside the UK

"Panel"                                  The Panel on Takeovers and Mergers

"Placing"                                the conditional placing by Investec Investment Banking on behalf of Alphameric

"Placing Shares"                         the Alphameric Shares proposed to be issued pursuant to the Placing

"UK" or the "United Kingdom"             the United Kingdom of Great Britain and Northern Ireland

"UK Listing Authority"                   the FSA in its capacity as a competent authority under Part VI of FSMA, as
                                         amended from time to time

"US" or the "United States"              the United States of America, its territories and possessions, any state of the
                                         United States of America and the District of Columbia and all other areas
                                         subject to its jurisdictions or any political sub-division thereof

"Williams de Broe"                       Williams de Broe Plc, sole financial adviser to Compass



                      This information is provided by RNS
            The company news service from the London Stock Exchange
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