Proposed Acquisition

RNS Number:7853R
Belgravium Technologies PLC
27 September 2005


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE
UNITED STATES OF AMERICA, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR
THE REPUBLIC OF SOUTH AFRICA

This announcement does not constitute, or form part of, an offer or any
invitation to sell, allot or issue or any solicitation of any offer to purchase
or subscribe for any securities, nor shall it (or any part of it) or the fact of
its publication form the basis of, or be relied upon in connection with, or act
as an inducement to enter into, any contract or commitment for securities.

          Belgravium Technologies plc ("Belgravium" or the "Company")

Proposed acquisition (the "Acquisition") of Touchstar Technologies Limited 
("Touchstar") and Placing of up to 33,600,000 new ordinary shares in the capital
of the Company at 14 pence per share (the "Placing Shares")


Introduction

The board of directors of the Company (the "Board") today announces that the
Company has conditionally agreed, subject, inter alia, to shareholder approval,
to acquire the entire issued share capital of Touchstar for a total
consideration of #10.75 million of which #8.17 million will be paid in cash and
#2.58 million will be paid as bank guaranteed loan notes. At completion,
Touchstar is expected to have cash of at least #2.55 million. This cash will be
retained by the Enlarged Group (comprising the Company, its subsidiary,
Belgravium Limited (together the "Group") and Touchstar). The consideration, net
of cash within Touchstar, is therefore approximately #8.2 million (before
expenses). The Acquisition is subject to a completion accounts mechanism which
will adjust the consideration if defined levels of working capital are not
delivered.

The Acquisition is to be funded by the issue of the Placing Shares at 14 pence
per share raising #4.7 million (before expenses), the Company's existing cash
reserves, which at 30 June 2005 were #2.5 million, and new banking facilities.

Touchstar is a manufacturer and distributor of hand-held mobile computing
devices to the niche markets of fuel distribution, van sales and the airline
industry. The directors of the Company (the "Directors") believe the Acquisition
offers the Company opportunities for revenue growth and that it will benefit
from synergies and adoption of best practice across the Enlarged Group.

The Acquisition constitutes a reverse takeover under the AIM Rules by virtue of
its size and, as such, requires the approval of the Company's shareholders
("Shareholders") which will be sought at the EGM of the Company to be held on 21
October 2005.  The notice convening the EGM is set out at the end of the
circular which will be posted to Shareholders today (the "Circular").

As a result of the Acquisition and Placing, the Board will be strengthened by
the appointment of Mark Hardy, currently non-statutory Managing Director of
Belgravium Limited.


Background to and reasons for the Acquisition

The Company has previously stated its intention to augment its organic growth
through acquisition. As Shareholders are aware, the Directors have sought to
identify and target companies which will add both depth and breadth to
Belgravium's offering, allowing it to reap the benefits associated with greater
market presence.

The Directors believe that the acquisition of Touchstar represents just such an
opportunity. The increased critical mass of the Enlarged Group will create a
platform for the Belgravium business from which to exploit existing and target
new vertical markets (such as defence, transportation and retail) by offering
its existing product range (in particular the newly developed Atlanta product)
through Touchstar's distribution network. The strength of Touchstar's brand in
overseas territories such as the US and Australia is also expected to provide
the Enlarged Group with far greater international sales reach and thereby
reduced reliance on the domestic market.

In addition, greater critical mass is expected to provide potential economies of
scale through increased buying power with suppliers and in helping secure
continuity of component supply.

The market for mobile computing devices now demands a greater breadth of product
and service offering. Inevitably this means investment in technological
advancement for the companies operating in the market. At the same time, the
convergence of different modes of technology, from PC and wireless to RFID,
across different industries, means the solutions provided by manufacturers must
be increasingly integrated. Both these factors place the emphasis on forward
technical planning and point to higher research and development spend.

Both Belgravium and Touchstar are dedicated to solving the problems associated
with mobile data capture in industrial and commercial environments which require
a rugged yet functionally rich solution. The Acquisition will mean that the cost
of product development can be spread over a stronger earnings stream and offers
the potential to realise a number of cost synergies, for example from the
combination of product development resources. The combination of the two
businesses also has the potential for development of a stronger next generation
product offering incorporating the latest functionality (such as RFID) from
both, which can be implemented across each business' respective product ranges.

The Directors believe that the Acquisition will be earnings enhancing in the
first year, however this should not be interpreted to mean that the Enlarged
Group's future earnings per share following the Acquisition will be necessarily
greater than its historic earnings per share.


Information on Touchstar

Touchstar is one of the UK's leading providers of hand-held battery powered
mobile computing solutions to a variety of blue chip industrial and commercial
end users. Its products incorporate both proprietary hardware and software in
Windows CE and DOS formats. It also offers a bespoke software development
capability with comprehensive support and maintenance services. Its core markets
are fuel distribution and the airline industry; the nature of these global
markets means that sales growth is increasingly driven through its network of
international distributor partners. Touchstar's recent product development has
focussed on updating its existing hardware devices, such as Eagle, to operate on
a Windows CE based system, rather than a DOS based system. This has led to the
launch of a succession of improved products including the CEagle, the Falcon and
the Voyager II with further new products in the pipeline.

The Touchstar business was originally established in the UK in 1986 as Wingcross
Limited, which later changed its name to ACS Data Limited. In 1997 ACS Data
Limited was acquired by Mapco Inc, a company which was based in Tulsa, Oklahoma,
from its shareholders, including its founder and the current Managing Director
of Touchstar, Richard Smith. As a result of its expansion and growth, branches
were also established in mainland Europe and South Africa, forming the original
Touchstar group.

In 1998 Mapco Inc was acquired by the Williams Companies Inc. The original
Touchstar group was identified as a non-core activity following a strategic
review in 2001, and was acquired by the then UK management team in a management
buy out financed by Lloyds TSB Development Capital Limited ("LDC").

In 2002, the original Touchstar group experienced poor trading, and subsequently
suffered cash flow difficulties brought about in the aftermath of 9/11. As a
result, Richard Smith returned to the business in April 2002. In May 2003 the UK
operations and global intellectual property rights only were acquired from
administrators by an off-the-shelf company, Inhoco 2836 Limited, which was
renamed Touchstar Technologies Limited on 23 May 2003, the shareholders of which
were LDC, the original founder, Richard Smith and one other director, Paul
Sanders. Paul Sanders' shares were repurchased by Touchstar in November 2003.

Since the acquisition, Touchstar has achieved strong revenue and earnings
growth. Much of this growth reflects the fact that it is no longer encumbered by
the high cost base and operational gearing associated with being an
international company with sales teams located around the world. In the year
ended 31 May 2005, just under 50 per cent. of Touchstar's sales were outside the
UK, and a large proportion of its sales were made via third party distributors
and resellers.

The following information has been extracted without material adjustment from
the financial information on Touchstar set out in the Circular:

                                                            Year ended       53 week period
                                                                31 May               31 May
                                                                  2005                 2004
                                                                  #000                 #000

Sales                                                            7,393                6,309
Operating profit                                                 2,103                1,132
Operating profit margin                                          28.4%                17.9%
Profit before tax                                                2,135                1,116

As at 31 May 2005, Touchstar had net assets of #2,467,000.

During the year ended 31 May 2005, Touchstar employed an average of 31 full time
employees.



Information on Belgravium

Belgravium is a computer design and manufacturing company, specialising in the
mobile computing and radio frequency data communications (RF/DC) market areas
with a focus on real time data capture and rugged hand-held mobile computing
devices. From its UK headquarters, the Company manufactures a comprehensive
range of batch and radio data terminals together with the necessary software to
cater for specific requirements. To complement the radio terminal range,
Belgravium also provides host connectivity solutions which include mainframe and
mid-range emulation software and host resident handlers. Key products, which
operate on the CE.NET operating system, include the Atlanta series and Vienna
series of hand-held mobile computing devices. Belgravium also provides a full
maintenance contract service.

Belgravium's trading subsidiary, Belgravium Limited, was formed in 1982 and
rapidly established itself as an innovative designer of rugged mobile computer
equipment. Since then, it has grown to become widely acknowledged as one of the
leading suppliers of industrial mobile computing equipment for use in a wide
variety of application sectors including warehousing, logistics, field service
and proof of delivery, across Europe.

In 1995, Belgravium Limited was acquired by Eadie Holdings plc. On 2 April 2001,
Eadie Holdings plc, following the disposal of Eadie Industries Limited, changed
its name to Belgravium Technologies plc, in order to reflect the change in focus
of the Group's operations, and moved from a full listing on the London Stock
Exchange to be admitted to trading on AIM.

The following information has been extracted without material adjustment from
the financial information on Belgravium set out in the Circular:

                                 6 months ended 30 June           Year ended 31 December
                                   2005          2004          2004          2003     2002
                                   #000          #000          #000          #000     #000
Sales                             2,359         1,935         3,859         3,895    4,188
Operating profit                    430           350           659           682    1,353
Operating profit margin           18.2%         18.1%         17.1%         17.5%    32.3%
Profit before tax                   484           393           751           795    1,405
Basic earnings per share          0.51p         0.41p         0.90p         0.85p    1.54p

At 30 June 2005, Belgravium had 41 employees in total.



Principal terms of the Acquisition

Under the terms of the Acquisition, the Company has conditionally agreed,
subject, inter alia, to Shareholder approval, to acquire the entire issued share
capital of Touchstar for a total consideration of #10.75 million of which #8.17
million will be paid in cash and #2.58 million will be paid as bank guaranteed
loan notes. At completion, Touchstar is expected to have cash of at least #2.55
million. This cash will be retained by the Enlarged Group. The consideration,
net of cash within Touchstar, is therefore approximately #8.2 million (before
expenses). The Acquisition is subject to a completion accounts mechanism which
will adjust the consideration if defined levels of working capital are not
delivered.

The Acquisition is to be funded by the issue of 33,600,000 Placing Shares at 14
pence per Ordinary Share, raising #4.7 million (before expenses), the Company's
existing cash reserves, which at 30 June 2005 were #2.5 million, and new banking
facilities.

The Acquisition is conditional, inter alia, on the passing of the resolutions
set out in the paragraph headed "Extraordinary General Meeting" below (the
"Resolutions") and admission of the Company's shares to trading on AIM
("Admission").  The anticipated date for completion is 24 October 2005.


Business strategy of the Enlarged Group

The Enlarged Group will, from Admission, offer a range of hand-held mobile
computing devices aimed at its core markets of warehousing, logistics and
distribution, fuel distribution and the airline industry. The Belgravium and
Touchstar brands will be maintained in order to capitalise on their existing
brand strength, however, the administrative and support functions of the
businesses will be combined.

The Enlarged Group will continue to invest in product development, where
appropriate, combining the best features of the Company's and Touchstar's
products into new offerings.

The entire staff of Touchstar will be retained post completion with the
exception of the existing Managing Director, Richard Smith, and the Finance
Manager, Stephen Dunbar (who is an external consultant). Richard Smith will be
retained as an employee until 31 December 2005 on the same terms as his current
service contract, save that he will not receive any pension contributions.

Mark Hardy will assume Richard Smith's role of Managing Director of Touchstar.
His primary focus will be on the strategy and sales operations of the Enlarged
Group, including responsibility for customer relationships and delivery of the
strategic benefits from the combination of the two businesses.

The Directors have confirmed that the existing employment rights, including
pension rights, of all employees of the Enlarged Group will be fully
safeguarded.


Current trading and prospects

The interim results for Belgravium for the six months ended 30 June 2005 are set
out in the Circular. The Directors believe that there is greater visibility of
forward orders than in previous years and are confident that the Group's
products are right for market developments. The Directors would therefore expect
trading in the second half of 2005 to be as strong as the first.

Touchstar has continued to trade in line with expectations since the year ended
31 May 2005. The Directors are therefore confident of current trading prospects.



Proposed Board and Company Secretary of the Enlarged Group

The proposed Board at completion following the appointment of Mark Hardy will
consist of two executive directors and two non-executive directors. Brief
biographies of the Directors, Mark Hardy (the "Proposed Director") and the
Company Secretary are set out below:


John Kembery: Executive Chairman (aged 65)

John has been Executive Chairman of Belgravium, and previously Eadie Holdings
plc, since 1997. He is a Chairman and Director with over 30 years experience in
executive and non-executive roles in both public and private companies in a wide
variety of industries, including McKechnie plc, Europower plc and Sunleigh plc.
Amongst other things, he brings to the Board extensive experience of
acquisitions and their integration. In addition, he is the single largest holder
of existing ordinary shares in the capital of the Company (the "Existing
Ordinary Shares").


Mark Hardy: Group Managing Director (aged 41)

Mark has been involved in the commercial aspects of business within the IT and
communications sector for the past 20 years. He was involved in the sales and
marketing functions for both Harris Systems and Lex Industrial Systems, prior to
joining Belgravium Limited in 1992 as Business Development Manager. He was
appointed Sales Director in 1996 and Managing Director in 1998 (both roles as a
non-statutory director) and has had full operational responsibility since that
date.

Mark Hardy will retain the remuneration and benefits under his existing service
agreement with Belgravium, entered into on 25 February 2005. The agreement is
terminable by the Company, by giving not less than 12 months' written notice,
and by Mark Hardy, by giving not less than 6 months' written notice.


Stephen Day: Non-executive Director (aged 60)

Stephen joined the Board of Belgravium on 25 January 2001. Between 1989 and
1999, he was Chief Executive of Kode International plc, the electronics and
computer group. He is also a director of Radstone Technology plc.


Roderick (Roddy) McDougall: Non-executive Director (aged 63)

Roddy joined the Board of Belgravium on 26 March 1997. He is a director of a
number of private companies in the industrial and commercial sectors. He has
also served on the board of three listed public companies in the last 15 years.
Roddy is the senior independent non-executive director of Belgravium, bringing
an ethos of strong corporate governance to the Board. He chairs the Audit
Committee and Remuneration Committee.


Mike Unwin: Group Financial Controller and Company Secretary (aged 51)

Mike Unwin undertook his training with an accountancy firm in Sheffield. In 1978
he joined Stainless Steel Wire Company Limited, which was later acquired by
Eadie Holdings plc. Upon the subsequent sale of Stainless Steel Wire Company
Limited in 1988, Mike was retained as assistant to the then Group Financial
Director. Following the various changes within the Group he became Group
Financial Controller and later Company Secretary. He is the longest serving
employee of the Group.


Admission, settlement and dealing arrangements

Application will be made to the London Stock Exchange for all the Existing
Ordinary Shares to be re-admitted, and for the Placing Shares to be admitted, to
trading on AIM.  It is expected that Admission will become effective and that
dealings will commence in the ordinary shares of the Company ("Ordinary Shares")
on 24 October 2005.

No temporary documents of title will be issued.  All documents sent by or to the
Shareholder, or at his direction, will be sent through the post at the
Shareholder's risk.  Pending the dispatch of definitive share certificates,
instruments of transfer will be certified against the register of members of the
Company.

The Ordinary Shares are eligible for settlement in CREST, the computerised share
transfer and settlement system.  CREST allows shares and other securities to be
held in electronic form rather than paper form.  Accordingly, settlement of the
transactions in Existing Ordinary Shares and the Placing Shares following
Admission may take place within the CREST system if the relevant Shareholder
wishes.

For more information concerning CREST, Shareholders should contact their broker
or, alternatively, CRESTCo at 33 Cannon Street, London, EC4M 5SB.


Dividend policy

Dividends paid and proposed in the last three years were 0.45 pence per share in
2004, 0.42 pence per share in 2003 and 0.36 pence per share in 2002. The Board
intends to pursue a progressive dividend policy with dividend cover set at a
level to enable the Enlarged Group to fund its medium-term growth and
development requirements over the longer term.


Details of the Placing

The Placing Shares are being placed by Teather & Greenwood with institutional
investors, John Kembery, Roddy McDougall, Mark Hardy and one of the Company's
key employees and will represent approximately 33.46 per cent. of the enlarged
share capital of the Company after the Placing (the "Enlarged Share Capital").
In the Placing, the Company will issue 33,600,000 new ordinary shares at 14
pence per share, payable in full, to raise approximately #4.7 million (before
expenses). The Placing Shares will rank pari passu in all respects with the
Existing Ordinary Shares.

As a demonstration of their commitment to the Company, John Kembery, Roddy
McDougall and Mark Hardy who currently own 7.49 per cent, 2.51 per cent. and
0.09 per cent. respectively of the Existing Ordinary Shares, intend to subscribe
for 522,285, 100,000 and 42,000 Placing Shares, at a cost of #73,120, #14,000
and #5,880 respectively as part of the Placing.

Following Admission, the Directors and the Proposed Director will be interested
in 7,506,481 ordinary shares in the Company, representing approximately 7.47 per
cent. of the Enlarged Share Capital.

The Placing is conditional, inter alia, on the passing of the Resolutions and
the Acquisition having become unconditional (save only for Admission). It is
expected that Admission will become effective and that dealings in the Placing
Shares and Existing Ordinary Shares will commence at 8.00 a.m. on 24 October
2005 (or such later date, being not later than 7 November 2005, as Teather &
Greenwood and the Company may agree).


Re-admission

The size of the Acquisition and consequent fundamental change in the Company's
business give rise, inter alia, to the requirement that the Company applies for
re-admission to AIM.



Extraordinary General Meeting

An extraordinary general meeting of the Company has been convened for 11 am on
21 October 2005, to be held at New Broad Street House, 35 New Broad Street,
London, EC2M 1NH.  At the EGM, Shareholders will be asked to consider the
Resolutions, which will be proposed as follows:

(a) to increase the authorised share capital of the Company to #7,500,000 by the
creation of 50,000,000 new ordinary shares;

(b) to approve the Acquisition for the purposes of Rule 14 of the AIM Rules;

(c) to grant authority to allot the Placing Shares;

(d) to disapply statutory pre-emption rights;

(e) to adopt new articles of association.


Resolutions (d) and (e) are special resolutions, are conditional on Admission,
and to be passed require a majority of not less than 75 per cent. of the
Shareholders of the Company voting in person or on a poll by proxy in favour. If
the Resolutions are not passed none of the Proposals can be implemented.


General

The Circular, which sets out the principal terms of the Acquisition and the
Placing and contains the notice of the EGM will be sent to Shareholders later
today.

Copies of the Circular are available free of charge during normal business hours
on any weekday (Saturdays, Sundays and public holidays excepted) from the
offices of KPMG Corporate Finance, 1 The Embankment, Neville Street, Leeds, LS1
4DW from today until the date falling one month from the admission date.

Expected Timetable of Principal Events

Latest time and date for receipt of completed Forms of Proxy         11am on 19 October 2005

Extraordinary General Meeting                                        11am on 21 October 2005

Completion of the Acquisition                                                24 October 2005

Admission and dealings to commence in the Existing Ordinary        8:00am on 24 October 2005
Shares and Placing Shares on AIM

Delivery in CREST of Placing Shares to be held in uncertificated             24 October 2005
form

Despatch of definitive share certificates in respect of Placing              31 October 2005
Shares to be held in certificated form by



Commenting on today's announcement, John Kembery, Executive Chairman of
Belgravium Technologies said:



"Belgravium has been consistent in its search for a high quality acquisition
over the past few years and is delighted to have found what the Board believes
to be a business which demonstrates real synergy with both Belgravium and its
markets.



In its own right, Touchstar has an excellent reputation in the global airline
and fuel distribution markets where its strong product portfolio has seen it
secure a number of high profile client relationships. However, the acquisition
of Touchstar will also enable Belgravium to market its products to a new
distribution network and into a number of new vertical markets. In addition, it
is hoped that the Acquisition will strengthen the Company's presence abroad,
offering Belgravium new opportunities in the USA, Europe and Australia.



We have always believed that Belgravium would benefit from an earnings enhancing
acquisition, offering greater market presence and increased critical mass. We
welcome the new employees from Touchstar and look forward to our future as an
Enlarged Group with huge potential."



Mark Hardy, Group Managing Director of the Enlarged Group said:



"We believe that Touchstar's international network of distributor partners will
provide new sales avenues for Belgravium's product range, in particular the
Atlanta, which continues to gain international customer approval.



The acquisition will also allow us greater potential in developing a next
generation data capture product, through combined technologies and product
ranges. Costs relating to research and development can be met by a stronger
earnings stream, which will assist the Enlarged Group as technology continues to
advance within our markets.



We are looking forward to the future as a combined force in the industry, and we
are delighted to announce this important development in the growth of our group.
I would like to welcome our new members of staff and thank everyone at
Belgravium in advance for their co-operation and support."





Definitions used in this announcement have the same meaning as in the Circular.



For further information, please contact:


Belgravium Technologies plc                                    01274 718800
John Kembery, Executive Chairman
Mark Hardy, Managing Director

KPMG Corporate Finance                                        0161 838 4000
Christian Mayo

Teather & Greenwood                                           0207 426 9000
Mark Dickenson
Tom Hulme

Buchanan Communications Ltd                                    01943 883990
Eric Burns


KPMG Corporate Finance, a division of KPMG LLP which is authorised and regulated
by the Financial Services Authority for investment business activities, is
acting for the Company as nominated adviser and financial adviser in relation to
the Acquisition and the Placing and is not acting for any other person in
relation to the Acquisition and the Placing. KPMG Corporate Finance will not be
responsible to anyone other than the Company for providing the protections
afforded to its clients or providing advice in relation to the contents of this
document or any matter or arrangement referred to herein.

Teather & Greenwood Limited, which is authorised and regulated by the Financial
Services Authority for investment business activities, is acting exclusively for
the Company in relation to the proposed Placing. Teather & Greenwood Limited is
not acting for any other person (including the recipient of this document) and
will not be responsible to anyone other than the Company for providing advice in
relation to the Placing or in relation to the contents of this document or any
transactions or arrangements referred to herein.


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

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