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March 14, 1988

RECONSTITUTED COMPSOFT PICKS WOOTTON JEFFREYS AS ITS FIRST ACQUISITION

By CBR Staff Writer

Micro database software developer Compsoft Plc of Godalming, Surrey, now being run by a management team installed by Octagon Industries Plc, has lighted on privately-held systems house and consultancy Wootton Jeffreys Plc as its first acquisition. Compsoft sees Wootton Jeffreys as a platform on which to build a substantial consultancy and software services group that will serve specific niche markets, and says that it sees big opportunities to create a major business because the market for such services is at present highly fragmented. It accompanied the news with proposal of a three-for-five rights issue at a deep discount of 35 pence a share to raise UKP2.4m net of expenses, and announcement that Dr Robb Wilmot is to become a non-executive director of Compsoft. The cash is wanted in part for further acquisitions – another target in a related field to Wootton is in the company’s sights – for additional working capital for Wootton, and to redeem an issue of debentures to be issued in redemption of Wootton’s preference shares. Wootton Jeffreys, based not far from Compsoft, on the outskirts of Woking, right alongside the quaintly named Brookwood Necropolis (City of the Dead for non-classists), was founded in 1971, initially to serve the public transport sector. Urban planning The company is now split into a software division that does both custom work and offers turnkey systems on Prime and DEC hardware, half this business being done with the public sector), and a consultancy specialising in transport, traffic and urban planning. In the year to July last, the systems division did UKP3.5m – down from UKP6.9m in 1986 – and the consultancy UKP1.9m, but the company plunged to a loss of UKP579,000, mainly as a result of costs of reorganising the systems business and cutting staff. Compsoft is offering 36.68 new shares for each Wootton outstanding, and says that with full acceptance and dilution this will amount to 3.1m shares, 13.3% of the enlarged capital following the rights issue. At Friday’s closing price of 60 pence it values Wootton at UKP1.86m, but that price is now cum-rights: Compsoft is putting a theoretical ex-rights value of 50 pence on its shares, which would value Wootton at UKP1.57m. Rather than buy in the Wootton preference share issue at once, Compsoft will replace it with UKP790,000 of interest-free debentures redeemable after 12 months. Compsoft has irrevocable acceptances for 92% of the Wootton shares, so the acquisition looks like a done deal. As to the rights issue, TR Technology Trust, Prudential Portfolio Managers, Euroventures UK and Close Securities Ltd with 51.8% in aggregate of Compsoft’s shares, have undertaken to take up their rights, but co-founders Nick Horgan and Heather Kearsley, with 31.3% of the shares, have waived their rights and their entitlement has been placed. Reason for the deep discount on the shares is clearly that Compsoft has already tapped shareholders for UKP1.3m in a rights issue last October. Compsoft also reported a UKP900,000 loss for the nine months to December 31 (see Company Results). It says that since October, UK turnover has increased and is now running at levels approaching those of last year. The disastrous European adventure is at an end, and the company’s continental subsidiaries have all either ceased trading or have been sold.

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