TIDMNXS
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
GBP4.25 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 GBP0.75.
2. Each resulting ordinary share of GBP0.75 will then be sub-divided and
re-designated into 1 New Ordinary Share of nominal value GBP0.01 and 1
Deferred Share of nominal value GBP0.74.
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 GBP0.75.
2. Each resulting ordinary share of GBP0.75 will then be sub-divided and
re-designated into 1 New Ordinary Share of nominal value GBP0.01 and 1
Deferred Share of nominal value GBP0.74.
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 GBP5 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 GBP0.01 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
END
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