Proposed Acquisition and Placing

 

TIDMIEN 
 
RNS Number : 7861O 
Intelligent Environments Group PLC 
05 July 2010 
 

IEN 
 
                       Intelligent Environments Group plc 
 
                   Proposed acquisition of Documetric Limited 
      Placing of 63,874,286 Placing Shares at a price of 7 pence per share 
                        Waiver of Rule 9 of the City Code 
                          Change of name to Parseq plc 
    Application for Admission of the Enlarged Share Capital to trading on AIM 
 
Introduction 
 
Intelligent Environments Group plc ("IE" or the "Company"), the AIM listed 
online financial services software provider,  is pleased to announce that it has 
agreed, subject to shareholder approval, to acquire the entire issued share 
capital of Documetric Limited a provider of technology-led outsourcing services 
in finance and administration including payments processing, content management 
and business intelligence. 
 
The Acquisition is classified as a reverse takeover for the purposes of the AIM 
Rules and is conditional, amongst other things, upon the approval of 
Shareholders at a general meeting. An admission document is being sent to all 
shareholders today, convening a general meeting at 11:00am on 21 July 2010. 
 
The Company also announces the Placing by Canaccord Genuity of 63,874,286 
Ordinary Shares at a placing price of 7 pence per share. The Placing Shares were 
placed with institutional and other investors, raising gross proceeds of 
approximately GBP4.5 million. Furthermore, following the combination of the two 
businesses, the Company will change its name to Parseq plc. 
 
The Enlarged Group's Shares are expected to be re-admitted to trading on AIM at 
8:00am on 22 July 2010. The market capitalisation of the Enlarged Group, at the 
Placing Price, will be GBP30.6 million. 
 
The Independent Directors unanimously recommend that Shareholders vote in favour 
of the Resolutions to be proposed at the General Meeting, as they have 
irrevocably undertaken to do in respect of their own shareholdings, which, in 
aggregate, amount to 14.3 per cent. of the Existing Ordinary Shares. 
 
Highlights 
 
·      Acquisition creates a strong new business with significant scale and 
capability  providing  a complete end-to-end service in the growing Business 
Process Outsourcing market 
 
·      Combines the Company's expertise in online and mobile banking markets 
with Documetric's middle & back office to deliver turnkey solutions to clients 
 
·      Enlarged Group will be better equipped to exploit IE's inherent 
technology and core competencies within the mobile banking market 
 
·      Enlarged Group's pro-forma revenues for the financial year ended 31 
December 2009 were GBP16.6 million the majority of which is viewed as recurring 
 
·      Significant new sales pipelines created underpinned by cross selling and 
entry into new market opportunities 
 
·      Board strengthened with existing management team remaining with the 
Enlarged Group 
 
·      Directors confident of Parseq's future prospects 
 
 
Clive Richards, the current non-executive Chairman of the Company and the 
proposed deputy non-executive Chairman of the Enlarged Group commented on the 
Proposals today: 
 
"I am delighted to announce this acquisition, subject to, inter alia, 
Shareholder approval, which will dramatically transform our business and create 
a financially strong new entity with comprehensive outsourcing solutions, scale 
and market presence.  With our new, combined offering, I believe there exists a 
real opportunity for the Enlarged Group to drive growth within both established 
and new markets and to better capture the opportunities inherent in the online 
and mobile banking market where IE currently has a competitive technology 
advantage. 
 
Furthermore, I would like to take this opportunity to thank all of our loyal 
staff at IE for their commitment over many years and that together we can now 
look forward to new opportunities and continued growth within Parseq plc." 
 
 
For further information please contact:- 
 
+-----------------------------------------------+----------------+ 
| Intelligent Environments Group plc            |                | 
+-----------------------------------------------+----------------+ 
| Phillip Blundell, Chief Executive             | Tel: [phone]  | 
|                                               | 9800           | 
+-----------------------------------------------+----------------+ 
| www.ie.com                                    |                | 
|                                               |                | 
+-----------------------------------------------+----------------+ 
| Documetric Limited                            | Tel: [phone]  | 
|                                               | 2320           | 
+-----------------------------------------------+----------------+ 
| Rami Cassis, Chief Executive                  |                | 
+-----------------------------------------------+----------------+ 
|                                               |                | 
+-----------------------------------------------+----------------+ 
| Canaccord Genuity                             |                | 
+-----------------------------------------------+----------------+ 
| Simon Bridges / Henry Fitzgerald-O'Connor     | Tel: [phone]  | 
|                                               | 6500           | 
+-----------------------------------------------+----------------+ 
|                                               |                | 
| Biddicks                                      |                | 
+-----------------------------------------------+----------------+ 
| Shane Dolan                                   | Tel: [phone]  | 
|                                               | 1000           | 
+-----------------------------------------------+----------------+ 
 
 
                   Proposed acquisition of Documetric Limited 
      Placing of 63,874,286 Placing Shares at a price of 7 pence per share 
                        Waiver of Rule 9 of the City Code 
                          Change of name to Parseq plc 
    Application for Admission of the Enlarged Share Capital to trading on AIM 
 
 
                                Chairman's Letter 
 
Introduction 
 
I am pleased to announce on behalf of the Board, that the Company has 
conditionally agreed to acquire the entire issued share capital of Documetric 
Limited. Consideration for the acquisition is to be satisfied entirely by the 
issue of 197,518,858 Consideration Shares to the shareholders of Documetric, 
representing approximately 53 per cent.of the enlarged share capital following 
the Acquisition and before the issue of Placing Shares and Management Bonus 
Shares. At the Placing Price, this values the entire issued share capital of 
Documetric at GBP13.8 million. 
 
Documetric's primary activity is as a provider of technology-led outsourcing 
services including payments, accounts payable and receivables management and 
business intelligence. Documetric is one of the ten largest BACS Bureaux in the 
UK, with around a six per cent share of UK wage and salary BACS payments. For 
the year ended 31 December 2009, Documetric reported revenues of GBP10.2 million 
and profits before tax of GBP1.8 million. 
 
In early 2009, the Board undertook a strategic review of the Company and its 
prospects. It was concluded that the Company should look for partners who could 
give the business access to greater scale and a more secure platform for future 
growth. 
 
The Existing Directors believe that the acquisition of Documetric fulfils this 
objective enabling Shareholders to be part of a larger, more diversified, 
end-to-end service offering. The Enlarged Group should have access to new 
markets and key geographies that may not have been possible alone. The Board 
believes that the Company's expertise in software and services to the online and 
mobile banking markets, combined with Documetric's middle and back office 
capabilities will create a complete service offering in areas of payment 
applications processing and data analytics. 
 
The Company has today also announced that it has conditionally raised GBP4.5 
million before expenses by way of a Placing of 63,874,286 Placing Shares at a 
price of 7 pence per share. The approximate net proceeds of the Placing are 
GBP3.5 million which will be used, inter alia, as working capital for the 
Enlarged Group, to repay part of the existing debt of the Documetric Group, and 
to provide the resources to allow the Enlarged Group to increase its market 
share in the BPO and self-service banking market though complementary 
acquisitions and organic growth. 
 
The Acquisition constitutes a Reverse Takeover of the Company under the AIM 
Rules and will therefore require the approval of Shareholders at the General 
Meeting. The Acquisition is conditional, inter alia, upon the passing of the 
Resolutions and Admission (further details of the Resolutions can be found in 
the General Meeting section towards the end of this announcement). 
 
If the Resolutions are duly passed, trading in the Existing Ordinary Shares will 
be cancelled and the Company will apply for admission of the Enlarged Share 
Capital to trading on AIM under the name Parseq plc. It is expected that the 
Enlarged Share Capital will be admitted to trading on AIM on 22 July 2010. 
 
Rami Cassis and The Cartesian Trust, of which Mr. Cassis and his immediate 
family are beneficiaries, constitute a concert party for the purposes of the 
City Code. Following Completion, and the issue of the Consideration Shares to 
the Concert Party, the Concert Party will control 155,356,253 Ordinary Shares in 
the Company, representing approximately 35.5 per cent. of the Enlarged Share 
Capital of the Company. Therefore, the Company is seeking the Waiver of Rule 9 
of the City Code, which would otherwise require the Concert Party to make a 
general offer for the remaining shares of the Company. A resolution seeking 
Shareholder approval for the Waiver is in the General Meeting section at the end 
of this announcement. 
 
Acquisition Background 
 
Since the Company's admission to AIM in 1996 the Company has developed into a 
recognised software and services provider to the high-growth online and mobile 
banking market. Over the years the Company has continued to gain market share in 
a highly competitive market with key customer wins including Barclaycard, 
National Savings and Investments, HSBC and Halifax, and supporting brands such 
as Orange, Thomas Cook, Argos, Homebase, Sainsbury's, John Lewis, BHS and the 
Hilton. 
 
The Company has been developing a mobile banking platform in order to address 
the mobile banking opportunity in the UK as well as internationally and raised 
GBP0.75 million (gross) on 17 February 2010 to fund further development of this 
significant opportunity. 
 
The Company has, however, suffered from a lack of significant recurring revenue 
and operational scale which has meant, to date, that it has not possessed the 
financial platform from which it can significantly capture the opportunities 
inherent in the online and mobile banking market where it currently has a 
competitive technology advantage. 
 
As discussions between the Company and Documetric developed and after a detailed 
review of the business of Documetric, it was proposed and agreed that the 
shareholders of both Documetric and the Company would benefit from the 
acquisition of Documetric by the Company, enabling the Enlarged Group to offer 
an enhanced portfolio of services to both existing and new clients as well as 
having the capability to enter new markets and key geographies. 
 
The Existing Directors believe the Acquisition provides Shareholders with the 
opportunity to participate in a larger, more diversified group with a successful 
financial and trading record and strong management and that the Acquisition will 
enhance earnings in 2010 and will be highly complementary to the Company's 
business for the following reasons. 
 
·      the Enlarged Group will provide an end-to-end service in payments, 
applications processing and data analytics; 
·      Documetric's growing capability in business intelligence and data mining 
will strengthen the Company's current self-service banking proposition; 
·      the Company's strong front-office capabilities in mobile and online 
banking and Documetric's middle and back office delivery are complementary and 
that combination will open new opportunities with both existing and new 
customers; 
·      Documetric will be able to support the Company's mobile platform by, 
inter alia, hosting, business intelligence and providing contact centre support; 
·      the Enlarged Group will be of an increased scale and will be able to 
enter new markets and key geographies which may not have been possible alone; 
·      both businesses have a focus on common customers in the financial 
services sector (four out of five common customers are in the financial services 
sector); 
·      the Enlarged Group will be better equipped to exploit the inherent 
technology and core competencies with a stronger management team; 
·      the Enlarged Group will be of sufficient size to attract a wider range of 
investors and with greater market appeal; and 
·      the Enlarged Group would have pro forma revenue for the financial year 
ended 31 December 2009 of GBP16.6 million, the majority of which can be viewed 
as recurring revenue. 
 
Principal terms of the Acquisition 
 
Today, the Company entered into the Acquisition Agreement with the Vendors to 
acquire the entire issued share capital of Documetric subject to certain 
conditions set out in the Acquisition Agreement. 
 
Consideration for the Acquisition is to be satisfied by the issue of 
Consideration Shares. There are currently 175,158,233 Existing Ordinary Shares 
in issue and the number of Consideration Shares to be issued proportionally 
amongst the Vendors is 197,518,858, representing approximately 53 per cent. of 
the Enlarged Share Capital following the Acquisition and before the issue of the 
Placing Shares and the Management Bonus Shares. The Consideration Shares will, 
when issued, rank pari passu in all respects with the Existing 
Ordinary Shares, including all rights to all dividends and other distributions 
declared, made or paid following Admission. 
 
The existing EMI share options in Documetric (which are the only Documetric 
share options in issue), shall be released and replacement options shall be 
granted over shares in the Company under the Documetric EMI Option Scheme with 
such conversion being carried out at the same ratio as the issue of 
Consideration Shares to Documetric Shares (with a corresponding change in the 
exercise price). 
 
Taking into account all existing options in the Company and the conversion of 
the EMI options described above, the fully diluted Enlarged Share Capital on 
Admission will be 465,940,127 Ordinary Shares. 
 
In view of the size of the Acquisition, in relation to the Company, the 
Acquisition constitutes a Reverse Takeover of the Company under the AIM Rules. 
As such, the Acquisition is subject to the approval of the Shareholders, which 
is being sought at the General Meeting of the Company convened for 21 July 2010. 
Subject to such approval and to satisfaction of the other conditions relating to 
the Acquisition, completion of the Acquisition is expected to take place on 22 
July 2010, the expected date of Admission. 
 
All the Vendors have given warranties in relation to their title to the shares 
being sold by them and their authority to execute, deliver and perform their 
obligations under the Acquisition Agreement. Rami Cassis, Richard Last, Richard 
Arden and Simon Rubin have given warranties in relation to the business, 
finances and operational status of Documetric. 
 
Information on the Company 
 
The Group was founded in the UK in 1984 and has focussed on developing software 
products and tools that allow financial institutions to access corporate data. 
The Company was admitted to trading on AIM in 1996 when it first launched its 
internet development tools. 
 
The Company's key focus is on providing on-line software products for financial 
services organisations and their customers, particularly in the credit card, 
consumer finance, savings and investment markets. The Company's software and 
services allows companies in the financial services sector the ability to offer 
online application, account management and administrative capabilities. All the 
Company's products use the single NetFinance platform which is built from the 
Microsoft NET technology. NetFinance has the ability to be integrated into the 
clients' existing online banking systems, call centre databases, workflows and 
back-office systems. All of the Company's solutions are hosted by the client 
bank or a third-party services provider. 
 
The Company's revenue model has several streams including licensing, service 
charges, support fees and transaction fees based on usage of its applications. 
 
The Company's offering has recently taken a major step forward with the 
development of its mobile banking solution. The mobile banking solution allows a 
banks' customer to engage with their bank at a time and location convenient to 
them. The Board believes this is a fast growing segment of the market and has 
already signed three customers and is in discussions with several financial 
institutions to roll out its versatile and functional mobile banking 
applications. 
 
Key customers include Barclaycard, National Savings and Investments, HSBC and 
Halifax, and supporting brands such as Orange, Thomas Cook, Argos, Homebase, 
Sainsbury's, John Lewis, BHS and the Hilton. The Company largely sells through 
system integrators and back-office service providers including Siemens, First 
Data, Fidelity National Information Services, Unisys and Bravura. 
 
In December 2009 the Company was named as one of eight "Hot Banking Tech 
Companies to Watch in 2010" by Forrester Research Inc. 
 
Information on the Documetric Group 
 
Documetric is a provider of technology-led outsourcing services in the UK. It 
was founded in February 2007 by Rami Cassis through the management buy-out of 
the trade and assets of a BPO subsidiary of Atos Origin, a leading European IT 
outsourcer. In July 2008, Documetric acquired Active Business Services Limited 
from First Data International for a total consideration of GBP16.7 million 
(which included GBP6 million of cash and two freehold properties). 
 
Documetric operates in the following areas: 
·      payments BPO; 
·      remittance, applications and invoice processing services; 
·      information management; 
·      contact centre support; and 
·      outsourced contingency services. 
 
Payments BPO is an end-to-end offering which provides a managed service to SMEs 
(through banking contracts) for the execution and maintenance of all payment 
related activities, predominantly via BACS. It accounts for approximately 50 per 
cent. of Documetric's revenue. 
 
The Proposed Directors believe that Documetric's main selling point revolves 
around two attributes, being its niche position in the BPO market based on 
Documetric's ability to process complex, low volume transactions profitably and 
secondly, a service offering developed with the intent of building a greater 
range of offerings than competitors with strong technology content as part of 
its solution. 
 
The Proposed Directors believe that Documetric's major competitors tend to be 
more specialist in their offerings and that whilst most do provide a range of 
services, they tend to be limited to accounts payable or accounts receivable 
services. 
 
Documetric has over 50 clients, including tier 1 banks and financial services 
organisations, leading telecommunications providers, high profile professional 
organisations and corporate clients. 
 
Key statistics: 
 
·      Documetric has a six per cent. market share in UK wage and salary BACS 
payments market. The Proposed Directors believe that Documetric is one of the 
ten largest BACS Bureaux in the UK; 
·      provides a BACS BPO service on behalf of banks to over 79,000 of their 
SME; 
·      pays almost 7.5 per cent. of UK SME workforce customers; 
·      hosts in excess of 5 million images and documents; 
·      payment card industry ("PCI") ISO (9001 quality & 27001 security) and 
BACS accreditation; 
·      CHAPS processing capability; 
·      processes in excess of 24 million transactions a year; 
·      handles in excess of 500,000 calls per annum; 
·      processing payments with a total value in excess of GBP19 billion per 
annum; and 
·      an accuracy rate of 99.1 per cent. 
 
Details of the Placing and Use of Proceeds 
 
The Company will raise GBP4.5 million (gross) pursuant to the Placing through 
the issue of 63,874,286 Placing Shares at the Placing Price. The Placing Shares 
will represent approximately 14.6 per cent. of the Enlarged Share Capital of the 
Company immediately following Admission. 
 
Under the Placing Agreement, Canaccord Genuity has conditionally agreed to 
place, with institutional and other investors, the Placing Shares at the Placing 
Price. The net proceeds of the Placing are expected to be GBP3.5 million, and 
will be used, inter alia, as working capital for the Enlarged Group, to repay 
part of the existing debt of the Documetric Group, and to provide the resources 
to allow the Enlarged Group to increase its market share in the BPO and 
self-service banking market though complementary acquisitions and organic 
growth. 
 
The Placing is conditional, inter alia, upon the passing of Resolutions 1, 2, 3, 
5 and 7 at the General Meeting, Admission and the Acquisition Agreement becoming 
unconditional in all respects. 
 
The Placing is not being underwritten, in whole or in part, by Canaccord Genuity 
or any other party. 
 
Clive Richards (the current Non-Executive Chairman of the Company and the 
proposed Non-Executive Deputy Chairman of the Enlarged Group) and Richard Last 
(the proposed Non-Executive Chairman of the Enlarged Group) are participating in 
the Placing. Clive Richards will subscribe for GBP150,000 being 2,142,857 
Placing Shares at the Placing Price and Richard Last will subscribe for 
GBP100,000 being 1,428,571 Placing Shares at the Placing Price. 
 
The Existing Directors, other than Clive Richards, having consulted with 
Canaccord Genuity believe Mr Richards' participation in the Placing is fair and 
reasonable insofar as Shareholders are concerned. 
 
New Board and Key Employees 
 
At Admission, it is proposed Clive Richards will step down as Non-Executive 
Chairman to become a Non-Executive Deputy Chairman of the Company (to be 
replaced by Richard Last as Non-Executive Chairman) and Mike Warriner, Jerry 
Mulle, Michael Jackson and Ian Peters will retire from the board of the Company. 
The biographical details of the New Board and key employees after Admission are 
set out below: 
 
New Board 
 
Richard Last, aged 53 (Proposed Non-Executive Chairman) 
 
Richard Last is a Fellow of the Institute of Chartered Accountants in England 
and Wales with substantial experience in the IT software and services sectors, 
and is Chairman and non-executive director of Patsystems plc and Arcontech Group 
plc (both financial software businesses listed on AIM). He is also a 
non-executive director of Lighthouse Group plc and of Corero Group plc, both AIM 
listed companies, and of British Smaller Companies VCT plc which is listed on 
the Official List. In addition, he is a director and shareholder of a number of 
private companies including APD Communications Limited and CSE Global UK 
Limited, a subsidiary of a Singapore Stock Exchange listed company. 
 
Rami Cassis, aged 41 (Proposed Chief Executive Officer) 
 
Rami founded Documetric in February 2007 through the management buyout of the 
data services bureau from Atos Origin. Rami was previously managing director of 
Atos Origin's BPO UK division having joined them from consulting group KPMG, 
where he was a principal consultant advising UK and European corporate clients. 
Previously, he held several executive roles with Schlumberger where he started 
his career as an engineer. 
 
Rami will have the responsibility of overseeing the strategic direction of the 
Enlarged Group. He will focus on driving organic growth through synergies and 
delivering complementary acquisitions. 
 
Phillip Blundell, aged 49 (Current Chief Executive Officer and Proposed Managing 
Director) 
 
Phillip joined the Company as finance director and has been the Company's chief 
executive since 2001. He joined the Company from Ocean Software Limited, the 
interactive computer games publisher, where he was group finance director. 
Previously, he worked at Thomas Nelson Limited, Northern Telecom Europe Limited 
and GEC Plessey Telecommunications Ltd. Phillip is a chartered accountant who 
qualified with Coopers & Lybrand. 
 
Phillip will be responsible for overseeing the delivery of the existing 
Intelligent Environments' business plan as well as working with the New Board to 
integrate the two businesses and help develop the Enlarged Group's strategy. 
 
Richard Arden, aged 37 (Proposed Chief Financial Officer) 
 
Richard joined Documetric in September 2008 as finance director. Richard 
qualified as a Chartered Accountant in 2000, having trained with 
PricewaterhouseCoopers. He has seven years' experience as a finance director of 
various service based organisations. He was previously group finance director at 
Debts.co.uk plc and executive director at Westfield Contributory Health Scheme, 
a health insurer, with responsibility for its finance, compliance and IT. 
 
Richard will have responsibility for Group financial activity and reporting. He 
will also be supporting the chief executive officer in meeting the strategic 
direction of the Enlarged Group. 
 
Clive Richards, aged 72 (Current Non-Executive Chairman and Proposed 
Non-Executive Deputy Chairman) 
 
Following six years at KPMG, Clive joined Wedd Durlacher Mordaunt in 1960 and 
subsequently became managing partner. In 1970, Clive joined N M Rothschild & 
Sons Ltd, latterly taking the position of group finance director. In 1976, Clive 
set up his own investment venture capital and financial services Company, 'Clive 
Richards & Co', which has been involved in a number of successful enterprises. 
 
Simon Rubin, aged 62 (Proposed Non-Executive Director) 
 
Simon Rubin was previously UK managing director of First Data International 
which provides payment processing services to UK banks and building societies. 
Simon was North European Vice President for NCR Corporation's Financial 
Solutions Division and its UK Chairman and Country Manager. NCR is the global 
leader in financial self service technology (ATMs), and Simon was with the 
company from August 1993 until joining First Data in April 2005. 
 
Key employees after Admission 
 
The New Board will be supported by the following key employees: 
 
Mike Warriner, aged 40 (Chief Technology Officer) 
 
On Admission, Mike will be stepping down from the Board but will remain 
responsible for the research and development of the Company's NetFinance product 
suite. Prior to being appointed chief technology officer, Mike was involved in 
the development of AM, Amazon and IE Integrator (the Company's major e-finance 
application software). Before working for the Company, Mike worked for several 
high-tech companies after completing a degree at Cambridge University. Mike will 
remain a director of the trading subsidiary of Intelligent Environments and will 
sit on the operating board of the Enlarged Group with specific responsibility 
for technology. 
 
Jerry Mulle, aged 44 (Sales and Marketing Officer) 
 
On Admission, Jerry will be stepping down from the Board but will remain 
responsible for the sales and the product marketing team within the Enlarged 
Group's business. Jerry has a wide range of financial services experience across 
both the personal and commercial banking sectors and for the last eight years 
has been working in the card industry. Prior to joining the Company, he was head 
of e-commerce for NatWest Commercial Cards where he was responsible for 
developing and delivering e-business solutions across all areas of new 
technology. Prior to that, he headed the cards product management team. 
 
The Company is currently recruiting a Managing Director who will oversee the day 
to day running of the ongoing Documetric business and will be responsible for 
generating new revenue within BPO through organic sales and proposition 
development. This candidate will not join the New Board. 
 
Current trading and prospects of the Enlarged Group 
 
The Company 
 
The Company has been developing a mobile banking platform in order to address 
the mobile banking opportunity in the UK as well as internationally and raised 
GBP0.75 million (gross) on 17 February 2010 to help develop this significant 
opportunity further. 
 
The Company has made important progress with this strategy and in addition to 
First Data, two other of the Company's existing clients, Generali and LaSer have 
signed up to the mobile service and are expected to go live in the third quarter 
of 2010. 
 
The Existing Directors believe that with the Company's progress in this new 
market to date, and with a strong pipeline in existence underpinned by the 
significant growth expected in mobile banking across Europe, the Company is well 
positioned to capture the potential in the mobile banking market. 
 
In contrast, the retail banking market in the UK remains subdued and this in 
turn has had an impact on the Company's NetFinance business. Sales cycles have 
been extended which in turn have led to a significant reduction in 
implementation fees compared to the same time last year. 
 
However with a new partnership with Fidelity recently signed and an improving 
pipeline of potential business, the Company expects a recovery in the second 
half of the year offsetting this initial shortfall. 
 
The Company's strategy to develop a long term recurring revenue base has 
continued to improve due to a full half year contribution from National Savings 
and Investments, and also the launch of the Orange credit card by Barclaycard. 
These transactional revenue customers coupled with Argos and Vanquish going live 
in the first quarter of 2010 mean that the recurring revenue performance will be 
ahead of 2009 at the half year stage. 
 
Overall the Company has made good progress in the year to date and the Existing 
Directors expect the Company's financial performance to reflect this by the end 
of the year. 
 
Documetric 
 
For the year ended 31 December 2009 Documetric's revenues under IFRS were 
GBP10.2 million (7 months to December 2008: GBP5.3 million), of which more than 
75 per cent. is recurring revenue, with operating profit before exceptional and 
other items of GBP2.9 million (7 months to December 2008: GBP1.1 million). 
Documetric's full year results were originally accounted for under UK GAAP and 
have been restated under IFRS for the purposes of this document. Documetric made 
an interim dividend payment of GBP149,999.37 to all Documetric shareholders on 
31 March 2010. 
 
Documetric has continued to trade profitably during 2010. The first four months 
of 2010 report revenues of GBP3.5 million, in line with management expectations. 
The business has been successful in its implementation of a number of key 
contracts won in 2009 and has also managed to secure a number of smaller 
contracts with new clients in processing and business intelligence. Management 
put in place at the end of 2009 and early 2010 a number of activities to further 
develop the business. The most significant of these was an expansion of the 
sales team by taking on two additional senior sales executives to drive 
additional organic growth and the investment in the OCR technology of GBP870,000 
(of which GBP550,000 had been incurred by April 2010) designed to improve 
efficiencies in processing. 
 
Prospects for the Enlarged Group 
 
The Directors believe the prospects for the Enlarged Group are strong and view 
the future with confidence. Documetric's significant base of recurring revenue 
strengthens the Enlarged Group's overall revenue visibility and provides a more 
stable platform for future growth. 
 
Strategy of the Enlarged Group 
 
The Enlarged Group will create a new company with a critical mass capable of 
delivering comprehensive outsourcing and technology services with a key sector 
focus in financial services. 
 
From a sales and marketing perspective, the market proposition will be created 
by combining Documetric and the Company's offerings incorporating both products 
(for example, Netfinance and Digital Image workflow) and services. The strategy 
will then be to target common clients with a view to delivering services as part 
of the broader proposition. This includes following up on some immediate 
opportunities with, for example, First Data and Barclaycard. 
 
Outside of the financial services sector, there are a number of telecoms and 
professional organisations where the Directors believe that the wider services 
could be readily deployed. 
 
In terms of the development of the joint products and services propositions, 
research and development will remain a key component of the Enlarged Group with 
a particular focus on the Company's mobile banking platform. The Enlarged Group 
will be better able to support the mobile platform by providing, amongst other 
things, hosting, business intelligence and contact centre support. At the same 
time, there are a number of Documetric's clients and applications who can 
potentially benefit from the deployment of the Company's mobile proposition. 
 
Development will also continue on NetFinance, the Directors intend to build a 
number of key functional specifications into the platform to reflect greater 
functionality in business intelligence applications, as well as an enhanced user 
interface. 
 
The Enlarged Group will continue ongoing product development of key solutions, 
including cheque replacement technology, business intelligence applications and 
enhancement to the PCI compliant, web-based, image hosting platform. Providing 
solutions to clients,  which are predicated on technology remains the 
cornerstone of the Enlarged Group's strategy. 
 
In order to maximise growth opportunities and promote "cross-company" synergies, 
it is anticipated that a "group" product and marketing role will be created 
following completion of the Acquisition. The objective will be to create a 
client proposition which seamlessly blends core skills and services from both 
companies without delineating services for Documetric or the Company. A single 
name for the Enlarged Group is crucial to helping establish a unique identity to 
clients and promoting growth across the Enlarged Group. To achieve this, subject 
to the passing of Resolution 6, the Enlarged Group will be rebranded and renamed 
Parseq plc following Admission. 
 
The increased scale will benefit the Enlarged Group and will be deployed in two 
ways. In terms of governance and methodology, a rigorous project management 
standard will be uniformly deployed across the Enlarged Group. In addition, 
access to greater resources will assist in building a more "IP centric" culture 
where patent registration will become more common. 
 
Complementary acquisitions 
 
Management will assess key targets via a defined acquisition strategy. The types 
of acquisition opportunities the enlarged entity will consider include: 
 
·      Financial services front and back-office products to develop the current 
NetFinance application. This may include e-commerce type applications to enhance 
user interface within NetFinance; 
 
·      Bolt-on outsourcing/services companies with a view to consolidating 
within the existing Documetric operation; and 
 
·      Acquisition and/or partnership to establish a solid offshore platform to 
provide BPO services on a broader scale. 
 
A number of possible targets have already been identified and discussions with a 
small number of parties are in progress. In particular, one opportunity has 
arisen that the Directors are particularly interested in pursuing. Should 
negotiations continue to move forward, it is conceivable that the Enlarged Group 
may be in a position, following Admission, to decide on the relative the merits 
of such a transaction with the intention of proceeding to a binding agreement 
shortly thereafter. 
 
Management Incentive Arrangements 
 
As outlined previously, in early 2009 the Board undertook a strategic review of 
the Company and its prospects. At this time it was concluded that the Company 
should look for strategic partners that could give the business access to 
greater scale and a more secure platform for future growth. 
As part of the Board's review of the business in early 2009, certain 
arrangements were put in place in order to incentivise the Existing Executive 
Directors, being Phillip Blundell, Jerry Mulle and Mike Warriner for identifying 
strategic partners that might help take the business forward. 
 
In April 2009 the Board agreed that the Existing Executive Directors and the 
Company would enter into a side letter to the Existing Executive Directors' 
service agreements, entitling them to a management bonus of, in aggregate, 
GBP720,000 if the Company was successfully sold for a price in excess of a set 
amount per share. In April 2010, the Board agreed to amend the terms of the 
Management Incentive Arrangements such that (a) they would also become payable 
if a reverse takeover was consummated with Documetric and (b) GBP372,000 of the 
total was to be deferred until the first anniversary of Admission. Subsequently 
the deferred payments were made subject to certain performance criteria. 
 
As part of the incentive arrangements detailed above, Phillip Blundell is to be 
awarded 756,000 Ordinary Shares at the Placing Price on the date of Admission. 
 
Non-Management Shareholders will be asked at the General Meeting to approve the 
Management Incentive Arrangements by voting on Resolution 4. Pursuant to Rule 16 
of the City Code, none of the Existing Executive Directors will be entitled to 
vote on this resolution and voting will be by way of a poll. 
 
Canaccord Genuity considers that terms of the Management Incentive Arrangements 
to be fair and reasonable. 
 
Summary of Existing Directors' Shareholdings 
 
+--------------+--------------+----------+--------------+----------+ 
|              | Shareholding |   As a % | Shareholding |   As a % | 
|              |   before the |       of | on Admission |       of | 
|              |      Placing | Existing |              | Enlarged | 
|              |              |    Share |              |    Share | 
|              |              |  Capital |              |  Capital | 
|              |              |          |              |          | 
+--------------+--------------+----------+--------------+----------+ 
| Clive        |   24,763,056 |    14.1% |   26,905,913 |     6.2% | 
| Richards     |              |          |              |          | 
+--------------+--------------+----------+--------------+----------+ 
| Phillip      |    1,085,000 |     0.6% |    1,841,000 |     0.4% | 
| Blundell     |              |          |              |          | 
+--------------+--------------+----------+--------------+----------+ 
| Mike         |      262,500 |     0.1% |      262,500 |     0.1% | 
| Warriner     |              |          |              |          | 
+--------------+--------------+----------+--------------+----------+ 
| Jerry Mulle  |      225,000 |     0.1% |      225,000 |     0.1% | 
+--------------+--------------+----------+--------------+----------+ 
| Ian Peters   |            - |        - |            - |        - | 
+--------------+--------------+----------+--------------+----------+ 
| Michael      |      300,000 |     0.2% |      300,000 |     0.1% | 
| Jackson      |              |          |              |          | 
+--------------+--------------+----------+--------------+----------+ 
 
Lock-in Arrangements 
 
Clive Richards, Phillip Blundell, the Proposed Directors and their connected 
parties have undertaken to the Company and Canaccord Genuity to enter into 
lock-in agreements pursuant to which they have agreed not to dispose of any 
Ordinary Shares held by them and their connected parties for a period of 12 
months from Admission (subject to certain limited exceptions) and for a further 
12 months thereafter, in order to maintain an orderly market, to deal in their 
Ordinary Shares only through Canaccord Genuity. 
 
In addition to the lock-in arrangements described above, all the Vendors, who 
are not also Proposed Directors or their connected parties, have undertaken to 
Canaccord Genuity to enter into lock-in agreements in respect of their Ordinary 
Shares. 
 
Under the terms of these lock-in arrangements, each has agreed not to sell or 
otherwise dispose of any Ordinary Shares held by them, other than in specified 
circumstances, for a period of six months from date of Admission and in order to 
maintain an orderly market for a further six months thereafter to deal in their 
Ordinary Shares only through Canaccord Genuity subject to certain limited 
exceptions. 
 
The total number of Ordinary Shares subject to a lock-in arrangement is 
therefore 226,265,771 representing approximately 51.7 per cent. of the Enlarged 
Share Capital. 
 
The City Code on Takeovers and Mergers 
 
The Acquisition and the issue of the Consideration Shares to members of the 
Concert Party gives rise to certain considerations under the City Code. Brief 
details of the Panel, the City Code and the protections they afford to 
Shareholders are described below. 
 
The City Code is issued and administered by the Panel. The City Code applies to 
all takeover and merger transactions, however effected, where the offeree 
company is, inter alia, a listed or unlisted public company resident in the UK 
and to certain categories of private companies. 
 
Under Rule 16.2 of the City Code, when there are certain arrangements 
incentivising management regarding an offer, the arrangements must be approved 
at a general meeting of the company's shareholders. Accordingly, the Independent 
Directors are proposing Resolution 4 at the General Meeting to obtain the 
approval of the Non-Management Shareholders to the Management Incentive 
Arrangements. 
 
Under Rule 9 of the City Code, when any person or group of persons acting in 
concert individually or collectively are interested in shares which in aggregate 
carry not less than 30 per cent. of the voting rights of a company but does not 
hold shares carrying more than 50 per cent. of the voting rights of a company 
and such person or any person acting in concert with him acquires an interest in 
any other shares, which increases the percentage of the shares carrying voting 
rights in which he is interested, then that person or group of persons is 
normally required by the Panel to make a general offer in cash to all 
shareholders of that company at the highest price paid by them for any interest 
in shares in that company during the previous 12 months. 
 
Under the City Code, a concert party arises where persons acting in concert 
together pursuant to an agreement or understanding (whether formal or informal) 
actively co-operate, through the acquisition by them of shares in a company, to 
obtain or consolidate control of that company. Control means the holding, or 
aggregate holdings of shares carrying 30 per cent. or more of the voting rights 
of the company, irrespective of whether the holding or holdings give de facto 
control. 
 
In the context of the Acquisition, for the purposes of the City Code, Rami 
Cassis and the Cartesian Trust, which is beneficially owned by Rami Cassis, are 
considered to be persons acting in concert. 
 
Immediately following Admission, the Concert Party will be interested in 
155,356,253 Ordinary Shares, representing approximately 35.5 per cent. of the 
voting rights attaching to the Enlarged Share Capital. 
 
The Panel has agreed, subject to the approval on a poll by the Independent 
Shareholders at the General Meeting to waive the obligation for the Concert 
Party to make a general offer to Shareholders under Rule 9 that would otherwise 
arise upon Completion. Accordingly, Resolution 2 is being proposed at the 
General Meeting to obtain approval of Shareholders for the waiver of any 
obligations under Rule 9 of the City Code. 
 
For the purposes of Resolution 2, Richard Last and the Existing Executive 
Directors are deemed to be non independent and, as such, will be excluded from 
voting on such resolution. 
 
In accordance with Rule 16 of the City Code, the Existing Executive Directors 
are not entitled to vote their shares on Resolution 4. 
 
General Meeting 
 
The General Meeting of the Company is to be held at the office of Taylor Wessing 
LLP of 5 New Street Square, London, EC4A 3TW at 11:00a.m on 21 July 2010 at 
which the following resolutions will be proposed as ordinary or special 
resolutions (as the case may be): 
 
(a)        to approve the Acquisition (ordinary resolution); 
(b)        to approve the waiver of Rule 9 of the City Code to be passed on a 
poll by Independent Shareholders (ordinary resolution); 
(c)        to authorise the Existing Directors to generally allot ordinary 
shares (including for the purposes of the Placing and the Acquisition) (ordinary 
resolution); 
(d)        to approve the payment of the Management Incentive Arrangements 
(ordinary resolution); 
(e)        to waive statutory pre-emption rights in connection with the 
allotment of the ordinary shares pursuant to the above authority (special 
resolution); 
(f)         to change the name of the Company to Parseq plc (special 
resolution); and 
(g)        to approve the amendment of the articles of association of the 
Company to allow the Company to issue and allot 'worthless' deferred shares, if 
required (special resolution). 
 
The attention of the Shareholders is drawn to the section entitled "Irrevocable 
Undertakings" below and to the recommendations and voting instructions of the 
Independent Directors as set out in the section entitled "Recommendations and 
Voting Instructions". 
 
Details of Admission and Settlement 
 
Application will be made to the London Stock Exchange for admission of the 
Enlarged Share Capital to trading on AIM. It is expected that Admission will 
become effective and that trading in the Enlarged Share Capital will commence on 
22 July 2010. 
 
The Articles permit the Company to issue shares in uncertificated form. CREST is 
a computerised paperless share transfer and settlement system, which allows 
shares and other securities, including depositary interests, to be held in 
electronic rather than paper form. Accordingly, settlement of transactions in 
the New Ordinary Shares following Admission may take place within CREST if 
relevant Shareholders wish. 
 
CREST is a voluntary system and Shareholders who wish to retain certificates 
will be able to do so. 
 
Action to be taken 
 
You will find enclosed with the Admission Document to be sent to Shareholders 
today a Form of Proxy, for use by Shareholders, in connection with the General 
Meeting. Whether or not you intend to be present at the General Meeting, 
Shareholders are asked to complete, sign and return the Form of Proxy in 
accordance with the instructions printed on it so as to be received by 
Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol, 
BS99 6ZY as soon as possible but in any event not later than 11:00 a.m. on 19 
July 2010. Completion of the Form of Proxy will not preclude Shareholders from 
attending and voting at the meeting should they so wish. 
 
Irrevocable Undertakings 
 
Irrevocable undertakings to vote in favour of the Resolutions on which they are 
each entitled to vote have been received from the Existing Directors (other than 
Ian Peters who holds no Ordinary Shares) and any persons connected with them 
(within the meaning of section 252 of the 2006 Act) in respect of their entire 
aggregate holdings of 26,635,556 Ordinary Shares (representing approximately 
15.2 per cent. of the Existing Ordinary Shares). 
 
Recommendations and Voting Intentions 
 
The Independent Directors, who have been so advised by Canaccord Genuity, 
consider that the Proposals are fair and reasonable and in the best interests of 
the Company and its Shareholders as a whole. 
 
Consequently, the Independent Directors unanimously recommend that Shareholders 
vote in favour of the resolutions to be proposed at the General Meeting, as they 
have irrevocably undertaken to do in respect of their own shareholdings, which 
in aggregate amount to 14.3 per cent. of the Existing Ordinary Shares. 
 
Expected Timetable of Principle Events 
 
+-----------------------------------+------------------------+ 
| Latest time and date for receipt  |  11:00 a.m. on 19 July | 
| of Forms of Proxy for the General |                   2010 | 
| Meeting                           |                        | 
|                                   |                        | 
+-----------------------------------+------------------------+ 
| General Meeting                   |  11:00 a.m. on 21 July | 
|                                   |                   2010 | 
+-----------------------------------+------------------------+ 
| Completion of the Acquisition and |   8:00 a.m. on 22 July | 
| Admission                         |                   2010 | 
|                                   |                        | 
+-----------------------------------+------------------------+ 
| Commencement of dealings in the   |   8:00 a.m. on 22 July | 
| Enlarged Share Capital on AIM     |                   2010 | 
|                                   |                        | 
+-----------------------------------+------------------------+ 
| CREST accounts credited in        |   8:00 a.m. on 22 July | 
| respect of the New Ordinary       |                   2010 | 
| Shares to be issued in            |                        | 
| uncertificated form               |                        | 
|                                   |                        | 
+-----------------------------------+------------------------+ 
| Despatch of definitive share      |      Week commencing 2 | 
| certificates in respect of the    |            August 2010 | 
| New Ordinary Shares               |                        | 
|                                   |                        | 
+-----------------------------------+------------------------+ 
 
Definitions 
 
+------------------+-------------------------------------------+ 
| "2006 Act"       | the Companies Act 2006, as amended        | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Acquisition"    | the proposed acquisition by the Company   | 
|                  | of the entire issued share capital of     | 
|                  | Documetric from the Vendors, pursuant to  | 
|                  | the Acquisition Agreement                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Acquisition     | the conditional agreement between the     | 
| Agreement"       | Company and the Vendors dated 5 July 2010 | 
|                  | relating to the acquisition by the        | 
|                  | Company of the entire issued share        | 
|                  | capital of Documetric                     | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Act"            | the Companies Act 1985, as amended        | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Admission"      | admission of the Enlarged Share Capital   | 
|                  | to trading on AIM becoming effective in   | 
|                  | accordance with the AIM Rules for         | 
|                  | Companies                                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "AIM"            | the AIM market operated by the London     | 
|                  | Stock Exchange                            | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "AIM Rules for   | the rules of the London Stock Exchange    | 
| Companies" or    | for companies governing the admission to  | 
| "AIM Rules"      | and operation of AIM                      | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Articles"       | the articles of association of the        | 
|                  | Company                                   | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "BACS"           | the Bankers' Automated Clearing Service   | 
|                  | being a scheme for the electronic         | 
|                  | processing of financial transactions      | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Board" or       | the existing directors of the Company     | 
| "Existing        | namely Clive Richards, Phillip Blundell,  | 
| Directors"       | Mike Warriner, Jerry Mulle, Ian Peters    | 
|                  | and Michael Jackson                       | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "BPO"            | Business Process Outsourcing              | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Canaccord       | Canaccord Genuity Limited, which is       | 
| Genuity"         | authorised and regulated in the United    | 
|                  | Kingdom by the Financial Services         | 
|                  | Authority                                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "certificated"   | not in uncertificated form (that is, not  | 
| or "in           | in CREST)                                 | 
| certificated     |                                           | 
| form"            |                                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "CHAPS"          | an electronic bank to bank payment system | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "City Code"      | the City Code on Takeovers and Mergers    | 
|                  | (as published by the Panel)               | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Company"        | Intelligent Environments Group plc, a     | 
|                  | company incorporated in England and Wales | 
|                  | with registered number 3182741            | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Completion"     | completion of the Acquisition Agreement   | 
|                  | and the Placing Agreement                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Computershare"  | Computershare Investor Services plc       | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Concert         | Rami Cassis and The Cartesian Trust       | 
| Party"           |                                           | 
+------------------+-------------------------------------------+ 
| "Consideration   | 197,518,858 Ordinary Shares issued to     | 
| Shares"          | Documetric in consideration for the       | 
|                  | entire issued share capital of the        | 
|                  | Company                                   | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "CREST"          | the relevant system (as defined in the    | 
|                  | CREST Regulations) in respect of which    | 
|                  | Euroclear UK & Ireland Limited is the     | 
|                  | operator (as defined in such Regulations) | 
|                  | in accordance with which securities may   | 
|                  | be held and transferred in uncertificated | 
|                  | form                                      | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "CREST           | the Uncertificated Securities Regulations | 
| Regulations"     | 2001 (SI 2001/3755)                       | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Documetric"     | Documetric Limited, a company             | 
|                  | incorporated in England and Wales with    | 
|                  | registered number 5815806                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Documetric      | the Documetric Ltd EMI Option Scheme      | 
| EMI Option       | which was adopted by Documetric Ltd on 25 | 
| Scheme"          | February 2010                             | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Documetric      | Documetric and its subsidiaries           | 
| Group"           |                                           | 
+------------------+-------------------------------------------+ 
| "Documetric      | the ordinary shares of 1p each in the     | 
| Shares"          | capital of Documetric                     | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Directors"      | the Existing Directors and the Proposed   | 
|                  | Directors                                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Enlarged        | the Group as enlarged by the Acquisition  | 
| Group"           |                                           | 
+------------------+-------------------------------------------+ 
| "Enlarged        | the Existing Ordinary Shares and the New  | 
| Share Capital"   | Ordinary Shares                           | 
|                  |                                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Existing        | Phillip Blundell, Mike Warriner and Jerry | 
| Executive        | Mulle                                     | 
| Directors"       |                                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Existing        | the 175,158,233 Ordinary Shares of 1p     | 
| Ordinary         | each in issue at the date of this         | 
| Shares"          | document                                  | 
|                  |                                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Existing        | the holders of Existing Ordinary Shares   | 
| Ordinary         |                                           | 
| Shareholders"    |                                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Form of         | the form of proxy accompanying the        | 
| Proxy"           | admission document to be used by          | 
|                  | Shareholders in respect of the General    | 
|                  | Meeting                                   | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "General         | the general meeting of the Company        | 
| Meeting"         | convened for 11:00 a.m on 21 July 2010 to | 
|                  | vote on the Resolutions, notice of which  | 
|                  | is set out at the end of this document    | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Group"          | the Company and its Subsidiaries as at    | 
|                  | the date of this document                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Independent     | Clive Richards, Michael Jackson and Ian   | 
| Directors"       | Peters                                    | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Independent     | all Shareholders, with the exception of   | 
| Shareholders"    | Richard Last, Phillip Blundell, Jerry     | 
|                  | Mulle and Mike Warriner                   | 
+------------------+-------------------------------------------+ 
| "London Stock    | London Stock Exchange Plc                 | 
| Exchange"        |                                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Management      | the incentive arrangements set out in     | 
| Incentive        | this announcement concerning Phillip      | 
| Arrangements"    | Blundell, Jerry Mulle and Mike Warriner   | 
+------------------+-------------------------------------------+ 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Management      | 756,000 Ordinary Shares to be issued to   | 
| Bonus Shares"    | Phillip Blundell on                       | 
|                  | Admission pursuant to the Management      | 
|                  | Incentive Arrangements                    | 
+------------------+-------------------------------------------+ 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "New Board"      | the new board of directors of the Company | 
|                  | following Admission comprising Richard    | 
|                  | Last, Rami Cassis, Richard Arden, Phillip | 
|                  | Blundell, Clive Richards and Simon Rubin  | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "New Ordinary    | the Placing Shares, the Consideration     | 
| Shares"          | Shares and the Management Bonus Shares    | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Non-Executive   | Richard Last, Clive Richards and Simon    | 
| Directors"       | Rubin                                     | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Non-Management  | all Shareholders other than the Existing  | 
| Shareholders"    | Executive Directors  who are holders of   | 
|                  | Ordinary Shares                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "OCR"            | Optical Character Recognition             | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Official        | the Official List of the UK Listing       | 
| List"            | Authority                                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Ordinary        | ordinary shares of 1p each in the capital | 
| Shares"          | of the Company                            | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Panel"          | The Panel on Takeovers and Mergers        | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Placing"        | the conditional placing by Canaccord      | 
|                  | Genuity of the Placing Shares at the      | 
|                  | Placing Price pursuant to the terms and   | 
|                  | conditions of the Placing Agreement       | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Placing         | the conditional placing agreement dated 5 | 
| Agreement"       | July 2010 between                         | 
|                  | Canaccord Genuity (1), the Existing       | 
|                  | Directors (2), and the Proposed Directors | 
|                  | (3) relating to, inter alia, the Placing  | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Placing         | 7 pence per Placing Share                 | 
| Price"           |                                           | 
+------------------+-------------------------------------------+ 
| "Placing         | 63,874,286 New Ordinary Shares which are  | 
| Shares"          | the subject of the Placing                | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Proposals"      | the Acquisition, the Placing, and the     | 
|                  | Waiver                                    | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Proposed        | Rami Cassis, Richard Arden, Richard Last  | 
| Directors"       | and Simon Rubin                           | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Resolutions"    | the resolutions to be proposed at the     | 
|                  | General Meeting, as set out in the notice | 
|                  | of General Meeting at the end of the      | 
|                  | admission document                        | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Reverse         | as defined by Rule 14 of the AIM Rules    | 
| Takeover"        |                                           | 
+------------------+-------------------------------------------+ 
| "Shareholders"   | holders of Existing Ordinary Shares       | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Subsidiary"     | a subsidiary undertaking (as defined by   | 
|                  | section 1162 of the 2006 Act) of the      | 
|                  | Company                                   | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "UK"             | the United Kingdom of Great Britain and   | 
|                  | Northern Ireland                          | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "uncertificated" | Ordinary Shares held in uncertificated    | 
| or "in           | form in CREST and title to which, by      | 
| uncertificated   | virtue of the CREST Regulations, may be   | 
| form"            | transferred by means of CREST             | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "US" or          | the United States of America, its         | 
| "United          | territories and possessions, any state of | 
| States"          | the United States and the District of     | 
|                  | Columbia and all other areas subject to   | 
|                  | its jurisdiction                          | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Vendors"        | Robert Sharp and Robert Roynon-Jones as   | 
|                  | trustees of The Cartesian Trust, BK       | 
|                  | Capital Group Limited, Richard Manson,    | 
|                  | Pieter Hooft, Andrew Hunt, Neil Stanley,  | 
|                  | Michael Martin, Akram Chaudhary, Mike     | 
|                  | Goodwin, Richard Youngman, Paul Barrett,  | 
|                  | Jo Considine, Fred Satow and the Proposed | 
|                  | Directors                                 | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
| "Waiver"         | the conditional waiver by the Panel of    | 
|                  | the obligation of the Concert Party that  | 
|                  | may otherwise arise under Rule 9 of the   | 
|                  | City Code to make a mandatory cash offer  | 
|                  | for the issued Ordinary Shares not        | 
|                  | already owned by the Concert Party on     | 
|                  | completion of the Acquisition and the     | 
|                  | Placing                                   | 
|                  |                                           | 
+------------------+-------------------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCUSVRRRVABRUR