NEXUS MANAGEMENT PLC - Proposed acquisition and readmission to trading on AIM

        






NEXUS MANAGEMENT PLC - Proposed acquisition and readmission to trading on AIM

                                                                30 October 2012

                             Nexus Management Plc                              

                          ("Nexus" or "the Company")                           

   Proposed acquisition of Enables IT Limited, capital reorganisation, board   
           changes, change of name and readmission to trading on AIM           

Nexus Management Plc, the AIM quoted provider of specialist IT Managed Services, announces that it has entered into conditional agreements to acquire the entire issued share capital of Enables, a company which operates in the IT Managed Services sector. The consideration for the acquisition is approximately £4.25 million, which will be satisfied by the issue of 11,798,475 New Ordinary Shares (representing approximately 74.47 per cent. of the Enlarged Issued Share Capital of the Company).

Following Admission and the implementation of the Proposals, the Concert Party, comprising of Michael Walliss, Erica Walliss, Martin Bradburn and Marcus Yeoman will hold interests in Ordinary Shares in excess of 30 per cent. of the Enlarged Issued Share Capital and would normally incur an obligation, under Rule 9 of the City Code, to make a general offer to the Shareholders. However, subject to the approval of Shareholders on a poll at the General Meeting, the Panel has agreed to waive this obligation.

In addition, it is proposed to effect a Capital Reorganisation on the basis of the following two steps:

1. The Existing Ordinary Shares in Nexus will be consolidated by a ratio of

300 to 1. Following this step the resulting ordinary shares in Nexus will

have a nominal value of £0.75.

2. Each resulting ordinary share of £0.75 will then be sub-divided and

re-designated into 1 New Ordinary Share of nominal value £0.01 and 1

Deferred Share of nominal value £0.74.

On Admission, it is proposed that Marcus Hanke will resign as a director of the Company, Martin Bradburn will join the board of the Company and Mark Barney Battles will become Non-Executive Chairman. Further details of the Directors and the Proposed Director of the Company are set out below.

Completion of the Acquisition is conditional, inter alia, on the passing of the Resolutions and Admission becoming effective by not later than 30 December 2012. A General Meeting has been convened for 10.00 a.m. on 23 November 2012 for the purpose of considering and, if thought fit, passing the Resolutions. Subject to the conditions being satisfied, completion is expected to take place upon Admission.

Application will be made to the London Stock Exchange for the Enlarged Issued Share Capital to be admitted to trading on AIM. The AIM Admission Document, which comprises a circular to Shareholders and notice of the General Meeting, will be posted to Shareholders and will be available from the Company's website, www.nexusmanagementplc.com later today. It is expected that Admission will become effective and that dealings in the Enlarged Issued Share Capital will commence on 26 November 2012.

Commenting on the transaction, M Barney Battles, Executive Chairman of Nexus Management plc and proposed non-executive Chairman of Enables IT Group plc, said:

"We believe that Nexus's existing foothold in the US markets will offer an ideal opportunity for Enables to cross sell into this substantial and lucrative market. In addition, we believe that the Enlarged Group will benefit from a significant increase in the critical mass of the UK business which, with the broader client base, will de-risk the US focus of the business and will offer further cross selling opportunities. The added strength to the management team following completion of the transaction should allow for increased leverage of the business through both organic and acquisitive growth."

FURTHER ENQUIRIES

Nexus Management Plc                                   Tel: [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 £0.75.

2. Each resulting ordinary share of £0.75 will then be sub-divided and

re-designated into 1 New Ordinary Share of nominal value £0.01 and 1

Deferred Share of nominal value £0.74.

Holders of fewer than 300 Existing Ordinary Shares will not be entitled to receive a New Ordinary Share following the Capital Reorganisation. Shareholders with a holding in excess of 300 Existing Ordinary Shares, but which is not exactly divisible by 300, will have their holding of New Ordinary Shares rounded down to the nearest whole number of New Ordinary Shares following the Capital Reorganisation. Fractional entitlements, whether arising from holdings of fewer or more than 300 Existing Ordinary Shares, will be aggregated, and in accordance with the articles of association of the Company, sold in the market for the benefit of the relevant Shareholders pro rata to their entitlement (save where the entitlement is below the de minimis amount of £5 set out in the New Articles).

The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares.

New Board

Details of the Directors and the Proposed Director of the Company are set out below. Martin Bradburn will join the board of the Company on Admission. Marcus Hanke will resign as a director of the Company on Admission and Mark Barney Battles will become Non-Executive Chairman.

Existing Directors

Mark Barney Battles (Executive Chairman and proposed Non-Executive Chairman) aged 45, has over 20 years of experience working within the technology, media and telecommunications sectors, operating as both CEO and CFO of many private and publicly traded businesses. Barney trained with Ernst & Young as a Scottish Chartered Accountant and went on to build and sell one of London's first and largest digital marketing agencies in 2000 (now trading under the brand name of LBI). Since 2003, Barney has assumed roles as Chairman or non-executive director across a range of international media and technology businesses assisting with their growth and exit strategies.

Peter Weller (Finance Director and proposed Chief Financial Officer) aged 43, in his early career worked for Harvard International, now part of Alba plc. He joined Coral Racing, part of Bass plc, in 1987 where he remained for 10 years, becoming financial controller to both Coral Racing and Coral Stadia. Immediately prior to joining the Company Peter was financial controller at Barkers Interiors, having qualified as a certified Chartered Accountant in 1999. Peter joined the Group in October 2000 and was appointed Finance Director in January 2001.

Marcus Hanke (Non-Executive Director) aged 41, joined the board of Nexus in November 2011. Marcus began his career at Price Waterhouse (now PricewaterhouseCoopers) and qualified as a Chartered Management Accountant. Marcus worked in industry with Compass Group plc and consulting with KPMG and Deloitte. In 2006, he joined Avisen plc (now 1Spatial plc) as Managing Director and led the growth of the services business and the diversification into software distribution. He is now CEO of 1Spatial plc, responsible for managing the company and formulating and executing long-term strategies, and interacting with clients, employees, investors and other stakeholders.

Over the last 10 years, he has led several corporate performance management programs rolled out in Europe, the Middle East and Africa. His specialist areas include corporate performance management, cost transparency, value based management and the technology enablement of these processes.

Marcus Yeoman (Non-Executive Director) aged 49, is currently non-executive director of AIM listed R4E Group plc, Concha Plc and 1 Spatial plc. He is also a director of two PLUS quoted companies, as well as holding directorships of a number of private companies which have engaged him principally to assist them with their growth strategies. His early career started with the formation of three companies in IT infrastructure and distribution, after which he moved into small company broking and corporate work with Rathbone Stockbrokers Limited and Cheviot Capital (Nominees) Limited. In 2003, Marcus established Springtime Consultants Ltd to act as a consultant or non-executive director to growing companies and those that he could assist with M&A work.

Michael Walliss (Executive Director and Proposed Chief Executive Officer), aged 48, has extensive background knowledge running IT Network Infrastructure and IT Support Services. Working with a variety of leading organisations, Michael has successfully built and operated a number of businesses within the IT sector for over 20 years. Since 1996 he has led Enables as Managing Director and has developed and sold a number of successful companies that originated from the company. His development of key accounts, in particular in the private healthcare environment, has delivered substantial growth at Enables.

Michael started out his career in the mid-eighties in the property construction industry where he trained as an Architect Technician and went on to create his own property construction business specialising in the design and build of high level residential properties. He continues to have an interest within this sector having acquired a number of investment opportunities.

Michael's aspirations are to continue his successes within the IT industry and develop Enables as a global company delivering IT Managed Services that will build shareholder value.

Proposed Director

Martin Bradburn (Proposed Chief Information Officer), aged 42, has worked within the IT services industry for over 20 years. In that time Martin has continued to apply his technological expertise whilst developing his commercial experience.

In 1995 Martin joined Hartshead Education Services and was instrumental in creating and building an IT services business within the company. He was responsible for the day to day management of the IT services division. In 1997 the parent company, Hartshead Solway, was acquired by Capita Group plc. As a result Martin was seconded to Capita-SIMS to provide direction on national projects. Two years after the acquisition Martin joined ANS Group, taking management control of the technical support and delivery elements of the business. In August 2000 ANS Group floated on the Ofex (Plus) market and grew substantially under the control of the management team. In 2004 Martin was appointed to the board of the company as Chief Technical Officer.

Martin joined Enables in 2009. He is currently a director and minority shareholder in the company.

A General Meeting of the Company, to be held at the offices of Brown Rudnick, 8 Clifford Street, London W1S 2LQ on 23 October 2012 at 10.00 a.m. and any adjournment thereof has been convened for the purpose of considering and, if thought fit, passing the Resolutions.

The Independent Director and certain other Shareholders have irrevocably undertaken to the Company to vote in favour of the Resolutions to be proposed at the General Meeting, in respect of their aggregate beneficial holdings totalling 356,000,232 Existing Ordinary Shares, representing approximately 30.17

Subject to the passing of the Resolutions at the General Meeting and on Admission the name of the Company will change to Enables IT Group plc.

Following Admission, the Company will have 15,842,425 Ordinary Shares in issue and admitted to trading on AIM.

                                  Definitions                                  
                                                                               

The following words and expressions shall have the following meanings in this announcement unless the context otherwise requires:

                                                                               
"2006 Act"               the UK Companies Act 2006 as amended                  
                                                                               
"Acquisition"            the acquisition by the Company of the entire issued   
                         share capital of Enables pursuant to the Acquisition  
                         Agreement                                             
                                                                               

"Acquisition Agreements" (i) the principal acquisition agreement dated 30      

                         October 2012 between (1) Michael Walliss, Erica       
                         Walliss and Martin Bradburn, and (2) the Company; and 
                         (ii) the conditional dated 30 October 2012 between (1)
                         Marcus Yeoman and (2) the Company                     
                                                                               
"Admission"              admission of the Enlarged Issued Share Capital to     
                         trading on AIM and such admission becoming effective  
                         in accordance with Rule 6 of the AIM Rules            
                                                                               
"AIM"                    the market of that name operated by the London Stock  
                         Exchange                                              
                                                                               
"AIM Rules"              the AIM Rules for Companies published by the London   
                         Stock Exchange                                        
                                                                               
"Board" or "Directors"   the existing directors of the Company                 
                                                                               

"Capital Reorganisation" the proposed consolidation of every 300 Existing      

                         Ordinary Shares into one ordinary share and           
                         sub-division of each such one ordinary share of       
                         nominal value 75p into one New Ordinary Share and one 
                         Deferred Share                                        
                                                                               

"Capital Reorganisation  6.00 p.m. on 23 October 2012(or such later time and   

                         date as the Board or a duly authorised committee of   
Record Date"             the Board may determine)                              
                                                                               
"Company" or "Nexus"     Nexus Management plc, a public limited company        
                         registered in England and Wales under registered      
                         number 3895363                                        
                                                                               
"Completion"             completion of the Acquisition in accordance with the  
                         terms of the Acquisition Agreements                   
                                                                               

"Consideration Shares"   the 11,798,475 New Ordinary Shares proposed to be     

                         issued to the Vendors in consideration for the        
                         Acquisition                                           
                                                                               
"Deferred Shares"        the new deferred shares of 74p each arising from the  
                         Capital Reorganisation                                
                                                                               
"Enlarged Group"         the Company and its subsidiaries as enlarged by the   
                         Acquisition, to include Enables                       
                                                                               
"Enlarged Issued Share   the entire issued ordinary share capital of the       
Capital"                 Company being the New Ordinary Shares, the            
                         Consideration Shares and the Fee Shares               
                                                                               
"Enables"                Enables IT Limited, a private limited company         
                         incorporated in England and Wales under registered    
                         number 2669422                                        
                                                                               
"Enables Directors"      Michael Walliss, Martin Bradburn and Marcus Yeoman    
                                                                               
"Existing Ordinary       the 1,179,851,765 ordinary shares of 0.25p each in the
Shares"                  capital of the Company in issue at the date of this   
                         document                                              
                                                                               
"General Meeting"        the General Meeting of the Company, to be held at the 
                         offices of Brown Rudnick, 8 Clifford Street, London   
                         W1S 2LQ on 23 October 2012 at 10.00 a.m. and any      
                         adjournment thereof to be held for the purpose of     
                         considering and, if thought fit, passing the          
                         Resolutions                                           
                                                                               

"Independent Director"   Peter Weller                                          
                                                                               
"Irrevocable             the agreement by each of the Directors and certain    
Undertakings"            Shareholders to vote in favour of the Resolutions     
                                                                               
"London Stock Exchange"  London Stock Exchange plc                             

                                                                               
"Merchant Securities"    Merchant Securities Limited, the Company's nominated  
                         adviser                                               
                                                                               
"New Articles"           the new articles of association of the Company        
                         proposed to be adopted at the General Meeting         
                                                                               
"New Ordinary Shares"    the new ordinary shares of £0.01 each in the capital  
                         of the Company arising from the Capital Reorganisation
                                                                               
"Notice"                 the notice convening the General Meeting              
                                                                               
"Ordinary Shares"        the Existing Ordinary Shares or the New Ordinary      
                         Shares as the context requires                        
                                                                               
"Proposed Director"      Martin Bradburn                                       
                                                                               
"Resolutions"            the resolutions set out in the Notice                 
                                                                               
"Rule 9 Waiver"          the waiver of the obligation, which would otherwise   
                         arise on the Concert Party to make a mandatory offer  
                         and the agreement by the Panel to waive the obligation
                         on the Concert Party to make an offer to all          
                         Shareholders pursuant to Rule 9 of the City Code      
                         conditional upon the approval of Resolution 2 at the  
                         General Meeting                                       
                                                                               
"Shareholders"           holder(s) of Existing Ordinary Shares or New Ordinary 
                         Shares (as appropriate)                               
                                                                               

"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern      
                         Ireland                                               
                                                                               
"Vendors"                Michael Walliss, Erica Walliss, Martin Bradburn and   
                         Marcus Yeoman

Copyright r 29 PR Newswire