Rolfe & Nolan writes down Contac; renegotiates payment schedule
27 March 2002 | 2899 views | 0
Rolfe & Nolan has renegotiated the outstanding payments on its contract for the acquisition of underperforming Singapore-based back office software house Contac Software Engineering.
The £15.4 million sale and purchase agreement with Contac CEO Roger Wan Fook Meng specified a final deferred consideration of £1.85 million on 1 March 2002. Wan has now agreed to an immediate payment of £462,500 and three further installments for the same amount through to 2005.
Wan has been issued with 685,185 ordinary shares at 67.5p each in settlement of the first payment of £462,500, raising his personal stake in Rolfe & Nolan to 10.5% of the company's issued share capital.
In addition, Wan has contracted to serve as Contac's CEO until 28 February 2005 and to underwrite personally any losses incurred by Contac in any financial year during that period up to a maximum of £66,000 in each financial year.
Rolfe & Nolan completed the acquisition of Contac in February 2000. At the time it was seen as providing a bridge-head into Asia Pacific together with a modern PC-based product which would enable the company to compete more effectively at the smaller client end of the market. However the company has been hit by uncertainties in the local trading environment, and slower-than-expected license sales.
With no sign of an immediate upturn its fortunes, Rolfe & Nolan says it has reviewed the carrying value of the investment in the balance sheet, and made a one-off write down of £4m.
Despite the difficulties in the Asia Pacific market, the group maintains that operating profit before exceptionals for the year ended 28 February 2002 will be in line with market expectations.
The company says it is still locked in contract negotiations with two of its largest clients for funding of the first module of Project Merlin, its next generation trading solution. Heads of agreement have been signed and Rolfe & Nolan says it expects to conclude negotiations "shortly".