Recommended Cash Offer for Patsystems plc (3099U)

TIDMPTS TIDMTTM

RNS Number : 3099U

Pattington Limited

20 December 2011

Not for release, publication or distribution, in whole or in part, DIRECTLY OR INDIRECTLY in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction

20 December 2011

RECOMMENDED CASH OFFER FOR

PATSYSTEMS PLC BY PATTINGTON LIMITED

The boards of Pattington Limited ("Pattington"), a member of the ION Group, and Patsystems Plc ("Patsystems") are pleased to announce that they have agreed the terms of a recommended cash offer to be made by Pattington for the entire issued and to be issued share capital of Patsystems which is not already owned by Pattington.

Summary and highlights

-- The Offer is unanimously recommended to Patsystems Shareholders by the Patsystems Directors.

-- The Offer is being made at a price of 14 pence in cash for each Patsystems Share and represents a premium of approximately 45.4 per cent. to the Closing Price of 9.63 pence per Patsystems Share on 25 November 2011, being the last Business Day prior to the commencement of the Offer Period.

-- The Offer values the entire issued ordinary share capital of Patsystems (fully diluted for the exercise of all options considered to be in-the-money at the Offer Price under the Patsystems Share Option Schemes) at approximately GBP28.6 million.

-- Pattington holds 57,051,191 Patsystems Shares representing 27.91 per cent. of the entire issued ordinary share capital of Patsystems at the date of this Announcement.

-- Pattington has received irrevocable undertakings from certain Patsystems Shareholders, in respect of, in aggregate, 24,837,636 Patsystems Shares, representing approximately 12.15 per cent. of the entire issued share capital of Patsystems. Furthermore, Pattington has received letters of intent to accept the Offer in respect of 16,869,432 Patsystems Shares, representing approximately 8.25 per cent. of the entire issued share capital of Patsystems. Accordingly, Pattington has received irrevocable undertakings and letters of intent to accept the Offer representing, in aggregate, 20.4 per cent. of the entire issued share capital of Patsystems.

-- The Patsystems Directors, who have been so advised by Numis, consider the terms of the Offer to be fair and reasonable. In providing advice to the Patsystems Directors, Numis has taken into account the commercial assessments of the Patsystems Directors.

-- Accordingly, the Patsystems Directors unanimously recommend that eligible Patsystems Shareholders accept the Offer, as they themselves have irrevocably undertaken to do (or procure to be done) in respect of their own entire beneficial holdings comprising, in aggregate, 2,388,636 Patsystems Shares (representing, in aggregate, approximately 1.17 per cent. of the Patsystems Shares currently in issue). These irrevocable undertakings will remain binding in the event of a competing offer being made for Patsystems and will cease to be binding only if the Offer lapses or is withdrawn.

-- The ION Group is a leading provider of software solutions for financial institutions, corporate clients and central banks.

-- Patsystems provides electronic trading systems, post-trade risk management software and exchange matching capability to banks, futures clearing merchants, brokers and exchanges.

-- The Offer Document and Form of Acceptance will be posted to Patsystems Shareholders (and, for information only, to Patsystems Option Holders) as soon as practicable and in any event by no later than 17 January 2012.

Investec is acting as sole financial adviser to Pattington. Numis is acting as sole financial adviser to Patsystems.

This summary should be read in conjunction with, and is subject to, the full text of the following Announcement and the appendices to it. The Offer will be made subject to the conditions and certain further terms which are set out in Appendix I to this Announcement and the full conditions and further terms to be set out in the Offer Document and (in respect of Patsystems Shares held in certificated form) in the Form of Acceptance. Certain capitalised terms used in this Announcement are defined in Appendix III.

Enquiries:

Pattington +44 (0) 20 7398 0200

Yohannah Walford, Corporate M&A

Investec (Financial Adviser to Pattington) +44 (0) 20 7597 5000

David Currie / Andrew Pinder

Dominic Emery

Patsystems

Richard Last, Non-Executive Chairman +44 (0) 7713 214 484

David Webber, Chief Executive +44 (0) 20 7940 0490

Numis (Financial Adviser to Patsystems) +44 (0) 20 7260 1000

Michael Meade / Richard Thomas as Nominated Adviser

David Poutney as Corporate Broker

   Threadneedle Communications (PR adviser to Patsystems)                      +44 (0) 207 653 9850

Graham Herring

Josh Royston

A copy of the Announcement, the irrevocable undertakings and letter of intent will be published on Pattington's website at www.pattingtonlimited.com and Patsystems' website at www.patsystems.com by no later than 12.00pm on 21 December 2011.

Further information

Appendix I sets out the conditions and certain further terms of the Offer.

Appendix II contains the sources and bases of certain information used in this summary and the following Announcement.

Appendix III contains definitions of certain terms used in this summary and the following Announcement.

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them, and publication of this Announcement shall not give rise to any implication that there has been no change in the facts set forth in this Announcement since such date. Nothing contained in this Announcement shall be deemed to be a forecast, projection or estimate of the future financial performance of Patsystems or the Patsystems Group or Pattington or the ION Group except where otherwise stated.

IMPORTANT NOTICE

Investec, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Pattington and no one else in connection with the Offer and other matters referred to in this Announcement and will not be responsible to any person other than Pattington for providing the protections afforded to clients of Investec nor for giving advice in relation to the Offer or any other matter or arrangement referred to in this Announcement.

Numis, which is authorised and regulated in the United Kingdom by the FSA, is acting exclusively for Patsystems and no one else in connection with the Offer and other matters referred to in this Announcement and will not be responsible to any person other than Patsystems for providing the protections afforded to clients of Numis nor for giving advice in relation to the Offer or any other matter or arrangement referred to in this Announcement.

The Pattington Directors accept responsibility for the information contained in this Announcement other than: (i) the information relating to the Patsystems Group, the Patsystems Directors, their immediate families, related trusts and connected persons and (ii) the recommendations and opinions of the Patsystems Directors relating to the Offer. To the best of the knowledge and belief of the Pattington Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Patsystems Directors accept responsibility for the information contained in this Announcement relating to the Patsystems Group, the Patsystems Directors, their immediate families, related trusts and connected persons and the recommendations and opinions of the Patsystems Directors relating to the Offer. To the best of the knowledge and belief of the Patsystems Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

This Announcement is for information purposes only and is not intended to and does not constitute, or form any part of, an offer to sell or an invitation to subscribe for or purchase any securities or the solicitation of an offer to purchase or subscribe for any securities in any jurisdiction pursuant to the Offer or otherwise. The Offer will be made solely through the Offer Document and the Form of Acceptance, which will contain the full terms and conditions of the Offer (including details on how to accept the Offer). Any response in relation to the Offer should be made only on the basis of the information contained in the Offer Document and the Form of Acceptance or any other document by which the Offer is made. Patsystems Shareholders are advised to read carefully the formal documentation in relation to the Offer once it has been despatched. This Announcement does not constitute a prospectus or prospectus equivalent document.

This Announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed is not the same as would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the UK. Unless otherwise determined by Pattington or required by the Code and permitted by applicable law and regulation, the Offer will not be made, directly or indirectly, in or into, or by use of the mails, or by any means or instrumentality (including, without limitation, by means of telephone, facsimile, telex, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facilities of a securities exchange of, any Restricted Jurisdiction, and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction. Accordingly, unless otherwise determined by Pattington or required by the Code and permitted by applicable law and regulation, copies of this Announcement and any other related document are not being, and must not be, directly or indirectly, mailed or otherwise distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not distribute or send them in, into or from such jurisdictions as doing so may make invalid any purported acceptance of the Offer by persons in any such jurisdiction.

The availability of the Offer to persons not resident in the UK may be affected by the laws of the relevant jurisdiction. Persons who are subject to the laws of any jurisdiction other than the United Kingdom should obtain professional advice and observe any applicable requirements.

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them, and publication of this Announcement shall not give rise to any implication that there has been no change in the facts set forth in this document since such date. Nothing contained in this Announcement shall be deemed to be a forecast, projection or estimate of the future financial performance of Pattington or the ION Group or Patsystems or the Patsystems Group except where otherwise stated.

DEALING DISCLOSURE REQUIREMENTS

Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

OPENING POSITION DISCLOSURE

The ION Group has made an Opening Position Disclosure setting out the details required to be disclosed by it under Rule 8.1(a) of the Code.

MARKET PURCHASES

In accordance with normal UK market practice, Pattington or members of the ION Group or their nominees or brokers (acting as agents) may from time to time make certain purchases of, or arrangements to purchase, Patsystems Shares outside the United States, other than pursuant to the Offer, during the Offer Period. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Announcement may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Patsystems or Pattington or the Patsystems Group or the ION Group and certain plans and objectives of the boards of directors of Patsystems and Pattington. These forward-looking statements can be identified by the fact that they do not relate to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the boards of directors of Patsystems and Pattington in the light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty and the factors described in the context of such forward-looking statements in this document could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Except as expressly provided in this document, they have not been reviewed by the auditors of Patsystems or Pattington. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. All subsequent oral or written forward-looking statements attributable to Patsystems or Pattington or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above.

Should one or more of these risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Announcement. Patsystems and Pattington assume no obligation to update or correct the information contained in this Announcement except as required by applicable law or regulation.

OVERSEAS PATSYSTEMS SHAREHOLDERS

Unless otherwise determined by Pattington or required by the Code, and permitted by applicable law and regulation, the Offer will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may accept the Offer by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Offer to Patsystems Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Notice to US investors

The Offer is for the securities of a corporation organised under the laws of England and Wales and is subject to the procedure and disclosure requirements of the United Kingdom, which are different from those of the United States. The Offer is being made in the United States pursuant to Section 14(e) of, and Regulation 14E under, the US Securities Exchange Act of 1934, as amended (the "Exchange Act"), subject to the exemptions provided by Rule 14d-1(d) under the Exchange Act and otherwise in accordance with the requirements of the Code. Accordingly, the Offer is subject to disclosure and other procedural requirements, including with respect to withdrawal rights, the offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and laws.

To the extent permitted by applicable law, in accordance with, and to the extent permitted by, the Code and normal UK market practice and Rule 14e-5 under the Exchange Act, Pattington or its nominees or brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, Patsystems Shares, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Code, the AIM Rules, and Rule 14e-5 under the Exchange Act to the extent applicable. In addition, in accordance with, and to the extent permitted by, the Code, normal UK market practice and Rule 14e-5 under the Exchange Act, Investec and its affiliates will continue to act as exempt principal traders in Patsystems Shares and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the Exchange Act. Any information about any such purchases will be disclosed on a next day basis to the Panel and will be available from any Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website, www.londonstockexchange.com. To the extent that such information is made public in the United Kingdom, this information will also be publicly disclosed in the United States.

Each US shareholder of Patsystems Shares is urged to consult with his independent professional adviser regarding any acceptance of the Offer.

This Announcement does not constitute an offer of securities for sale in the United States or an offer to acquire or exchange securities in the United States. No offer to acquire securities or to exchange securities for other securities has been made, or will be made, directly or indirectly, in or into, or by use of the mails, any means or instrumentality of interstate or foreign commerce or any facilities of a national securities exchange of, the United States or any other country in which such offer may not be made other than (i) in accordance with the tender offer requirements under the Exchange Act or the securities laws of such other country, as the case may be, or (ii) pursuant to an available exemption from such requirements. Neither the US Securities and Exchange Commission nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this Announcement. Any representation to the contrary is a criminal offence.

It may be difficult for US holders of Patsystems securities to enforce their rights under and any claim arising out of the US federal securities laws, since Pattington and Patsystems are located outside of the United States, and some or all of their officers and directors may be resident outside of the United States. US holders of Patsystems securities may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the US securities laws. Further, it may be difficult to compel a foreign company and its affiliates to subject themselves to a US court's judgment.

PUBLICATION ON WEBSITE

A copy of this Announcement will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Pattington's website at www.pattingtonlimited.com and Patsystems' website at www.patsystems.com by no later than 12.00p.m. on 21 December 2011. For the avoidance of doubt, the content of the websites referred to above is not incorporated into and does not form part of this Announcement.

You may request a hard copy of this Announcement (and any information incorporated by reference in this announcement) by contacting Patsystems during business hours on +44 (0)20 7940 0490 or by submitting a request in writing to Patsystems at Riverside House, 2A Southwark Bridge Road, London SE1 9HA. It is important that you note that unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

FURTHER INFORMATION

Please be aware that addresses, electronic addresses and certain other information provided by Patsystems Shareholders, persons with information rights and other relevant persons for the receipt of communications from Patsystems may be provided to Pattington during the Offer Period as required under Section 4 of Appendix IV of the Code.

In accordance with Rule 2.10 of the Code, Patsystems confirms that it has 204,431,185 ordinary shares of GBP0.01 each in issue and admitted to trading on the AIM Market of the London Stock Exchange. The ISIN reference for these securities is GB0032386822. In addition, Patsystems has two deferred shares of GBP0.01 each in issue and these shares are not publically traded.

If you are in any doubt about the action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser authorised under the Financial Services and Market Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

20 December 2011

RECOMMENDED CASH OFFER FOR

PATSYSTEMS PLC BY PATTINGTON LIMITED

   1.         Introduction

The boards of Pattington Limited ("Pattington"), a member of the ION Group, and Patsystems Plc ("Patsystems")are pleased to announce that they have agreed the terms of a recommended cash offer to be made by Pattington for the entire issued and to be issued share capital of Patsystems which is not already owned by Pattington.

   2.         The Offer

The Offer, which will be subject to the terms and conditions which are set out below and in Appendix I to this Announcement and to the full terms and conditions to be set out in the Offer Document when issued and, in respect of Patsystems Shares held in certificated form, in the Form of Acceptance, will be made by Pattington on the following basis:

for each Patsystems Share 14 pence in cash

The consideration of 14 pence in cash for each such Patsystems Share represents:

- a premium of approximately 45.4 per cent. over the Closing Price of 9.63 pence per Patsystems Share on 25 November 2011, being the last Business Day prior to the commencement of the Offer Period; and

- a premium of approximately 30.0 per cent. over the average Closing Price of approximately 10.8 pence per Patsystems Share for the one month prior to the commencement of the Offer Period.

Full details of the conditions and certain further terms to which the Offer is subject are set out in Appendix I of this Announcement.

The Offer values the entire issued ordinary share capital of Patsystems (fully diluted for the exercise of all options considered to be in-the-money at the Offer Price under the Patsystems Share Option Schemes) at approximately GBP28.6 million.

Pursuant to the Offer, the Patsystems Shares will be acquired with full title guarantee fully paid and free from all liens, charges, equitable interests, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights attaching to such Patsystems Shares, including without limitation, voting rights and the right to receive in full all dividends and other distributions (if any) announced, declared, made or paid or any return of capital made on or after the date of this Announcement.

   3.         Recommendation

The Patsystems Directors, who have been so advised by Numis, consider the terms of the Offer to be fair and reasonable. In providing advice to the Patsystems Directors, Numis has taken into account the commercial assessments of the Patsystems Directors.

Accordingly, the Patsystems Directors unanimously recommend that the Patsystems Shareholders accept the Offer, as they themselves have irrevocably undertaken to do (or procure to be done) in respect of their own entire beneficial holdings comprising, in aggregate, 2,388,636 Patsystems Shares, representing 1.17 per cent. of Patsystems' entire existing issued share capital. These irrevocable undertakings will remain binding in the event of a competing offer being made for Patsystems and will cease to be binding only if the Offer lapses or is withdrawn.

   4.         Background to the Offer and background to and reasons for recommending the Offer

Pattington believes its acquisition of Patsystems will provide greater stability for Patsystems' customers and employees. Patsystems has recently reported to Patsystems Shareholders on the challenging trading environment in which the business is operating. The current fragility of the global economy and the recent collapse of MF Global Holdings (Patsystems' largest customer) on 31 October 2011 have significantly impacted Patsystems, with a consequential decline in Patsystems' share price.

The Patsystems Directors have weighed both the costs and benefits of maintaining an independent AIM listing including the need to raise additional capital to ensure the business is sufficiently capitalised and the potential future growth in equity value for investors, against the certainty for Patsystems Shareholders of realising value at an immediate cash premium to the recent share price that is not currently available in the market.

Following the announcement of the approach made to Patsystems by Pattington, the Patsystems Board has held detailed discussions with its major shareholders regarding the terms of the proposed Offer. The Patsystems Board has concluded that Patsystems Shareholders' best interests are served by the Offer being made to them. The Patsystems Board also believes that the advantages that can be achieved through the financial stability of being part of a larger organisation will potentially provide further benefits to employees and customers. Finally, the Patsystems Board believes the Offer Price represents an attractive premium to the price immediately before the Offer Period commenced and therefore unanimously recommends that Patsystems Shareholders accept the Offer when made.

   5.         Directors, management and employees

Pattington has not undertaken detailed due diligence on Patsystems prior to the date of this Announcement and intends, conditional upon the Offer becoming wholly unconditional, to carry out a strategic review of Patsystems' business and operations which will then be completed as soon as possible. Pattington attaches importance to the skills, experience and industry knowledge of the existing management and employees of Patsystems. Pattington's strategic review may result in the combination of elements of the respective businesses in order to capitalise on the benefits of co-ordination. Until such a review is completed, Pattington cannot be certain as to what, if any, repercussions there will be on employment, the locations of Patsystems' or the ION Group's places of business or any redeployment of their fixed assets. The Pattington Board expects to commence this review as soon as possible after completion of the Acquisition and currently expects that the review will be completed within six months. The Pattington Board cannot exclude the possibility that changes will take place during the period of the strategic review. The Pattington Board confirms that, upon the Offer becoming or being declared unconditional in all respects, the existing employment rights of all Patsystems Group employees will continue to be fully safeguarded and their accrued rights to pensions benefits protected. It is the intention of the ION Group to build a larger business in the financial services software and solutions marketplace.

The Patsystems Directors have carefully considered the effects of the Offer on the Patsystems Group, including specifically the effect on its employees. The Patsystems Directors note that following the trading update on 3 October 2011 cost reductions have been implemented that included the loss of some jobs across the Patsystems Group. The collapse of MF Global Holdings (Patsystems' largest customer) has created further uncertainty for the Patsystems Group as was summarised within the announcement on 28 November 2011. The full impact on the Patsystems Group of the MF Global Holdings situation is still being assessed but the Patsystems Directors consider it likely that there will need to be a further reassessment of the operating model and cost structures of the Patsystems Group to reflect the anticipated medium and long term impact. The Patsystems Directors note the intentions stated by Pattington above in relation to employees of the Patsystems Group. The Patsystems Directors note that whilst there is uncertainty around the repercussions for employees as a result of the Offer and that elements of the businesses may be combined, the Patsystems Directors believe, given the difficult trading conditions which the Group faces, that the Offer will, on a balance, provide greater stability and certainty for Patsystems Group employees in the long term.

   6.         Irrevocable undertakings and letter of intent

Pattington has received irrevocable undertakings to accept the Offer in respect of a total of 24,837,636 Patsystems Shares, representing, in aggregate, approximately 12.15 per cent. of the existing issued ordinary share capital of Patsystems. In addition, Pattington has received letters of intent to accept the Offer in respect of a total of 16,869,432 Patsystems Shares, representing approximately 8.25 per cent. of the existing issued ordinary share capital of Patsystems.

Further details of these undertakings are set out in paragraphs (A) and (B) below. Further details of the letters of intent are set out in paragraph (C) below.

                (A)       Directors' Irrevocable Undertakings

Each of the Patsystems Directors who beneficially own Patsystems Shares, being 2,388,636, has irrevocably undertaken to accept the Offer in respect of their entire beneficial holdings, as set out below, being Patsystems Shares representing, in aggregate, approximately 1.17 per cent. of the existing issued ordinary share capital of Patsystems. The terms of these irrevocable undertakings will continue to be binding in the event that a higher competing offer is made for Patsystems.

 
                                                Percentage       Number of 
                                                        of      options in 
                                   Number         existing      Patsystems 
                                       of           issued          Shares 
                               Patsystems         ordinary 
                                   Shares    share capital 
 Richard Last                     995,636                0.49%           - 
 David Webber                     875,000                0.43%   2,159,090 
 Martin Thorneycroft               68,000                0.03%   2,049,409 
 Stewart Douglas-Mann             250,000                0.12%           - 
  John Priestley                  200,000                0.10%           - 
 
 
                (B)       Other Undertakings

Undertakings have been received from certain other Patsystems Shareholders to accept the Offer in respect of their beneficial holdings, as set out below, being Patsystems Shares representing, in aggregate, approximately 10.98 per cent. of the existing issued ordinary share capital of Patsystems.

 
                                                       Percentage 
                                                        of 
                                                        existing 
                                         Number of      issued 
                                          Patsystems    ordinary 
                                          Shares        share capital 
 
 Herald Investment Management Limited    13,000,000    6.36% 
 Kabouter Management, LLC                9,449,000     4.62%

In aggregate, therefore, Pattington has received irrevocable undertakings to accept the Offer in respect of, in aggregate, 24,837,636 Patsystems Shares representing approximately 12.15 per cent. of the existing issued ordinary share capital of Patsystems.

                (C)       Letters of Intent

Pattington has also received letters of intent to accept the Offer from Cazenove Capital Management and Henderson Global Investors, in respect of, in aggregate, 16,869,432 Patsystems Shares representing approximately 8.25 per cent. of the existing issued ordinary share capital of Patsystems. These letters of intent are entirely non-binding and indicate that Cazenove Capital Management and Henderson Global Investors may accept any higher offer.

   7.         Information on Patsystems

Patsystems was founded in 1994 as an independent software vendor providing a suite of products to support the electronic trading of futures and options. Patsystems listed on the Official List of the London Stock Exchange in 2000 and was subsequently delisted and admitted to trading on AIM in 2003.

Patsystems provides electronic trading systems, post-trade risk management software and exchange matching capability to banks, futures clearing merchants, brokers and exchanges.

Patsystems has eight international offices serving its 150 plus customers.

In its audited preliminary results for the year ended 31 December 2010, Patsystems had revenues of GBP22.1 million (FY2009: GBP22.1 million) and profit before tax of GBP3.2million (FY2009: GBP4.5 million). As at 31 December 2010, net assets were GBP25.7 million (FY2009: GBP23.5 million).

   8.         Current trading of Patsystems

Patsystems issued the following trading update in its announcement of 28 November 2011:

"Following the Company's announcement dated 31 October 2011, Patsystems has completed its preliminary assessment of the financial impact of the collapse of MF Global Holdings ("MF Global"), and provides shareholders with the following update.

The impact on our business has essentially two aspects to it. MF Global was our single largest client and, as well as owing us money at the point of collapse, was expected to provide revenues throughout the remainder of 2011 and onwards. The majority of those revenues relate to transactions conducted by MF Global's own customer base which if they migrate to other Patsystems clients would lessen the impact of the direct loss of MF Global's business.

The administration of MF Global is complicated by its multi-jurisdictional nature which is impacting the release of client funds to enable MF Global's customers to migrate to new platform providers and hence to resume trading (or at least to the same extent as previously) as well as delaying the process of establishing the full extent of recoverability on sums owed directly to us.

Recently there has been a release of some client funds by the Trustees of the North American MF Global business and a transfer of client positions to other brokers and Futures Commission Merchants ("FCMs"), a number of these brokers and FCMs being Patsystems clients. In addition, outside of the USA, Patsystems has seen a number of the professional/institutional customers of MF Global commence the transfer of their business to other customers of Patsystems.

However, with minimal release of client funds for individual traders by Administrators in countries other than the USA, this has meant that there has been little trading activity by those customers to date and we do not expect this to change significantly before the end of the year. We anticipate that as a consequence of the above, Patsystems revenues and therefore profits for the year will be lower by approximately GBP500,000.

In addition to the above, we have sums due from MF Global of GBP900,000. Although we are in dialogue with Trustees and Administrators with respect to this amount and also the on-going provision of systems, these discussions have yet to be concluded and we cannot be certain of the extent to which these monies will be fully recovered.

Other clients

In response to the current economic climate and the particular issues facing the financial services industry we have reviewed our exposure to our clients, especially those currently seeking strategic funding and those with whom we have material debtor balances and / or accrued income positions. As a result of our review, we believe that provisions are required against our financial exposure in respect of one exchange client, amounting to a minimum of GBP600,000 and up to a total provision of GBP1.3m depending upon the success of a second client in securing its further financing.

Outlook

We expect to benefit from the transfer of MF Global's customers to other of our clients but it is not yet possible to determine at what level this will occur. Taking this into account, and the anticipated growth in the Mixit business and the business efficiencies that are being implemented, we expect trading in 2012 to show significant improvement on 2011."

   9.         Information on Pattington and the ION Group

Pattington is a private company limited by shares incorporated and registered in the Republic of Ireland with registration number 506962. Pattington holds 57,051,191 shares which equates to 27.91% of the entire issued ordinary share capital of Patsystems.

The ION Group is a leading provider of software solutions for financial institutions, corporate clients and central banks.

   10.       Financing arrangements for the Offer

Pattington will fund the cash consideration payable under the terms of the Offer from its existing cash resources.

Full implementation of the Offer would result in consideration of approximately GBP20.7 million being payable to the Patsystems Shareholders (excluding the ION Group) and the participants in the Patsystems Share Option Schemes.

   11.       Cash confirmation

Investec, financial adviser to Pattington, is satisfied that sufficient resources are available to satisfy in full the cash consideration payable by Pattington under the terms of the Offer.

   12.       Patsystems Share Option Schemes

The Offer will extend to all Patsystems Shares unconditionally allotted or issued on the date of the Offer and any Patsystems Shares which are unconditionally allotted or issued (including pursuant to the exercise of options granted under the Patsystems Share Option Schemes) whilst the Offer remains open for acceptance or by such earlier date as Pattington may, subject to the Code, determine, not being earlier than the date on which the Offer becomes or is declared unconditional as to acceptances.

Appropriate proposals will be made to participants in the Patsystems Share Option Schemes in due course. Details of these proposals will be set out in the Offer Document.

   13.       Disclosure of interests

Save for a total of 57,051,191 Patsystems Shares held by Pattington which represent, in aggregate, approximately 27.91 per cent. of Patsystems' issued ordinary share capital, neither Pattington, nor (so far as Pattington is aware) any person acting, or deemed to be acting, in concert with Pattington for the purposes of the Offer has:

(i) an interest in, or a right to subscribe for, Patsystems Shares or in any securities convertible or exchangeable into Patsystems Shares ("Relevant Patsystems Securities");

                (ii)        any short position in Relevant Patsystems Securities (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery; or 
                (iii)       borrowed or lent any Relevant Patsystems Securities (except for any borrowed Shares which have been either on-lent or sold) or has any arrangement in relation to Relevant Patsystems Securities.

For these purposes, "arrangement" includes indemnity or option arrangements and any agreement or understanding, formal or informal, of whatever nature, relating to Relevant Patsystems Securities which may be an inducement to deal or refrain from dealing in such securities. In the interests of secrecy prior to this announcement, Pattington has not made any enquiries in this respect of certain parties which are or may be deemed to be acting in concert with it for the purposes of the Offer. If such enquiries, which are now being made, reveal any relevant additional interests, the same will be discussed with the Panel and, if appropriate, will be disclosed to Patsystems Shareholders.

   14.       Compulsory acquisition, cancellation of trading and re-registration

If Pattington receives acceptances under the Offer in respect of, and/or otherwise acquires or contracts to acquire, 90 per cent. or more in nominal value of the Patsystems Shares to which the Offer relates and of the voting rights carried by those Patsystems Shares and assuming that all of the other conditions of the Offer have been satisfied or waived (if capable of being waived), Pattington intends to exercise its rights in accordance with sections 974 to 991 of the Companies Act to acquire compulsorily the remaining Patsystems Shares on the same terms as the Offer.

Following the Offer becoming or being declared unconditional in all respects and subject to any applicable requirements of the AIM Rules, Pattington intends to propose that Patsystems applies to the London Stock Exchange for the cancellation of trading in the Patsystems Shares on AIM. It is anticipated that such cancellation will take effect no earlier than 20 Business Days after the Offer becomes or is declared unconditional in all respects, subject to satisfaction of the applicable requirements of the AIM Rules. The cancellation of trading of Patsystems Shares will significantly reduce the liquidity and marketability of any Patsystems Shares not acquired by Pattington.

Following the Offer becoming or being declared unconditional in all respects and, assuming the cancellation of trading of Patsystems Shares on AIM, it is also the intention of Pattington to propose a resolution to re-register Patsystems as a private company.

   15.       Structure of the offer and anticipated timetable

The Offer is an offer for cash on the basis described in paragraph 2 above.

The Offer is proposed to be implemented by way of takeover offer within the meaning of Part 28 of the Companies Act.

Pattington will dispatch the Offer Document and Form of Acceptance to Patsystems Shareholders and, for information only, to Patsystems Options Holders under the Patsystems Share Option Schemes as soon as practicable and, in any event, within 28 days of the date of this Announcement.

   16.       Documents on display

Copies of the following documents will be made available on Patsystems' and Pattington's websites at www.patsystems.com and www.pattingtonlimited.com respectively by no later than 12.00p.m. on 21 December 2011 until the end of the Offer Period:

                -          this Announcement; and 
                -          the irrevocable undertakings and letters of intent referred to in paragraph 6 above. 
   17.       General

There are no agreements or arrangements to which Pattington is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a condition to the Offer.

Neither Pattington nor any person acting in concert with Pattington has any arrangement of the kind referred to in Note 6 of Rule 8 of the Code or Rule 21.2 of the Code.

Your attention is drawn to the further information contained in the Appendices which form part of this Announcement.

The conditions to the Offer and a summary of further terms in relation to the Offer set out in Appendix I to this Announcement form part of, and should be read in conjunction with, this Announcement.

Appendix II contains the sources and bases of certain information used in this summary and the following Announcement.

Appendix III to this Announcement contains definitions of certain terms used in this Announcement.

The Offer will be subject to the applicable requirements of the Code.

Overseas jurisdictions

This Announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed is not be the same as would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the UK. Unless otherwise determined by Pattington or required by the Code and permitted by applicable law and regulation, the Offer will not be made, directly or indirectly, in or into, or by use of the mails, or by any means or instrumentality (including, without limitation, by means of telephone, facsimile, telex, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facilities of a securities exchange of, any Restricted Jurisdiction, and the Offer will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction. Accordingly, unless otherwise determined by Pattington or required by the Code and permitted by applicable law and regulation, copies of this Announcement and any other related document are not being, and must not be, directly or indirectly, mailed or otherwise distributed or sent in or into any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not distribute or send them in, into or from such jurisdictions as doing so may make invalid any purported acceptance of the Offer by persons in any such jurisdiction.

Notice to US investors

Each US shareholder of Patsystems Shares is urged to consult with his independent professional adviser regarding any acceptance of the Offer.

This announcement does not constitute an offer of securities for sale in the United States or an offer to acquire or exchange securities in the United States. No offer to acquire securities or to exchange securities for other securities has been made, or will be made, directly or indirectly, in or into, or by use of the mails, any means or instrumentality of interstate or foreign commerce or any facilities of a national securities exchange of, the United States or any other country in which such offer may not be made other than (i) in accordance with the tender offer requirements under the Exchange Act or the securities laws of such other country, as the case may be, or (ii) pursuant to an available exemption from such requirements. Neither the US Securities and Exchange Commission (the "SEC") nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this document or the Offer Document. Any representation to the contrary is a criminal offence.

Copies of this Announcement and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where to do so would breach applicable laws, and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in or into or from any jurisdiction where to do so would breach applicable laws.

Responsibility

The Patsystems Directors accept responsibility for the information contained in this Announcement relating to the Patsystems Group, the Patsystems Directors, their immediate families, related trusts and connected persons and the recommendation(s) and opinions of the Patsystems Directors relating to the Offer. To the best of the knowledge and belief of the Patsystems Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Investec, which is authorised and regulated in the United Kingdom by the Financial Services Authority for investment business activities, is acting exclusively as financial adviser to Pattington and no one else in connection with the Offer and will not be responsible to anyone other than Pattington for providing the protections afforded to clients of Investec Bank plc or for providing advice in relation to the Offer or any other matters referred to in this Announcement.

Numis, which is authorised and regulated in the United Kingdom by the Financial Services Authority for investment business activities, is acting exclusively as financial adviser to Patsystems and no one else in connection with the Offer and will not be responsible to anyone other than Patsystems for providing the protections afforded to clients of Numis or for providing advice in relation to the Offer or any other matters referred to in this Announcement.

Dealing disclosure requirements

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication on Website and hard copy information

For the avoidance of doubt, the contents of the websites referred to above are not incorporated and do not form part of this announcement.

You may request a hard copy of this Announcement (and any information incorporated by reference in this announcement) by contacting Pattington during business hours on +44 (0) 20 7398 0200 or by submitting a request in writing to Patsystems. It is important that you note that unless you make such a request, a hard copy of this Announcement and any such information incorporated by reference in it will not be sent to you. You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

Appendix I

CONDITIONS AND FURTHER TERMS OF THE OFFER

1. The Offer will be subject to the following conditions and (in respect of certificated Patsystems Shares) the terms set out in the Form of Acceptance and to the applicable rules and regulations of the AIM Market and the Code:

1.1 valid acceptances being received (and not, where permitted, withdrawn) by no later than 3.00p.m. on the first closing date of the Offer (or such later time(s) and/or date(s) as Pattington may, with the consent of the Panel or in accordance with the Code, decide) in respect of Patsystems Shares which, together with Patsystems Shares acquired or agreed to be acquired before such time(s), will result in Pattington and any person acting in concert with it holding Patsystems Shares carrying, in aggregate, more than 50 per cent. of the voting rights then normally exercisable at a general meeting of Patsystems, including (to the extent, if any, required by the Panel for this purpose) any such voting rights attaching to any Patsystems Shares that are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise; and for this purpose shares which have been unconditionally allotted, whether pursuant to the exercise of any outstanding conversion or subscription rights or otherwise, shall be deemed to carry the voting rights which they will carry upon issue;

1.2 no Authority having prior to the date when the Offer becomes otherwise unconditional in all respects, decided to take, instituted, implemented or threatened any action, proceedings, suit, investigation, enquiry or reference, or made, proposed or enacted, any statute, regulation, decision or order, or taken any other steps which would or might reasonably be expected to (which in each case would be material in the context of the Wider Patsystems Group or the Wider ION Group taken as a whole):

(i) require, prevent or delay the divestiture by the Wider Patsystems Group or the Wider ION Group of all or a portion of their respective businesses, assets or properties or impose any limitation on the ability of any of them to conduct all or any portion of their respective businesses or own all or any portion of their respective assets or properties;

(ii) impose any limitation on, or result in a material delay in, the ability of any member of the Wider ION Group directly or indirectly to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares in Patsystems or on the ability of any member of the Wider Patsystems Group or any member of the Wider ION Group to hold or exercise effectively, directly or indirectly, all or any rights of ownership of shares or loans or securities convertible into shares or any other securities (or the equivalent) in any member of the Wider Patsystems Group or to exercise management control over any such member of the Wider Patsystems Group;

(iii) require any member of the Wider ION Group to offer to acquire any shares or other securities or interest in any member of the Wider Patsystems Group owned by any third party other than in the implementation of the Offer;

(iv) make the Offer or its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control of, Patsystems void, illegal, and/or unenforceable under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit or delay to a material extent the same, or impose additional conditions or obligations with respect thereto, or (b) otherwise challenge, or require amendment of, the Offer; or

(v) otherwise adversely affect the business, assets or profits or prospects of any member of the Wider ION Group or any member of the Wider Patsystems Group,

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

1.3 all necessary and appropriate filings (including, without limitation to the foregoing, all necessary and appropriate merger control filings) having been made in connection with the Offer and all statutory or regulatory obligations in any relevant jurisdiction having been complied with in connection with the Offer or the acquisition by any member of the Wider ION Group of any shares or other securities in, or control of, Patsystems and all necessary waiting periods (including any extensions thereof) under any applicable legislation or regulations of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals ("Authorisations") necessary or deemed reasonably appropriate in any jurisdiction in respect of the Offer and the proposed acquisition of any shares or other securities in, or control of, Patsystems by any member of the Wider ION Group having been obtained in terms and in a form satisfactory to Pattington from all relevant Authorities or persons with whom any member of the

Wider Patsystems Group has entered into contractual arrangements and all such Authorisations necessary to carry on the business of any member of the Wider Patsystems Group, remaining in full force and effect and all filings deemed reasonably necessary for such purpose having been made and there being no notice of any intention to revoke or not to renew the same at the time at which the Offer becomes otherwise unconditional (where such revocation or failure to renew would be material in the context of the Wider Patsystems Group, taken as a whole) and all necessary statutory or regulatory obligations in any relevant jurisdiction having been complied with;

1.4 save as Disclosed, there being no provisions of any arrangement, agreement, licence, permit or other instrument to which any member of the Wider Patsystems Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject and which, in consequence of the Offer, or the proposed acquisition of any shares or other securities in Patsystems or because of a change in the control or management of Patsystems or otherwise, would or might reasonably be expected to result in (to an extent in any such case which is material in the context of the Wider Patsystems Group taken as a whole):

(i) any such arrangement, agreement, licence, permit or instrument or the rights, liabilities, obligations or interests thereunder of any such member of the Wider Patsystems Group being terminated or adversely modified or any action being taken or any obligation or liability arising thereunder;

(ii) any monies borrowed by, or any other indebtedness (actual or contingent) of or grant available to, any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of such member to borrow monies or incur any indebtedness being withdrawn or inhibited;

(iii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member or any such security (whenever arising or having arisen) becoming enforceable;

(iv) the rights, liabilities, obligations, interests or business of any such member in or with any firm or body or, in the case of a business any arrangements relating to such interest or business, being terminated or adversely modified or affected;

(v) the value of any such member or its financial or trading position or prospects being prejudiced or adversely affected; or

   (vi)          the creation of any liability, actual or contingent, by any such member;

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit, or other instrument to which any member of the Wider Patsystems Group is a party or by or to which any such member or any of its assets is bound, entitled or subject, would result in any of the events or circumstances as are referred to in sub-paragraphs 1.4 (i) to (vi) to an extent in any such case which is material in the context of the Wider Patsystems Group taken as a whole;

1.5 save as Disclosed, no member of the Wider Patsystems Group since 31 December 2010 having:

(i) issued or agreed to issue or authorised the issue or grant of additional shares of any class, or securities convertible into, or rights, warrants or options to subscribe for or acquire any such shares or convertible securities (save for as between Patsystems and wholly owned subsidiaries of Patsystems or between the wholly owned subsidiaries of Patsystems or save for options or awards granted on or before 31 December 2010 under the Patsystems Share Option Schemes and for any Patsystems Shares allotted upon exercise or vesting of such options);

(ii) other than to a wholly-owned member of the Patsystems Group, recommended, declared, paid or made or the Patsystems Board having proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

(iii) issued or authorised the issue of any debentures, save in the ordinary course of business, or incurred or increased any indebtedness or become subject to any contingent liability which is material in the context of the Wider Patsystems Group as a whole;

(iv) entered into or offered to enter into (which remains open for acceptance) or varied or terminated or authorised entry into any contract, any reconstruction or amalgamation, any transaction or arrangement in each case otherwise than in the ordinary course of business;

(v) entered into or varied or made an offer (which remains open for acceptance) to enter into or vary, the terms of any service agreement with any director or with any senior executive of the Wider Patsystems Group;

(vi) entered into or offered to enter into (which offer remains open for acceptance) any agreement which consents to the restriction of the scope of the business of any member of the Wider Patsystems Group which is material in the context of the Wider Patsystems Group taken as a whole;

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

(viii) entered into or varied or authorised, or offered (which offer remains open for acceptance) to enter into or vary any contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or which is restrictive to the businesses of any member of the Wider Patsystems Group or which involves an obligation of such a nature or magnitude and which is material in the context of the Wider Patsystems Group as a whole;

(ix) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced, save in respect of the matters mentioned in sub-paragraph 1.5 (i) above, or made any other material change to any part of its share capital;

(x) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or a material part of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(xi) save for transactions between wholly-owned members of the Patsystems Group, merged with any body corporate or acquired or disposed of or demerged or transferred, mortgaged or charged or created any security interest over any material assets or any right, title or interest in any material asset (including shares in subsidiaries, associates and trade investments) or authorised or proposed or announced any intention to propose any merger, demerger, acquisition or disposal, transfer, mortgage or charge or security interest or change in its loan capital, as aforesaid which in any such case is material in the context of the Wider Patsystems Group taken as a whole;

(xii) been unable, or admitted in writing that is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xiii) (save as disclosed on publicly available registers) made any alteration to its memorandum or articles of association;

(xiv) made or consented to any change to the terms of the trust deeds constituting the pension schemes established for its directors and/or employees and/or their dependants or to the benefits which accrue, or to the pensions which are payable thereunder, or to the basis on which qualification for or accrual or entitlement to such benefits or pensions are calculated or determined, or to the basis upon which the liabilities (including pensions) of such pension schemes are funded or made, or agreed or consented to, any change to the trustee;

   1.6           since 31 December 2010 and save as Disclosed:

(i) there having been no adverse change in the business, assets, financial or trading position or profits of Patsystems or any other member of the Wider Patsystems Group which is material in the context of the Wider Patsystems Group taken as a whole;

(ii) there having been no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Patsystems Group is or could reasonably be expected to become a party (whether as plaintiff or defendant or otherwise) announced or initiated, no such proceedings having been threatened in writing against any member of the Wider Patsystems Group and no investigation by an Authority against or in respect of any member of the Wider Patsystems Group having been instituted, threatened in writing or announced by or against or remaining outstanding in respect of any member of the Wider Patsystems Group which in any such case is material in the context of the Wider Patsystems Group taken as a whole;

(iii) no contingent or other liability in respect of any member of the Wider Patsystems Group having arisen which would be reasonably likely materially and adversely to affect the Wider Patsystems Group taken as a whole; or

(iv) no steps having been taken which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Patsystems Group which is necessary for the proper carrying on of its business and where such withdrawal, cancellation, termination or modification would be material in the context of the Wider Patsystems Group, taken as a whole;

1.7 Save as Disclosed, Pattington not having discovered after the date of this Announcement:

(i) that any financial, business or other information concerning the Wider Patsystems Group that is material in the context of the Offer as contained in the information publicly disclosed at any time by any member of the Wider Patsystems Group, is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make the information contained therein not materially misleading which has not been corrected and which is material in the context of the Wider Patsystems Group taken as a whole;

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

(iii) that any past or present member of the Wider Patsystems Group has not complied with any and all applicable laws and regulations of any relevant jurisdiction relating to an emission, disposal, discharge, deposit, spillage or leak of waste or hazardous or harmful substances on or about or from any land or property of any description or other asset now or previously owned, occupied or made use of by any past or present member of the Wider Patsystems Group which non-compliance would be reasonably likely to give rise to any liability (whether actual or contingent) on the part of any member of the Wider Patsystems Group which is material in the context of the Wider Patsystems Group taken as a whole; and

(iv) that there is or is reasonably likely to be any liability (whether actual or contingent) of any past or present member of the Wider Patsystems Group to or requirement to make good, repair, reinstate or clean-up any property now or previously owned, occupied or made use of by any past or present member of the Wider Patsystems Group (in any case to an extent which is material in the context of the Wider Patsystems Group taken as a whole).

   2.             Certain further terms of the Offer

To the extent permitted by law, regulation or subject to the requirements of the Panel Pattington reserves the right to waive all or any of conditions 1.2 to 1.7 (inclusive) above, in whole or in part. Except with the consent of the Panel the Offer will lapse unless conditions 1.2 to 1.7 (inclusive) of the Offer set out above are fulfilled or, if capable of waiver, waived or, where appropriate, have been determined by Pattington in its opinion to be or to remain satisfied by midnight on the date which is 21 days after the later of the first closing date of the Offer and the date on which condition 1.1 is satisfied (or such later date as Pattington may, with the consent of the Panel, decide). Pattington shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled or satisfied any of the conditions 1.2 to 1.7 inclusive by any date earlier than the latest date specified above for fulfilment or satisfaction of that condition notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled or satisfied and that there are at such earlier date no earlier circumstances indicating that any such conditions may not be capable of fulfilment or satisfaction.

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

The Offer will lapse (unless otherwise agreed by the Panel) if it is referred to the Competition Commission in the United Kingdom before 1.00 p.m on the first closing date of the Offer or of the date on which the Offer becomes or is declared unconditional as to acceptances, whichever is the later.

If the Offer lapses, the Offer will cease to be capable of further acceptance and persons accepting the Offer and Pattington shall thereupon cease to be bound by acceptances delivered on or before the date on which the Offer so lapses.

Patsystems Shares acquired under the Offer will be acquired with full title guarantee, fully paid and free from all liens, charges, equitable interests, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any), announced, declared, made or paid on or after the date of this announcement. Accordingly, insofar as a dividend and/or a distribution and/or a return of capital is proposed, declared, made, paid or payable by Patsystems in respect of a Patsystems Share on or after the date of this Announcement, the price payable under the Offer in respect of a Patsystems Share will be reduced by the amount of the dividend and/or distribution and/or return of capital except insofar as the Patsystems Share is or will be transferred pursuant to the Offer on a basis which entitles Pattington alone to receive the dividend and/or distribution and/or return of capital and to retain it. To the extent that a reduction in the price payable pursuant to the Offer in respect of a Patsystems Share is to apply in respect of a dividend and/or distribution and/or return of capital but that reduction in price has not been effected, the person to whom the Offer Price is paid in respect of that Patsystems Share will be obliged to account to Pattington for the amount of such dividend or distribution or return of capital.

This Offer will be governed by English law and will be subject to the jurisdiction of the English courts and the conditions set out above and those terms which will be set out in the Offer Document and in the Form of Acceptance.

Appendix II

Sources of Information and Bases of Calculation

Unless otherwise stated, the following constitute the bases and sources of information referred to in this Announcement:

1. Financial information relating to Patsystems has been extracted or derived (without material adjustment) from the audited financial statements of Patsystems for the financial year ended 31 December 2010.

2. The fully diluted share capital of Patsystems (being 204,618,685 Shares) is calculated on the basis of 204,431,185 ordinary Patsystems Shares in issue on 19 December 2011, with a further maximum of 187,500 Shares under options granted under the Patsystems Share Option Schemes which are considered to be in-the-money at the Offer Price and which are vested or able to be vested.

3. All prices for Patsystems Shares have been extracted from the AIM section of the Daily Official List and represent the Closing Price on the relevant date or dates.

Appendix III

Definitions of terms used

In this Announcement, the following words and expressions have the following meanings, unless the context requires otherwise:

 
 "AIM"                            the AIM market operated by the London Stock 
                                   Exchange; 
 "AIM Rules"                      the AIM Rules for Companies, published by 
                                   the London Stock Exchange; 
 "Announcement"                   this announcement of the Offer in accordance 
                                   with Rule 2.7 of the Code dated 20 December 
                                   2011; 
 "Authority"                      government or governmental, quasi-governmental, 
                                   supranational, statutory, regulatory, environmental 
                                   or investigative body, court, trade agency, 
                                   association, institution, or any other body 
                                   or person whatsoever in any jurisdiction; 
 "Business Day"                   a day, other than a Saturday, Sunday, public 
                                   holiday or bank holiday, on which banks are 
                                   generally open for normal business in the 
                                   City of London; 
 "Closing Price"                  in respect of a Patsystems Share on any particular 
                                   day, the closing middle-market quotation 
                                   thereof as derived from the AIM section of 
                                   the Daily Official List on that day; 
 "Code"                           the City Code on Takeovers and Mergers; 
 "Companies Act"                  the Companies Act 2006 (as amended); 
 "Conditions"                     the conditions to the Offer which are set 
                                   out in Appendix I to this Announcement and 
                                   to be set out in the Offer Document; 
 "Disclosed"                      (i) as disclosed in Patsystems' annual reports 
                                   and accounts for the period ended 31 December 
                                   2010; 
                                   (ii) as disclosed in Patsystems' interim 
                                   report and accounts for the period ended 
                                   30 June 2011; 
                                   (iii) as publicly announced by Patsystems 
                                   (through a Regulatory Information Service) 
                                   prior to the date of this Announcement; or 
                                   (iv) as disclosed in writing (including by 
                                   email) to Pattington's advisers on 14 December 
                                   2011 by or on behalf of Patsystems; 
 "Exchange Act"                   the US Securities Exchange Act of 1934, as 
                                   amended, and the rules and regulations promulgated 
                                   thereunder; 
 "Financial Services Authority"   the Financial Services Authority of the United 
  or "FSA"                         Kingdom; 
 "Form of Acceptance"             the form of acceptance relating to the Offer 
                                   which will be distributed with the Offer 
                                   Document when issued; 
 "FY2009"                         the financial year ended 31 December 2009; 
 "Investec"                       Investec Bank plc, sole financial adviser 
                                   to Pattington; 
 "ION Group"                      Pattington and its subsidiary undertakings, 
                                   its parent undertakings and subsidiary undertakings 
                                   of its parent undertakings; 
 "London Stock Exchange"          London Stock Exchange Plc; 
 "Numis"                          Numis Securities Limited; 
 "Offer"                          the cash offer to be made by Pattington to 
                                   acquire all of the issued and to be issued 
                                   Patsystems Shares not already owned by Pattington 
                                   on the terms and conditions to be set out 
                                   in the Offer Document and where the context 
                                   permits any subsequent revision, variation, 
                                   extension or renewal thereof; 
 "Offer Document"                 the document to be published containing the 
                                   Offer and sent to Patsystems Shareholders 
                                   following the date of this Announcement containing, 
                                   inter alia, the terms and conditions of the 
                                   Offer; 
 "Offer Period"                   the period commencing on 28 November 2011 
                                   and ending in accordance with the rules of 
                                   the Code; 
 "Offer Price"                    14 pence per Patsystems Share; 
 "Panel"                          the Panel on Takeovers and Mergers; 
 "Pattington"                     Pattington Limited a company incorporated 
                                   and registered in the Republic of Ireland 
                                   with registered number 506962; 
 "Pattington Board" or            the board of directors of Pattington; 
  "Pattington Directors" 
 "Patsystems"                     Patsystems plc, a company incorporated in 
                                   England and Wales with registered number 
                                   04498002; 
 "Patsystems Board"               the board of directors of Patsystems; 
 "Patsystems Directors"           all the directors of Patsystems from time 
                                   to time; 
 "Patsystems Group"               Patsystems and its subsidiaries and subsidiary 
                                   undertakings; 
 "Patsystems Option Holders"      means the holders of options granted or awards 
                                   made under any of the Patsystems Share Schemes; 
 "Patsystems Share Option         (i) the Patsystems plc 2003 Enterprise Management 
  Scheme(s)"                       Incentive Share Option Scheme; 
                                  (ii) the Patsystems plc Share Option Scheme; 
                                   (iii) the Patsystems plc Key Executive Long-Term 
                                   Incentive Plan; 
 "Patsystems Shareholders"        the holders of Patsystems Shares; 
 "Patsystems Shares"              ordinary shares of 1 pence each and the deferred 
                                   shares of 1 pence each in the capital of 
                                   Patsystems and "Share" or "Patsystems Share" 
                                   will be construed accordingly; 
 "Regulations"                    the Uncertificated Securities Regulations 
                                   2001 (SI 2001/3755); 
 "Regulatory Information          a service approved by the London Stock Exchange 
  Service"                         for the distribution to the public of announcements 
                                   and included within the list maintained on 
                                   the London Stock Exchange's website; 
 "Restricted Jurisdiction"        any jurisdiction where the relevant action 
                                   would constitute a violation of the relevant 
                                   laws and regulations of such jurisdiction; 
 "Substantial Interest"           in relation to an undertaking, a direct or 
                                   indirect interest of 20 per cent. or more 
                                   of the total voting rights conferred by the 
                                   equity share capital (as defined in section 
                                   548 of the Companies Act) of such undertaking; 
 "takeover offer"                 as that phrase is defined in section 974 
                                   of the Companies Act; 
 "United Kingdom" or "UK"         the United Kingdom of Great Britain and Northern 
                                   Ireland; 
 "Wider ION Group"                Pattington, its subsidiary undertakings, 
                                   parent undertakings, subsidiary undertakings 
                                   of its parent undertakings and any other 
                                   undertakings in which that company and such 
                                   undertakings (aggregating their interests) 
                                   have a Substantial Interest; 
 "Wider Patsystems Group"         Patsystems, its subsidiary undertakings, 
                                   associated undertakings and any other undertakings 
                                   in which that company and such undertakings 
                                   (aggregating their interests) have a Substantial 
                                   Interest; 
 "$"                              United States dollars, or the lawful currency 
                                   of the United States from time to time; and 
 "pounds sterling" or             pounds sterling, or the lawful currency of 
  "GBP"                            the UK from time to time.

In this Announcement, the expressions "subsidiary", "subsidiary undertaking", "associated undertaking" and "undertaking" have the meanings given by the Companies Act.

In this Announcement, the references to the singular includes the plural and vice versa, unless the context otherwise requires. References to time are to London time.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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