Nexteq plc
("Nexteq", the "Company"
or the "Group")
Proposed Share Buyback, Rule 9 Waiver
and Notice of General Meeting
Nexteq (AIM: NXQ), a leading
technology solutions provider to customers in selected industrial
markets, announces
that today it has posted a Circular to Shareholders giving Notice
of a General Meeting, to be held at 11.00 a.m. on 16 April 2024 at
the Company's offices at The Galleria, Station Road, Crawley, RH10
1WW.
Proposed Share Buyback and Rule 9 Waiver
The Company proposes to seek
Shareholder approval to have the authority to buy back up to 10 per
cent of the Company's issued share capital, being up to 6,653,906
Ordinary Shares.
Assuming utilisation of the full
buyback authority, the Concert Party (being Nicholas Jarmany,
Francesca Marzilli, Alessandro Jarmany, Oliver Jarmany, Daniel
Jarmany, Gary Mullins, Sophie Mullins, Susan Mullins, John Mullins,
Mark Mullins, Jacob Mullins, Joseph Mullins, Louis Mullins and Best
Acumen Limited), may own up to approximately 37.3 per cent of the
voting rights in the Company. Therefore, the Independent
Shareholders will be asked to waive an obligation on the Concert
Party to make a general offer for the entire issued, and to be
issued, share capital of the Company which may arise under Rule 9
of the Takeover Code as a result of the Company purchasing its
Ordinary Shares.
The Company has historically sought
authority and received approval from its shareholders to make
market purchases of its own shares, with the most recent authority
being granted at the Company's AGM on 27 April 2023, permitting the
Company to repurchase up to 6,647,506 Ordinary Shares, equal to 10
per cent. of the Company's issued ordinary share capital at the
time of the 2023 AGM. However, despite this authority having
already been granted (to expire at the conclusion of the 2024 AGM),
the Company has been restricted from using it owing to the Concert
Party being interested in more than 30 per cent. but holding less
than 50 per cent. of the total voting rights of the Company (and
therefore, any repurchases of shares under such buyback authority
being liable to trigger an obligation for the Concert Party to make
an offer, in cash, for the entire issued and to be issued share
capital of the Company, pursuant to Rule 9 of the City Code, if the
repurchase would cause the aggregate number of shares of which the
Concert Party was interested to increase).
With a strong cash balance, that the
Board believes will increase, the Board has concluded that it
wishes to have the flexibility to utilise the Proposed Buy Back
Authority in circumstances which it decides are in the best
interests of the Company. Accordingly, this letter sets out the
background to, and reasons why the Board believes it to be in the
best interests of Shareholders as a whole for the Company to
reapply for authority, to make market purchases of its Ordinary
Shares under the same parameters as previously approved, being that
any share repurchases are made at a price:
i. no
less than the nominal value of an Ordinary Share, being 0.1
pence;
ii. no
higher than an amount which is not more than 5 per cent. above the
average of the closing middle market quotations for an Ordinary
Share, as derived from the London Stock Exchange Daily Official
List for the five business days immediately preceding the date on
which that Ordinary share is contracted to be purchased;
or,
iii. the higher of
the price of the last independent trade of an ordinary share or the
highest current independent bid on the London Stock
Exchange.
Share Buy Backs
Should the Proposed Buy Back
Authority be approved, the Board intends to undertake any share buy
backs subject to the parameters described above. The Company's
dividend policy remains unchanged.
The full Circular to Shareholders
will be made available on the Company's website,
https://www.nexteqplc.com/. Defined terms used in this announcement
are the same as those defined in the Circular unless the context
requires otherwise.
Nexteq plc
Jon Jayal, Chief Executive Officer
Johan Olivier, Chief Financial Officer
|
Tel: +44 (0)1223 892
696
|
Nominated Adviser
and Broker:
Cavendish Capital Markets Ltd
Matt Goode / Simon Hicks (Corporate Finance)
Tim Redfern / Harriet Ward (ECM)
|
Tel: +44 (0) 20 7220
0500
|
Joint
Broker:
Canaccord Genuity Limited
Simon Bridges / Andrew Potts
|
Tel: +44 (0) 20 7523
8000
|
Financial
PR:
Alma Strategic Communications
Hilary Buchanan / Kieran Breheny
|
Tel: +44 (0)20 3405
0205
|
About
Nexteq
Nexteq (AIM: NXQ) is a strategic technology
solutions provider to customers in selected industrial markets. Its
innovative technology enables the manufacturers of global
electronic equipment to outsource the design, development and
supply of non-core aspects of their product offering. By
outsourcing elements of their technology stack to Nexteq, customers
can focus their product development effort on the most critical
drivers of their business' success.
Our solutions are delivered through a global
sales team and leverage the Group's electronic hardware, software,
display and mechanical engineering expertise. Our Taiwan operation
is at the heart of Asian supply networks and facilitates cost
effective manufacturing and strategic supply chain
management.
The Group operates in seven countries and
services over 500 customers across 50 countries.
Nexteq operates two distinct brands: Quixant, a
specialised computer platforms provider, and Densitron, leaders in
human machine interface technology, each with dedicated sales,
account management and product innovation teams. Founded in 2005,
and later floating on the London Stock Exchange's AIM stock market
as Quixant plc, the Group rebranded to Nexteq in 2023.
Further information on Nexteq and its divisions
can be found at www.nexteqplc.com.
Disclaimer
Cavendish Capital Markets Limited
("Cavendish"), which is authorised and regulated by the Financial
Services Authority (FCA), is acting as Financial Adviser to the
Company in connection with the matters described in this
announcement. Cavendish will not be responsible to anyone other
than the Company for providing the protections afforded to clients
of Cavendish or for advising any other person on the Proposed
Buy-Back Authority and the Rule 9 Waiver or any other arrangements
described in this announcement. Cavendish has not authorised the
contents of, or any part of, this announcement and no liability
whatsoever is accepted by Cavendish for the accuracy of any
information or opinions contained in this announcement or for the
omission of any information.
The below
text has been extracted from the Circular.
1.
Introduction
The Company has historically sought authority
and received approval from its shareholders to make market
purchases of its own shares, with the most recent authority being
granted at the Company's AGM on 27 April 2023, permitting the
Company to repurchase up to 6,647,506 Ordinary Shares, equal to 10
per cent. of the Company's issued ordinary share capital at the
time of the 2023 AGM. However, despite this authority having
already been granted (to expire at the conclusion of the 2024 AGM),
the Company has been restricted from using it owing to the Concert
Party being interested in more than 30 per cent. but holding less
than 50 per cent. of the total voting rights of the Company (and
therefore, any repurchases of shares under such buyback authority
being liable to trigger an obligation for the Concert Party to make
an offer, in cash, for the entire issued and to be issued share
capital of the Company, pursuant to Rule 9 of the City Code, if the
repurchase would cause the aggregate number of shares of which the
Concert Party was interested to increase).
With a strong cash balance, that the Board
believes will increase, the Board has concluded that it wishes to
have the flexibility to utilise the Proposed Buy Back Authority in
circumstances which it decides are in the best interests of the
Company. Accordingly, this letter sets out the background to, and
reasons why the Board believes it to be in the best interests of
Shareholders as a whole for the Company to reapply for authority,
to make market purchases of its Ordinary Shares under the same
parameters as previously approved, being that any share repurchases
are made at a price:
i. no less than
the nominal value of an Ordinary Share, being 0.1 pence;
ii. no higher than an
amount which is not more than 5 per cent. above the average of the
closing middle market quotations for an Ordinary Share, as derived
from the London Stock Exchange Daily Official List for the five
business days immediately preceding the date on which that Ordinary
Share is contracted to be purchased; or,
iii. the higher of the price
of the last independent trade of an Ordinary Share or the highest
current independent bid on the London Stock Exchange.
If the Company buys-back shares under the
Proposed Buy-Back Authority and, at the time, the voting rights
attributable to the interests in Ordinary Shares of the Concert
Party exceeds 30 per cent. of such voting rights, an obligation
under Rule 9 of the Takeover Code would arise on one or more of the
Concert Party to make a cash offer for the issued shares of the
Company not already owned by them if the repurchase would cause the
aggregate number of shares of which the Concert Party was
interested to increase.
The Panel has agreed, however, to waive the
obligation to make a general offer that would otherwise arise on
the Concert Party as a result of the buy-back by the Company of any
Ordinary Shares and under the proposed Buy-Back Authority subject
to approval on a poll by the Independent Shareholders of the Waiver
Resolution as set out in the Notice of GM.
The Circular sets out details of the existing
buy back authority and contains the Notice of GM to be held at
11.00 a.m. on 16 April 2024 to consider and approve both the new
Repurchase Resolution and the Waiver Resolution. The GM will follow
the 2024 AGM of the Company taking place at 10.00 a.m. on 16 April
2024.
2. Background to and
reasons for the recommendation
Rationale for
using the share buy-back authority
The Board believes it to be in the best
interests of Shareholders as a whole for the Company to have
authority to purchase its Ordinary Shares in the market.
The Directors believe that the Proposed
Buy-Back Authority would be a productive use of the Company's cash
reserves, whilst at the same time enhancing earnings per share. The
Directors also believe that the Proposed Buyback Authority would
provide Shareholders with the flexibility, but without any
compulsion, to realise value in respect of all or some of their
shareholdings and is a tax efficient method of returning surplus
cash to certain Shareholders.
The Board is mindful of the financial impact a
share buy-back may have on the Company and has therefore conducted
a thorough exercise with regards to the capital requirements of the
Group, its prospects and its funding available, whilst also taking
into account the merits of providing greater short-term liquidity
for Ordinary Shares. The Board will only proceed to make market
purchases at prices which make sense for the Company and its
Shareholders as a whole and intends to only do so when there is a
lack of liquidity for the Ordinary Shares. The Directors have
confirmed that none of them (or any persons connected with them
within the meaning of sections 252-255 of the Act) will, nor do
they have any current intention to, sell any of the Ordinary Shares
which they beneficially own to the Company should the Company
utilise the Proposed Buy-Back Authority.
Similarly, all members of the Concert Party
have confirmed that none of them (or any persons connected with
them within the meaning of sections 252-255 of the Act) will, nor
do they have any current intention to, sell any of the Ordinary
Shares which they beneficially own to the Company should the
Company utilise the Proposed Buy-Back Authority.
Purchases of
Own Shares
The Board is seeking the authority, in
accordance with Section 701 of the Act, for the Company to make
market purchases of its own shares (within the meaning of Section
693(4) of the Act) providing such purchases do not exceed, in
aggregate 10 per cent. of the Company's issued ordinary share
capital as at the latest practicable date before publication of
this announcement, being 27 March 2024, being 6,653,906 Ordinary
Shares, and subject to such pricing restrictions as described in
Paragraph 1 above.
The Board is seeking the flexibility to buy
back shares should they consider it appropriate to do so. However,
the Board will only exercise the authority after taking account of
the overall financial position of the Company and in circumstances
where they believe that to do so would result in either an increase
or protection of value for the remaining Shareholders and be in the
best interests of Shareholders as a whole.
Any Ordinary Shares purchased under the
Proposed Buy-Back Authority will either be cancelled and the number
of Ordinary Shares in issue reduced accordingly, or will be held in
treasury. Shares held in treasury may be used, to the extent
necessary to satisfy the exercise of options by existing
Shareholders whilst at the same time minimising dilution to
existing Shareholders.
City Code on
Takeovers and Mergers
The City Code applies to the Company. Under
Rule 9 of the Code, any person who acquires an interest in shares
which, taken together with shares in which that person or any
person acting in concert with that person is
interested, carry 30 per cent. or more of the voting rights of a
company which is subject to the Code is normally required to make
an offer to all the remaining shareholders to acquire their
shares.
Similarly, when any person, together with
persons acting in concert with that person, is interested in shares
which in the aggregate carry not less than 30 per cent. of the
voting rights of such a company but does not hold shares carrying
more than 50 per cent. of the voting rights of the company, an
offer will normally be required if such person or any person acting
in concert with that person acquires a further interest in shares
which increases the percentage of shares carrying voting rights in
which that person, and any persons acting in concert with that
person, are interested.
An offer under Rule 9 must be made in cash at
the highest price paid by the person required to make the offer, or
any person acting in concert with such person, for any interest in
shares of the company during the 12 months prior to the
announcement of the offer.
Under Rule 37 of the City Code, when a company
purchases its own voting shares, the resulting increase in the
percentage of shares carrying voting rights in which a person or
group of persons acting in concert is interested will be treated as
an acquisition for the purpose of Rule 9 of the City Code (although
a shareholder who is neither a director nor acting in concert with
a director will not normally incur an obligation to make an offer
under Rule 9 in these circumstances).
Current and
potential shareholdings of the Concert Party
For the purposes of the City Code, Nicholas
Jarmany, Francesca Marzilli, Alessandro Jarmany, Oliver Jarmany,
Daniel Jarmany, Gary Mullins, Sophie Mullins, Susan Mullins, John
Mullins, Mark Mullins, Jacob Mullins, Joseph Mullins, Louis Mullins
and Best Acumen Limited are considered to be acting in concert (the
"Concert Party").
The Concert Party currently holds, in
aggregate, 22,366,436 Ordinary Shares representing an aggregate
interest of 33.614 per cent. of the Company's issued share capital
of 66,539,060 Ordinary Shares as at 27 March 2024 (being the latest
practicable date prior to the publication of this
announcement).
The details of the effect of the Repurchase
Resolution on the aggregate interests of Concert Party are set out
in paragraph 3 below and paragraph 5.4 of Part II of the
Circular.
3. The Waiver
Resolution
As set out in paragraph 2 above, and given that
the Concert Party's current percentage interest in Ordinary Shares
is between 30 and 50 per cent. of the of the voting rights of the
Company, any increase in any member of the Concert Party's
percentage interest in Ordinary Shares (which includes any increase
caused by way of a share buyback) would have the effect of
triggering Rule 9 of the City Code and result in the Concert Party
being under an obligation to make a general offer to all
Shareholders.
The Independent Directors have consulted with
the Panel, which has agreed that, subject to approval of the Waiver
Resolution by the Independent Shareholders on a poll at the GM, it
will grant the Repurchase Waiver. The effect of the Repurchase
Waiver, if approved by the Independent Shareholders, would be that
the Concert Party would not be required to make a general offer
under Rule 9 of the City Code that would otherwise arise due to the
increase in the aggregate holding of the Concert Party resulting
from the purchase by the Company of its own Ordinary Shares
pursuant to the Proposed Buy-Back Authority.
The Waiver Resolution is subject to the
approval of Independent Shareholders on a poll, where each
Independent Shareholder will be entitled to one vote for each
Ordinary Share they hold. Members of the Concert Party are not
entitled to vote on this poll as they are not considered to be
independent.
Set out below, and also in paragraph 5.4 of
Part II of the Circular, are details of the maximum percentage of
the Company's voting rights which could be held by the Concert
Party following the approval of the Repurchase Resolution and the
Waiver Resolution as it assumes the full utilisation of the
Proposed Buy-Back Authority (assuming no member of the Concert
Party participates in the proposed buyback and no further Ordinary
Shares are issued by the Company).
Scenario
In the event that:
· the
Independent Shareholders approve the Waiver Resolution;
· the
maximum number of Ordinary Shares are repurchased by the Company
under the Proposed Buy-Back Authority and no further Ordinary
Shares are issued by the Company; and
·
there are no sales of Ordinary Shares by any member of the
Concert Party pursuant to the proposed share buyback or
otherwise.
the combined shareholding of the Concert Party
of 22,366,436 Ordinary Shares would increase from 33.614 per cent.
to a maximum of 37.349 per cent. of the issued ordinary share
capital of the Company (excluding any shares held in treasury) as
further detailed in paragraph 5.4 of Part II of the
Circular.
|
Current interests of the
Concert Party
|
Interests of the Concert
Party assuming full utilisation of the Proposed Buy-Back Authority,
the Concert Party does not participate in the share buyback nor
sell any Ordinary Shares and no further Ordinary Shares are issued
by the Company
|
Concert Party Member
|
Number of
Ordinary Shares
|
% of
current issued share capital
|
Number of
Ordinary Shares
|
% of
current issued share capital
|
Nick Jarmany
|
5,769,980
|
8.67
|
5,769,980
|
9.64
|
Francesca Marzilli
|
5,356,683
|
8.05
|
5,356,683
|
8.94
|
Alessandro Jarmany
|
2,250
|
0.003
|
2,250
|
0.004
|
Oliver Jarmany
|
2,250
|
0.003
|
2,250
|
0.004
|
Daniel Jarmany
|
602,481
|
0.91
|
602,481
|
1.01
|
Gary Mullins
|
1,913,071
|
2.88
|
1,913,071
|
3.19
|
Sophie Mullins
|
302,582
|
0.45
|
302,582
|
0.51
|
Susan Mullins
|
2,232,707
|
3.36
|
2,232,707
|
3.73
|
John Mullins
|
1,626,213
|
2.44
|
1,626,213
|
2.72
|
Mark Mullins
|
1,105,000
|
1.66
|
1,105,000
|
1.85
|
Jacob Mullins
|
2,220
|
0.003
|
2,220
|
0.004
|
Joseph Mullins
|
2,220
|
0.003
|
2,220
|
0.004
|
Louis Mullins
|
2,220
|
0.003
|
2,220
|
0.004
|
Best Acumen Limited (Chen-Tai Lin
and Shu-Hsiang Wu)*
|
3,446,559
|
5.18
|
3,446,559
|
5.76
|
Total
|
22,366,436
|
33.614
|
22,366,436
|
37.349
|
*
Shares held by Best Acumen Limited, an entity owned and controlled
by Chen-Tai Lin and Shu-Hsiang Wu.
Shareholders should note that any further
increase in the interests of the Concert Party in the Ordinary
Shares of the Company, which increases the percentage of the voting
rights in which they are interested, whether collectively or
individually, other than as a result of the purchase of Ordinary
Shares pursuant to the Proposed Buy-Back Authority will be subject
to the provisions of Rule 9. Whether or not the Waiver Resolution
is passed by the Independent Shareholders, members of the Concert
Party will not be restricted from making an offer for the
Company.
In the event that the Concert Party's interest
in the voting rights of the Company increases as a result of the
exercise of the Proposed Buy-Back Authority, they could not acquire
any further interest in the shares of the Company without
triggering an obligation under Rule 9.
The Waiver described in the Waiver Resolution,
applies only in respect of increases in the percentage interest of
the Concert Party resulting from purchases by the Company of its
own shares under the Proposed Buy-Back Authority and not in respect
of any other increases in the Concert Party's interests in Ordinary
Shares by any other means.
4. The intentions of
the Concert Party
The members of the Concert Party have each
confirmed to the Company that they are not proposing, following any
increase in their percentage interests in Ordinary Shares or voting
rights as a result of any buy-back of its Ordinary Shares by the
Company to seek any change in the composition of the Board or the
general nature of the Company's business.
The members of the Concert Party have also each
confirmed that they have no intention to make any changes regarding
the future of the Company's business, the locations of the
Company's places of business and the continued employment of its
employees and management (and those of its subsidiaries) as a
result of any increase in their percentage interests in Ordinary
Shares or voting rights as a result of a buy-back of its Ordinary
Shares by the Company nor will there be any redeployment of the
fixed assets of the Company as a result of such an
increase.
The Company intends for its Ordinary Shares to
remain admitted to AIM in the event the Proposed Buy-Back Authority
is exercised in whole or in part at any point within the authority
being requested.
There have been no changes to the relationship
agreement entered into between the Company and each of Nick
Jarmany, Gary Mullins and Chen-Tai Lin on 14 May 2013.
5. Current Trading and
Prospects
In the audited final results for the year ended
31 December 2023 released on 13 March 2024, Nexteq provided the
following trading update on current trading:
·
"The Group entered 2024 with confirmed order book covering
five months revenue.
·
Strong balance sheet with net cash position and good
operational liquidity; supported by good cash generation,
positioning the Group for future organic and strategic acquisitive
growth.
· The
Board is confident in meeting market expectations for 2024 with the
typical second half weighting."
6. General
Meeting
A notice convening the General Meeting to be
held at 11.00 a.m. on 16 April 2024 is set out at the end of the
Circular.
Owing to their interests in it, the Concert
Party members will not be voting on the Waiver Resolution in
respect of their combined interests of 22,366,436 Ordinary Shares
representing 33.614 per cent. of the Company's issued ordinary
share capital (excluding treasury shares) as at 27 March 2024,
being the last practicable date prior to the publication of this
announcement.
7. Action to be
Taken
Please note that a hard copy form of proxy has
been included with the Circular. If you would like to vote on the
Resolutions to be proposed at the GM, you are requested to vote in
accordance with the instructions printed below as soon as
possible.
In the case of CREST members, Shareholders
should record their proxy appointment by utilising the CREST
electronic proxy appointment service in accordance with the
procedures set out in the Notes on page 22 of the
Circular.
The instrument appointing a proxy must reach
the Company's registrars, Neville Registrars Limited, Neville
House, Steelpark Road, Halesowen B62 8HD by no later than 11.00
a.m. on 12 April 2024.
8.
Recommendation
Repurchase Resolution
The Directors recommend all Shareholders to
vote in favour of the Repurchase Resolution to be proposed at the
GM, as they intend to do in respect of their own beneficial
holdings of Ordinary Shares which, as at 27 March 2024, being the
last practicable date prior to the publication of this announcement
in aggregate, amount to 13,815,536 Ordinary Shares representing
approximately 20.76 per cent. of the existing issued ordinary share
capital of the Company. The Directors consider the proposals to be
in the best interests of the Company and its members as a whole and
are most likely to promote the success of the Company for the
benefit of its members as a whole.
Waiver Resolution
The Independent Directors who have been so
advised by Cavendish, believe that the Proposed Buy Back Authority
and the Waiver Resolution are fair and reasonable and in the best
interests of the Independent Shareholders and the Company as a
whole. In providing advice to the Independent Directors, Cavendish
has taken into account the Independent Directors' commercial
assessments.
Accordingly, the Independent Directors
recommend all Independent Shareholders vote in favour of the Waiver
Resolution as they intend to do in respect of their own beneficial
holdings of Ordinary Shares which, as at 27 March 2024, being the
last practicable date prior to the publication of this
announcement, in aggregate amount to 468,720 Ordinary Shares,
representing approximately 0.7 per cent. of the existing issued
ordinary share capital of the Company (exclusive of treasury
shares).
As detailed above, the Concert Party is
considered to be interested in the outcome of the Waiver
Resolution. Accordingly, no Director who is also a member of the
Concert Party (being Nick Jarmany and Gary Mullins) has
participated in the Independent Directors' recommendation and no
member of the Concert Party will vote on the Waiver
Resolution.