Proposed acquisition

 

TIDMSOV 
 
RNS Number : 7357R 
SovGEM Limited 
06 May 2009 
 

Disclaimer 
 
 
If you are in any doubt about the contents of this announcement or the action 
you should take, you should consult a person authorised for the purposes of the 
Financial Services and Markets Act 2000 who specialises in advising on the 
acquisition of shares and other securities. 
 
 
This announcement does not constitute, or form part of, any offer or invitation 
to sell, allot or issue any solicitation of any offer to purchase or subscribe 
for any shares or other securities, nor shall it (or any part of it) or the fact 
of its distribution form the basis of, or be relied upon in connection with, or 
act as any inducement to enter into, any contract or commitment with respect to 
shares or other securities. 
 
 
Any persons who are considering acquiring shares or other securities are 
reminded that any such purchase or subscription should be made only on the basis 
of the information contained in the Admission Document, which may be different 
from the information contained in this announcement. No reliance may be placed 
for any purpose whatsoever on the information or opinions contained in this 
announcement or on the completeness, accuracy or fairness thereof. 
 
 
The contents of this announcement have not been approved by an authorised person 
for the purposes of section 21 of the Financial Services and Markets Act 2000. 
The financial promotion restriction within Article 67 of Financial Services and 
Markets Act 2000 (Financial Promotion) Order 2005. Set out in section 21 of the 
Financial Services and Markets Act 2000 does not apply to this announcement 
being a communication required by the AIM Rules and, as such, falling within 
Article 67 of Financial Services and Markets Act 2000 (Financial Promotion) 
Order 2005. 
 
 
SovGEM Limited 
 
 
Proposed acquisition of Hanson Westhouse Holdings Limited 
 
 
SovGEM Limited ("SovGEM" or the "Company") (AIM: SOV), the emerging market 
equity finance house, is pleased to announce the proposed acquisition of Hanson 
Westhouse Holdings Limited ("HansonWesthouse"), the holding company of Hanson 
Westhouse Limited, a full-service investment bank specialising in small and 
mid-cap companies and emerging markets. The shares of the Company will be 
suspended from trading on AIM pending the publication of an admission document 
in relation to the proposed acquisition, pursuant to the AIM Rules. 
 
 
Key information 
 
 
  *  The Company is intending to enter into a conditional Sale and Purchase Agreement 
  to acquire the entire issued share capital of HansonWesthouse ("the 
  Acquisition"). 
  *  It is intended that the consideration for the Acquisition will be satisfied by 
  the allotment to the shareholders of HansonWesthouse ordinary shares in SovGEM 
  (the "Consideration Shares"). For the purpose of the Acquisition, 
  HansonWesthouse is valued at GBP3,000,000 (excluding the GBP258,000 proceeds of 
  a preliminary placing previously undertaken by HansonWesthouse at this 
  valuation). The number of the Consideration Shares to be issued as consideration 
  for HansonWesthouse will imply a valuation for SovGEM of 
  GBP2,710,225 (equivalent to 11.9p per Ordinary Share) which equates to a 20 per 
  cent. discount to the SovGEM directors' estimate of the Company's average net 
  asset value over the five business days ending on 5 May 2009. 
  *  The Acquisition will constitute a reverse takeover of the Company under the AIM 
  Rules and so will require the prior approval of existing shareholders. The 
  Acquisition will also require and is conditional on a waiver from the Takeover 
  Panel, which is currently being sought, of the requirement for an offer under 
  Rule 9 that would otherwise arise on completion of the Acquisition. 
 
  *  The Board has concluded that the combination of SovGEM and HansonWesthouse will 
  be one that will be beneficial for existing shareholders. The Board believes 
  that the proposals will allow existing shareholders to derive enhanced benefits 
  from the Company's portfolio and strategy as well as creating the opportunity, 
  particularly given current market conditions, to expand the corporate and 
  advisory business of the enlarged group. 
 
  *  The Board believes that the Enlarged Group will benefit from the skills of 
  accomplished corporate advisory, broking and research professionals with 
  considerable experience in the small and mid-cap broking sector. Their expertise 
  will be complemented by an advisory panel whose members' experience in growing 
  advisory businesses is well recognised throughout the corporate broking 
  industry. 
 
  *  HansonWesthouse raised approximately GBP258,000 through a preliminary placing. 
  In addition, the Company proposes to raise up to a further GBP850,000 through 
  the placing of new ordinary shares in the Company, to fund the costs of the 
  transaction and to provide the Enlarged Group with additional working capital 
  going forward. 
 
 
 
Commenting on the proposed acquisition, Garth Milne, Chairman of SovGEM, said: 
 
 
"The SovGEM board is delighted to be proposing this transaction to our 
shareholders. We recognise the market opportunity that the combined group will 
have.  Our shareholders will gain from exposure to a broader range of revenue 
streams and we remain confident that SovGEM's existing investments will continue 
to benefit from a market recovery. 
 
 
Furthermore we recognise the market need for a return to high quality 
relationship driven corporate broking and advisory services. The HansonWesthouse 
Board coupled with the industry recognised advisory panel believes it is well 
placed in the market cycle, with the right sector and geographic offering, to 
build a long term successful business on behalf of shareholders." 
 
 
Commenting on the proposed acquisition, William Staple, Chief Executive of 
HansonWesthouse, said: 
 
 
"We believe there is a great and timely opportunity to grow a high quality 
relationship-based broking and corporate finance business focusing on small and 
medium-sized companies. The combination of HansonWesthouse and SovGEM with, in 
particular, our experience in emerging markets, notably China, will create a 
well capitalised platform to exploit these opportunities. 
 
 
Additionally the support we will receive from the very experienced non-executive 
directors and the advisory panel will be invaluable." 
 
 
 
For further information: 
 
 
+-----------------------------------------------------------+------------------------------------+ 
| SovGEM Limited                                            |                                    | 
| Garth Milne, Chairman                                     | Tel: [phone]           | 
| Hugh de Lusignan, Chief Executive Officer                 | Tel: [phone]          | 
| [e-mail]                            | www.sovgem.com                     | 
|                                                           |                                    | 
+-----------------------------------------------------------+------------------------------------+ 
| Hanson Westhouse Holdings Limited                         |                                    | 
| William Staple, Chief Executive                           | Tel: [phone]           | 
| [e-mail]                           | www.hansonwesthouse.com            | 
|                                                           |                                    | 
+-----------------------------------------------------------+------------------------------------+ 
| Nominated Adviser                                         |                                    | 
| Smith & Williamson Corporate Finance Limited              |                                    | 
| Azhic Basirov/Joanne Royden-Turner                        | Tel: [phone]          | 
| [e-mail]                        | www.smith.williamson.co.uk         | 
|                                                           |                                    | 
+-----------------------------------------------------------+------------------------------------+ 
| Broker                                                    |                                    | 
| Hanson Westhouse Limited                                  |                                    | 
| Tim Metcalfe                                              | Tel: [phone]           | 
| [e-mail]                          | www.hansonwesthouse.com            | 
|                                                           |                                    | 
+-----------------------------------------------------------+------------------------------------+ 
| Media enquiries:                                          |                                    | 
| Abchurch Communications Limited                           |                                    | 
| Henry Harrison-Topham/Charlie Jack                        | Tel: [phone]          | 
| [e-mail]                           | www.abchurch-group.com             | 
|                                                           |                                    | 
+-----------------------------------------------------------+------------------------------------+ 
 
 
 
 
 
 
 
 
Proposed acquisition of Hanson Westhouse Holdings Limited 
Proposed waivers of Rule 9 of the City Code on Takeovers and Mergers 
Proposed change of name to Hanson Westhouse Holdings plc 
Proposed consolidation of Ordinary Shares 
and 
Re-admission to trading on AIM 
 
 
 
 
Introduction 
 
 
The Company is intending to enter into a conditional Sale and Purchase Agreement 
to acquire the entire issued share capital of Hanson Westhouse Holdings Limited 
("HansonWesthouse"), the holding company of Hanson Westhouse Limited, an 
integrated corporate finance and broking house. The consideration for the 
Acquisition will be satisfied in full by the allotment to the Vendors of the 
Consideration Shares. For the purpose of the Acquisition, HansonWesthouse is 
valued at GBP3 million (excluding the proceeds of GBP258,000 of a preliminary 
placing previously undertaken by HansonWesthouse at this valuation). The number 
of Consideration Shares which will be issued as consideration for 
HansonWesthouse will imply a valuation for SovGEM of GBP2,710,225 (equivalent to 
11.9p per Ordinary Share) which equates to a 20 per cent. discount to the SovGEM 
directors' estimate of the Company's average net asset value over the five 
business days ending on 5 May 2009. There will be no cash consideration to be 
paid as part of the terms of the Acquisition. HansonWesthouse raised GBP258,000 
pursuant to the Preliminary Placing and the Company intends, conditional on 
Admission, to raise up to a further GBP850,000 pursuant to the Placing, as 
further explained below. 
 
 
The Acquisition will constitute a reverse takeover of the Company under the AIM 
Rules and this will require the prior approval of Existing Shareholders at the 
General Meeting. In conjunction with the Acquisition, the Company proposes to 
change its name to Hanson Westhouse Holdings plc and to consolidate its Ordinary 
Shares into New Ordinary Shares in accordance with which five Ordinary Shares 
would be consolidated into one New Ordinary Share. 
 
 
Following completion of the Acquisition and the issue of Placing Shares pursuant 
to the Placing, as the Concert Party (comprising the current shareholders of 
HansonWesthouse) is expected to be interested in more than 30 per cent. of the 
voting rights in the Company on Admission, in normal circumstances a general 
offer to Existing Shareholders would be required under Rule 9 of the Takeover 
Code to acquire all the Ordinary Shares not already owned by the Concert Party. 
However, the Company is seeking that the Panel agree to waive the requirement 
for an offer under Rule 9 that would otherwise arise on completion of the 
Acquisition, subject to the approval of Existing Shareholders. The completion of 
the Acquisition is subject to this waiver being granted. 
 
 
Background to and reasons for the Acquisition 
 
 
The Board has been looking for a business to complement the Company's existing 
business, share and reduce costs and create a larger business that has several 
income streams, and will ultimately be a stronger entity for its shareholders. 
 
 
The Board has concluded that the combination of the businesses of SovGEM and 
HansonWesthouse will be beneficial for Existing Shareholders. The Board believes 
that the Proposals will allow Existing Shareholders to derive enhanced benefits 
from the Company's portfolio and strategy as well as creating the 
opportunity, particularly given current market conditions, to expand the 
advisory and corporate broking business of the Enlarged Group. 
 
 
The combination of the businesses of the Company and HansonWesthouse will, in 
the view of the Board, create a more cost effective business with a strong asset 
base, a variety of income streams and complementary skills, which is expected to 
enhance the profitability of the Enlarged Group. 
 
 
Information on HansonWesthouse 
 
 
HansonWesthouse holds 100% of the shares in the regulated, operating business, 
Hanson Westhouse Limited. Headquartered in the City of London, the business of 
Hanson Westhouse Limited started in 2004 (initially trading as Westhouse 
Securities LLP). Hanson Westhouse Limited offers both corporate advisory and 
broking services to small and medium sized public and private companies. It has 
a particular specialisation in servicing companies admitted to trading on the 
AIM market with international operations, particularly in the natural resources 
sector and those based in Asia. 
 
 
Hanson Westhouse Limited is authorised and regulated by the FSA, is a member of 
the London Stock Exchange and is a registered AIM nominated adviser and broker. 
 
 
Hanson Westhouse Limited currently employs 30 staff headed by William Staple, 
the Chief Executive. Employees are divided approximately equally between the 
Corporate Advisory department, the Corporate Broking department and the Research 
department (excluding senior management and administration staff). 
 
 
Hanson Westhouse Limited currently has 32 retained publicly traded clients in a 
range of sectors including 15 in the natural resources sector and 12 which have 
operations in Asia. The majority of the publicly traded clients are traded on 
AIM. In addition, Hanson Westhouse Limited acts for a number of private 
companies. 
 
 
The business of Hanson Westhouse Limited is primarily based in the City of 
London, but it also has an office in Leeds. Hanson Westhouse Limited has formed 
a strategic alliance with Agile Partners, a small corporate advisory boutique 
based in Beijing, China, as well as other close working relationships with a 
number of advisory businesses worldwide. 
 
 
Financial information on HansonWesthouse, including HansonWesthouse's results 
for the year ended 31 December 2008, will be published in the Admission 
Document. 
 
 
Information on SovGEM 
 
 
SovGEM Limited is admitted to trading on AIM and specialises in providing 
investment finance to companies operating in emerging markets, especially in 
China. Co-founded by Hugh de Lusignan and Douglas Kearney, the Company was 
admitted to trading on AIM in November 2004 at which time it raised 
approximately GBP2.8 million. Since then, SovGEM has invested into a diverse 
range of companies from a variety of industry sectors in China as well as in 
other emerging markets. SovGEM currently has holdings in 18 companies, the 
securities of 14 of which are publicly traded and the securities of four of 
which are privately held. 
 
 
Although there are exceptions in the portfolio, SovGEM focuses on investing in 
companies that supply goods and services to satisfy Chinese domestic demand 
rather than producing for export markets. SovGEM generally invests in securities 
representing no more than 5% of the relevant investee company and does not seek 
to take short investment positions. SovGEM's portfolio has exposure to a range 
of industrial sectors, including electronics and electrical goods, oil and gas 
exploration, gas distribution, manufacturing, mining and minerals, 
pharmaceuticals and software. 
 
 
Financial information on SovGEM, including SovGEM's results for the year ended 
31 December 2008, will be published in the Admission Document. 
 
 
Intentions regarding the Enlarged Group 
 
 
The Board believes that the Enlarged Group will be well positioned to take 
advantage of opportunities to grow its business, in particular those presented 
by the current economic downturn. 
 
 
It is the Board's intention that the Enlarged Group's principal place of 
business will become HansonWesthouse's existing premises in the City of London. 
A consequence of this is that the Enlarged Group is likely to become UK resident 
for tax purposes following Admission. There will not be any redeployment of the 
Company's fixed assets. 
 
 
It is the Board's intention that the existing SovGEM executive management, Hugh 
de Lusignan and Douglas Kearney, will be employed within the Enlarged Group and 
that the existing staff of HansonWesthouse will be retained. In particular, the 
Board believes that the complementary skills of the SovGEM and HansonWesthouse 
management, particularly in relation to the Chinese market, can be utilised to 
the benefit of the Enlarged Group. 
 
 
It is the intention of the Board to manage the existing SovGEM portfolio as an 
investment portfolio within the Enlarged Group. The Board proposes to establish 
an investment committee following Admission, consisting of members of the 
current SovGEM and HansonWesthouse management, who will be responsible for the 
management of SovGEM's investment portfolio. 
 
 
The Enlarged Group will also continue to focus on HansonWesthouse's existing 
areas of business, taking advantage of opportunities to grow the business 
through the hiring of additional staff as the Board feels is appropriate. The 
Board believes that the profile of the Enlarged Group will be enhanced through 
Admission and this will assist in the retention and winning of new corporate 
clients, together with the retention and hiring of staff. 
 
 
Principal terms and conditions of the Acquisition 
 
 
As noted above, under the terms of the Sale and Purchase Agreement, SovGEM is to 
acquire all the issued share capital of HansonWesthouse in consideration for the 
allotment and issue of the Consideration Shares (credited as fully paid). The 
consideration for the Acquisition will be satisfied in full by the allotment to 
the Vendors of the Consideration Shares. For the purpose of the 
Acquisition, HansonWesthouse is valued at GBP3 million (excluding the GBP258,000 
proceeds of a preliminary placing previously undertaken by HansonWesthouse at 
this valuation). The number of Consideration Shares to be issued as 
consideration for HansonWesthouse will imply a valuation for SovGEM of 
GBP2,710,225 (equivalent to 11.9p per Ordinary Share) which equates to a 20 per 
cent. discount to the SovGEM directors' estimate of the Company's average net 
asset value over the five business days ending on 5 May 2009. 
 
 
The Acquisition will be conditional on, inter alia, the passing of the 
Resolutions at the General Meeting, FSA Approval having been received, the Panel 
agreeing to waive the requirement for an offer under Rule 9 that would otherwise 
arise on completion of the Acquisition and Admission becoming effective. 
 
 
Under the terms of the Sale and Purchase Agreement, the HansonWesthouse Shares 
will be acquired free from all liens, charges, equitable interests, 
encumbrances, and third party rights and together with all rights now 
or hereafter attaching thereto, including the right to all dividends and other 
distributions, if any, hereafter declared, made or paid. 
 
 
Hanson Westhouse Limited is authorised and regulated by the FSA. The FSA has 
been notified of the Acquisition in accordance with section 178 FSMA. An 
application for a change in controller was submitted to the FSA on 28 April 2009 
(the "Application"). It is one of the conditions of the Sale and Purchase 
Agreement that the FSA approves unconditionally, or confirms that it has no 
objection to, the Acquisition or, in the absence of such approval or 
confirmation or notification by the FSA that the Application is incomplete, the 
period has elapsed within which the FSA may, pursuant to section 189(4)(b) 
FSMA, give notice that it has determined to approve the Acquisition 
unconditionally or give a warning notice to the effect that either it proposes 
to approve the Acquisition conditionally or to object to the Acquisition, 
without the FSA having given notice to that effect. 
 
 
Financial effects of the Acquisition 
 
 
The purpose of the funds raised pursuant to the Preliminary Placing and the 
Placing will be to fund the costs of the implementation of the Proposals and 
provide the Enlarged Group with additional working capital going forward. The 
Directors believe that the Placing, together with the financial resources of 
HansonWesthouse and SovGEM, will help to position the Enlarged Group as a 
business with a solid asset base and enable it to develop into a larger business 
with several income streams. 
 
Board of Directors following Admission 
 
 
On Admission, the Board will comprise: 
 
 
Garth Milne (Non-executive Chairman) 
Mr Milne has been involved with investment funds in the City for over 30 years. 
He was formerly head of the investment funds team at UBS Warburg, having 
originally set up the team at Laing & Cruickshank. He is currently a 
non-executive director of Invesco Perpetual UK Smaller Companies Trust 
plc, Directors' Dealing Investment Trust plc, Real Estate Opportunities Limited 
and Utilico Emerging Markets Limited. 
 
 
William Staple (Chief Executive) 
Mr Staple joined Cazenove & Co in 1972 after qualifying as a Barrister. In 1981 
he joined NM Rothschild & Sons and became a Director of the bank in 1986. He was 
seconded by Rothschild to the Takeover Panel as Director General in 1994, 
returning to Rothschild in 1996. Mr Staple left Rothschild in 1999 to help 
establish Benfield Advisory, part of the Benfield reinsurance broking group. He 
joined Brown Shipley in 2001 and became Chief Executive of Westhouse Securities 
(subsequently HansonWesthouse) in 2005. 
 
 
Jonathan Azis (Finance Director) 
Mr Azis, Finance Director, was previously an adviser to Lord Hanson having been 
a director, company secretary and tax manager of Hanson PLC. A solicitor, he is 
a non-executive director of Victrex plc, Molins plc and on the council of Royal 
Albert Hall. 
 
 
Andrew Beeson (Non-executive director) 
Mr Beeson was the founder and chief executive officer of the Beeson Gregory 
Group and subsequently chairman of Evolution Group plc following its merger with 
Beeson Gregory, before leaving in 2003. He founded the City Group for Smaller 
Companies in 1992, now known as QCA (Quoted Company Alliance), and became its 
first chairman. Between 2001 and 2004 he was a director of IP Group Plc and is 
currently a non-executive director of Schroders plc and Nelson Bakewell Holdings 
Limited, is on the advisory board of Armstrong Bonham Carter and is co-Chairman 
of DataWind Inc. 
 
 
Sir Hayden Phillips GCB (Non-executive director) 
Sir Hayden is chairman of the National Theatre, and amongst other appointments 
he is an adviser to Englefield Capital and Deputy Chairman of Hanson Transport. 
His previous career was in the Civil Service, where he was Permanent Secretary 
of the Lord Chancellor's Department (now the Ministry of Justice) from 1998 to 
2004, and Permanent Secretary of the Department of Culture, Media and Sport from 
1992 to 1998. Before that he held senior positions in the Treasury, the Cabinet 
Office, the Home Office and in the European Commission. 
 
 
Advisory panel 
 
 
Given that the Enlarged Group will be at an early and growing stage of its 
development it is considered to be advantageous to have access to experienced 
senior individuals who will help guide the development of the business across 
its various areas of operation. The Board therefore proposes to establish an 
advisory panel following Admission, initially comprising the following people: 
 
 
Christopher Holdsworth Hunt 
Mr Holdsworth Hunt was co-founder and previous managing director of KBC Peel 
Hunt, a stockbroker specialising in corporate broking to small and medium sized 
companies. He was head of corporate finance and responsible for overseeing 
numerous flotations and secondary fund-raisings, especially of companies 
admitted to trading on AIM. Prior to founding Peel Hunt in 1989 he was a 
director of Morgan Grenfell Securities, having previously been a managing 
partner of Pinchin Denny & Co. He is a former member and deputy chairman of the 
Stock Exchange Domestic Equities Rules Committee. 
 
 
Peter Meinertzhagen 
Mr Meinertzhagen joined Hoare Govett in 1965, was head of Hoare Govett equity 
sales and was appointed Chairman of Hoare Govett Limited, subsequently ABN AMBRO 
Hoare Govett, in 1990. He served in this role until retiring in 2007 after 
nearly 42 years in the City. He is formerly a non-executive director of the 
London Stock Exchange plc. 
 
 
Christopher Munro 
Mr Munro is a director of Beckwith Asset Management and Pacific Capital Partners 
and a non-executive director of Jupiter Second Enhanced Income Trust. Previously 
he was chief executive of River & Mercantile Investment Management, a director 
of Robert Fleming Holdings with responsibility for the UK and European 
stockbroking department of Robert Fleming Securities and a director of Jardine 
Fleming Holdings, based in Hong Kong. 
 
 
Mark Greaves 
Mr Greaves is a shareholder of and consultant to HansonWesthouse. Mr Greaves 
joined NM Rothschild & Sons in 1977 working in London, Hong Kong and Singapore. 
He was appointed to the main board of Rothschild in 1994 and had overall 
management responsibility for all the group's businesses in Asia as Managing 
Director for the region.  In 2002, he left Rothschild to set up Anglo FarEast 
Group, a consulting business specialising in transactions involving Asia and the 
UK, becoming Chief Executive of Hanson Capital in 2004.  Mr Greaves, who is 
based in Singapore, is on the board of a number of companies including Gome 
Electrical Appliances Holding Limited, Sinosoft Technology plc and Octtane Pte 
Ltd. 
 
 
Robert Hanson 
Mr Hanson is currently the chairman of HansonWesthouse. He joined NM Rothschild 
& Sons in 1983 where he worked initially in London and later at its subsidiaries 
in Hong Kong, Chile and Spain. In 1990 he joined Hanson PLC becoming a main 
board director in 1992 with responsibility for strategy, mergers and acquisition 
transactions. He left Hanson PLC at the end of 1997 to set up Hanson Capital. He 
is a non executive director of Ivanhoe Mines Ltd, e-commerce Logistics Ltd and 
chairman of Sport & Artist Management. He is also chairman of Hanson Transport 
Group, a private Hanson family company. 
 
 
Tim Stephenson 
Mr Stephenson is chairman of Stephenson & Co, a niche executive search firm that 
specialises in filling board appointments in the financial services sector. He 
started his career in the Army where he spent 7 years with the Welsh Guards. He 
then joined Gallahers where he held a number of senior production and human 
resource appointments and was a founder member for the Board Of The Labours 
Relations Agency (ACAS) for Northern Ireland. He was later Chief Executive of 
Grafton Inc, a specialist supplier to the IT industry, which was sold in 1986. 
 
 
The advisory panel will provide advice to the Enlarged Group in their respective 
areas of expertise and will meet formally two or three times a year, together 
with informal ad hoc meetings. Members of the advisory panel will also be 
available individually to advise the Enlarged Group. 
 
 
 
The Placing and proposed use of proceeds 
 
 
It is intended that Hanson Westhouse Limited, acting as agent for the Company, 
will place with investors New Ordinary Shares to raise up to GBP850,000. The 
Placing, which will not be underwritten, will be conditional upon Admission 
becoming effective. The proceeds of the Placing (together with the amount raised 
pursuant to the Preliminary Placing) will be used to fund the cost of 
implementing the Proposals and to provide working capital for the Enlarged 
Group. In addition, up to GBP125,000 of the proceeds raised in the Placing will 
be used to repay part of the Convertible Loan. 
 
 
Consolidation of share capital 
 
 
The Company is proposing that every five issued and every five authorised but 
unissued Ordinary Shares will be consolidated into one New Ordinary Share. The 
New Ordinary Shares will have identical rights to those attaching to the 
Existing Shares. A resolution to effect the Consolidation will be proposed at 
the General Meeting. Any entitlements to a fraction of a New Ordinary Share 
arising as a result of the Consolidation will not be issued to existing 
Shareholders but will be aggregated and (so far as is practicable) sold in the 
market for the benefit of the Company. 
 
 
Appendix 
 
 
+---------------------------+----------------------------------------------------------------------+ 
| "Acquisition"           | the proposed acquisition of the entire issued share capital of       | 
|                           | HansonWesthouse by the Company                                       | 
+---------------------------+----------------------------------------------------------------------+ 
| "Admission"             | admission of the Enlarged Issued Share Capital to trading on AIM and | 
|                           | such admission becoming effective in accordance with the AIM Rules   | 
+---------------------------+----------------------------------------------------------------------+ 
| "Admission Document       | the document to be sent to Shareholders containing information on    | 
|                           | the Proposals                                                        | 
+---------------------------+----------------------------------------------------------------------+ 
| "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   | 
|                           | from time to time governing admission to and operation of AIM        | 
+---------------------------+----------------------------------------------------------------------+ 
| "Board"                 | the directors of the Company prior to or post Admission, as the      | 
|                           | context requires                                                     | 
+---------------------------+----------------------------------------------------------------------+ 
| "Company" or "SovGEM" | SovGEM Limited, a company incorporated and registered in Jersey      | 
|                           | under the Companies Law 1991 with registered number 88781            | 
+---------------------------+----------------------------------------------------------------------+ 
| "Concert Party"         | the Vendors, who are deemed by the Panel to be acting in concert in  | 
|                           | relation to the Acquisition                                          | 
+---------------------------+----------------------------------------------------------------------+ 
| "Consideration Shares"  | the 5,475,630 New Ordinary Shares (equivalent to 27,378,151 Ordinary | 
|                           | Shares) to be issued by the Company to the Vendors on completion of  | 
|                           | the Acquisition                                                      | 
+---------------------------+----------------------------------------------------------------------+ 
| "Consolidation"         | the proposed consolidation of the issued Ordinary Shares and         | 
|                           | authorised but as yet unissued Ordinary Shares into New Ordinary     | 
|                           | Shares in accordance with which five Ordinary Shares shall be        | 
|                           | consolidated into one New Ordinary Share                             | 
+---------------------------+----------------------------------------------------------------------+ 
| "Convertible Loan"      | the convertible loan by Robert Hanson to the Company                 | 
+---------------------------+----------------------------------------------------------------------+ 
| "Directors"             | the Existing Directors and the Proposed Directors                    | 
+---------------------------+----------------------------------------------------------------------+ 
| "Enlarged Group"        | the Company and its subsidiaries following completion of the         | 
|                           | Acquisition                                                          | 
+---------------------------+----------------------------------------------------------------------+ 
| "Enlarged Issued Share   | the entire issued ordinary share capital of the Company immediately  | 
| Capital"                 | following Admission comprising the Existing Shares, the              | 
|                           | Consideration Shares and the Placing Shares                          | 
+---------------------------+----------------------------------------------------------------------+ 
| "Existing Directors"    | the existing directors of the Company being Garth Milne, Hugh de     | 
|                           | Lusignan, Douglas Kearney, Howard Bilton, Christopher Labrow, Allan  | 
|                           | Moloney and Peter St George                                          | 
+---------------------------+----------------------------------------------------------------------+ 
| "Existing Shares"       | the 22,775,000 Ordinary Shares in issue immediately prior to         | 
|                           | Admission, the Placing and the Consolidation                         | 
+---------------------------+----------------------------------------------------------------------+ 
| "Existing Shareholders" | the holders of the Existing Shares                                   | 
+---------------------------+----------------------------------------------------------------------+ 
| "FSA"                   | the UK Financial Services Authority                                  | 
+---------------------------+----------------------------------------------------------------------+ 
| "General Meeting"       | the extraordinary general meeting of the Company to be convened for  | 
|                           | the purposes of passing the Resolutions, or any adjournment thereof  | 
+---------------------------+----------------------------------------------------------------------+ 
| "HansonWesthouse"       | Hanson Westhouse Holdings Limited, a company incorporated in England | 
|                           | & Wales under the 1985 Act with registered number  06212832          | 
+---------------------------+----------------------------------------------------------------------+ 
| "Hanson Westhouse        | Hanson Westhouse Limited, a company incorporated in England and      | 
| Limited"                 | Wales under the 1985 Act with registered number 05861129             | 
+---------------------------+----------------------------------------------------------------------+ 
| "New Ordinary Shares"   | ordinary shares of 0.005p each in the capital of the Company,        | 
|                           | following the Consolidation                                          | 
+---------------------------+----------------------------------------------------------------------+ 
| "Notice of General       | the notice convening the General Meeting which will be sent to       | 
| Meeting"                 | Shareholders with the Admission Document                             | 
+---------------------------+----------------------------------------------------------------------+ 
| "Ordinary Shares" or    | ordinary shares of 0.001p each in the capital of the Company         | 
| "Shares"                |                                                                      | 
+---------------------------+----------------------------------------------------------------------+ 
| "Panel"                 | the Panel on Takeovers and Mergers                                   | 
+---------------------------+----------------------------------------------------------------------+ 
| "Placing"               | the placing by Hanson Westhouse Limited of the Placing Shares, at    | 
|                           | the Placing Price pursuant to the Placing Agreement                  | 
+---------------------------+----------------------------------------------------------------------+ 
| "Placing Agreement"     | the agreement to be entered into between the Company, the Directors, | 
|                           | Smith & Williamson and Hanson Westhouse Limited relating to the      | 
|                           | Placing and admission of the Enlarged Issue Share Capital to AIM     | 
+---------------------------+----------------------------------------------------------------------+ 
| "Placing Price"         | 59.5p per New Ordinary Share (equivalent to 11.9p per Ordinary       | 
|                           | share)                                                               | 
+---------------------------+----------------------------------------------------------------------+ 
| "Placing Shares"        | the New Ordinary Shares to be allotted and issued pursuant to the    | 
|                           | Placing                                                              | 
+---------------------------+----------------------------------------------------------------------+ 
| "Preliminary Placing"   | the private placement of ordinary shares in the share capital of     | 
|                           | HansonWesthouse to existing shareholders of HansonWesthouse on 30    | 
|                           | December 2008 raising an aggregate amount of GBP258,000              | 
+---------------------------+----------------------------------------------------------------------+ 
| "Proposals"             | the Acquisition, Waivers, Placing and Admission                      | 
+---------------------------+----------------------------------------------------------------------+ 
| "Proposed Directors"    | the proposed new directors of the Company to be appointed as from    | 
|                           | Admission, being William Staple, Jonathan Azis, Sir Hayden Phillips  | 
|                           | and Andrew Beeson                                                    | 
+---------------------------+----------------------------------------------------------------------+ 
| "Resolutions"           | the resolutions which will be set out in the Notice of General       | 
|                           | Meeting                                                              | 
+---------------------------+----------------------------------------------------------------------+ 
| "Sale and Purchase       | the agreement expected to be entered into between the Vendors and    | 
| Agreement"               | the Company pursuant to which the Company would conditionally agree  | 
|                           | to acquire the entire issued share capital of HansonWesthouse        | 
+---------------------------+----------------------------------------------------------------------+ 
| "Shareholders"          | holders of Ordinary Shares or, following the Consolidation, New      | 
|                           | Ordinary Shares                                                      | 
+---------------------------+----------------------------------------------------------------------+ 
| "Smith & Williamson"    | Smith & Williamson Corporate Finance Limited                         | 
+---------------------------+----------------------------------------------------------------------+ 
| "Vendors"               | the holders of the issued share capital of HansonWesthouse being     | 
|                           | Jonathan Azis, Martin Dobson, Timothy Feather, Mark Greaves, Robert  | 
|                           | Hanson, Simon Hodges, Timothy Metcalfe, Sanjiv Pandya, Sir Hayden    | 
|                           | Phillips, William Staple and John Wade                               | 
+---------------------------+----------------------------------------------------------------------+ 
| "Waivers"               | the conditional waivers by the Panel of the obligations of the       | 
|                           | Concert Party to make a general offer to all Existing Shareholders   | 
|                           | under Rule 9 of the Takeover Code to acquire their Ordinary Shares   | 
|                           | (or New Ordinary Shares following the Consolidation)                 | 
+---------------------------+----------------------------------------------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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