Rights Issue to raise approximately 3.5 million

 

TIDMMAT 
 
RNS Number : 0483B 
Matica Plc 
20 October 2009 
 
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THIS ANNOUNCEMENT (AND THE INFORMATION CONTAINED HEREIN) IS RESTRICTED AND IS 
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE 
OR IN PART, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR 
THE REBPULIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD 
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION 
 
 
 
 
Matica PLC ("Matica" or the "Company") 
 
 
Proposed Rights Issue to raise approximately GBP3.5 million 
 
 
The Board of Directors of Matica, the international supplier of card 
personalisation and card mailing systems, announces a 7 for 2 Rights Issue to 
raise gross proceeds of approximately GBP3.5 million (before expenses). The 
Rights Issue is subject to approval by Shareholders at a General Meeting to be 
held on 5 November 2009. 
 
 
Highlights 
 
 
  *  7 for 2 Rights Issue of 35,219,856 New Ordinary Shares at a price of 10 pence 
  per New Ordinary Share, representing a 63.64 per cent. discount to the closing 
  middle market price of 27.5 pence per Ordinary Share. 
 
 
 
  *  The proceeds of the Rights Issue will be used to expand the Company's sales and 
  support infrastructure and to add new distributors and dealers; for research and 
  development of new card personalisation systems, with particular reference to 
  graphic desktop systems and high speed systems; and for working capital. 
 
 
 
A circular will be posted to Shareholders today which will include the Notice of 
General Meeting. The circular will also appear on the Company's website at 
www.maticasystem.com. 
 
 
Sandro Camilleri, Chief Executive Office of Matica commented: 
 
 
"The Board continues to believe that the prospects for Matica are encouraging. 
Whilst the Company has experienced difficulties in 2009 due to the prevailing 
economic conditions, the proceeds of the Rights Issue will provide the Company 
with capital to assist in its continued growth and to ensure there is sufficient 
working capital. 
 
 
I am confident that through taking measures such as cutting costs and, through a 
successful Rights Issue, that the Company will be well positioned to grow in the 
future". 
 
 
 
 
20 October 2009 
 
 
Enquiries 
 
 
Sandro Camilleri 
CEO, Matica plc 
[phone] 
Hanson Westhouse Limited 
Tim Metcalfe 
+ 44 (0) 20 7601 6100 
 
 
 
Disclaimer 
 
 
The information contained in this announcement has been prepared by Matica plc 
(the "Company") in connection with a rights issue by the Company. This 
announcement is not a prospectus or any other kind of financial promotion. This 
announcement is a summary only and should be used solely for information 
purposes. This announcement does not constitute or form part of, and should not 
be construed as, an offer, invitation, or inducement to purchase or subscribe 
for any securities in the Company not shall it or any part of it form the basis 
of, or be relied upon in connection with, any contract or commitment whatsoever. 
This announcement does not take into account any recipient's individual 
objectives, financial situation or needs and all recipients are expressly warned 
of the requirement to carry out their own due diligence into the Company and 
this investment opportunity. Recipients should form their own assessment and 
take independent professional advice on the merits of investment and the legal, 
regulatory, tax and investment consequences and risks of doing so. Any decision 
to purchase securities in any proposed offering should be made solely on the 
basis of publicly available information and offering documentation. 
 
 
The distribution of this announcement and other related documents including the 
circular may be restricted in jurisdictions other than the United Kingdom, It is 
the responsibility of each individual recipient to comply with and observe any 
restrictions as failure to do so may contravene the securities laws of the 
relevant jurisdiction. 
 
 
This announcement is not an offer of securities for sale in the United States 
and none of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares 
or the Provisional Allotment Letters have been or will be registered under the 
US Securities Act or under the securities laws of any state of the United States 
or qualified for distribution under any of the relevant securities laws of the 
Excluded Territories. In addition, no prospectus in relation to the New Ordinary 
Shares has been lodged with or registered by the Australian Securities and 
Investments Commission. The New Ordinary Shares may not be offered, sold, 
resold, delivered or transferred, directly or indirectly, in or into the United 
States or the Excluded Territories absent an applicable exemption. 
 
 
Hanson Westhouse, which is regulated in the United Kingdom by the Financial 
Services Authority, is acting exclusively for the Company and for no one else in 
connection with the matters described in this announcement and will not be 
responsible to anyone other than the Company for providing the protections 
afforded to customers of Hanson Westhouse or for providing advice in relation to 
the Rights Issue or any other matter referred to in this announcement. 
 
 
Apart from the responsibilities and liabilities, if any, which may be imposed on 
Hanson Westhouse by FSMA or the regulatory regime established thereunder, Hanson 
Westhouse accepts no responsibility whatsoever, and makes no representation or 
warranty, express or implied, for the contents of this announcement including 
its accuracy, completeness or verification or for any other statement made or 
purported to be made by it or on behalf of it, the Company or any other person, 
in connection with the Company, the Nil Paid Rights, the Fully Paid Rights and 
the Rights Issue Shares or the Rights Issue and nothing in this announcement 
shall be relied upon as a promise or representation in this respect, whether as 
to the past or the future. Hanson Westhouse accordingly disclaims all and any 
liability whatsoever, whether arising in tort, contract or otherwise (save as 
referred to above), which it might otherwise have in respect of this 
announcement or any such statement. 
 
 
General Meeting 
 
 
In the event that the Resolution is not passed at the General Meeting, the 
Company cannot complete the Rights Issue. As a result the Company may not have 
sufficient working capital for its present requirements, that is, for at least 
the 12 month period from the date of publication of the Circular. In that case, 
the Directors would need to make further significant overhead reductions, in 
addition to those detailed in the Interim Results published on 29 September 2009 
and there would not be enough working capital to pursue their planned activities 
which form the basis of the Company's growth plans. 
 
 
As well as overhead reductions, the Directors would need to make reductions in 
investment related to research and development which could affect the 
implementation of growth strategies by Matica Americas, the Company's US 
subsidiary company. 
 
 
The Directors believe that the taking of such steps to further reduce overheads 
and curtail expansion plans would lead to significant loss of current and 
potential value for Shareholders. However, the Directors are of the opinion that 
the Group would have enough working capital for a period of at least 12 months 
were the Company to undertake the significant overhead reduction plan referred 
to above and no longer pursue its current plans. 
 
 
AIM 
 
 
The New Ordinary Shares will be admitted to AIM and it is emphasised that no 
application is being made for admission of the New Ordinary Shares to the 
Official List or to any other stock exchange at this time. An investment in 
shares quoted on AIM may be less liquid and may carry a higher risk than an 
investment in shares quoted on the Official List. The rules of AIM are less 
demanding than those of the Official List. Further, neither the United Kingdom 
Listing Authority nor the London Stock Exchange have examined or approved the 
contents of this announcement. A prospective investor should be aware of the 
risks of investing in such companies and should make the decision to invest only 
after careful consideration and, if appropriate, consultation with an 
independent financial adviser authorised for the purposes of FSMA who 
specialises in the acquisition of shares and other securities. 
 
 
Future Funding 
 
 
Whilst the Directors are of the opinion that if the Rights Issue is fully 
subscribed the working capital available to the Group will be sufficient for its 
present requirements and have no current plans for raising additional capital 
for a period of 12 months after the issue of the New Ordinary Shares, it is 
possible that the Company will need to raise extra capital in the future to 
develop fully the Group's business or to take advantage of acquisition 
opportunities. No assurance can be given that any such additional financing 
will be available or that, if available, it will be available on terms 
favourable to the Company or the Shareholders. 
 
 
If further financing is obtained by issuing equity securities or convertible 
debt securities, the existing shareholders may be diluted and the new securities 
may carry rights, privileges and preferences superior to the New Ordinary 
Shares. The Directors may seek debt finance to fund all or part of any 
future acquisition. There can be no assurance that the Company will be able to 
raise those debt funds, whether on acceptable terms or at all. If debt financing 
is obtained, the Company's ability to raise further finance and its ability to 
operate its business may be subject to restrictions. 
 
 
A number of factors (including changes in interest rates, conditions in the 
banking market and general economic conditions which are beyond the Company's 
control) may make it difficult for the Company to obtain new financing on 
attractive terms or even at all. If the Company's borrowings become 
more expensive, then the Company's profits will be adversely affected. 
 
 
Should the Rights Issue not be fully subscribed the Directors may consider 
additional means of funding for the Company. Depending upon the sources of 
finance that may be available the appropriateness of maintaining the quotation 
on AIM may need to be reviewed. 
 
 
Forward Looking Statements 
 
 
All statements, other than statements of historical facts, included in this 
announcement, including, without limitation, those regarding the Company's or 
Group's financial position, business strategy, plans and objectives of 
management for future operations or statements relating to expectations in 
relation to dividends or any statements preceded by, followed by or that include 
the words "targets", "believes", "expects", "aims", "intends", "plans", "will", 
"may", "anticipates", "would", "could" or similar expressions or the negative 
thereof, are forward looking statements. Such forward looking statements involve 
known and unknown risks, uncertainties and other important factors beyond the 
Company's or Group's control that could cause the actual results, performance, 
achievements of or dividends paid by the Company to be materially different from 
actual results, performance or achievements, or dividend payments expressed or 
implied by such forward looking statements. Such forward looking statements are 
based on numerous assumptions regarding the Group's net asset value, present and 
future business strategies and income flows and the environment in which the 
Group will operate in the future. 
 
 
These forward looking statements speak only as of the date of this announcement. 
The Company expressly disclaims any obligation or undertaking to disseminate any 
updates or revisions to any forward-looking statements contained herein to 
reflect any change in the Company's expectations with regard thereto, any new 
information or any change in events, conditions or circumstances on which any 
such statements are based, unless required to do so by law or any appropriate 
regulatory authority. 
 
 
 
 
Expected Timetable of Principal Events 
 
 
+------------------------------------------+---------------------------+ 
| Announcement of the Rights Issue and     |   7.00 a.m. on 20 October | 
| Circular published                       |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Record Date for entitlements under the   |   5.00 p.m. on 2 November | 
| Rights Issue                             |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Latest time and date for receipt of      |  10.00 a.m. on 3 November | 
| Forms of Proxy                           |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| General Meeting                          |  10.00 a.m. on 5 November | 
|                                          |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Dispatch of Provisional Allotment        |           5 November 2009 | 
| Letters (to Qualifying Non-CREST         |                           | 
| Shareholders only)                       |                           | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Dealings in Nil Paid Rights commence on  |   8.00 a.m. on 6 November | 
| the London Stock Exchange                |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Existing Ordinary Shares marked          |   8.00 a.m. on 6 November | 
| "ex-rights" by the London Stock Exchange |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Nil Paid Rights credited to stock        | as soon as possible after | 
| accounts in CREST                        |   8.00 a.m. on 6 November | 
| (Qualifying CREST Shareholders only)     |                      2009 | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Recommended latest time for requesting   |  4.30 p.m. on 23 November | 
| withdrawal of Nil Paid Rights from CREST |                      2009 | 
| (i.e. if your Nil Paid Rights or Fully   |                           | 
| Paid Rights are in CREST and you wish to |                           | 
| convert them into Certificated form)     |                           | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Recommended latest time and date for     |  3.00 p.m. on 25 November | 
| depositing renounced Provisional         |                      2009 | 
| Allotment Letters, nil paid or fully     |                           | 
| paid, into CREST or for dematerialising  |                           | 
| Nil Paid Rights or Fully Paid Rights     |                           | 
| into a CREST stock account               |                           | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Latest time and date for splitting       |  3.00 p.m. on 26 November | 
| Provisional Allotment Letters, nil paid  |                      2009 | 
| or fully paid                            |                           | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Latest time and date for acceptance and  | 11.00 a.m. on 30 November | 
| payment in full and registration of      |                      2009 | 
| renounced Provisional Allotment Letters  |                           | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Dealings in New Ordinary Shares, fully   | as soon as possible after | 
| paid, commence on AIM and New Ordinary   |   8.00 a.m. on 1 December | 
| Shares credited to CREST stock accounts  |                      2009 | 
| (uncertificated holders only)            |                           | 
+------------------------------------------+---------------------------+ 
|                                          |                           | 
+------------------------------------------+---------------------------+ 
| Expected date of dispatch of definitive  |       by 14 December 2009 | 
| share certificates for New Ordinary      |                           | 
| Shares in certificated form.             |                           | 
+------------------------------------------+---------------------------+ 
 
 
Notes: 
 
 
Each of the times and dates set out in the above timetable is subject to change 
by the Company (with the agreement of Hanson Westhouse), in which event details 
of the new times and dates will be notified to the London Stock Exchange and, 
where appropriate, to Shareholders. 
 
 
References to times in this announcement are to London times. 
 
1.    Introduction 
 
 
The Company's Directors have today announced that, subject to Shareholder 
approval being granted at a General Meeting of the Company, the Company proposes 
to raise up to approximately GBP3.5 million (net of expenses) by way of a 7 for 
2 Rights Issue of up to 35,219,856 New Ordinary Shares at a price of 10 pence 
per New Ordinary Share. 
 
 
The Issue Price of 10 pence per New Ordinary Share has been structured to 
represent a significant discount to the Closing Price on the last Business Day 
prior to the announcement of the Rights Issue. 
 
 
The Rights Issue is not being underwritten. Hanson Westhouse is acting as 
Nominated Adviser, broker and financial adviser to the Company in relation to 
the Rights Issue. 
 
 
The New Ordinary Shares to be issued under the Rights Issue, when fully paid, 
will rank pari passu with the existing Ordinary Shares, including the right to 
all future dividends and other distributions declared, made or paid. 
 
 
Further details of the Rights Issue and how Qualifying Shareholders can apply 
for New Ordinary Shares are set out in the Circular which is being sent to 
Shareholders today. 
 
2.    Background to and reasons for the Rights Issue 
 
 
The Company designs, manufactures and markets a comprehensive range of card 
personalisation equipment and issuance solutions for the personalisation of 
cards and documents, such as credit cards, ID cards, passport, membership cards 
and gift cards. Matica began the production of card personalisation machines in 
2000 and since then, the Company has grown and is now an established 
international supplier of card personalisation and mailing systems. 
 
 
Matica has targeted markets worldwide and grown its customer base through a 
broad distribution network from which the majority of its revenues are derived. 
The Directors believe that it is important for the Company to continue to grow 
its distribution network globally. 
 
 
In order to continue to expand the Company's global presence and increase market 
share, the Directors have identified two key target areas of growth, which are: 
 
 
  *  updating of existing products and development of new products; and 
  *  expansion of distribution networks in Asia, North and South America and Europe. 
 
 
 
On 1 April 2009 the Company announced its final results reporting that in 2008 
the Company recorded significant increases in revenue, profitability and 
operating cash flow. Revenue growth in 2008 was mainly driven by new contract 
wins globally, particularly in the Middle East and the Americas. 
Consolidated revenue for the 12 months ended 31 December 2008 increased by 12 
per cent. to EUR14.6 million, compared with 2007. Profit before tax was EUR1.1 
million, which represented a significant improvement on the reported loss of 
EUR1.4 million in 2007. Since then, the Company released its interim results on 29 
September 2009 and reported that revenue for the first 6 months of 2009 
decreased by 43 per cent. to EUR4.3 million compared with EUR7.5 million for the 
same period in 2008. The Company further reported a pre tax loss of EUR0.9 million 
and a loss for the period of EUR1 million. In order to tackle the 
difficult trading conditions seen in recent months the Company has cut its 
operating costs by 12 per cent. when compared to the same period in 2008. 
Recently there have been signs of economic improvement and the Company is seeing 
improvements in the business and the level of orders. The Company also reported 
that it has made significant new contract wins in the Middle East totalling EUR0.5 
million. 
 
 
On 31 March 2009, the Company entered into a loan facility with an Italian bank 
for a 5 year loan facility of EUR1,750,000. Under the terms of the facility 
agreement, the Company invested EUR1,000,000 in an AAA BEI Europe Bank bond. The 
Company's first repayment in respect of such loan facility is due in September 
2010 with interest payable quarterly from the date at a rate of 2 per cent. 
above Euribor. The balance of the loan facility has been used for working 
capital purposes. 
 
 
Recently, the Directors believe that there have been signs of economic 
improvement and the Company is seeing improvements in the business and the level 
of orders. The Company has also reported that it has made a significant new 
contract win in the Middle East totalling EUR0.5 million. 
 
 
Despite these tough trading conditions experienced by the Company this year, the 
Directors believe that the long term prospects for the market for using plastic 
cards for ID, security, banking and loyalty programs remains encouraging. 
 
 
To position the Company for future growth, the Company is seeking to raise up to 
approximately GBP3.5 million through the Rights Issue. Approximately EUR500,000 
will be used as additional working capital for the Company. 
 
 
The remaining funds will be used in new global channel development, market 
expansion and graphic printing products and technology development. 
 
 
Markets 
 
 
The card industry has experienced robust growth driven by increasing demand for 
personalised cards. In 2008, the number of cards manufactured worldwide 
increased by 15 per cent. to 22.2 billion compared with 2007 and it is expected 
to stay flat for the year 2009. Despite difficult wider economic conditions, the 
Directors have forecasted growth to resume in 2010. The Directors believe that 
demand for card personalisation solutions will be largely driven by: 
 
 
  *  the growth in credit and debit card use; 
  *  technological changes (such as the switch from magnetic cards to smart cards); 
  *  decentralisation of credit and debit cards issuance; 
  *  growth in new markets such as Gift cards, SIM cards, Transport cards, Loyalty 
  cards; and 
  *  continued global concerns over security and safety. 
 
 
 
The Americas have emerged as the largest region within this market, estimated to 
represent 46 per cent. of the total card personalisation industry by 2010 
(Source: ICMA "Global Card Market - Statistic and Trend 2001-2010"), with the 
emergence of new areas such as gift cards are contributing to further growth 
across the Americas. The American markets include financial, retail, service 
bureaus, governments, healthcare, gift and transport. Given the importance of 
the Americas as a marketplace, the Company formed the view that it was prudent 
for the Group to establish a physical presence as a basis for increasing the 
Company's American sales growth. The 100 per cent. ownership of Matica Americas 
has provided the Company with a platform from which to develop and grow its 
U.S., Canadian and Latin American businesses. Current operations in the Americas 
are small, but the Company plans to expand this geographic market as the world 
economy improves and working capital becomes available to the Company. 
 
 
The Directors believe that another important area of growth is represented by 
the Asian markets. With additional capital, the Company would expand its sales 
activity in Asia and the appropriate distribution channels. 
 
 
Strategy 
 
 
Matica will focus its resources and efforts in the following three areas: 
 
 
  *  Expansion of distribution channels for card personalisation and mailing 
  applications globally. 
  *  Expansion of distribution channels for graphic, desktop ID card printers and 
  supplies globally. 
  *  Development of new products employing graphic, embossing and mailing 
  technologies for card personalisation. 
 
 
 
Matica has an established distribution network and historically the strength of 
this network has been in Europe, Africa and the Middle East. To effectively take 
advantage of the opportunity in the market, the Directors believe that this 
distribution system needs to expand to cover all major markets of the world. The 
Directors believe that expansion of distribution of Matica's products into new 
markets represents the fastest way to achieve growth. 
 
 
The Company formed Matica Americas LLC ("Matica Americas") through a 50-50 joint 
venture with a North American partner in 2008. As announced on 26 March 2009, 
the Company acquired the remaining 50 per cent. equity in Matica Americas 
thereby becoming the 100 per cent. owner of Matica Americas. Matica Americas 
will focus on establishing relationships with new dealers in order to sell 
Matica's products in the American region. In addition, the Directors may add to 
the numbers of sales personnel in Asia to capitalise on the increasing demand in 
the emerging markets. The Directors believe that the additional sales force, 
together with the expansion and strengthening of the Group's European, Middle 
Eastern and African distribution networks, will enable the Company to grow its 
market share further. 
 
 
Competition 
 
 
In addition to the general market growth brought about by the multiplication of 
uses and usage of cards, the Directors believe that opportunities for the 
industry are being influenced by the actions of their main competitor and market 
share leader, Datacard Corporation ("Datacard"). In December 2006 Datacard 
announced to customers around the world its intention to discontinue field 
support for its large installed base of high speed card issuance equipment by 
2014. The Directors have estimated that this installed base of equipment 
represents approximately 5,000 units with an average individual replacement 
value, at retail, of approximately GBP200,000. The Directors believe that this 
range and installed base of equipment has been placed in the field by Datacard 
since the 1990's. By announcing that it no longer intends to support this 
installed base of equipment and discontinue technical service and parts 
availability, and if Datacard continues with such strategy, the Directors 
believe that Datacard customers will be forced to buy new equipment. The 
Directors believe that this represents a considerable opportunity for Matica to 
compete with their present and new product offerings in this unique replacement 
market and achieve a significant presence. 
 
 
At the Cartes trade fair in Paris in November 2009, the leading show for credit 
and security card issuance, Matica will introduce its new Quantum series of 
equipment designed with input from customers and by Matica's engineering team. 
The Quantum is positioned against Datacard's high end product that it will be 
offering to end users to replace its present ageing and discontinued equipment. 
With the introduction of Quantum, the Directors believe that Matica will have a 
full range of mid and high speed card personalisation and mailing equipment to 
offer end users an alternative to the Datacard equipment. The Quantum is being 
developed by Matica to customer specifications and requirements with a focus on 
achieving a lower cost per- card performance and superior return on investment 
for end users. 
 
 
With additional funds available to the Company from the Rights Issue to be put 
towards working capital and the development of new products, the Company intends 
to employ sales and service personnel for dealer and customer support. The 
Directors believe the Company will provide customers with a viable alternative 
to Datacard's products. 
 
 
Matica Americas LLC 
 
 
Matica Americas, incorporated in Minneapolis in July 2008, was initially formed 
through a 50:50 joint venture between the Company and an U.S. investors. On 31 
March 2009, Matica took full control of Matica Americas by acquiring the 
outstanding shares in the company which it did not already own. This terminated 
the joint venture. The Directors believe that the acquisition will enhance 
Matica's ability to develop the business in the American regions, to establish 
strong partnership with prospective customers with the intention of providing 
the best in class products and services for the region. 
 
 
The Directors' intention is that Matica Americas will specifically target the 
card personalisation equipment and issuance solutions markets in the United 
States, Canada and Latin America. Matica Americas will aim to offer the 
Company's complete range of card personalisation and mailing systems and will 
aim to provide the same high level of sales, services, parts, supplies and 
customer support that the Directors believe have traditionally been provided by 
the Company. 
 
 
Matica Americas has been operational since July 2008. Since its inception the 
company has been focused on establishing dealers within North America. At 
present Matica Americas has entered into agreements with sixteen dealers who 
have a strong presence and high level of experience in Card Issuance and 
Embossing equipment sales and post sales services. 
 
 
3. Use of net proceeds 
 
 
In order to pursue the above strategies, the Directors intend to use the net 
proceeds of the Rights Issue to invest in the following: 
 
 
  *  expanding the Company's sales and support infrastructure and adding new 
  distributors and dealers; 
  *  research and development of new card personalisation systems, with particular 
  reference to graphic desktop systems and high speed systems; and 
  *  working capital. 
 
4.    Summary of Principal terms and conditions of the Rights Issue 
 
 
Pursuant to the Rights Issue (further details on which are set out in the 
Circular which is being sent to Shareholders), 35,219,856 New Ordinary Shares 
will be offered by way of rights to Qualifying Shareholders on the following 
basis: 
 
 
7 New Ordinary Shares at 10 pence per share for every 2 Existing Ordinary Shares 
 
 
held by the Qualifying Shareholders at the close of business on the Record Date, 
and so in proportion for any other number of Existing Ordinary Shares then held. 
The New Ordinary Shares will, when issued and fully paid, rank equally in all 
respects with the Existing Ordinary Shares, including the right to receive all 
dividends and distributions made, paid or declared after Admission. 
 
 
The Rights Issue is not being underwritten. 
 
 
The Rights Issue if fully subscribed is expected to result in the issue of up to 
35,219,856 New Ordinary Shares. 
 
        a.  The Rights Issue is conditional upon the approval of Shareholders, 
which will be sought at a General 
 

            Meeting of the Company to be 
held at 10.00 a.m. on 5 November 2009 at the offices of Hanson 
 
Westhouse Limited, One Angel Court, London EC2R (notice of which is set out at 
the end of the 
 

            Circular); and 
 
        b.   Admission becoming effective by not later than 8.00 a.m. on 6 
November 2009 (as the Dealing Day 
              immediately after the General Meeting or such later time and/or 
date as the Company and Hanson 
 

             Westhouse may agree). 
 
 
Application will be made to the London Stock Exchange for the New Ordinary 
Shares to be admitted to trading on AIM. It is expected that Admission will 
become effective on 6 November 2009 and that dealings in the New Ordinary Shares 
will commence, nil paid, at 8.00 a.m. on that date. 
 
 
The Existing Ordinary Shares are traded on AIM and are already admitted to 
CREST. No further application for admission to CREST is required for the New 
Ordinary Shares and all of the New Ordinary Shares when issued and fully paid 
may be held and transferred by means of CREST. Application is being made for the 
Nil Paid Rights and the Fully Paid Rights to be admitted to CREST. Euroclear 
requires the Company to confirm to it that certain conditions (imposed by the 
CREST Manual) are satisfied before Euroclear will admit any security to CREST. 
It is expected that these conditions will be satisfied, in respect of the Nil 
Paid Rights and the Fully Paid Rights, on Admission. As soon as practicable 
after satisfaction of the conditions, the Company will confirm this to 
Euroclear. 
 
5.    Current Trends in Trading and Prospects 
 
 
Demand for plastic cards such as ID, banking and royalty cards continued to grow 
in most of Matica's markets in 2008. As a result, the Company grew revenue by 12 
per cent. to EUR14.6 million compared with 2007. In particular, the Company saw a 
growth in orders in both the Middle East and Americas markets. 
 
 
In 2008, the Company transferred Digicard's key assets including manufacturing 
facilities and technologies from its Austrian location to Paderno, Italy. This 
transfer allowed the Company to reduce its overall operating costs in relation 
to these products and technologies. 
 
 
However, the wider difficult economic environment, in particular in the banking 
sector, one of Matica's main markets, has negatively impacted on the Company's 
trading, particularly since the announcement of the 2008 results in April 2009 
and as detailed in the interim results on 29 September 2009. Revenue for the 
first 6 months of 2009 decreased by 43 per cent. to EUR4.3 million compared with 
EUR7.5 million for the same period in 2008. The Company further reported a pre tax 
loss of EUR0.9 million and a loss for the period of EUR1 million. In order to tackle 
the difficult trading conditions the management of the Company has focused in 
2009 so far on adjusting the internal organization and cost base to better align 
the Company to the difficult trading environment and the Company has cut its 
operating costs by 12 per cent. when compared to the same period in 2008. The 
Company also sourced an additional EUR1,750,000 loan facility the details of which 
are detailed above in Section 2. 
 
 
Recently, the Directors believe that there have been small signs of economic 
improvement in the market and the Directors further believe that the Company is 
benefiting from improvements in the business and the level of orders although 
the results for the full year will be negatively impacted by the difficulties 
faced in the first half and the ongoing recession. The Company has reported that 
it has made a significant new contract win in the Middle East totalling EUR0.5 
million. 
 
 
Despite the tough trading conditions experienced by the Company this year, the 
Directors believe that the long term prospects for the market for using plastic 
cards for ID, security, banking and loyalty programs remains encouraging. The 
Directors of the Company are confident in the underlying strength of Matica's 
global markets on a medium to long term basis. The increasing use of credit and 
debt cards, particularly in the emerging markets, together with the trend for 
banks to produce cards in regional branches rather than from a central location, 
is expected to improve demand for Matica's products. The Directors believe that 
the migration of magnetic cards to smart cards and concerns over securities and 
safety are also the key drivers to the demand in Matica's products worldwide - 
in addition to the growth of the use of graphics for card personalisation. 
 
6.     General Meeting 
 
 
A General Meeting of the Company is to be held at 10.00 a.m. on 5 November 
2009 at the offices of Hanson Westhouse Limited, One Angel Court, London EC2R 
(notice of which is set out at the end of the Circular) at which resolutions 
will be proposed to authorise the Directors for the purposes of section 549 of 
the Act to exercise all the powers of the Company to allot relevant securities 
up to an aggregate nominal amount of GBP1,761,000.  Such authority (unless 
previously renewed, varied or revoked by the Company in general meeting) shall 
expire on the earlier of fifteen months from the date the resolution is passed 
and the conclusion of the annual general meeting of the Company to be held in 
2010. 
 
 
Definitions 
+--------------------+-----------------------------------------------------+ 
| "Act"              | the Companies Act 2006, as amended                  | 
+--------------------+-----------------------------------------------------+ 
| "Admission"      | the admission of the New Ordinary Shares, nil paid, | 
|                    | to trading on AIM and such admission becoming       | 
|                    | effective in accordance with the AIM Rules          | 
+--------------------+-----------------------------------------------------+ 
| "AIM"            | the AIM market of the London Stock Exchange         | 
+--------------------+-----------------------------------------------------+ 
| "AIM Rules"        | the rules published by the London Stock Exchange    | 
|                    | governing admission to, and the operation of, AIM   | 
+--------------------+-----------------------------------------------------+ 
| "Board" or       | the board of directors of the Company whose names   | 
| "Directors"        | are set out on page 5 of the Circular               | 
+--------------------+-----------------------------------------------------+ 
| "Business Day"   | a day other than a Saturday, Sunday or public       | 
|                    | holiday in England and Wales                        | 
+--------------------+-----------------------------------------------------+ 
| "certificated     | a share or other security which is not in           | 
| form" or "in     | uncertificated form (that is, not in CREST)         | 
| certificated       |                                                     | 
| form"             |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "CCSS"           | the CREST Courier and Sorting Service established   | 
|                    | by Euroclear to facilitate, inter alia, the deposit | 
|                    | and withdrawal of securities                        | 
+--------------------+-----------------------------------------------------+ 
| "Closing Price"    | the closing middle market quotation of a Ordinary   | 
|                    | Share on a particular day, as derived from the AIM  | 
|                    | Appendix to the Daily Official List                 | 
+--------------------+-----------------------------------------------------+ 
| "Company" or     | Matica PLC                                          | 
| "Matica"         |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "CREST"          | the Relevant System (as defined in the CREST        | 
|                    | Regulations) in respect of which Euroclear is the   | 
|                    | Operator (as defined in the CREST Regulations)      | 
+--------------------+-----------------------------------------------------+ 
| "CREST Deposit    | has the same meaning as in the CREST Manual         | 
| Form"             |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "CREST Manual"   | the rules governing the operation of CREST,         | 
|                    | consisting of the CREST Reference Manual, CREST     | 
|                    | International Manual, CREST Central Counterparties  | 
|                    | Service Manual, CREST Rules, Registrars Service     | 
|                    | Standards, Settlement Discipline Rules, CCSS        | 
|                    | Operations Manual, Daily Timetable, CREST           | 
|                    | Application Procedures and CREST Glossary of Terms  | 
|                    | (all defined in the CREST Glossary of Terms         | 
|                    | promulgated by Euroclear on 15 July 1996 and as     | 
|                    | amended since)                                      | 
+--------------------+-----------------------------------------------------+ 
| "CREST member"   | a person who has been identified by Euroclear as a  | 
|                    | system member (as defined in the Regulations)       | 
+--------------------+-----------------------------------------------------+ 
| "CREST            | a person who is, in relation to CREST, a system     | 
| participant"      | member (as defined in the Regulations)              | 
+--------------------+-----------------------------------------------------+ 
| "CREST            | the Uncertificated Securities Regulations 2001 (SI  | 
| Regulations"      | 2001 No.01/3755), as amended                        | 
+--------------------+-----------------------------------------------------+ 
| "CREST sponsor"  | a CREST participant admitted to CREST as a CREST    | 
|                    | sponsor                                             | 
+--------------------+-----------------------------------------------------+ 
| "CREST sponsored   | a CREST member admitted to CREST as a sponsored     | 
| member"            | member                                              | 
+--------------------+-----------------------------------------------------+ 
| "CREST Transfer   | has the same meaning as in the CREST Manual         | 
| Form"             |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "Dealing Day"    | Any day on which the London Stock Exchange is open  | 
|                    | for business in the trading of securities admitted  | 
|                    | to AIM                                              | 
+--------------------+-----------------------------------------------------+ 
| "Ex-rights Date" | 6 November 2009                                     | 
+--------------------+-----------------------------------------------------+ 
| "Excluded         | Canada, Japan, Australia, New Zealand and the       | 
| Territories"      | Republic of South Africa and any other jurisdiction | 
|                    | where the extension or availability of the Rights   | 
|                    | Issue (and any transaction contemplated thereby)    | 
|                    | would breach any applicable law                     | 
+--------------------+-----------------------------------------------------+ 
| "Existing         | the Ordinary Shares in the capital of the Company   | 
| Ordinary Shares"  | in issue as at the date of the Circular             | 
+--------------------+-----------------------------------------------------+ 
| "EU"             | the union of countries established by the Treaty on | 
|                    | European Union dated 7 February 1992 (the           | 
|                    | Maastricht Treaty) as amended by the Treaty of      | 
|                    | Amsterdam dated 2 October 1997, the Treaty of Nice  | 
|                    | dated 26 February 2001 and as amended from time to  | 
|                    | time thereafter                                     | 
+--------------------+-----------------------------------------------------+ 
| "Euroclear"        | Euroclear UK & Ireland Limited                      | 
+--------------------+-----------------------------------------------------+ 
| "FSA"              | the Financial Services Authority                    | 
+--------------------+-----------------------------------------------------+ 
| "FSMA"           | the Financial Services and Markets Act 2000         | 
+--------------------+-----------------------------------------------------+ 
| "Form of Proxy"  | the form of proxy accompanying the Circular for use | 
|                    | at the General Meeting                              | 
+--------------------+-----------------------------------------------------+ 
| "Fully Paid       | rights to acquire the New Ordinary Shares, fully    | 
| Rights"           | paid                                                | 
+--------------------+-----------------------------------------------------+ 
| "General          | the general meeting of the Company to be held at    | 
| Meeting" or       | 10.00 a.m. on 5 November 2009, notice of which is   | 
| "GM"             | set out at the end of the Circular                  | 
+--------------------+-----------------------------------------------------+ 
| "Group"          | Matica together with its subsidiary undertakings    | 
+--------------------+-----------------------------------------------------+ 
| "Hanson Westhouse" | Hanson Westhouse Ltd which is authorised and        | 
|                    | regulated by the FSA                                | 
+--------------------+-----------------------------------------------------+ 
| "Issue Price"    | 10 pence per New Ordinary Share                     | 
+--------------------+-----------------------------------------------------+ 
| "ISIN"           | the International Security Identification Number    | 
+--------------------+-----------------------------------------------------+ 
| "London Stock     | London Stock Exchange plc, or its successor         | 
| Exchange"         |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "Matica Americas"  | Matica Americas LLC, a company incorporated in      | 
|                    | Minneapolis, United States in July 2008 and which   | 
|                    | is wholly owned by the Company                      | 
+--------------------+-----------------------------------------------------+ 
| "member account   | the identification code or number attached to any   | 
| ID"               | member account in CREST                             | 
+--------------------+-----------------------------------------------------+ 
| "Memorandum"     | the memorandum of association of the Company        | 
+--------------------+-----------------------------------------------------+ 
| "New Ordinary     | up to 35,219,856 new Ordinary Shares to be issued   | 
| Shares"           | by the Company pursuant to the Rights Issue         | 
+--------------------+-----------------------------------------------------+ 
| "Nil Paid         | rights to acquire New Ordinary Shares, nil paid     | 
| Rights"           |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "NOMAD"            | nominated adviser for the purposes of the AIM Rules | 
+--------------------+-----------------------------------------------------+ 
| "Official List"  | the Official List of the UKLA                       | 
+--------------------+-----------------------------------------------------+ 
| "Ordinary         | the ordinary resolution to be proposed at the       | 
| Resolution"       | General Meeting granting the Directors authority to | 
|                    | allot relevant securities                           | 
+--------------------+-----------------------------------------------------+ 
| "Ordinary         | the ordinary shares of 5 pence each in the capital  | 
| Shares" or        | of the Company                                      | 
| "Shares"         |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "Overseas         | Qualifying Shareholders with registered addressed   | 
| Shareholders"     | in, or who are citizens in, or residents of,        | 
|                    | countries other than in the UK                      | 
+--------------------+-----------------------------------------------------+ 
| "participant ID" | the identification code of membership number used   | 
|                    | in CREST to identify a particular CREST member or   | 
|                    | other CREST participant                             | 
+--------------------+-----------------------------------------------------+ 
| "Prospectus       | the Prospectus Rules made by the FSA pursuant to    | 
| Rules"            | Part VI of FSMA                                     | 
+--------------------+-----------------------------------------------------+ 
| "Provisional      | the form of renounceable provisional allotment      | 
| Allotment Letter" | letter to be issued to Qualifying non-CREST         | 
|                    | Shareholders (other than, subject to certain        | 
|                    | exceptions, certain Overseas Shareholders as        | 
|                    | described in Part VI of the Circular) by the        | 
|                    | Company in respect of the Nil Paid Rights, pursuant | 
|                    | to the Rights Issue                                 | 
+--------------------+-----------------------------------------------------+ 
| "Qualifying CREST | Qualifying Shareholders whose Ordinary Shares on    | 
| Shareholder"      | the register of members of the Company on the       | 
|                    | Record Date are in uncertificated form              | 
+--------------------+-----------------------------------------------------+ 
| "Qualifying       | Qualifying Shareholders whose Ordinary Shares on    | 
| non-CREST          | the register of members of the Company on the       | 
| Shareholder"      | Record Date are in certificated form                | 
+--------------------+-----------------------------------------------------+ 
| "Qualifying       | holders of Ordinary Shares on the register of       | 
| Shareholder"      | members of the Company at the Record Date           | 
+--------------------+-----------------------------------------------------+ 
| "Record Date"    | 5.00 p.m. on 2 November 2009                        | 
+--------------------+-----------------------------------------------------+ 
| "Regulatory       | one of the Regulatory Information Services          | 
| information        | authorised by the London Stock Exchange to receive, | 
| Service" or       | process and disseminate information in respect of   | 
| "RIS"            | AIM listed companies                                | 
+--------------------+-----------------------------------------------------+ 
| "Resolution"     | the Ordinary Resolution                             | 
+--------------------+-----------------------------------------------------+ 
| "RGTS / RTGS"      | real-time gross settlement system                   | 
+--------------------+-----------------------------------------------------+ 
| "Rights Issue"   | the proposed issue by way of rights of New Ordinary | 
|                    | Shares to Qualifying Shareholders on the terms and  | 
|                    | subject to the conditions set out in this           | 
|                    | announcement and the Circular and, in the case of   | 
|                    | Qualifying Non-CREST Shareholders only, on the      | 
|                    | terms and subject to the conditions set out in the  | 
|                    | Circular and the Provisional Allotment Letters      | 
+--------------------+-----------------------------------------------------+ 
| "Shareholders"   | the holders from time to time of Ordinary Shares    | 
| or "Ordinary      |                                                     | 
| Shareholders"     |                                                     | 
+--------------------+-----------------------------------------------------+ 
| "stock account"  | an account within a member account in CREST to      | 
|                    | which a holding of a particular share or other      | 
|                    | security in CREST is credited                       | 
+--------------------+-----------------------------------------------------+ 
| "UKLA"             | UK Listing Authority, which is the FSA acting in    | 
|                    | its capacity as the competent authority for the     | 
|                    | purposes of Part VI of FSMA                         | 
+--------------------+-----------------------------------------------------+ 
| "uncertificated   | recorded on the register of members as being held   | 
| form" or "in     | in uncertificated form in CREST and title to which, | 
| uncertificated     | by virtue of the Regulations may be transferred by  | 
| form"             | means of CREST                                      | 
+--------------------+-----------------------------------------------------+ 
| "United Kingdom" | the United Kingdom of Great Britain and Northern    | 
| or "UK"          | Ireland                                             | 
+--------------------+-----------------------------------------------------+ 
| "United States" or | the United States of America, its territories and   | 
| "US"               | possessions, any state of the United States and the | 
|                    | District of Columbia                                | 
+--------------------+-----------------------------------------------------+ 
| "US Securities    | the United States Securities Act 1933, as amended   | 
| Act"              |                                                     | 
+--------------------+-----------------------------------------------------+ 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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