Nexus Management Plc Proposed acquisition and readmission to trading on AIM

 
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: [phone] 
M Barney Battles 
 
Merchant Securities Ltd (Nomad)                        Tel: [phone] 
Simon Clements/Virginia Bull 
 
Peterhouse Corporate Finance (Broker)                  Tel: [phone] 
Jon Levinson 
 
Bishopsgate Communications Ltd                         Tel: [phone] 
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