Patsystems weighs potential deal; measures MFGI impact

Potential Offer for the Company and MF Global impact and trading statement

Potential Offer for the Company

The Board of Patsystems plc announces that it has received an approach from its largest shareholder, ION Trading ("ION"), regarding a possible cash offer by ION (either directly or through one of its affiliates) for the Company, which values each share in Patsystems at 14 pence. The Board acknowledges the Company's strong commercial fit with ION, their greater financial stability, as well as the potential benefits to staff, customers and product development. The Board will therefore carefully assess the merits of the proposed combination.

In accordance with Rule 2.6(a) of the Code, ION must, by not later than 5.00 p.m. on 26 December 2011, either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

This announcement is being made with the prior agreement and approval of ION.

A further announcement will be made in due course.

MF Global Update

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 £500,000.

In addition to the above, we have sums due from MF Global of £900,000. 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 £600,000 and up to a total provision of £1.3m 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.

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