REG - Nexus Infrastructure - Proposed disposal of TriConnex & eSmart Networks

Nexus InfrastructureAnnouncement

30/12/2022 07:00

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RNS Number : 2606L  Nexus Infrastructure PLC  30 December 2022

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE UK VERSION OF THE MARKET ABUSE REGULATION (EU 596/ 2014) AS IT FORMS PART
OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED

FOR IMMEDIATE RELEASE

30 December 2022

Nexus Infrastructure plc

("Nexus" or the "Company" or the "Group")

Proposed disposal of TriConnex Limited and eSmart Networks Limited

and

Notice of General Meeting

 

Nexus Infrastructure plc ("Nexus") today announces that it has conditionally
agreed to sell TriConnex and eSmart Networks to FWCP Spark (UK) Holdco Limited
(the "Purchaser"), an indirect wholly owned subsidiary of funds managed or
advised by FitzWalter Capital ("FitzWalter") and its affiliates, for cash
consideration of £77.7 million (the "Disposal").

Transaction highlights:

·     Equity offer value and cash consideration of £77.7 million for
TriConnex and eSmart Networks representing an offer enterprise value of £80.6
million (with adjustments made for cash of £19.6 million to be retained
within the sale perimeter, and debt/debt like items including working capital
within TriConnex and eSmart Networks as at 30 September 2022).

·      The consideration for the Disposal represents:

o  a 11.8% premium to the Nexus Market Capitalisation of £69.5 million (as
at 29 December 2022) and a 26.4% and 26.3% premium to Nexus's average Market
Capitalisation over the past one and three months 1 , respectively; and

o  a FY22 EV/EBIT multiple of c.18.3x 2 .

·    A substantial proportion of the net proceeds from the Disposal will
be returned to Shareholders in early 2023 (assuming the Disposal is approved
by Shareholders) by way of a tender offer. This is expected to be c.£65
million.

On completion of the Disposal, Tamdown will be the principal trading business
of Nexus.

·     Mike Morris, CEO, and Alan Martin, CFO, will step-down from their
current roles at Nexus and become employees and directors of the Purchaser, to
lead TriConnex and eSmart Networks. Mike Morris will remain on the Nexus Board
as a non-executive director post completion of the Disposal.

·     Mike Morris will remain committed to Nexus as the largest
shareholder of the Company and will enter into a 12-month Lock-in Agreement
with the Company, effective from Completion, during which time, subject to
certain customary exceptions, he may not sell or otherwise dispose of any of
his Ordinary Shares.

·    Mike Morris is required to reinvest all of the net proceeds he
receives following the return of capital from the Disposal into FWCP Spark
Midco Limited.

·    Charles Sweeney will be promoted to the Nexus Board as CEO and Dawn
Hillman will be promoted to the Nexus Board as CFO. Both are experienced
individuals with a combined tenure at Nexus of over 40 years.

·      On completion of the Disposal, Nexus will enter into a
transitional services agreement for certain IT, HR, payroll and communication
functions with TriConnex and eSmart Networks.

·      The Disposal is conditional upon shareholder approval. The
General Meeting for approval of the Resolution is on 16 January 2023 and
Completion is expected on or around 3 February 2023.

·    The Independent Directors, being Richard Kilner, Ffion Griffith, Alex
Wiseman, and Clare Lacey, believe that the Disposal is in the best interests
of Nexus and its Shareholders and unanimously recommend that Shareholders vote
in favour of the Resolution. The Independent Directors believe that:

o  The Disposal fairly reflects the value and growth prospects for TriConnex
and eSmart Networks and crystallises value for Shareholders in cash at an
attractive valuation, at a time when there is heightened macroeconomic
uncertainty.

o   The Disposal enables Shareholders to realise a higher value for
TriConnex and eSmart Networks than could otherwise be generated from Nexus'
continued ownership, taking into account the macroeconomic uncertainty and
resulting demand risk in the near term, execution risk in the business plans
(particularly with eSmart Networks given its growth trajectory) and the
investment required to achieve their growth potential.

·    FitzWalter are a global private investment firm managing c.$1 billion
(USD) of funds and represent an attractive owner of TriConnex and eSmart
Networks to ensure that both businesses fulfil their potential and growth
ambitions. The Board understand that the FitzWalter offer is not subject to
any requirement for external debt financing and FitzWalter intend to commit
additional capital to TriConnex and eSmart Networks to support future growth
and expansion.

·   Post Disposal, Shareholders will retain their interest in Nexus with
Tamdown as the principal trading business. Tamdown is well established and
although Nexus will be a smaller business, the Board believes Nexus will
continue to generate value for Shareholders.

·     The Purchaser has received irrevocable undertakings from Mike
Morris, Michelle Morris, Keith Breen, Mary Breen, Alan Martin and the
Independent Directors who hold Ordinary Shares to vote in favour of the
Disposal in respect of a total of 15,902,159 Ordinary Shares, representing, in
aggregate, approximately 34.9% of the Company's issued share capital.

 1  Based on the volume weighted average price over the relevant period.

 2  Based on FY22 unaudited figures

Nexus post completion of the proposed Disposal:

·      Nexus will continue to be a public company quoted on AIM.

·      Charles Sweeney and Dawn Hillman will join the Nexus Board as CEO
and CFO, respectively, following completion of the Disposal. Both have been
with Nexus for a number of years and transition arrangements are in place for
Mike Morris and Alan Martin in the period post completion.

·      Mike Morris will remain on the Nexus Board as a non-executive
director and will remain the largest shareholder; there will be no other
changes to the Board.

·      Tamdown has an established position with a reputation for
providing services to a broad range of the top UK housebuilders over the last
40 years.

·      Tamdown is well advanced with its two-year turnaround strategy to
deliver improving operational performance with a focus on contract quality,
customer retention and improving operating margins to its long term average.

·      The Board believes that the long-term fundamental growth drivers
for Tamdown remain strong given the structural undersupply of housing in the
UK.

·      The Board believes that Tamdown is capable of improving operating
profit margins and generating positive free cash in 2023 and thereafter
supporting a progressive dividend policy. This dividend policy will be
announced shortly after completion of the Disposal.

·      c.£10 million of the net proceeds of the Disposal are to be
retained by Nexus to strengthen its balance sheet and ensure Tamdown has
adequate working capital. To the extent that surplus capital arises in the
future, it is the Board's intention that such capital will be distributed to
Shareholders.

 

Nexus FY22 performance (unaudited):

Further to the trading update on 26 October 2022, the Board confirms that the
Group's FY22 results (for the year ended 30 September 2022) are in line with
expectations. The FY22 results will be published in January 2023.

The following FY22 financials and figures are subject to audit:

·      Group revenue of c.£173.4 million, up c.26.6% on the prior
period.

·      Group operating profit (before exceptional items) of c.£4.0
million, up c.40% on the prior period.

·      Group net cash position (pre-IFRS 16) as at 30 September 2022 was
£24.2 million (FY21: £18.1 million), with £19.6 million within TriConnex
and eSmart Networks.

·      Group order book as at 30 September 2022 was £316.1 million, up
c.9.8% on the prior period (Tamdown: £95.5 million, TriConnex: £197.4
million, eSmart Networks: £23.2 million)

 

Nexus current trading and outlook:

·      Trading in the first quarter of FY23 is in line with the Board's
expectations, with TriConnex and Tamdown continuing to see positive demand for
services despite macroeconomic headwinds building and new build housing market
softness.

·      The two year turnaround plan for Tamdown is well progressed with
operational benefits coming through. Cash within Tamdown has come under
pressure since year end due to higher trading activity coupled with higher
levels of debtors.

·      The eSmart Networks order book has increased significantly year
on year as the business continues to scale, however some recent short-term
supply chain disruption has occurred since September, leading to some delays
in delivering its order book. Whilst these supply side pressures are ongoing
and being managed, the outlook for eSmart Networks remains positive for FY23
although with a significant weighting to H2 FY23.

 

Richard Kilner, Chairman of Nexus, commented:

"Having undertaken a significant review of the Nexus Group, the Board believes
that we have achieved a positive outcome for shareholders and stakeholders.
The transaction today crystallises the inherent value of TriConnex and eSmart
Networks and ensures Tamdown is well capitalised and able to progress with its
two-year turnaround plan focusing on high quality contracts and improving
operating margins towards those achieved historically.

The Independent Board is recommending that Shareholders vote in favour of the
Resolution at the forthcoming General Meeting."

Mike Morris, CEO of Nexus, commented:

"Tamdown is well progressed on its two-year turnaround plan with benefits
coming through and profit margins improving. I remain deeply committed to the
business and will continue with Nexus on the Board as a non-executive director
retaining my shareholding in full. I look forward to Nexus and Tamdown
achieving future success and will be helping and supporting the new executive
leadership team."

Posting of Circular and Notice of General Meeting:

Full details of the proposed Disposal will be included in a circular which is
expected to be published and available on the Group's website shortly
(www.nexus-infrastructure.com).

In view of the size of TriConnex and eSmart Networks relative to the Company,
the Disposal will result in a fundamental change of business of the Company
for the purposes of Rule 15 of the AIM Rules for Companies and is therefore
conditional upon the approval of the Shareholders. That approval will be
sought at a general meeting of the Company to be held at 10.00 a.m. on 16
January 2023 at the Company's registered office at Nexus Park Avenue East,
Skyline 120, Great Notley, Braintree, Essex, England, CM77 7AL.

Enquiries:

 Nexus Infrastructure plc                                                                                       Tel: 01376 320856

 Michael Morris, Chief Executive Officer

 Alan Martin, Chief Financial Officer

 Numis Securities Limited                                                                                       Tel: 0207 260 1200

 Financial Adviser, Nominated Adviser & Broker

 Oliver Hardy (Nomad)

 Heraclis Economides

 Alec Pratt

 Hannah Boros

 Financial Public Relations                                                                                     Tel: 0203 757 4992

 Camarco

 Ginny Pulbrook

 Rosie Driscoll

 

NOTICE IN RELATION TO OVERSEAS PERSONS

The release, publication or distribution of this announcement in or into
jurisdictions other than the UK may be restricted by law and therefore any
person who is subject to the laws of any jurisdiction other than the UK should
inform themselves about and observe any of those restrictions. Any failure to
comply with any of those restrictions might constitute a violation of the
relevant laws or regulations of such jurisdiction.

FORWARD-LOOKING STATEMENTS

This announcement includes "forward-looking statements" which include all
statements other than statements of historical fact, including, without
limitation, those regarding the Group's financial position, business strategy,
plans and objectives of management for future operations, or any statements
preceded by, followed by or that include the words "targets", "believes",
"expects", "aims", "intends", "will", "may", "anticipates", "would, "could" or
similar expressions or negatives thereof. Such forward- looking statements
involve known and unknown risks, uncertainties and other important factors
beyond the Group's control that could cause the actual results, performance or
achievements of the Group to be materially different from the future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions
regarding the Group's present and future business strategies and the
environment in which the Group will operate in the future. These
forward-looking statements speak only as at the date of this document. Whilst
the Directors consider these statements to be reasonable based upon
information currently available, they may prove to be incorrect. However, the
Company expressly disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based unless required to do so by applicable law or the AIM Rules.

NO PROFIT FORECAST OR ESTIMATES

Unless otherwise stated, no statement in this announcement is intended as a
profit forecast or estimate for any period and no statement in this
announcement should be interpreted to mean that earnings, earnings per share
or income, cash flow from operations or free cash flow for the Group, for the
current or future financial years would necessarily match or exceed the
historical published earnings, earnings per share or income, cash flow from
operation or free cash flow from the Group.

Numis Securities Limited ("Numis"), which is authorised and regulated in the
United Kingdom by the FCA, is acting exclusively for Nexus and no one else in
connection with the proposed Disposal and will not be responsible to anyone
other than Nexus for providing the protections afforded to clients of Numis
nor for providing advice in relation to the proposed Disposal or any other
matter referred to herein. Neither Numis nor any of its group undertakings or
affiliates owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Numis in connection with the
proposed Disposal or any matter referred to herein.

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 

 Publication of this announcement and the shareholder Circular               30 December 2022
 Latest time and date for receipt of Forms of Proxy for the General Meeting  10.00 a.m. on 12 January 2023
 General Meeting                                                             10.00 a.m. on 16 January 2023
 Announcement of the results of the General Meeting                          16 January 2023
 Anticipated Completion of Disposal                                          3 February 2023
 Return of capital to Shareholders                                           Early 2023

 

Notes

 

1.     References in this announcement are to London times unless
otherwise stated and are subject to change.

2.     Completion of the Disposal is conditional on the approval by
Shareholders of the Resolution.

3.     Following Completion, the Board expects to return a substantial
proportion of the proceeds from the Disposal to Shareholders (subject to
complying with all relevant law and regulation in effecting such return).

4.     Each of the times and dates above are indicative only and are
subject to change. If any of the above times and/or dates change, the revised
times and/or dates will be notified by the Company to Shareholders by
announcement through a Regulatory Information Service.

5.     All references to figures for the financial year ended 30 September
2022 are approximate and subject to final audit.

 

Proposed Disposal of TriConnex and eSmart Networks
 

1.   Introduction

The Board is pleased to announce that it has conditionally agreed to sell
TriConnex and eSmart Networks to the Purchaser, an indirect wholly-owned
subsidiary of funds managed or advised by FitzWalter and its affiliates, for
cash consideration of £77.7 million.

The Board believes the Consideration for the Disposal represents an attractive
valuation for the two divisions and is at a premium of 11.8% to the Market
Capitalisation of Nexus of £69.5 million as at 29 December 2022 (being the
Latest Practicable Date prior to the publication of this announcement) and a
26.4% and 26.3% premium to Nexus's average Market Capitalisation over the past
one and three months, respectively 3  (#_ftn3) . After deducting associated
transaction costs the Company expects to receive net proceeds from the
Disposal of approximately £75.6 million upon Completion and it is anticipated
that approximately £65 million will be returned to Shareholders in early 2023
as outlined in this announcement, with the remainder of the proceeds to be
kept within Nexus for working capital purposes.

Following Completion, the principal trading entity within Nexus will be
Tamdown, the Group's civil engineering business. Tamdown has undergone a
period of strengthening over the past 18 months and the Directors believe the
division is on-track to deliver improving margins and cash generation.
Following Completion, Nexus will remain quoted on AIM.

In connection with the Disposal, Mike Morris, CEO, and Alan Martin, CFO, will
step-down from their current roles at Nexus and become employees and directors
of the Purchaser, to lead TriConnex and eSmart Networks under their new
ownership. On Completion, Charles Sweeney will be promoted to the Nexus Board
as CEO, having previously been Nexus COO and Dawn Hillman will be promoted to
the Nexus Board as CFO, having previously been Financial Director of TriConnex
and Nexus Company Secretary. Together, Charles and Dawn have been with Nexus
for 43 years, bringing both continuity and experience to their new roles. In
addition, Mike Morris will remain on the Nexus Board as a non-executive
director following Completion and appropriate transition arrangements are in
place for Mike Morris and Alan Martin in the period post Completion. Mike
Morris will remain committed to Nexus as the largest shareholder of the
Company and will enter into a 12-month Lock-in Agreement with the Company,
effective from Completion, during which time, subject to certain customary
exceptions, he may not sell or otherwise dispose of any of his Ordinary
Shares.

The purpose of this announcement is to explain the background to, and reasons
for, the proposed Disposal, and to explain why the Independent Directors
consider it to be in the best interests of Nexus and its Shareholders as a
whole and unanimously recommend that Shareholders vote in favour of the
Resolution set out in the Notice of General Meeting. Given that Mike Morris
and Alan Martin will become employees and directors of the Purchaser, they are
considered by the Board to be non-independent for the purposes of the
Disposal.

The Independent Directors believe that the Offer fairly reflects the value and
growth prospects of TriConnex and eSmart Networks and crystallises value for
Shareholders in cash at an attractive valuation, at a time of heightened
macroeconomic uncertainty. The Independent Directors believe that the Disposal
enables Shareholders to realise a higher value for TriConnex and eSmart
Networks than could otherwise be generated from Nexus' continued ownership,
taking into account the macroeconomic uncertainty and resulting demand risk in
the near term, execution risk in the business plans (particularly with eSmart
Networks given its growth trajectory) and the investment required to achieve
their growth potential.

In view of the size of TriConnex and eSmart Networks relative to the Company,
the Disposal will result in a fundamental change of business of the Company
for the purposes of Rule 15 of the AIM Rules for Companies and is therefore
conditional upon the approval of Shareholders. That approval will be sought at
a General Meeting of the Company to be held at 10.00 a.m. on 16 January 2023
at the Company's registered office at Nexus Park Avenue East, Skyline 120,
Great Notley, Braintree, Essex, England, CM77 7AL.

The Purchaser has received irrevocable undertakings from Mike Morris, Michelle
Morris, Keith Breen, Mary Breen, Alan Martin and the Independent Directors who
hold Ordinary Shares to vote in favour of the Disposal in respect of a total
of 15,902,159 Ordinary Shares, representing, in aggregate, approximately 34.9%
of the Company's issued share capital.

 3  Based on the volume weighted average price over the relevant period.

2.   Background to, and reasons for, the Disposal of TriConnex and eSmart
Networks

 

Nexus announced on 10 December 2021 that it was exploring strategic options
for eSmart Networks with a view to unlocking value for Shareholders through
either a separate listing on AIM or a minority investment. During the course
of 2022, the Board has had a number of conversations with interested parties
capable of providing eSmart Networks with capital to fulfil its ambitious
growth plans. Throughout these discussions it became clear that eSmart
Networks and TriConnex were viewed as complementary businesses with value
attributed to their strategic positioning. As such, the Board is pleased that
the Company has agreed to the conditional sale of both TriConnex and eSmart
Networks to the Purchaser, an indirect wholly-owned subsidiary of funds
managed or advised by FitzWalter and its affiliates, for a total cash
consideration of £77.7 million.

FitzWalter is a global private investment firm established in 2020. FitzWalter
manages approximately US$1 billion and has offices in London, New York and
Hamburg. FitzWalter invests across a broad spectrum of sectors and asset
classes, including corporate businesses, real estate, renewables, aircraft and
other "hard" assets. The Board understand that the Offer is not subject to any
requirement for external debt financing.

The Board believes that FitzWalter intends to commit additional capital to
TriConnex and eSmart Networks to support future growth and expansion and
FitzWalter represents an attractive owner of TriConnex and eSmart Networks to
ensure that both businesses fulfil their potential and growth ambitions for
the benefit of customers, employees and stakeholders.

Reasons for the Disposal:

The Independent Directors believe that the Disposal is in the best interests
of Nexus and its Shareholders as a whole for the following reasons:

 

·      TriConnex and eSmart Networks require capital investment to fully
realise their growth potential. The Independent Directors believe the Disposal
will enable Shareholders to realise a higher value than could be generated
from Nexus' continued ownership, taking into account macro-economic
uncertainty and resulting demand risk in the near term, execution risk in the
business plans (particularly with eSmart Networks given its growth trajectory)
and the investment required to achieve their growth potential.

 

·      The Independent Directors believe that the Market Capitalisation
of Nexus has persistently undervalued Nexus and the sum of its underlying
individual businesses:

o  The Consideration represents a 11.8% premium to Nexus's Market
Capitalisation (as at 29 December 2022) and a 26.4% and 26.3% premium to
Nexus's average Market Capitalisation over the past one month and three
months, respectively 4  (#_ftn4) .

o  The cash consideration reflected in the premia above does not include any
value attributed to Tamdown, which will be the principal operating division of
Nexus post Completion.

o  The Offer values TriConnex and eSmart Networks on a c.18.3x FY22
EV/EBIT 5  (#_ftn5) multiple, materially above the average EV/EBIT multiple
that Nexus has traded on since IPO and the current Nexus FY22 EV/EBIT
multiple.

 

·      The Offer fairly reflects the value and growth prospects for
TriConnex and eSmart Networks and crystallises value for Nexus Shareholders in
cash when there is heightened macroeconomic uncertainty.

 

·      FitzWalter will provide capital to TriConnex and eSmart Networks
and the team at FitzWalter have a strong track record and expertise in growing
energy transition businesses.

 

·      The Disposal will enable Nexus to undertake a significant return
to Shareholders of approximately £65 million in early 2023 (assuming the
Resolution is approved).

·      Post Disposal, Shareholders will retain their interest in Nexus
which will include Tamdown as the principal trading business. Tamdown is well
established and although Nexus will be a smaller business, the Board believes
Nexus will continue to generate value for Shareholders.

 4  Based on the volume weighted average price over the relevant period.
 5  Based on an Offer enterprise value for TriConnex and eSmart Networks of £80.6 million calculated as the Consideration of £77.7 million with adjustments made for cash of £19.6 million to be retained within the sale perimeter, and debt/debt like items including working capital adjustments of £22.5 million as at 30 September 2022. The EV/EBIT multiple is calculated using FY22 unaudited numbers for TriConnex and eSmart Networks.

 

TriConnex overview:

TriConnex is the Group's multi-utilities business which designs, installs and
connects energy, water, fibre networks and EV charging infrastructure on new
residential developments.

For the year ended 30 September 2022 ("FY22") TriConnex generated revenue of
c.£55.7 million, an increase of c.9.7% year on year. In FY22 the division
generated operating profit of c.£5.6 million representing an operating profit
margin of c.10.0%. The TriConnex order book as at 30 September 2022 was
£197.4 million.

                                FY19   FY20   FY21   FY22 (unaudited)
 Order book (£ million)         184.8  185.4  189.0  197.4
 Revenue (£ million)            41.8   39.1   50.7   55.7
 Operating profit (£ million)   4.3    3.4    5.3    5.6
 Operating margin               10.3%  8.7%   10.5%  10.0%

The above figures exclude group PLC costs

 

eSmart Networks overview:

Founded in 2018, eSmart Networks is the Group's energy transition
infrastructure division created to respond to the UK's growing demand for EV
and renewable energy solutions. eSmart Networks provides an integrated service
offering through the design, engineering and installation of smart energy
solutions and infrastructure and currently employs a capital light model as
the business does not own installed assets or completed infrastructure.

In FY22 eSmart Networks generated revenue of c.£19.3 million, an increase of
c.114.7% year on year. The division is scaling up with an employee base of 96
currently. The order book has grown significantly and as at 30 September 2022
was £23.2 million with visibility over a significant pipeline of work. In
FY22 the division recorded an operating loss of c.£1.2 million, which was
impacted by one low margin contract completed within the year and reflecting
continued investment in overhead to support the growing order book and
pipeline.

                                FY19     FY20     FY21  FY22 (unaudited)
 Order book (£ million)         2.5      3.8      13.5  23.2
 Revenue (£ million)            2.1      2.2      9.0   19.3
 Operating profit (£ million)   (0.6)    (0.8)    0.2   (1.2)
 Operating margin (%)           (29.5)%  (36.0)%  1.9%  (6.3)%

The above figures exclude group PLC costs

 

3.   Summary terms of the Disposal

 

Pursuant to the Share Purchase Agreement entered into between the Company and
the Purchaser on 30 December 2022, the Purchaser has conditionally agreed to
acquire TriConnex and eSmart Networks for cash consideration of £77.7
million. The net cash proceeds arising from the Disposal (after anticipated
transaction costs on behalf of Nexus) are expected to be approximately £75.6
million. The offer was based on an enterprise value for TriConnex and eSmart
Networks of £80.6 million calculated as the Consideration of £77.7 million
with adjustments made for cash of £19.6 million to be retained within the
sale perimeter, and debt/debt like items including working capital adjustments
of £22.5 million as at 30 September 2022.

 

The proposed Disposal is conditional upon approval of the Resolution. The
General Meeting for approval of the Resolution is on 16 January 2023 and
Completion is expected on or around 3 February 2023. The Consideration is
determined by using a locked box mechanism based on a 30 September 2022
accounts date and is subject to customary adjustments for any leakage
(excluding permitted leakage).

 

As is usual in transactions of this nature, the Share Purchase Agreement
includes customary warranties and covenants. There is also a customary tax
indemnity. The aggregate liability of Nexus in respect of the warranties
(excluding certain fundamental warranties) and the tax indemnity is limited to
£1 million, as well as other customary limitations. Further details of the
Share Purchase Agreement are set out in paragraph 1 of appendix 1 (Additional
Information) in this announcement.

 

On completion of the Disposal, Nexus will enter into a transitional services
agreement with TriConnex and eSmart Networks. This agreement covers items
around payroll, HR, IT and Communications as detailed in paragraph 2 of
appendix 1 (Additional Information) in this announcement.

 

In connection with the Disposal, Mike Morris, CEO, and Alan Martin, CFO, will
step-down from their current roles at Nexus and become employees and directors
of the Purchaser, to lead TriConnex and eSmart Networks under their new
ownership. Mike Morris will reinvest all of the net proceeds he receives
following the return of capital from the Disposal into FWCP Spark Midco
Limited (an indirect parent undertaking of the Purchaser).

 

Mike Morris has entered into an undertaking agreement with FitzWalter to vote
in favour of the proposed Disposal in respect of his 21.1% shareholding in
Nexus. As part of this agreement, Mike Morris has agreed: (i) to work
exclusively, and in good faith with FitzWalter with a view to facilitating the
Disposal; (ii) not to sell or transfer any of his Ordinary Shares; and (iii)
not to agree or solicit or support any transaction with a third party which is
similar to the Disposal or which is in competition with or which might
otherwise frustrate, impede or delay the Disposal. Further details are
included in paragraph 5 of appendix 1 (Additional Information) in this
announcement.

4.   Use of funds and return of capital

It is expected that upon Completion, expected to be on or around 3 February
2023, the Company will receive total cash consideration of £77.7 million
(£75.6 million net of transaction costs).

It is anticipated that a substantial proportion of the proceeds from the
Disposal, expected to be approximately £65 million, will be returned to
Shareholders in early 2023. The Company will write to Shareholders in due
course setting out the terms and timetable of the capital return. It is
expected that the capital return will be by way of a tender offer, which will
also result in a consolidation of the ordinary share capital. Approximately
£10 million of the net proceeds of the Disposal are to be retained by Nexus
to strengthen its balance sheet and ensure Tamdown has adequate working
capital. To the extent that surplus capital arises in the future, it is the
Board's intention that such capital will be distributed to Shareholders.

5.   Nexus post disposal

Post Completion, Nexus will continue to be a public company quoted on AIM with
Tamdown as the Company's principal operating business.

Upon completion of the Disposal, Charles Sweeney will be appointed to the
Nexus Board as CEO and Dawn Hillman will be appointed to the Nexus Board as
CFO to lead the remaining Nexus group. Charles Sweeney is currently the COO of
Nexus and Dawn Hillman is currently Financial Director of TriConnex and Nexus
Company Secretary. Both individuals have deep knowledge and experience of
Tamdown and Nexus, having worked within the Group for a collective total of 43
years. Mike Morris will remain on the Nexus Board as a non-executive director
following Completion and will remain the largest shareholder. Otherwise, there
will be no other changes to the Nexus Board.

Mike Morris and Alan Martin have committed to an appropriate transition period
during which they will support and work with Charles Sweeney and Dawn Hillman
as part of an orderly handover.

Tamdown overview:

Tamdown has an established position with a reputation for providing services
to a broad range of the top UK housebuilders over the last 40 years. Services
include earthworks, highways, substructures and basements and installing
sustainable drainage systems.

Tamdown has made significant progress in delivering its two-year plan to
improve performance as announced in December 2021. In FY22 Tamdown generated
revenue of c.£98.4 million and operating profit of c.£2.3 million
(representing an operating margin of c.2.3%) and has grown the order book to
£95.5m as at 30 September 2022. As at 30 September 2022 Tamdown had £1.3
million of net cash on balance sheet to support the business in delivering its
order book. Cash within Tamdown has come under pressure since year end due to
higher trading activity coupled with higher levels of debtors.

                                FY19   FY20    FY21    FY22 (unaudited)
 Order book (£ million)         151.6  92.8    85.3    95.5
 Revenue (£ million)            112.2  85.8    78.0    98.4
 Operating profit (£ million)   4.0    (3.3)   (0.6)   2.3
 Operating margin (%)           3.6%   (3.8)%  (0.8)%  2.3%

The above figures exclude group PLC costs

 

Nexus strategy post Disposal

 

Tamdown will be the main operating company of the group post Completion and
will aim to deliver on its strategy of improving operational performance as
set out in December 2021.

·      The business will continue focusing on contract quality, customer
retention, operating efficiencies and improving operating margin back to its
long term average rather than focusing on revenue growth.

·      Tamdown has a strong order book, a detailed contract bidding
process and a successful track record of cost recovery.

·      The Board believes that the long-term fundamental growth drivers
for Tamdown remain strong given the structural undersupply of housing in the
UK

·      Tamdown's order book of £95.5 million (as at 30 September 2022)
provides a degree of future earnings visibility.

·      The Board believes that Tamdown is capable of improving operating
profit margins and generating positive free cash in 2023 and thereafter
supporting a progressive dividend policy. This dividend policy will be
announced shortly after Completion.

A proportion of central overhead costs will be shared between Nexus, TriConnex
and eSmart Networks pursuant to the Transitional Services Agreement, further
details of which are included in paragraph 2 of appendix 1 (Additional
Information) in this announcement. Post Completion, the ongoing central and
PLC costs payable by Nexus are expected to reduce over time from approximately
£2.6 million p.a. to around £1.7 million p.a. to reflect the smaller size of
the group.

Approximately £10 million of the net proceeds of the Disposal are to be
retained by Nexus to strengthen its balance sheet and ensure Tamdown has
adequate working capital. To the extent that surplus capital arises in the
future, it is the Board's intention that such capital will be distributed to
Shareholders.

6.   Financial impact of the Disposal on Nexus

The Disposal will involve Nexus selling TriConnex and eSmart Networks, which
for FY22 together generated c.£75.0 million of revenue and c.£4.4 million of
operating profit, representing c.43.3% and c.108.3% of Group revenue and Group
operating profit respectively. As at 30 September 2022 TriConnex and eSmart
Networks together had a total asset value and net asset value of c.£59.8
million and c.£8.4 million, representing c.48.9% and c.24.3% of Group total
asset value and net asset value respectively (based on unaudited FY22
financials). As a result of the Disposal, ongoing revenue and profit for Nexus
will be materially reduced and there is expected to be a one-off profit on
disposal of approximately £72 million which will be recognised in Nexus's
accounts for the year ending 30 September 2023.

Nexus intends to publish its results for the year ended 30 September 2022 in
January 2023. Under IFRS the accounts will be presented on a continuing and
discontinued basis.

In April 2022 Nexus conducted a sale and lease back of its head office, Nexus
Park. Following the Disposal, the lease for Nexus Park will remain with Nexus
Park Limited, a wholly owned subsidiary of Nexus. Subleases are being put in
place with each of Tamdown, TriConnex and eSmart Networks and the cost of the
Nexus Park lease (including rent and service charges) will be split between
the three businesses based upon usage of the premises. Given that the cost of
the lease will be borne by these entities, Nexus Park Limited will be
breakeven at the operating level. Under IFRS 16 Nexus currently accounts for
Nexus Park as a right of use asset and post Completion of the Disposal there
will continue to be a non-cash interest charge relating to the Nexus Park
lease of approximately £0.7 million per annum.

7.   Irrevocable undertakings

Pursuant to the undertaking entered into between Mike Morris and FitzWalter
(as described in paragraph 5 of appendix 1 (Additional Information) in this
announcement), Mike Morris has provided an irrevocable undertaking to vote in
favour of the Resolution in respect of his 9,590,710 Ordinary Shares
representing 21.1 % of the Company's issued share capital.

Separately, the other Directors who hold Ordinary Shares in the Company, being
Alan Martin, Richard Kilner, Ffion Griffith and Alex Wiseman, have irrevocably
undertaken to vote in favour of the Resolution at the General Meeting in
respect of their own beneficial holdings of, in aggregate, 277,042 Ordinary
Shares, representing approximately 0.61% of the Company's issued share
capital.

 Board irrevocable undertakings           Number of Ordinary Shares  % Holding
 Mike Morris (CEO)                        9,590,710                  21.05%
 Alan Martin (CFO)                        165,781                    0.36%
 Richard Kilner (Non-Executive Chairman)  53,142                     0.12%
 Alex Wiseman (NED)                       53,000                     0.12%
 Ffion Griffith (NED)                     5,119                      0.01%
 Total                                    9,867,752                  21.66%

*Alex Wiseman's holding includes ordinary shares held by his spouse

In addition, the following Shareholders have provided irrevocable undertakings
to vote in favour of the Resolution, representing, in aggregate, 13.25% of the
Company's issued share capital.

 Irrevocable undertakings  Number of Ordinary Shares  % Holding
 Keith Breen               5,228,757                  11.48%
 Michelle Morris           483,400                    1.06%
 Mary Breen                322,250                    0.71%
 Total                     6,034,407                  13.25%

The Purchaser has therefore received irrevocable undertakings in respect of a
total of 15,902,159 Ordinary Shares, representing, in aggregate, approximately
34.9% of the Company's issued share capital.

Further details of these irrevocable undertakings are set out in paragraph 6
of appendix 1 (Additional Information) in this announcement.

8.   Lock-in Agreement

Mike Morris will enter into a Lock-in Agreement, pursuant to which he will
undertake to the Company not to dispose of any of the 9,590,710 Ordinary
Shares held by him for a period of 12 months following Completion (the
"Lock-in Period"), subject to certain customary exceptions (including with
respect to any buyback or tender offer).

Furthermore, Mike Morris will also undertake to the Company not to dispose of
any of his Ordinary Shares for the period of 12 months following the expiry of
the Lock-in Period otherwise than through the Company's broker.

Further details of this Lock-in Agreement are set out in paragraph 7 of
appendix 1 (Additional Information) in this announcement.

9.   FY22 results and current trading

The Board confirms that the Group' FY22 results are in line with the Board's
expectations with Group revenue of approximately £173.4 million, up
approximately 26.6% on the prior period, and Group operating profit of
approximately £4.0 million, up approximately 40% on the prior period (before
exceptional items). The Group's net cash position (pre-IFRS 16) as at 30
September 2022 was £24.2 million (FY21: £18.1 million), with £19.6 million
within TriConnex and eSmart Networks. The Group's order book as at 30
September 2022 was £316.1 million, up 9.8% on the prior period. These figures
are subject to final audit and the FY22 results will be published in January
2023.

Trading in the first quarter of FY23 is in line with the Board's expectations,
with TriConnex and Tamdown continuing to see positive demand for services
despite macroeconomic headwinds and new build housing market softness. The
two-year turnaround plan for Tamdown is well progressed with operational
benefits coming through. Cash within Tamdown has come under pressure since
year end due to higher trading activity coupled with higher levels of debtors.
The eSmart Networks order book has increased significantly year on year as the
business continues to scale, however some recent short-term supply chain
disruption has occurred since September, leading to some delays in delivering
its order book. Whilst these supply side pressures are ongoing and being
managed, the outlook for eSmart Networks remains positive for FY23 although
with a significant weighting to H2 FY23.

10. Board recommendation

The Independent Directors consider that the Disposal is in the best interests
of the Company and its Shareholders as a whole.

The Independent Directors have irrevocably committed to vote in favour of the
Resolution in respect of their aggregate shareholdings of 111,261 Ordinary
Shares representing approximately 0.24% of the Ordinary Shares in issue at the
date of this announcement.

 

Appendix 1: Additional Information

 

1)    Share Purchase Agreement

Parties and structure

The Share Purchase Agreement was entered into on 30 December 2022 between
Nexus and the Purchaser. Pursuant to the terms of the Share Purchase
Agreement, Nexus has agreed to sell the entire issued share capital of
TriConnex and eSmart Networks.

Condition

Completion of the Disposal is conditional on the approval by Shareholders of
the Resolution (the "Condition").

Completion of the Share Purchase Agreement will take place within 14 Business
Days of the date on which the Condition is satisfied or waived.

Consideration

The consideration is determined by using a locked box mechanism supported by
the locked box accounts for TriConnex and eSmart Networks dated 30 September
2022 (being the "Locked Box Accounts Date") (the "Locked Box Accounts") and is
subject to customary adjustments for any leakage (excluding permitted leakage)
from TriConnex and eSmart Networks to Nexus, other members of Nexus' group and
any director, officer or employee of the foregoing during the period from the
Locked Box Accounts Date until Completion (the "Consideration").

The consideration payable in cash to Nexus pursuant to the Disposal amounts to
£77.7 million. Net cash proceeds from the Disposal at Completion are expected
to be approximately £75.6 million after allowing for transaction costs.

Warranties

Nexus has given warranties to the Purchaser that are customary for a
transaction of this nature. The warranties given include:

(i)            certain fundamental warranties in relation to title
to the shares in TriConnex and eSmart Networks and Nexus' capacity and
authority to enter into and perform its obligations under the Share Purchase
Agreement and other transaction documents (the "Fundamental Warranties"); and

(ii)           warranties in respect of the business and assets of
TriConnex and eSmart Networks including material contracts, licences, data
protection, insurance, debts, IT systems, intellectual property, property,
employees, pensions, litigation, compliance with laws and tax.

The warranties are subject to matters fairly disclosed by Nexus under a
disclosure letter to the Purchaser and via a virtual data room.

The warranties will be repeated immediately before Completion subject to
matters fairly disclosed by Nexus in an updated disclosure letter to be
provided prior to Completion.

Limitations of liability

The Share Purchase Agreement contains customary financial thresholds, time
limitations, and other limitations and exclusions in relation to Nexus'
liability under the warranties given to the Purchaser and in respect of other
claims made under the Share Purchase Agreement, including:

(i)            a de minimis on all warranty claims of £50,000
(meaning that any such claims below £50,000 will be disregarded);

(ii)           a threshold on all warranty claims of £500,000
(meaning that Nexus shall not be liable for any such claims unless the amount
of damages resulting from all such claims exceeds £500,000 in aggregate).
Once this threshold is reached, the Purchaser is entitled to claim the whole
amount resulting from such claims and not just the excess; and

(iii)          a maximum aggregate liability cap of £1 million on
the liability of Nexus in respect of any warranty claims (other than claims in
respect of Fundamental Warranties) and claims under the Tax Deed.

The Purchaser must give notice of any warranty claim under the Share Purchase
Agreement (other than a tax warranty claim or claim for breach of a
Fundamental Warranty) within 18 months from Completion. Claims for leakage
must be notified by the Purchaser to Nexus within six months from Completion.
Claims for breach of Fundamental Warranties must be notified by the Purchaser
to the Company within five years from Completion. Tax warranty claims or
claims under the Tax Deed must be notified within seven years from Completion.

The Share Purchase Agreement contains other limitations of liability customary
for an agreement of this type. No limitations apply in the case of fraud.

Pre-Completion covenants

Nexus has given customary covenants to the Purchaser in relation to the
conduct of TriConnex and eSmart Networks during the period between signing of
the Share Purchase Agreement and Completion. Such obligations include
procuring that TriConnex and eSmart Networks operate in the ordinary course of
their business consistent with past practice. There are also a number of
specific actions that TriConnex and eSmart Networks shall not take without the
prior written consent of the Purchaser, including making material changes to
the nature of its business, entering into certain material commitments,
disposing of a material part of its business or making changes to its share
capital.

There are a number of agreed exceptions to the foregoing restrictions,
including any action reasonably undertaken to comply with applicable law
and/or regulation or any action contemplated by the transaction documentation.

Restrictive covenants

Nexus has provided undertakings to the Purchaser that it will not for a period
of 24 months following Completion:

(i)            solicit or entice away from or approach any person
employed by TriConnex or eSmart Networks; or

(ii)           carry on or engage in any business anywhere in the
United Kingdom in competition with the businesses of TriConnex and eSmart
Networks.

The Purchaser has also provided undertakings to Nexus that it will not for a
period of 24 months following Completion:

(i)            solicit or entice away from or approach any person
employed by the retained group; or

(ii)           carry on or engage in any business anywhere in the
United Kingdom in competition with the retained business.

 

Termination

If the Condition is not satisfied by 31 March 2023 (the "Long Stop Date"), the
Purchaser may terminate the Share Purchase Agreement (other than certain
surviving provisions), unless the Purchaser and Nexus agree prior to the Long
Stop Date that Completion should be postponed.

If the Purchaser and Nexus agree that the Condition becomes incapable of
satisfaction prior to the Long Stop Date, the Share Purchase Agreement (other
than certain surviving provisions) shall automatically terminate in full.

2)    Transitional Services Agreement

In connection with the Disposal, Nexus will enter into a Transitional Services
Agreement with TriConnex and eSmart Networks to ensure the successful
separation of TriConnex and eSmart Networks from Nexus and its retained group.
The transitional services to be provided by Nexus shall consist of certain IT,
HR, payroll and other transitional services. The maximum period of the
transitional services is 15 months, with TriConnex and eSmart Networks having
the right to terminate services early. Nexus will be reimbursed for providing
the transition services, calculated on a cost recovery basis. Subject to
certain customary exceptions, the aggregate liability of TriConnex and eSmart
Networks under the Transitional Services Agreement is capped at £1 million.

3)    Tax Deed

In connection with the Disposal, Nexus and the Purchaser will enter into a tax
deed (the "Tax Deed") under which, subject to customary exclusions, Nexus will
indemnify the Purchaser for specified tax liabilities, including any tax
liabilities which relate to events or to income, profits or gains earned on or
before Completion and which are not reflected in the Locked Box Accounts and
Locked Box mechanism. The Purchaser will also indemnify the Seller against any
secondary tax liabilities in respect of taxes for which either the Purchaser
or members of the Purchaser's group are primarily liable. The Tax Deed will
include mechanical provisions to address the de-grouping of the target from
its existing VAT group, and provisions dealing with how any tax returns, or
any disputes with tax authorities relating to pre-Completion periods (and part
periods) should be conducted. The Tax Deed is subject to the financial and
time limits set out in paragraph 1 above and is governed by English law.

4)    Vesting of Nexus LTIPs and existing options

 

The Disposal will affect share options and share awards granted from October
2019 to March 2022 (the "Awards"), under the Company's 2016 Long Term
Incentive Plan and 2021 Long Term Incentive Plan (the "LTIPs"). Certain
elements of the Awards are, as at the date of this announcement, capable of
exercise and the implementation of the Disposal will result in certain other
elements of the Awards becoming capable of exercise.

In addition, in consequence of the Disposal, the Company's remuneration
committee ("Rem Com") is entitled to exercise discretion in relation to
certain other elements of the Awards pursuant to the terms of the LTIPs (as
approved by the Company's shareholders and consistent with the requirements of
institutional investor guidelines).  Conditional upon completion of the
Disposal, the Rem Com has determined the extent to which certain performance
conditions have been met resulting in certain elements of Awards crystalising
and certain elements of Awards lapsing.  The Rem Com has also used its
discretion not to time pro rate any elements of Awards which are to become
capable of exercise and to amend the LTIP rules so that Awards held by
employees remaining with the Group will be treated in the same way as
employees leaving the Group.

It is therefore anticipated that, as a result of the exercise of Awards which
will be capable of exercise on completion of the Disposal, there will be an
issue of approximately 700,000 Shares (approximately 1.5% of the Company's
issued share capital on a fully diluted basis) to satisfy the Awards. It is
expected that these new shares will be entitled to the capital return as set
out in this announcement.

5)    Undertaking Agreement

Mike Morris has entered into an undertaking agreement with FitzWalter to vote
in favour of the Resolution in respect of his 21.1% shareholding in Nexus. As
part of this agreement, Mike Morris has also given certain cooperation
undertakings as follows:

(i)        to work exclusively and in good faith, with FitzWalter with a
view to facilitating the Disposal;

(ii)       not to take any action which might frustrate, impede, delay or
otherwise be prejudicial to the Disposal; and

(iii)      not to agree, solicit, support, facilitate, or otherwise be of
assistance to, or fail to object to: (a) any transaction similar to the
Disposal with any third party; or (b) any other transaction in competition
with or which might otherwise frustrate, impede or delay the Disposal.

Mike Morris has also given certain undertakings in relation to his Ordinary
Shares as follows:

(i)         not to sell or transfer any of his Ordinary Shares;

(ii)       not to accept any offer or other transaction made in competition
with or which might otherwise frustrate the Disposal; and

(iii)     to vote against any resolution to approve any transaction or
corporate action made in competition with or which might otherwise frustrate
the Disposal.

6)    Irrevocable Undertakings

In addition to Mike Morris' undertaking agreement, irrevocable undertakings to
vote in favour of the Resolution have been received from the following persons
in respect of the following interests in the Ordinary Shares:

 

 Name of beneficial holder                Number of Ordinary Shares in respect of which undertaking is given  % of issued share capital of Nexus
 Directors
 Mike Morris (CEO)                        9,590,710                                                           21.05%
 Alan Martin (CFO)                        165,781                                                             0.36%
 Richard Kilner (Non Executive Chairman)  53,142                                                              0.12%
 Alex Wiseman (NED)                       53,000                                                              0.12%
 Ffion Griffith (NED)                     5,119                                                               0.01%
 Other shareholders
 Keith Breen                              5,228,757                                                           11.48%
 Michelle Morris                          483,400                                                             1.06%
 Mary Breen                               322,250                                                             0.71%

 Total                                    15,902,159                                                          34.91%

 

*Alex Wiseman's holding includes Ordinary Shares held by his spouse

With the exception of Mike Morris' irrevocable undertaking, the undertakings
given by the persons in the table above will lapse on the earlier of:

(i)            the General Meeting being held and the Resolution
duly proposed and voted on; and

(ii)           31 January 2023.

7)    Lock-in Agreement

 

Mike Morris will enter into a Lock-in Agreement with the Company pursuant to
which he will agree to be subject to a 12 month lock-in period ("Lock-in
Period"), effective from Completion, during which time, subject to certain
customary exceptions (including with respect to any buyback or tender offer),
he may not offer, sell or contract to sell, or otherwise dispose of any of his
9,590,710 Ordinary Shares or enter into any transaction with the same economic
effect as the foregoing (each, a "Share Disposal"). In addition, he will also
agree that any Share Disposal in the 12 months following the expiry of the
Lock-in Period will be undertaken, save in certain circumstances, only through
the Company's broker.

 

8)    New Directors of Nexus

The following individuals will join the Board of Nexus at Completion.

Charles Alan Sweeney (aged 63)

Charles will take on the role of Nexus CEO following the Disposal. Charles is
a Chartered Director and Chartered Engineer with extensive experience in the
leadership of companies involved in civil infrastructure and energy solutions,
both in the UK and overseas. His career has included several C-suite, Managing
Director and Senior Operational Director positions, including nine years on
the Executive Board of Costain Group plc and Managing Director of its Energy
& Process Division.

Charles joined Nexus in September 2016 as Chief Operating Officer and
subsequently took on the additional interim role of Tamdown Managing Director
through to September 2018. In his role as Chief Operating Officer, Charles has
worked closely with Mike Morris, Alan Martin and with the Managing Directors
and Directors of the subsidiary businesses. He has led various significant
business development projects and worked closely with the Nexus Board on Group
strategy.

Current directorships: TriConnex Limited, Tamdown Group Limited, Aktius
Limited.

Charles Sweeney currently holds 121,520 Ordinary Shares in Nexus.

Dawn Rosina Hillman (née Cranfield) (aged 54)

Dawn will take on the role of CFO of Nexus following the Disposal. She has
worked within or closely alongside the Tamdown business for over 35 years
providing significant continuity and experience. Dawn is a Chartered
Management Accountant and Chartered Secretary with extensive experience within
the infrastructure, construction, and engineering sectors. Dawn is an
experienced Executive Board Director and Company Secretary given her roles at
Nexus. She was instrumental in taking the business through IPO to AIM market
listing in 2017. Dawn has held Finance Director roles for Tamdown, TriConnex
and eSmart Networks at various times, and for other construction associated
businesses.

Current directorships: TriConnex Limited.

Past directorships (within the last 5 years): eSmart Networks Limited, Tamdown
Group, Tamdown Regeneration Ltd, Tamdown Plant Hire Limited and Tamdown
Services Limited.

Dawn Hillman and her PCAs currently hold 91,297 Ordinary Shares in Nexus

There is no further information which is required to be disclosed under
Schedule Two, paragraph (g) of the AIM Rules for Companies.

 

Appendix 2: Definitions

 

The following definitions apply throughout this announcement unless the
context otherwise requires:

 

 "Act"                              Companies Act 2006
 "AIM"                              AIM, a market operated by the London Stock Exchange
 "AIM Rules"                        the AIM Rules for Companies and the AIM Rules for Nominated Advisers published
                                    by the London Stock Exchange (as amended from time to time)
 "Board" or "Directors"             the directors of the Company or any duly appointed committee thereof
 "Circular"                         the shareholder circular to be posted in connection with the General Meeting
 "Company" or "Nexus"               Nexus Infrastructure plc, a public limited company incorporated in England and
                                    Wales with registered number 05635505
 "Completion"                       completion of the Disposal under the terms of the Share Purchase Agreement
 "Consideration"                    the cash consideration to be paid by the Purchaser to Nexus on Completion
 "CREST"                            the relevant system (as defined in the CREST Regulations) in respect of which
                                    Euroclear UK & International Limited is the Operator (as defined in the
                                    CREST Regulations)
 "CREST Regulations"                the Uncertificated Securities Regulations 2001 (as amended)
 "Disposal"                         the proposed sale of TriConnex and eSmart Networks to the Purchaser in
                                    accordance with the Share Purchase Agreement
 "eSmart Networks"                  the Company's subsidiary, eSmart Networks Limited, a private limited company
                                    incorporated in England and Wales with registered number 09974487
 "EV"                               electric vehicle
 "FitzWalter"                       FitzWalter Capital Limited, a private limited company incorporated in England
                                    and Wales with registered number 12400257
 "Form of Proxy"                    the form of proxy relating to the General Meeting
 "FY22 EV/EBIT"                     Enterprise value divided by earnings before interest and tax expressed as a
                                    multiple based on unaudited financial information for the year ended 30
                                    September 2022
 "FY22"                             Nexus financial year ended 30 September 2022
 "General Meeting"                  the general meeting of the Company, notice of which is set out in Part V of
                                    the Circular and including any adjournment(s) thereof
 "Group"                            the Company and its subsidiaries and subsidiary undertakings (in each case as
                                    defined in the Act)
  "Independent Directors"           being Richard Kilner, Ffion Griffith, Alex Wiseman, and Clare Lacey
 "Latest Practicable Date"          29 December 2022 being the latest practicable date prior to the publication of
                                    this announcement
 "Lock-in Agreement"                the lock-in agreement to be entered into between the Company and Mike Morris
 "London Stock Exchange"            London Stock Exchange plc
 "Market Capitalisation"            calculated as the total number of Ordinary Shares in issue multiplied by the
                                    price per Ordinary Share
 "Notice of General Meeting"        the notice of General Meeting, set out in Part V of the Circular
 "Offer"                            the offer for TriConnex and eSmart Networks by the Purchaser for cash
                                    consideration of £77.7 million
 "Ordinary Shares"                  ordinary shares of £0.02 each in the capital of the Company
  "Purchaser"                       FWCP Spark (UK) Holdco Limited a private limited company incorporated in
                                    England & Wales with registered number 14542680 and which is controlled by
                                    FitzWalter and its affiliates
 "Registrars"                       Link Group
 "Resolution"                       the resolution to be proposed at the General Meeting which is set out in full
                                    in the Notice of General Meeting
 "Shareholders"                     holders of Ordinary Shares
 "Share Purchase Agreement"         the conditional share purchase agreement dated 30 December 2022, entered into
                                    between the Purchaser and the Company in respect of the Disposal
 "Tamdown"                          the Company's subsidiary, Tamdown Group Limited, a private limited company
                                    incorporated in England and Wales with registered number 01268060
 "Transitional Services Agreement"  the transitional services agreement between Nexus, TriConnex and eSmart
                                    Networks to be entered into on Completion
 "TriConnex"                        the Company's subsidiary, TriConnex Limited, a private limited company
                                    incorporated in England and Wales with registered number 07466247
 "UK"                               the United Kingdom of Great Britain and Northern Ireland

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