NEXUS MANAGEMENT PLC - Proposed acquisition and readmission to
trading on AIM
30 October 2012
Nexus Management Plc
("Nexus" or "the Company")
Proposed acquisition of Enables IT Limited, capital reorganisation, board
changes, change of name and readmission to trading on AIM
Nexus Management Plc, the AIM quoted provider of specialist IT
Managed Services, announces that it has entered into conditional
agreements to acquire the entire issued share capital of Enables, a
company which operates in the IT Managed Services sector. The
consideration for the acquisition is approximately £4.25 million,
which will be satisfied by the issue of 11,798,475 New Ordinary
Shares (representing approximately 74.47 per cent. of the Enlarged
Issued Share Capital of the Company).
Following Admission and the implementation of the Proposals, the
Concert Party, comprising of Michael Walliss, Erica Walliss,
Martin Bradburn and Marcus Yeoman will hold interests in Ordinary
Shares in excess of 30 per cent. of the Enlarged Issued Share
Capital and would normally incur an obligation, under Rule 9 of the
City Code, to make a general offer to the Shareholders. However,
subject to the approval of Shareholders on a poll at the General
Meeting, the Panel has agreed to waive this obligation.
In addition, it is proposed to effect a Capital Reorganisation
on the basis of the following two steps:
1. The Existing Ordinary Shares in Nexus will be consolidated by
a ratio of
300 to 1. Following this step the resulting ordinary shares in
Nexus will
have a nominal value of £0.75.
2. Each resulting ordinary share of £0.75 will then be
sub-divided and
re-designated into 1 New Ordinary Share of nominal value £0.01
and 1
Deferred Share of nominal value £0.74.
On Admission, it is proposed that Marcus
Hanke will resign as a director of the Company, Martin Bradburn will join the board of the
Company and Mark Barney Battles will
become Non-Executive Chairman. Further details of the Directors and
the Proposed Director of the Company are set out below.
Completion of the Acquisition is conditional, inter alia, on the
passing of the Resolutions and Admission becoming effective by not
later than 30 December 2012. A
General Meeting has been convened for 10.00
a.m. on 23 November 2012 for
the purpose of considering and, if thought fit, passing the
Resolutions. Subject to the conditions being satisfied, completion
is expected to take place upon Admission.
Application will be made to the London Stock Exchange for the
Enlarged Issued Share Capital to be admitted to trading on AIM. The
AIM Admission Document, which comprises a circular to Shareholders
and notice of the General Meeting, will be posted to Shareholders
and will be available from the Company's website,
www.nexusmanagementplc.com later today. It is expected that
Admission will become effective and that dealings in the Enlarged
Issued Share Capital will commence on 26
November 2012.
Commenting on the transaction, M Barney Battles, Executive
Chairman of Nexus Management plc and proposed non-executive
Chairman of Enables IT Group plc, said:
"We believe that Nexus's existing foothold in the US markets
will offer an ideal opportunity for Enables to cross sell into this
substantial and lucrative market. In addition, we believe that the
Enlarged Group will benefit from a significant increase in the
critical mass of the UK business which, with the broader client
base, will de-risk the US focus of the business and will offer
further cross selling opportunities. The added strength to the
management team following completion of the transaction should
allow for increased leverage of the business through both organic
and acquisitive growth."
FURTHER ENQUIRIES
Nexus Management Plc Tel: +44 (0)778 976 6242
M Barney Battles
Merchant Securities Ltd (Nomad) Tel: +44 (0)20 7628 2200
Simon Clements/Virginia Bull
Peterhouse Corporate Finance (Broker) Tel: +44 (0)20 7469 0937
Jon Levinson
Bishopsgate Communications Ltd Tel: +44 (0)20 7562 3350
Nick Rome/Sam Allen
Information on Enables
History and background
Enables is a private company limited by shares which was
incorporated in England and
Wales on 9
December 1991. The company was previously named Network
Cabling Installations Limited and NCI (UK) Ltd. The company
provides network and IT solutions and is led by Michael Walliss,
who joined the company in 1992 and was appointed as Managing
Director in 1996. Enables provides technical solutions to business
problems and offers on-going support services. Enables partners
with industry vendors and provides its customers with solutions
that are tailored to their needs, with no vendor tie-in.
Enables's customers are focused in the health, education and
corporate sectors across the United
Kingdom. Enables conducts thorough audits prior to
commencing work in order to clearly understand its customers'
existing IT infrastructure and limitations. Enables's staff
communicate with clients to determine specific needs and use the
audit findings, and the consultants own experience and expertise,
to design infrastructures based on the benefits the clients
require. Implementation is undertaken in partnership with the
client to ensure there is a complete understanding of the solution
and technology at all times by all parties.
Enables looks to develop new client relationships whilst also
focusing on its current client portfolio which contains customers
with whom the company has had over 12 years of continuous
engagement.
Enables offers a complete end-to-end service in the following
key areas:
* Virtualisation and Cloud;
* Wireless & Networks; and
* Managed Support.
Virtualisation and Cloud
Virtualisation allows organisations to consolidate their IT
infrastructure, providing the benefits of lower hardware and
maintenance costs, combined with increased IT reliability and data
security.
Enables is a virtualisation specialist and can architect
solutions to create a cloud based infrastructure, either on or off
premise.
The Virtualisation and Cloud services are broken into the
following areas:
* Server Virtualisation - maximising computing resources by moving away from
the `one server, one application' model that is wasteful of both power and
cooling provisions;
* Storage Virtualisation - crucial for all organisations and underpins many
key business applications therefore should be tightly integrated into the
infrastructure and perform and behave with the same level of flexibility as
the servers;
* Business Continuity - keeping a company operating non-stop is more than
just planning for disaster recovery; Enables provides solutions to ensure
availability on critical services following localised failure or full site
failure or disaster to meet the most stringent of SLAs; and
* Desktop Virtualisation - with the advent of the consumerisation of IT, the
traditional desktop computer is no longer the future of user productivity,
today the application is more important than the device it is operated on
and Enables is at the leading edge of this ever changing technology.
Enables can facilitate integration of cloud infrastructure and
manage an organisation's transition to the cloud, in addition to
providing on-going 24/7 support for the virtualised
infrastructure
Wireless and networks
A client's network, whether wireless or cabled, provides the
foundations for the services and applications a customer needs to
operate and be successful. Enables's team are able to advise
regarding the most appropriate network configuration and will
create a solution that is tailored to the client's performance
requirements.
Enables creates an inherently intelligent integrated network to
adapt to prospective clients' current and future business needs
by:
* Providing secure, but unconstrained, connectivity between employees,
customers and information;
* Delivering quality, real-time applications, such as voice and video, on a
converged network platform;
* Ensuring access to information and resources from anywhere; and
* Automating a manageable and self-defending network that can be scaled
instantly to incorporate guest devices.
Managed Support
The Enables support centre is a multi-disciplinary support team
using telephone contact & remote control software to provide a
range of technical services. Enables provides the reassurance of
qualified and experienced technical support at the end of a
telephone.
The Managed Support Service can be broken down into the
following elements:
* Central Helpdesk;
* Proactive Monitoring Services; and
* Account Reports.
Central Helpdesk
The standard Enables IT support centre service is provided
during normal business hours. This can be extended into a 24/7
support offering to cover the operational hours or times when
change and risk most occurs.
Enables operates a trouble ticketing system that provides the
client with visibility as to the status of all calls logged. At all
times updates to the status and actions on the call are entered by
its support engineers. This is to ensure the client is kept
informed and assured that the issue has not left the sight of the
engineering team.
Enables follows a set of priority and escalation procedures
designed to ensure that issues have appropriate visibility within
the Enables technical and management teams. If vendor escalation is
appropriate for resolution. Enables's experience and status with
major vendors expedite the resolution.
Proactive Monitoring Services
This service runs 24/7 collecting the status of required
services and reporting these back to Enables's central console
where the support team have visibility of all collected data.
All monitors can have specific threshold values on which Enables
can provide warning or alter information; this is especially useful
for proactive support operations, predictive time to failure and
also change control management.
Account Reports
In order to provide visibility of the status of a client's
account, Enables provides the client with regular reports showing
the status of the servers, usage and performance, number of support
calls logged, any outstanding issues and any areas of preventive
maintenance that should be reviewed.
Competition
The IT services market is supported by thousands of IT companies
in London and therefore the
competitive landscape is generally different on each opportunity.
Of the IT companies that are based in London, 1,969 are Official Microsoft Partners
and are listed on Microsoft's web site. 100 of these are also
VMware partners and 26 are at the same Enterprise Level of
accreditation as held by Enables.
Current trading and Prospects
Whilst operating in a difficult economic market place the
revenue is in line with Enables management's expectations.
Investments have been made into new business sales, marketing and
telemarketing staff to increase the marketing campaigns success
rates and drive new business meetings. This has been supplemented
by quarterly seminars, a trade show presence and a position in the
top five for the CRN reseller of the year. The outcome of this
increased effort has been that Enables traded with eight new
clients in the third quarter and this rate is expected to continue.
New clients are incentivised to become support customers by means
of a free trial support period which has been successful in the
past in securing larger second orders and also recurring
contracts.
A new hosted cloud infrastructure was launched in October 2012. This has been priced to help gain
some early client wins which will enhance the recurring revenue
position. This will allow Enables to capture a growing number of
companies looking to utilise Cloud based computing services in
today's market space.
The revenue from existing clients remains consistent with the
prior years and Enables's Management are acutely aware of the
growth risks and are actively looking to increase the customer
facing staff numbers to meet these demands.
Reasons for the Proposals
With the continued pressure on costs, the Directors believe that
companies look to IT managed services to reduce capital expenditure
and improve operational efficiencies. From their experience, the
Directors believe that managed services free up valuable
information technology resources, decrease staffing needs and
enable companies to invest in activities that may differentiate
them from their competition. The Directors believe that both Nexus
and Enables are ideally located to capitalise on opportunities
where companies are willing to spend a substantial portion of their
budget on these services.
The Directors believe that Nexus's existing foothold in the US
markets will offer an ideal opportunity for Enables to cross sell
into this substantial and lucrative market. In addition, the
Directors believe that the Enlarged Group will benefit from a
significant increase in the critical mass of the UK business which,
with the broader client base, will de-risk the US focus of the
business and will offer further cross selling opportunities. The
added strength to the management team following completion of the
transaction should allow for increased leverage of the business
through both organic and acquisitive growth.
Principal terms of the Acquisition
Under the terms of the Acquisition Agreements, the Company has
conditionally agreed to acquire the entire issued share capital of
Enables from the Vendors for a total consideration to be satisfied
by the issue of the Consideration Shares (representing 74.47 per
cent. of the Enlarged Issued Share Capital) on Admission.
During the period between the date of the execution of the
Acquisition Agreements and Completion, the Vendors have undertaken
to operate the business of Enables in an orderly manner. The
Acquisition Agreements contain certain warranties (subject to
certain limitations of liability) and undertakings given by the
Vendors in favour of the Company.
On completion, Michael Walliss will remain as a director of
Enables and will also assume the position of Chief Executive
Officer of Nexus. Martin Bradburn
will remain as a director of Enables and will, subject to
Admission, also be appointed to the board of Nexus as an executive
director.
Completion of the Acquisition is conditional, inter alia, on the
passing of the Resolutions (including the passing of an ordinary
resolution to approve a Rule 9 Waiver) and Admission becoming
effective by not later than 30 December
2012. Completion is expected to take place upon
Admission.
Related party transaction
The Acquisition is classified as a related party transaction for
the purposes of Rule 13 of the AIM Rules. This is due to the fact
that Michael Walliss and Marcus
Yeoman are directors of the Company and Enables and that
Mike Walliss is also a major shareholder of Enables. The Directors
other than Michael Walliss and Marcus
Yeoman, having consulted with the Company's Nominated
Adviser, Merchant Securities Limited, consider the terms of the
Acquisition to be fair and reasonable insofar as the Shareholders
are concerned. In advising the Directors, Merchant Securities
Limited has taken into account the commercial judgement of the
Directors.
Capital Reorganisation
The Capital Reorganisation is being proposed primarily because
company law prohibits a company from issuing shares at a discount
to the nominal value of its shares. Currently, the mid-market price
for an Existing Ordinary Share is less than its nominal value.
Therefore in order to issue the Consideration Shares, it is
necessary to reduce the nominal value of the Existing Ordinary
Shares. The Capital Reorganisation is also being proposed because,
at present, the bid-offer spread for the Existing Ordinary Shares
is equivalent to 16.7 per cent. of the mid-market price. The
Directors believe that the proposed consolidation will help to
reduce the spread and increase liquidity. Accordingly, the
Directors have decided that a share reorganisation will be effected
on the basis of the following two steps:
1. The Existing Ordinary Shares in Nexus will be consolidated by
a ratio of
300 to 1. Following this step the resulting ordinary shares in
Nexus will
have a nominal value of £0.75.
2. Each resulting ordinary share of £0.75 will then be
sub-divided and
re-designated into 1 New Ordinary Share of nominal value £0.01
and 1
Deferred Share of nominal value £0.74.
Holders of fewer than 300 Existing Ordinary Shares will not be
entitled to receive a New Ordinary Share following the Capital
Reorganisation. Shareholders with a holding in excess of 300
Existing Ordinary Shares, but which is not exactly divisible by
300, will have their holding of New Ordinary Shares rounded down to
the nearest whole number of New Ordinary Shares following the
Capital Reorganisation. Fractional entitlements, whether arising
from holdings of fewer or more than 300 Existing Ordinary Shares,
will be aggregated, and in accordance with the articles of
association of the Company, sold in the market for the benefit of
the relevant Shareholders pro rata to their entitlement (save where
the entitlement is below the de minimis amount of £5 set out in the
New Articles).
The rights attaching to the New Ordinary Shares will be
identical in all respects to those of the Existing Ordinary
Shares.
New Board
Details of the Directors and the Proposed Director of the
Company are set out below. Martin
Bradburn will join the board of the Company on Admission.
Marcus Hanke will resign as a
director of the Company on Admission and Mark Barney Battles will become Non-Executive
Chairman.
Existing Directors
Mark Barney Battles (Executive
Chairman and proposed Non-Executive Chairman) aged 45, has over 20
years of experience working within the technology, media and
telecommunications sectors, operating as both CEO and CFO of many
private and publicly traded businesses. Barney trained with Ernst
& Young as a Scottish Chartered Accountant and went on to build
and sell one of London's first and
largest digital marketing agencies in 2000 (now trading under the
brand name of LBI). Since 2003, Barney has assumed roles as
Chairman or non-executive director across a range of international
media and technology businesses assisting with their growth and
exit strategies.
Peter Weller (Finance Director
and proposed Chief Financial Officer) aged 43, in his early career
worked for Harvard International, now part of Alba plc. He joined
Coral Racing, part of Bass plc, in 1987 where he remained for 10
years, becoming financial controller to both Coral Racing and Coral
Stadia. Immediately prior to joining the Company Peter was
financial controller at Barkers Interiors, having qualified as a
certified Chartered Accountant in 1999. Peter joined the Group in
October 2000 and was appointed
Finance Director in January 2001.
Marcus Hanke (Non-Executive
Director) aged 41, joined the board of Nexus in November 2011. Marcus began his career at Price
Waterhouse (now PricewaterhouseCoopers) and qualified as a
Chartered Management Accountant. Marcus worked in industry with
Compass Group plc and consulting with KPMG and Deloitte. In 2006,
he joined Avisen plc (now 1Spatial plc) as Managing Director and
led the growth of the services business and the diversification
into software distribution. He is now CEO of 1Spatial plc,
responsible for managing the company and formulating and executing
long-term strategies, and interacting with clients, employees,
investors and other stakeholders.
Over the last 10 years, he has led several corporate performance
management programs rolled out in Europe, the Middle
East and Africa. His
specialist areas include corporate performance management, cost
transparency, value based management and the technology enablement
of these processes.
Marcus Yeoman (Non-Executive
Director) aged 49, is currently non-executive director of AIM
listed R4E Group plc, Concha Plc and 1 Spatial plc. He is also a
director of two PLUS quoted companies, as well as holding
directorships of a number of private companies which have engaged
him principally to assist them with their growth strategies. His
early career started with the formation of three companies in IT
infrastructure and distribution, after which he moved into small
company broking and corporate work with Rathbone Stockbrokers
Limited and Cheviot Capital (Nominees) Limited. In 2003, Marcus
established Springtime Consultants Ltd to act as a consultant or
non-executive director to growing companies and those that he could
assist with M&A work.
Michael Walliss (Executive Director and Proposed Chief Executive
Officer), aged 48, has extensive background knowledge running IT
Network Infrastructure and IT Support Services. Working with a
variety of leading organisations, Michael has successfully built
and operated a number of businesses within the IT sector for over
20 years. Since 1996 he has led Enables as Managing Director and
has developed and sold a number of successful companies that
originated from the company. His development of key accounts, in
particular in the private healthcare environment, has delivered
substantial growth at Enables.
Michael started out his career in the mid-eighties in the
property construction industry where he trained as an Architect
Technician and went on to create his own property construction
business specialising in the design and build of high level
residential properties. He continues to have an interest within
this sector having acquired a number of investment
opportunities.
Michael's aspirations are to continue his successes within the
IT industry and develop Enables as a global company delivering IT
Managed Services that will build shareholder value.
Proposed Director
Martin Bradburn (Proposed Chief
Information Officer), aged 42, has worked within the IT services
industry for over 20 years. In that time Martin has continued to
apply his technological expertise whilst developing his commercial
experience.
In 1995 Martin joined Hartshead Education Services and was
instrumental in creating and building an IT services business
within the company. He was responsible for the day to day
management of the IT services division. In 1997 the parent company,
Hartshead Solway, was acquired by Capita Group plc. As a result
Martin was seconded to Capita-SIMS to provide direction on national
projects. Two years after the acquisition Martin joined ANS Group,
taking management control of the technical support and delivery
elements of the business. In August
2000 ANS Group floated on the Ofex (Plus) market and grew
substantially under the control of the management team. In 2004
Martin was appointed to the board of the company as Chief Technical
Officer.
Martin joined Enables in 2009. He is currently a director and
minority shareholder in the company.
A General Meeting of the Company, to be held at the offices of
Brown Rudnick, 8 Clifford Street, London W1S 2LQ on 23
October 2012 at 10.00 a.m. and
any adjournment thereof has been convened for the purpose of
considering and, if thought fit, passing the Resolutions.
The Independent Director and certain other Shareholders have
irrevocably undertaken to the Company to vote in favour of the
Resolutions to be proposed at the General Meeting, in respect of
their aggregate beneficial holdings totalling 356,000,232 Existing
Ordinary Shares, representing approximately 30.17
Subject to the passing of the Resolutions at the General Meeting
and on Admission the name of the Company will change to Enables IT
Group plc.
Following Admission, the Company will have 15,842,425 Ordinary
Shares in issue and admitted to trading on AIM.
Definitions
The following words and expressions shall have the following
meanings in this announcement unless the context otherwise
requires:
"2006 Act" the UK Companies Act 2006 as amended
"Acquisition" the acquisition by the Company of the entire issued
share capital of Enables pursuant to the Acquisition
Agreement
"Acquisition Agreements" (i) the principal acquisition agreement dated 30
October 2012 between (1) Michael Walliss, Erica
Walliss and Martin Bradburn, and (2) the Company; and
(ii) the conditional dated 30 October 2012 between (1)
Marcus Yeoman and (2) the Company
"Admission" admission of the Enlarged Issued Share Capital to
trading on AIM and such admission becoming effective
in accordance with Rule 6 of the AIM Rules
"AIM" the market of that name operated by the London Stock
Exchange
"AIM Rules" the AIM Rules for Companies published by the London
Stock Exchange
"Board" or "Directors" the existing directors of the Company
"Capital Reorganisation" the proposed consolidation of every 300 Existing
Ordinary Shares into one ordinary share and
sub-division of each such one ordinary share of
nominal value 75p into one New Ordinary Share and one
Deferred Share
"Capital Reorganisation 6.00 p.m. on 23 October 2012(or such later time and
date as the Board or a duly authorised committee of
Record Date" the Board may determine)
"Company" or "Nexus" Nexus Management plc, a public limited company
registered in England and Wales under registered
number 3895363
"Completion" completion of the Acquisition in accordance with the
terms of the Acquisition Agreements
"Consideration Shares" the 11,798,475 New Ordinary Shares proposed to be
issued to the Vendors in consideration for the
Acquisition
"Deferred Shares" the new deferred shares of 74p each arising from the
Capital Reorganisation
"Enlarged Group" the Company and its subsidiaries as enlarged by the
Acquisition, to include Enables
"Enlarged Issued Share the entire issued ordinary share capital of the
Capital" Company being the New Ordinary Shares, the
Consideration Shares and the Fee Shares
"Enables" Enables IT Limited, a private limited company
incorporated in England and Wales under registered
number 2669422
"Enables Directors" Michael Walliss, Martin Bradburn and Marcus Yeoman
"Existing Ordinary the 1,179,851,765 ordinary shares of 0.25p each in the
Shares" capital of the Company in issue at the date of this
document
"General Meeting" the General Meeting of the Company, to be held at the
offices of Brown Rudnick, 8 Clifford Street, London
W1S 2LQ on 23 October 2012 at 10.00 a.m. and any
adjournment thereof to be held for the purpose of
considering and, if thought fit, passing the
Resolutions
"Independent Director" Peter Weller
"Irrevocable the agreement by each of the Directors and certain
Undertakings" Shareholders to vote in favour of the Resolutions
"London Stock Exchange" London Stock Exchange plc
"Merchant Securities" Merchant Securities Limited, the Company's nominated
adviser
"New Articles" the new articles of association of the Company
proposed to be adopted at the General Meeting
"New Ordinary Shares" the new ordinary shares of £0.01 each in the capital
of the Company arising from the Capital Reorganisation
"Notice" the notice convening the General Meeting
"Ordinary Shares" the Existing Ordinary Shares or the New Ordinary
Shares as the context requires
"Proposed Director" Martin Bradburn
"Resolutions" the resolutions set out in the Notice
"Rule 9 Waiver" the waiver of the obligation, which would otherwise
arise on the Concert Party to make a mandatory offer
and the agreement by the Panel to waive the obligation
on the Concert Party to make an offer to all
Shareholders pursuant to Rule 9 of the City Code
conditional upon the approval of Resolution 2 at the
General Meeting
"Shareholders" holder(s) of Existing Ordinary Shares or New Ordinary
Shares (as appropriate)
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern
Ireland
"Vendors" Michael Walliss, Erica Walliss, Martin Bradburn and
Marcus Yeoman