Xploite (Storage Fusion) to Be Acquired by Avisen

The boards of Xploite and Avisen Plc have reached agreement on terms under which the entire issued share capital of Xploite will be acquired by Avisen in consideration for the issue of 3.6 New Avisen Shares for each Scheme Share.

The Proposal will be implemented by means of a Court-sanctioned Scheme of Arrangement under Part 26 of the Act, which requires the approval of Scheme Shareholders and the sanction of the Scheme and confirmation of the Reduction of Capital by the Court and that, subject to the satisfaction or, where relevant, waiver of all relevant Conditions, is expected to become Effective by 14 April 2010.

The Proposal values each Scheme Share at 52.2 pence and values the entire issued share capital of Xploite at approximately £11.38 million, based on the closing price of 36.5 pence per Xploite share and 14.5 pence per Avisen share on 10 March 2010, the last Business Day prior to the date of this Announcement.

The Proposal represents a premium of approximately:

• 43.01 per cent. to the Closing Price of 36.5 pence per Xploite Share on 10 March 2010, the last Business Day prior to this Announcement; and
• 43.80 per cent. to the average Closing Price of 36.3 pence per Xploite Share over the three month period ended on and including 10 March 2010, in each case based on a Closing Price for Avisen Shares of 14.5 pence on 10 March 2010.

The Proposal, assuming exercise of all the Xploite EMI Options and the surrender and cancellation of the balance of the Xploite Options held under the Xploite Option Schemes, will result in the issue of approximately 82,814,227 New Avisen Shares to Scheme Shareholders, representing approximately 36.87 per cent. of the Enlarged Issued Share Capital following the Scheme becoming effective.

The Enlarged Group will be led by a team comprising Marcus Hanke as Chief Executive Officer, Ian Smith as Executive Chairman, Robert Arrowsmith as Chief Financial Officer, Tony Weaver as Chief Operating Officer and Louis Peacock as Executive Officer. The non-executive director will be Marcus Yeoman.

The Xploite Board, who have been so advised by Brewin Dolphin, consider the terms of the Proposal to be fair and reasonable and in the best interests of Xploite and the Xploite Shareholders as a whole. In providing advice to the Xploite Board, Brewin Dolphin has taken into account the commercial assessments of the Xploite Board.

The Xploite Directors intend to unanimously recommend that Xploite Shareholders vote in favour of the Resolutions as they have irrevocably undertaken to do so in respect of their entire beneficial holdings amounting, in aggregate, to 4,425,617 Xploite Shares, representing approximately 20.31 per cent. of the Xploite Shares in issue on 10 March 2010.

An irrevocable undertaking to vote in favour of the Resolutions has also been received from Herald Investment Management Limited in respect of 1,976,910 Xploite Shares, representing approximately 9.07 per cent. of the Xploite Shares in issue on 10 March 2010.

In addition, non-binding letters of intent to vote in favour of the Resolutions have been received from certain Xploite Shareholders in respect of 2,318,193 Xploite Shares, representing approximately 10.64 per cent. of the Xploite Shares in issue on 10 March 2010.

In aggregate, therefore, irrevocable undertakings and non-binding letters of intent to vote in favour of the Resolutions have been received in respect of 8,720,720 Xploite Shares, representing approximately 40.01 per cent. of the Xploite Shares in issue on 10 March 2010.

Avisen
Avisen is a business and technology consultancy specialising in performance management with a focus on strategy creation, development and implementation. It provides advisory services and software distribution of solutions in the corporate performance management market. Avisen aims to provide specialist advice to enable organisations to build more effective capabilities in order to manage the performance of their businesses and allow them to achieve their desired targets. The solutions and advice provided by Avisen are used to assist clients in a number of areas including: development and implementation of improved business strategies, profitability management and cost reduction services, and business or corporate performance management.

Xploite
The main operating business of Xploite is that of Storage Fusion, a SRA software business which comprised part of the business of Itheon before it was hived out into Storage Fusion. Storage Fusion owns a range of tools that are focussed on storage analytics. These tools are offered using a Software as a Service (SaaS) business model and sold to customers both through licensed resellers and through a direct sales channel. The Storage Fusion marketing and pricing strategy has recently been altered and the SRA software is now distributed to customers using resellers, supported by certain direct sales activity. Since altering its approach Storage Fusion has secured six of the leading resellers in the market and has a visible pipeline of blue chip organisations which are beginning to convert into sales, demonstrating the viability of the SRA product.

Commenting on the Proposal, Marcus Hanke, Chief Executive Officer of Avisen, said: “Avisen believes that Xploite offers an excellent strategic fit and synergy potential for Avisen in the Performance Management market. With this transaction, Avisen, intends to strengthen its position in the business and technology consultancy sector and with the expertise and proven track record of the Proposed Directors, Avisen expects that its ability to identify future opportunities will be enhanced. Avisen intends to utilise some of the cash resources in Xploite to significantly extend and enhance Inca’s customer support offerings to its IBM client base. ”

Commenting on the Proposal, Ian Smith, Chief Executive Officer of Xploite, said: “We are delighted to have concluded the transaction with Avisen, which provides the enlarged group with the perfect platform to execute a buy and build strategy. We have a very strong and committed management team and we are currently looking at a number of opportunities which we believe will further enhance shareholder value.”

Current Trading and Prospects
Xploite released its preliminary results for the 12 months ended 31 October 2009 on 2 February 2010. Xploite reported total turnover for the year of £27.8 million (2008: £48.0 million) and total profit for the year (after tax) of £4.4 million (2008: £1.5 million) although it was highlighted that those results should be reviewed in the context of significant change for the Xploite Group both in the 2009 financial year (and in the months that followed) and the reporting requirements for continuing and discontinued operations.