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Tuesday 12 June, 2018

Business Control Sol

Offer by Business Control Solutions GpTrustees Ltd

RNS Number : 1587R
Business Control Solutions Grp Ltd
12 June 2018
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

Announcement For Immediate Release

12 June 2018

Business Control Solutions Group Trustees Limited (the Offeror)

Recommended cash offer for

Business Control Solutions Group Limited (BCS)

 

SUMMARY

·                 The boards of the Offeror and BCS announce that they have reached agreement on the terms of a recommended cash offer by the Offeror for the entire issued and to be issued share capital of BCS (the Offer).

·                 The Offeror is the trustee company of the Business Control Solutions Group Employee Ownership Trust (the Trust), which has been established for the benefit of employees of the BCS Group.

·                 The total consideration payable for each Ordinary Share shall be £1,300 in cash.

·                 The total consideration payable for each B Share shall be £1,210 in cash.

·                 Of this £225 per Ordinary Share and £10 per B Share is to be paid upon the Offer becoming wholly unconditional (Initial Consideration) and the balance is to be paid on future dates (as described in Appendix 2 and Appendix 3) (Future Consideration).

·                 The total Initial Consideration will be £7.51 million and will be financed from existing cash resources of BCS. The Future Consideration will be financed by cash generated from the future trading of BCS and therefore this amount is not fixed as to a time period or guaranteed but it is anticipated that it will be paid annually over a period of at least six years for the Ordinary Shares and a further two years for the B Shares.

·                 The Offer will extend to any Shares allotted or issued after the date of this announcement and before the Offer closes, including any Shares issued following the exercise of outstanding options over Shares.  

·                 The Board of BCS, which has been so advised by BDO LLP (BDO), considers the terms of the Offer to be fair and reasonable. In providing its advice to the Board of BCS, BDO has taken into account the Board of BCS's commercial assessment.

·                 The Board of BCS unanimously recommends that all Shareholders accept the Offer.

·                 The Offeror has received irrevocable undertakings to accept the Offer in respect of, in aggregate, 19,288 existing Ordinary Shares, options over 1,097 Ordinary Shares and 4,100 options over B Shares representing in aggregate approximately 60.4 per cent of the issued and to be issued share capital of BCS. 

·                 All of the above irrevocable undertakings remain binding even in the event of a higher competing offer for BCS, unless the Offer lapses or is withdrawn.

·                 Holders of options over Ordinary Shares and B Shares may participate in the Offer on the basis of the proposals pursuant to Rule 15 of the Code set out in this announcement.

Commenting on the Offer, Stephen Russell, Chairman of BCS, said:

"BCS is widely recognised as a leading provider of management consulting services and operational control software to the UK financial services sector. In the eight years since BCS delisted from AIM, its annual revenues have grown from £9 million to £31 million and an operating loss of £0.6 million in 2009 has turned into an operating profit of £4.1 million in 2017.

In pursuit of profitable organic growth, the Board of BCS has always placed great emphasis on attracting and retaining employees who represent the best of their profession. With over 200 highly motivated and engaged employees, we have combined our passion for quality with a determination to deliver excellence to our clients. As a result, BCS has developed an enviable reputation and a market leading position in its chosen field. The Board of BCS believes that BCS is well positioned to benefit from the ongoing demand for assistance from its clients across the financial services sector. BCS is strongly committed to its current strategic path.

Employee ownership has been a critical factor in BCS's success over the past eight years, with 55 per cent of the current issued Ordinary Shares being owned today by employees or held in trust for their benefit. The proposed acquisition of BCS by an employee ownership trust enables BCS to continue with the execution of its current strategy whilst ensuring that future equity value accrues for the benefit of the employees who work so hard to create it. The Board of BCS has a profound belief that such employee ownership will make BCS an even more exciting and successful place to work and importantly believes that this ownership model will be of increasing appeal to BCS's clients".  

This summary should be read in conjunction with, and is subject to, the full text of the following announcement. The Offer will be made subject to the Conditions and further terms set out in Appendix 1 to this announcement and on and subject to the full terms and conditions to be set out in the Offer Document.

The Offer Document, containing further details, terms and conditions of the Offer, will be posted to Shareholders as soon as practicable after the date of this announcement and in any event within 28 days of the date of this announcement.

 

Enquiries:

 

Roger Shepherd

BCS

0207 648 2050

John Stephan

Susan Jarram

BDO

0207 486 5888

 

 



FURTHER INFORMATION

This announcement does not constitute a prospectus or a document which is equivalent to a prospectus. Any decision in relation to the Offer should be made only on the basis of the information contained in the Offer Document or any document by which the proposals relating to the Offer are made, which will include the full terms and conditions of the Offer, including the procedure to accept the Offer. The Offeror Directors and the Board of BCS urge Shareholders to read in full the Offer Document when it becomes available as it will contain important information relating to the Offer.

BDO, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for BCS in connection with the Offer and the Offeror in connection with the Financing for the Offer statement made in section 8 of this announcement, and no-one else in connection with the Offer and will not be responsible to anyone other than BCS for providing the protections afforded to clients of BDO nor for providing advice in relation to the Offer, the content of this announcement nor any matter referred to herein.

Appendix 1 sets out the Conditions to, and certain further terms of, the Offer.

Appendix 2 sets out a summary of the Future Consideration.

Appendix 3 sets out proposals relating to Share Options over Ordinary Shares and B Shares.

Appendix 4 contains the definitions of terms used in this announcement (including this summary).

The release, publication or distribution of this announcement to persons in jurisdictions other than the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons (including, without limitation, nominees, trustees and custodians) should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. Further details in relation to Overseas Shareholders will be contained in the Offer Document.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of BCS and certain plans and objectives of the boards of the Offeror and BCS with respect to them. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the boards of the Offeror and BCS in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will or may occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although the Offeror, BCS and the persons who have accepted responsibility for the information contained in this announcement believe that the expectations reflected in their respective forward-looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct and the Offeror, BCS and the persons who have accepted responsibility for the information contained in this announcement therefore caution you not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement.

NO PROFIT FORECASTS OR ESTIMATES

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 or earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per Ordinary Share.

PUBLICATION ON WEBSITE

A copy of this announcement will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on BCS's website at www.bcsconsulting.com by not later than noon (London time) on the business day following this announcement.  For the avoidance of doubt, neither the contents of this website nor the contents of any website accessible from hyperlinks on any such website are incorporated into or form part of this announcement.

Neither the Offeror nor BCS (nor any of their respective directors, officers, employees, agents or advisers) make any representation or warranty (express or implied), or give any guarantee in this announcement as to the accuracy or completeness of the information on the website referred to above (nor any other website) nor the contents of any website accessible from hyperlinks on any such

website, nor shall they be liable for any loss or damage of any kind, direct or indirect, that any person may suffer as a result of using these websites or acting in reliance of the information on such websites. Persons who access such websites shall do so subject to the terms (if any) stated on those websites.

You may request a hard copy of this announcement (by contacting the Company Secretary of BCS at Ground Floor, Churchgate, New Road, Peterborough PE1 1TT).  It is important that you note that, unless you make such a request, a hard copy of this announcement may not be sent to you.  You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

DISCLOSURE REQUIREMENTS OF THE CITY CODE

Under Rule 8.3(a) of the City Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure (Opening Position Disclosure) following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure (Dealing Disclosure).

Under Rule 8.3(b) of the City Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.  You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

ELECTRONIC COMMUNICATION

Please be aware that addresses, electronic addresses and certain other information provided by Shareholders, persons with information rights and other relevant persons for the receipt of communications from BCS may be provided to the Offeror during the offer period as required under Section 4 of Appendix 4 of the City Code to comply with Rule 2.11(c).

 

CODE DISPENSATIONS

The Panel has granted the Offeror a dispensation from the requirements under the Code that announcements (other than the announcement referred to in paragraph 2.5.1 of Appendix 1) must be published via a Regulatory Information Service (RIS). The Offeror is instead required to publish all announcements on BCS's website at www.bcsconsulting.com. Should the Offer Document be published on the same date as this Announcement, BCS Shareholders will only receive the Offer Document in hard copy form.

The Panel has also granted a dispensation from the requirements in Note 3 on Rule 8 of the Code that disclosures made under Rule 8 of the Code must be made to a RIS. Therefore, any Opening Position Disclosures and Dealing Disclosures required under Rule 8 of the Code may be made to the Offeror by email to [email protected] and will be published on BCS's website at www.bcsconsulting.com. A copy must also be sent to the Panel's Market Surveillance Unit by email ([email protected]).



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

Announcement For Immediate Release

12 June 2018

Business Control Solutions Group Trustees Limited (the Offeror)
Recommended cash offer for
Business Control Solutions Group Limited (BCS)

1.            Introduction

The boards of the Offeror and BCS announce that they have reached agreement on the terms of a recommended cash offer by the Offeror for the entire issued and to be issued share capital of BCS.

The Offeror is the trustee company of the Business Control Solutions Group Employee Ownership Trust (the Trust), which has been established for the benefit of employees of the BCS Group.

2.            terms of the Offer

Under the Offer, which will be subject to the Conditions and certain further terms set out in Appendix 1 to this announcement and to be set out in full in the Offer Document:

·                 the holders of Ordinary Shares will be entitled to receive £1,300 per Ordinary Share in cash; and

·                       the holders of B Shares will be entitled to receive £1,210 per B Share in cash.

Of this £225 per Ordinary Share and £10 per B Share is to be paid on the Offer becoming wholly unconditional (as set out below) (Initial Consideration) and the balance is to be paid on future dates (as described in Appendix 2 and Appendix 3) (Future Consideration).

The total Initial Consideration will be £7.51 million and will be financed from existing cash resources of BCS. The Future Consideration will be financed by cash generated from the future trading of BCS and therefore this amount is not fixed as to a time period or guaranteed but it is anticipated that it will be paid annually over a period of at least six years for the Ordinary Shares and at least a further two years for the B Shares.  

The Initial Consideration and the Future Consideration value the entire issued and to be issued share capital of BCS at £52.03 million.

The Offer will extend to all Shares unconditionally allotted or issued at the date of the Offer Document, after the date of the Offer Document and before the Offer closes, including any Shares issued following the exercise of outstanding options over Shares.

Under the Offer, the Shares which are to be the subject of the Offer will be acquired by the Offeror fully paid and free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and other third party rights or interests of any nature whatsoever and together with all rights now or hereafter attaching to them, including all voting rights and the right to receive and retain all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

If any dividend or other distribution in respect of the Shares is declared, paid or made on or after the date of the Offer Document, the Offeror reserves the right to reduce the value of the consideration payable for each Share under the Offer by up to the amount per Share of such dividend or distribution that has been received and retained by Shareholders.

There are no agreements or arrangements to which BCS is a party which relate to the circumstances in which it may or may not seek to invoke any of the Conditions to the implementation of the Offer.

Details of the Conditions and certain further terms of the Offer are set out in Appendix 1 to this announcement and will be set out in the Offer Document.

3.            Recommendation

The Board of BCS, which has been so advised by BDO as to the financial terms of the Offer, considers the terms of the Offer to be fair and reasonable. In providing its advice to the Board of BCS, BDO has taken into account the Board of BCS's commercial assessment. BDO is acting as the independent financial adviser to BCS for the purposes of providing independent financial advice to the Board of BCS under Rule 3 of the Code.

The Board of BCS unanimously recommends that Shareholders accept the Offer as the directors of BCS who have an interest in Shares intend to do in respect of their holdings of 19,110 Ordinary Shares representing 57.8 per cent of the issued and to be issued Ordinary Shares and 2,800 B Shares representing in aggregate 37.3 per cent of the Company's to be issued B Shares.  

4.            BACKGROUND TO AND REASONS FOR RECOMMENDING THE OFFER

BCS is an unlisted company which provides management consulting services to financial institutions including programme management, operating model implementation, process management and design, technology change and regulatory change management. It supports the entire change lifecycle, and seeks to deliver pragmatic solutions to its clients which are informed by industry best practice.  BCS serves retail banks, corporate and investment banks, insurance companies, asset and wealth managers and the risk and finance functions within financial institutions. BCS also develops and supplies operational control software products to financial institutions.   

During the period from when BCS was delisted from AIM in December 2009, BCS's commercial success has been underpinned by growth in its consulting business, which has increased from 22 full time consultants in January 2010 to 156 full time consultants in January 2018. The Board of BCS believes that attracting and retaining high quality consulting staff has been central to BCS's commercial success over the past eight years.

Employee share ownership has increased from a low point of 3 per cent of BCS's issued Ordinary Share capital in March 2010 (shortly after the delisting from AIM) to 55 per cent of BCS's issued Ordinary Share capital in January 2018. Part of this increase in employee share ownership was achieved through implementing an HMRC approved share incentive plan in January 2015, which has enabled all employees of the BCS Group prior to January 2018 to become Shareholders. The Board of BCS believes that increased employee share ownership has contributed to the successful growth of BCS through alignment of employee and company objectives and through fostering high levels of employee engagement.

The Board of BCS considers that it would be beneficial to the future of BCS to allow it to be fully owned by its employees.  The Board of BCS believes that this will enable BCS to continue to grow which will benefit existing Shareholders who realise their investment in BCS by the payment of the Future Consideration and to its employees by way of the Offeror acquiring BCS on behalf of its employees. Furthermore, the Board of BCS believes that full employee ownership by way of the Offeror acquiring BCS on behalf of its employees will provide BCS with a positive differentiator within its sector from the larger consultancies with different ownership models against which BCS competes.

BCS is reliant on its people and as such the Board of BCS believes that an employee owned business model is an appropriate structure going forward. Within BCS's sector, demand for suitably qualified staff is high and it is considered that a fully employee owned business would be better positioned to recruit and retain talented, fully engaged staff.

It is expected that following completion of the Offer, the Offeror will hold all or at least a controlling interest of the issued and to be issued share capital of BCS as trustee of the Trust for the benefit of BCS employees.

In recommending the Offer and having been so advised by BDO, the Board of BCS has taken into account the following principal factors.

·                 The Board of BCS's commercial assessment that a company that is controlled by its employees will find it easier to recruit, motivate and retain staff and will benefit from improved commitment of its workforce.

·                 Over 50 per cent of BCS's issued share capital is held by management and employees of the BCS Group either directly or through a share investment plan or a beneficial trust.  The sale of the entire issued share capital of BCS to a third party would require the support of these Shareholders, which the Board of BCS believes may not be forthcoming.

·                 The Offer represents an opportunity for all Shareholders to realise their investment at a substantial premium to the share price offered in the BCS tender offer in March 2016 of £725 per Ordinary Share.

·                 The current independent non-executive directors of BCS have agreed to remain on the Board of BCS (including one as a non-executive chairman) following completion of the Offer in order to provide independent governance to BCS in particular with regard to the payment to the Offeror of funds to enable the Offeror to pay the Future Consideration.  

·                 Following completion of the Offer, the remuneration committee of BCS will continue in its current form with two independent non-executive directors tasked with ensuring that remuneration to directors remains in line with market norms for the roles they perform and their individual and overall company performance.

·                 Following completion of the Offer, it is the intention of the Board of the Offeror to continue to operate the BCS Group's business in the same manner and with the same objectives and strategy, as at present. The BCS Group will continue to operate with a level of corporate governance that the Board of the Offeror, in conjunction with the Board of BCS considers to be appropriate for a company of its size and resources. Stephen Russell will continue as independent chairman of the Board of BCS and to chair the remuneration committee of BCS.

The Board of BCS will continue to include at least two independent non-executive directors following completion of the Offer in order to provide independent governance to BCS, in particular with regard to making further contributions to the Trust by BCS to facilitate payment of the Future Consideration.

The Board of BCS has considered the structure of the Offer from the Offeror whereby following the payment of the Initial Consideration, there is no guarantee (i) that the Future Consideration will become payable or (ii) in the timing of any such payment and the risk that this causes Shareholders who accept the Offer. BCS has experienced strong revenue growth at stable gross margins over recent years. This has provided the Board of BCS with confidence that there is a firm platform for future development and growth of the business. BCS is currently debt free and has been cash generative. Having considered the plans and forecasts of the BCS business the Board of BCS currently anticipates that the holders of Shares should receive the Future Consideration in full over an estimated period of at least eight years. In the event that BCS's trading forecasts are not achieved, the period for payment of the Future Consideration would be longer. The Board of BCS and BDO have considered such scenarios in making the recommendation and providing financial advice respectively. Nothing in this paragraph should be construed as a profit forecast.

The Board of BCS also draws Shareholders' attention to the following.

·                 The directors of BCS have irrevocably undertaken to accept or procure the acceptance of the Offer for all of their beneficially held Shares and this means that should the Offer be declared wholly unconditional the Offeror will own in excess of 50 per cent of the Ordinary Shares, enabling it to pass ordinary resolutions.

·                 Shareholders who retain their BCS shareholding and do not accept the Offer will find themselves to be minority Shareholders in BCS on the Offer becoming wholly unconditional. BCS would then be under the indirect control of BCS employees via the Trust. Share trading liquidity in BCS is likely to be restricted and the Offeror will be able to vote any Shares that it acquires pursuant to the Offer for and on behalf of BCS employees. BCS employees, via the Offeror, will hold a controlling interest in BCS on completion of the Offer and, as such, will be in a position to exert significant influence over BCS.

·                 The Shares are currently illiquid and if Shareholders do not accept the Offer it is possible that they might be unable to sell their Shares at a price equivalent to that available under the Offer for some time, if at all.  The Offeror does not intend to provide a dealing facility for any Shareholders that do not accept the Offer.

·                 If the Offer becomes wholly unconditional, the Offeror will be free to increase its shareholding in BCS without making a further offer. 

·                 If the Offer becomes wholly unconditional, the Offeror will have an obligation to pay the Future Consideration to those Shareholders who accept the Offer and as such a portion of future profits and cash flows of BCS will be used to meet this obligation.

·                 If the Offer becomes wholly unconditional, the Board of BCS will determine on an annual basis whether to recommend the payment of a dividend. However, the Board of BCS believes that it will be in the best interests of BCS, the Shareholders and BCS employees to help facilitate the payment of outstanding Future Consideration to those Shareholders who accept the Offer.

On the basis of the above, the Board of BCS unanimously recommends that Shareholders accept the Offer.

5.            INFORMATION ON the Offeror

The Offeror was incorporated on 26 April 2018 and is the trustee company of the Trust. The Trust was established on 5 June 2018 as an Employee Ownership Trust in accordance with the provisions of sections 236H to 236U of the Taxation of Chargeable Gains Act 1992. It was established for the benefit of employees of the BCS Group only and, following the Offer being declared unconditional in all respects, will hold Shares as one block for the benefit of all employees of the BCS Group from time to time. The Trust is not permitted to offer shares or share options other than to BCS Group employees on a 'same terms' basis in order to maintain the Trust for the benefit of all BCS Group employees.

The directors of the Offeror are Paul Brock and Roger Shepherd, who are also directors of BCS.

None of the Offeror Directors or the directors of BCS are currently eligible to receive any assets or income from the Trust and they do not anticipate ever becoming eligible to receive any assets or income from the Trust.

6.            current trading and prospects OF BCS

On 6 June 2018, BCS published its Annual Report and Accounts for the year ended 31 December 2017 on its website www.bcsconsulting.com. Overall revenues for the year ended 31 December 2017 were £30.9 million, up 14% on the year ended 31 December 2016. The gross margin for the BCS Group for the year increased to 41%. BCS Group's operating expenses whilst increasing 13% to £8.4 million have fallen as a percentage of revenues. The strong operational performance, evidenced through the increased revenues, saw the BCS Group record a profit before tax for the year of £4.1 million. The profit performance along with an improvement in trade debtor days saw the BCS Group's cash grow to £13.9 million as at 31 December 2017, an increase of £5.5 million on 31 December 2016. This increase was achieved after the payment of a dividend of £1.7 million. The year saw the BCS Group continue to make progress against its long term plan with the business ending the year well placed to make further progress in the year ahead. With a strong balance sheet the BCS Group is able to support continued growth and development.

In the period from 1 January 2018 to date, the BCS Group has continued to trade satisfactorily with revenues for this period in line with the Board of BCS's expectations. Since the start of the year the BCS Group has continued to invest in growing its consulting capacity and its corporate infrastructure to support further growth into the future. Emphasis is being placed in 2018 on further diversifying client revenues across the banking, insurance and asset and wealth management sectors with significant sales effort focused in this direction and a corresponding investment in support costs. 

7.            INFORMATION ON BCS

BCS is an unlisted company which provides management consulting services to financial institutions including programme management, operating model implementation, process management and design, technology change and regulatory change management. It supports the entire change lifecycle, seeking to deliver pragmatic solutions to its clients which are informed by industry best practice.  BCS serves retail banks, corporate and investment banks, insurance companies, asset and wealth managers and the risk and finance functions within financial institutions. BCS also develops and supplies operational control software products to financial institutions.

8.            financing for the offer

The Initial Consideration, being £7.51 million, will be satisfied in full through cash resources provided by way of a contribution to the Trust by BCS.

BDO, financial adviser to the Offeror for this purpose, is satisfied that sufficient resources are available to the Offeror to satisfy in full the Initial Consideration.

Payment of the Future Consideration will be financed by further contributions to the Trust by BCS from cash generated from profits made by the BCS Group in future financial years. The Future Consideration is not guaranteed in whole or in part. Further details are set out in Appendix 2 and Appendix 3.

9.            Directors, management and LOCATIONS OF THE BUSINESS

The Offeror recognises the skills and experience of the existing management and employees of the BCS Group. The Offeror intends to work closely with them to build on the strengths of the business and expects them to play an important role in the ongoing development of the business. The Offeror has no intention of changing the business of the BCS Group and intends to grow the business using the existing experience and industry knowledge of the employees of BCS. 

BCS does not have a specific research and development function and the Offeror has confirmed that it does not intend to establish one. BCS develops its software products in order to maintain its commercial success and the Offeror has confirmed that it does not intend to make changes to this development function. 

The Offeror has confirmed to the Board of BCS that its plans do not include any changes to the BCS Group's management or workforce, that all employment rights (including pension rights) will be fully safeguarded in accordance with applicable law and that there are no planned changes to the conditions of employment of the management or employees of BCS or in the balance of the skills and functions of the management and employees.

The Offeror confirms that it intends that the employer's pension scheme will be maintained in accordance with contractual and statutory requirements. The Offeror intends to maintain the accrual of benefits for existing members and the contribution of employer benefits into the scheme. In addition the Offeror intends that the scheme will continue to be open to new members on the same terms currently offered by BCS to its employees. There is no pension fund deficit to be funded.

The Offeror confirms that it has no plans to change BCS's current strategic direction and consequently there will be no impact on either employment or on the locations of BCS's places of businesses (including its headquarters and headquarters functions).

The Offeror confirms that it has no intention to dispose or redeploy any of the fixed assets of BCS.

BCS does not currently maintain any trading facility for its securities and the Offeror confirms that it does not intend to establish one.

A review of the Board of BCS will be carried out over the next 12 months to consider the composition of the Board of BCS based on BCS's ongoing requirements.

10.          OFFER RELATED ARRANGEMENTS

Save for the contributions referred to in paragraph 8 above, there are no arrangements in place between the Offeror and the BCS Group relating to the Offer.

11.          SHARE INCENTIVE PLAN

The Offer will extend to Shares currently held by the trustees of the BCS Share Incentive Plan (SIP). Holders of entitlements to Shares under the SIP will be contacted by the trustees of the SIP in due course with regard to the action they should take.

12.          employee benefit trust

The Offer will also extend to Shares currently held by the trustees of the BCS Employee Benefit Trust (EBT). Holders of entitlements to Shares under the EBT will be contacted in due course with regard to the action they should take.

13.          Share OptionS

The Offer extends to any Shares allotted and issued during the Offer Period, including Shares arising from the exercise of Share Options. Option holders may exercise their Share Options in accordance with their terms and conditions of grant at any time before the Offer becomes or is declared unconditional in all respects.

The Initial Consideration payable to those Option holders who accept the Offer in respect of Ordinary Shares arising from the exercise of their Share Options will be the same amount per Ordinary Share and payable on the same dates as that payable to the holders of existing Ordinary Shares.

The Future Consideration payable to those Option holders who accept the Offer in respect of Ordinary Shares arising from the exercise of their Share Options will be the same amount per Ordinary Share and payable on the same dates as that payable to the holders of existing Ordinary Shares, as described in Appendix 2.

The Initial Consideration payable to those Option holders who accept the Offer in respect of B Shares arising from the exercise of their Share Options will be the same amount per B Share and payable on the same dates as that payable to the holders of the existing Ordinary Shares.

The Articles of Association of BCS require that the nominal value of each Share class is paid under certain circumstances, prior to any additional consideration.

The nominal value of an Ordinary Share is £100 per Ordinary Share and is included within the Initial Consideration. The nominal value of a B Share is £10 per B Share and this will be the only amount of Initial Consideration payable to a B Shareholder. As a result, the holders of B Shares will receive a total of £90 per B Share less than the holders of Ordinary Shares will receive per Ordinary Share under the Offer.  

The holders of B Share Options have agreed that they will only be entitled to receive Future Consideration after the consideration payable to the holders of Ordinary Shares (including those Ordinary Shares arising from the exercise of Share Options over Ordinary Shares) has been paid in full.

Further details of these proposals are set out in Appendix 3.  

14.          Irrevocable undertakings

The Offeror has received irrevocable undertakings to accept the Offer in respect of, in aggregate, 19,288 existing Ordinary Shares and 1,097 options over Ordinary Shares representing approximately 61.7 per cent of the existing issued and to be issued Ordinary Shares and 4,100 options over B Shares representing approximately 54.7 per cent of the to be issued B Shares. In aggregate, these irrevocable undertakings represent 60.4 per cent of the issued and to be issued share capital of BCS.  

All of the above undertakings remain binding even in the event of a higher competing offer for BCS, unless the Offer lapses or is withdrawn.

Details of these irrevocable undertakings are:

Shareholder

Number of existing Ordinary Shares

Percentage of existing issued share capital

Number of Share Options over Ordinary Shares

Number of Share Options over B Shares

Percentage of issued and to be issued share capital

SG Russell

30

0.1%

-

-

0.1%

AC Anderson

6,530

20.0%

-

-

16.1%

ND Walder

4,604

14.1%

-

-

11.4%

PD Brock

4,215

12.9%

168

1,200

13.8%

CJF Cardwell

1,804

5.5%

168

900

7.1%

RA Shepherd

1,053

3.2%

538

700

5.7%

G O'Rourke

796

2.4%

33

650

3.6%

AC Somerville

256

0.8%

190

650

2.7%

Apart from the irrevocable undertakings described above, neither the Offeror nor any persons acting in concert with the Offeror for the purposes of the Offer has any arrangement with any persons relating to the securities of BCS, including any indemnity or option agreement, or any agreement or understanding, formal or informal, of whatever nature, relating to relevant securities which may be an inducement to deal or refrain from dealing.

15.          overseas shareholders

The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction. Such persons should inform themselves about and observe any applicable requirements. Further details in relation to Overseas Shareholders will be contained in the Offer Document.

16.          Disclosure of interests

The Offeror confirms that an Opening Position Disclosure was made on the date of this announcement, setting out the details required to be disclosed by it under Rule 8.1(a) of the City Code.

Save as set out in the Opening Position Disclosure referred to above and save for the arrangements with Shareholders in relation to irrevocable undertakings summarised in paragraph 14 above, as at the close of business on 11 June 2018, being the last business day prior to this announcement, neither the Offeror nor any Offeror Director nor, so far as the Offeror is aware, any person acting in concert (as defined in the City Code) with the Offeror, owns or controls any Shares or any securities convertible or exchangeable into, or any rights to subscribe for or purchase, or any options (including traded options) to purchase or any short positions (whether conditional or absolute and whether in the money or otherwise and including under a derivative), or agreement to sell, or delivery obligation or right to require another person to take delivery of or any derivatives referenced to Shares, nor does any such person have any arrangement in relation to Shares. For these purposes, "arrangement" includes any indemnity or option arrangement, any agreement or understanding, formal or informal, of whatever nature, relating to Shares which may be an inducement to deal or refrain from dealing in such Shares.

17.          compulsory acquisition

If the Offer becomes or is declared unconditional in all respects, and sufficient acceptances are received, and if the Offeror receives acceptances under the Offer in respect of, or otherwise acquires, 90 per cent or more of the Shares to which the Offer relates, the Offeror may exercise its rights pursuant to the provisions of Chapter 3 of Part 28 of the Companies Act 2006 to acquire compulsorily the remaining Shares in respect of which the Offer has not been accepted. The Offeror does not intend to require BCS to invoke the drag along provisions in its Articles of Association.

18.          UNITED KINGDOM TAXATION

Liability to UK tax on the sale of Shares will depend on the individual circumstances of each Shareholder. Further details will be set out in the Offer Document.

19.          General

The Offer will be subject to the Conditions and certain further terms set out in Appendix 1 and the further terms and conditions to be set out in the Offer Document. The Offer Document will be posted to Shareholders and, for information only, to Option holders, as soon as practicable and in any event within 28 days of the date of this announcement, unless otherwise agreed with the Panel.

The Offer will be governed by English law.

20.          DOCUMENTS ON WEBSITE

A copy of this announcement and the irrevocable undertakings referred to above will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on BCS's website at www.bcsconsulting.com by no later than noon (London time) on the day following this announcement.  For the avoidance of doubt, neither the contents of this website nor the contents of any website accessible from hyperlinks on any such website are incorporated into or form part of this announcement.

21.          Appendices

Appendix 1 sets out the Conditions to, and certain further terms of, the Offer.

Appendix 2 sets out a summary of the Future Consideration.

Appendix 3 sets out proposals relating to the Share Options over Ordinary Shares and B Shares.

Appendix 4 contains definitions of terms used in this announcement.


Appendix 1 

CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER

 

The Offer, which will be made by the Offeror, will comply with the Code. The Offer and any dispute or claim arising out of, or in connection with, it (whether contractual or non-contractual in nature) will be governed by, and construed in accordance with, English law and be subject to the jurisdiction of the courts of England.  The Offer will be made on the terms and conditions set out in the Offer Document.

1.            CONDITIONS OF THE OFFER

The Offer will be subject to the following conditions:

1.1          valid acceptances being received and not, where permitted, withdrawn by not later than 1.00 pm on the First Closing Date of the Offer (or such later date as the Panel may agree) in respect of Shares representing not less than 90 per cent in nominal value to which the Offer relates or such lower percentage as the Offeror may decide provided that this condition 1.1 shall not be satisfied unless the Offeror shall have acquired or agreed to acquire (whether pursuant to the Offer or not) directly or indirectly, Shares carrying in aggregate more than 50 per cent of the Ordinary Shares and the voting rights normally exercisable at general meetings of BCS;

1.2          no government or governmental, quasi governmental, supranational, statutory, administrative or regulatory body, authority, court, trade agency, association, institution, environmental body or any other person or body in any jurisdiction (each a Relevant Authority) having decided to take, instituted, implemented or threatened any action, proceedings, suit, investigation, enquiry or reference, or made, proposed or enacted any statute, regulation, order or decision or taken any other steps and there not continuing to be outstanding any statute, regulation, order or decision, which would or might:

1.2.1       make the Offer or the acquisition of any Shares, or control of BCS by the Offeror void, illegal or unenforceable or otherwise restrict, restrain, prohibit, delay or interfere with their implementation, or impose additional conditions or obligations with respect to them, or require material amendment thereof or otherwise challenge or interfere with them (in any case to an extent which is material in the context of the Offer);

1.2.2       require or prevent the divestiture by BCS or any of its subsidiaries or subsidiary undertakings or any associated undertaking or any company of which 20 per cent or more of the voting capital is held by BCS or any partnership, joint venture, firm or company in which BCS may be interested (the wider BCS Group) or by the Offeror or any of its subsidiaries or subsidiary undertakings or any associated undertaking or any company of which 20 per cent or more of the voting capital is held by the Offeror or any partnership, joint venture, firm or company in which any member of the Offeror may be interested (the wider Offeror Group) of all or any material portion of their respective businesses, assets or property or impose any material limitation on the ability of any of them to conduct their respective businesses or own any of their assets or property;

1.2.3       impose any material limitation on or result in a material delay in the ability of any member of the wider Offeror Group or the wider BCS Group to acquire or to hold or to exercise effectively any rights of ownership of shares or loans or securities convertible into shares in any member of the wider Offeror Group or of the wider BCS Group held or owned by it or to exercise management control over any member of the wider Offeror Group or of the wider BCS Group;

1.2.4       require any member of the wider Offeror Group or the wider BCS Group to acquire or offer to acquire any shares or other securities in any member of the wider BCS Group; or

1.2.5       otherwise materially and adversely affect the assets, business, profits or prospects of the wider Offeror Group (taken as a whole) or of the wider BCS Group (taken as a whole);

and all applicable waiting and other time periods during which any such Relevant Authority could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference having expired, lapsed or been terminated;

1.3          all necessary notifications and filings having been made, all applicable waiting periods (including any extensions of them) under any applicable legislation or regulations of any jurisdiction having expired, lapsed or been terminated, in each case in respect of the Offer and the acquisition of any Shares, or of control of BCS, by the Offeror, and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals (Authorisations) necessary or appropriate in any jurisdiction for, or in respect of, the Offer and the proposed acquisition of any Shares, or of control of BCS, by the Offeror and to carry on the business of any member of the wider Offeror Group or of the wider BCS Group having been obtained, in terms and in a form satisfactory to the Offeror, from all appropriate Relevant Authorities and from any persons or bodies with whom any member of the wider BCS Group or the wider Offeror Group has entered into contractual arrangements in each case the absence of which would have a material adverse effect on the wider BCS Group (taken as a whole), and all such Authorisations remaining in full force and effect at the time at which the Offer becomes unconditional in all respects and the Offeror having no knowledge of an intention or proposal to revoke, suspend or modify or not to renew any of the same and all necessary statutory or regulatory obligations in any jurisdiction having been complied with;

1.4          there being no provision of any arrangement, agreement, licence, permit or other instrument to which any member of the wider BCS Group is a party or by or to which any such member or any of their assets is or may be bound, entitled or be subject to and which, in consequence of the Offer or the acquisition or proposed acquisition of any Shares, or control of BCS, by the Offeror or otherwise, would or might, result in (in any case to an extent which is or would be material in the context of the wider BCS Group taken as a whole):

1.4.1       any monies borrowed by, or other indebtedness actual or contingent of, any such member of the wider BCS Group being or becoming repayable or being capable of being declared immediately or prior to its or their stated maturity or the ability of any such member to borrow monies or incur any indebtedness being inhibited or becoming capable of being withdrawn;

1.4.2       the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member or any such security (whenever arising or having arisen) being enforced or becoming enforceable;

1.4.3       any such arrangement, agreement, licence or instrument being terminated or adversely modified or any action being taken of an adverse nature or any obligation or liability arising thereunder;

1.4.4       any assets of any such member being disposed of or charged, or right arising under which any such asset could be required to be disposed of or charged, other than in the ordinary course of business;

1.4.5       the interest or business of any such member of the wider BCS Group in or with any firm or body or person, or any agreements or arrangements relating to such interest or business, being terminated or adversely modified or affected;

1.4.6       any such member ceasing to be able to carry on business under any name under which it presently does so;

1.4.7            the creation of liabilities (actual or contingent) by any such member; or

1.4.8       the financial or trading position of any such member being prejudiced or adversely affected;

and no event having occurred which, under any provision of any arrangement, agreement, licence or other instrument to which any member of the wider BCS Group is a party, or to which any such member or any of its assets may be bound, entitled or subject, could reasonably be expected to result in any of the events or circumstances as are referred to in paragraphs 1.4.1 to 1.4.8 (inclusive) to an extent which is material in the context of the wider BCS Group, taken as a whole;

1.5          no member of the wider BCS Group having, since the date of this document:

1.5.1       issued, agreed to issue or proposed the issue of additional shares or securities of any class, or securities convertible into, or exchangeable for or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities (save as between BCS and wholly owned subsidiaries of BCS and save for options granted, and for any Shares allotted upon exercise of options granted under the Share Option Schemes before the date hereof), or redeemed, purchased or reduced any part of its share capital;

1.5.2       sold or transferred or agreed to sell or transfer any treasury shares;

1.5.3       recommended, declared, paid or made or proposed to recommend, declare, pay or make any dividend or other distribution other than to BCS or a wholly-owned subsidiary of BCS;

1.5.4       agreed, authorised, proposed or announced its intention to propose any merger or demerger or acquisition or disposal of assets or shares (other than in the ordinary course of trading) or to any material change in its share or loan capital;

1.5.5       issued, authorised or proposed the issue of any debentures or incurred any indebtedness or contingent liability;

1.5.6       acquired or disposed of or transferred, mortgaged or encumbered any asset or any right, title or interest in any asset (other than in the ordinary course of trading);

1.5.7       entered into or varied or announced its intention to enter into or vary any contract, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is of a long term or unusual nature or involves or could involve an obligation of a nature or magnitude;

1.5.8       entered into or proposed or announced its intention to enter into any reconstruction, amalgamation, transaction or arrangement (otherwise than in the ordinary course of business);

1.5.9       taken any action nor having had any steps taken or legal proceedings started or threatened against it for its winding up or dissolution or for it to enter into any arrangement or composition for the benefit of its creditors, or for the appointment of a receiver, administrator, trustee or similar officer over it or any of its assets (or any analogous proceedings or appointment in any overseas jurisdiction);

1.5.10     been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

1.5.11     entered into or varied or made any offer to enter into or vary the terms of any service agreement or arrangement with any of the directors of BCS;

1.5.12     waived, compromised or settled any claim which is material in the context of the wider BCS Group (taken as a whole); or

1.5.13     entered into any agreement, arrangement or commitment or passed any resolution with respect to any of the transactions or events referred to in this paragraph 1.5;

1.6          since the date of this document:

1.6.1       there having been no material adverse change in the business, assets, financial or trading position or profits or prospects of the wider BCS Group (taken as a whole);

1.6.2       no litigation, arbitration proceedings, prosecution or other legal proceedings having been instituted, announced or threatened by or against or remaining outstanding against any member of the wider BCS Group and no enquiry or investigation by or complaint or reference to any Relevant Authority against or in respect of any member of the wider BCS Group having been threatened, announced or instituted or remaining outstanding which in any case is material in the context of the wider BCS Group (taken as a whole);

1.6.3       no contingent or other liability having arisen or been incurred which might reasonably be expected materially and adversely to affect the BCS Group (taken as a whole); and

1.7          the Offeror not having discovered that:

1.7.1       the financial, business or other information concerning the wider BCS Group which has been disclosed in writing at any time by or on behalf of any member of the wider BCS Group whether publicly or to the Offeror or its professional advisers, either contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading;

1.7.2       any member of the wider BCS Group is subject to any liability, contingent or otherwise, which is not disclosed in the annual report and accounts of BCS for the financial year ended 31 December 2017;

1.7.3       any past or present member of the wider BCS Group has not complied with all applicable legislation or regulations of any jurisdiction or any notice or requirement of any Relevant Authority with regard to the storage, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health which non-compliance would be likely to give rise to any liability (whether actual or contingent) on the part of any member of the wider BCS Group;

1.7.4       there is or is likely to be any obligation or liability (whether actual or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the wider BCS Group or in which any such member may now or previously have had an interest under any environmental legislation or regulation or notice, circular or order of any Relevant Authority in any jurisdiction; or

1.7.5       circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture, or materials used therein, now or previously manufactured, sold or carried out by any past or present member of the wider BCS Group which claim or claims would be likely to affect adversely any member of the wider BCS Group;

which in each case is material in the context of the wider BCS Group (taken as a whole).

The Offeror reserves the right to waive, in whole or in part, all or any of Conditions 1.2 to 1.7 (inclusive).  If the Offeror is required by the Panel to make an offer for Shares under the provisions of Rule 9 of the Code, the Offeror may make such alterations to the Conditions, including Condition 1.1 above (Acceptance Condition), as are necessary to comply with the provisions of that Rule.

The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

2.            FURTHER TERMS OF THE OFFER

2.1          The Offer will extend to (i) all Shares unconditionally allotted or issued at the date of the Offer Document and (ii) any further Shares unconditionally allotted or issued after the date of the Offer Document and before the Offer becomes or is declared wholly unconditional.

2.2          The Offer will be governed by English law and is subject to the jurisdiction of the courts of England. In addition, the Offer will be subject to the terms and conditions as set out in the Offer Document. The Offer will comply with, and be subject to, the applicable rules and regulations of the Financial Conduct Authority in the United Kingdom, the London Stock Exchange, the AIM Rules and the City Code.

2.3          The following further terms apply, unless the context requires otherwise, to the Offer.

Unless the context requires otherwise, any reference in this document and in the Form of Acceptance to:

2.3.1       acceptance of the Offer includes deemed acceptances of the Offer;

2.3.2       the Offer will include any revision, variation, renewal or extension of it;

2.3.3       the Offer becoming unconditional includes the Offer being or becoming or being declared  unconditional as to acceptances whether or not any other conditions of the Offer remain to be fulfilled;

2.3.4       the Offer becoming wholly unconditional or unconditional in all respects means the Offer being or becoming or being declared wholly unconditional;

2.3.5       acting in concert will mean any such person acting or deemed to be acting in concert for the purposes of the City Code and/or the Offer;

2.3.6       an extension of the Offer shall include a reference to an extension of the date by which the Acceptance Condition has to be fulfilled;

2.3.7       Day 21 of the Offer shall mean 3 July 2018;

2.3.8       Day 39 of the Offer shall mean 21 July 2018;

2.3.9       Day 42 of the Offer shall mean 24 July 2018;

2.3.10     Day 46 of the Offer shall mean 28 July 2018; and

2.3.11     Day 60 of the Offer shall mean 11 August 2018.

2.4          Acceptance Period

2.4.1       The Offer will initially be open for acceptance until 1.00 p.m. on the First Closing Date. The Offeror reserves the right (but will not be obliged, other than as may be required by the City Code) at any time or from time to time to extend the Offer after such time and, in such event, will make a public announcement of such extension through BCS's website at www.bcsconsulting.com. If the Offer has not become unconditional by the First Closing Date, the Offeror currently intends to extend the Offer until such time as the Offer becomes unconditional. There can be no assurance, however, that the Offeror will, in such circumstances, extend the Offer and, if no such extension is made, the Offer will lapse on the First Closing Date and no Shares will be purchased pursuant to the Offer.

2.4.2       Although no revision is contemplated, if the Offer is revised it will remain open for acceptance for a period of at least 14 calendar days (or such other period as may be permitted by the Panel) after the date on which the Offeror publishes the revised offer documentation. Except with the consent of the Panel, the Offeror may not revise the Offer or publish any revised offer documentation after Day 46 of the Offer, or, if later, the date which is 14 calendar days before the last date on which the Offer can become unconditional.

2.4.3       The Offer, whether revised or not, will not (except with the consent of the Panel) be capable of becoming unconditional as to acceptances after 12.00 midnight on Day 60 of the Offer (or any other time and/or date beyond which the Offeror has stated that the Offer will not be extended and has not, where permitted, withdrawn that statement), nor of being kept open for acceptance after that time and/or date unless the Offer has previously become unconditional.

2.4.4       Except with the consent of the Panel, for the purpose of determining at any particular time whether the Acceptance Condition is satisfied, the Offeror may only take into account acceptances received or purchases of Shares made in respect of which all relevant documents are received by Neville Registrars Limited:

(a)      by 1.00 p.m. on Day 60 of the Offer (or any other date beyond which the Offeror has stated that the Offer will not be extended and has not withdrawn that statement); or

(b)      if the Offer is extended, with the consent of the Panel, such later time(s) and/or date(s) as the Panel may agree.

2.4.5            If the latest time at which the Offer may become unconditional is extended beyond 12.00 midnight on Day 60 of the Offer, acceptances received and purchases made in respect of which the relevant documents are received by Neville Registrars Limited after 1.00 p.m. on that date may (except where the City Code permits otherwise) only be taken into account with the agreement of the Panel.

2.4.6       If the Offer becomes unconditional it will remain open for acceptance for not less than 14 calendar days from the date on which it would otherwise have expired. If the Offer becomes unconditional and it is stated by or on behalf of the Offeror that the Offer will remain open until further notice then not less than 14 calendar days' written notice will be given by or on behalf of the Offeror to Shareholders who have not accepted the Offer prior to the closing of the Offer.

2.4.7       The Offeror may, if it has specifically reserved the right to do so at the time the statement was made (or otherwise with the consent of the Panel), choose not to be bound by the terms of a "no extension" or "no increase" statement and may publish an increased or improved offer (either as to the value or form of the consideration or otherwise) in any circumstance permitted by the Panel.

2.4.8       For the purposes of determining at any particular time whether the Acceptance Condition is satisfied, the Offeror is not bound (unless otherwise required by the Panel) to take into account any Shares which have been issued or unconditionally allotted or which arise as the result of the exercise of subscription or conversion rights before the determination takes place unless BCS or its agent has given written notice containing relevant details of the allotment, issue, subscription or conversion before that time to the Offeror or Neville Registrars Limited on behalf of the Offeror at the address specified in paragraph 2.6.2 of this Appendix 1. Notification by e-mail, telex of facsimile or other electronic transmission or copies will not be sufficient to constitute written notice for this purpose.

2.5          Announcements

2.5.1       Without prejudice to paragraph 2.6.2 of this Appendix 1, by 8.00 a.m. on the next Business Day (the relevant day) following the day on which the Offer is due to expire or becomes or is declared unconditional, or is revised or is extended (or such later time(s) or date(s) as the Panel may agree), the Offeror will make an appropriate announcement on BCS's website at www.bcsconsulting.com and through a Regulatory Information Service. Such announcement will state (unless otherwise permitted by the Panel) the total number of Shares and rights over Shares (as nearly as practicable):

(a)      for which acceptances of the Offer have been received;

(b)      acquired or agreed to be acquired by or on behalf of the Offeror or any person acting with them during the course of the Offer Period;

(c)      held by or on behalf of the Offeror or any person acting in concert with them before the Offer Period; and

(d)      for which acceptances of the Offer have been received from any person acting in concert with the Offeror,

and will in each case specify the percentages of each class of relevant securities represented by these figures.

2.5.2       Any decision to extend the time and/or date by which the Acceptance Conditions has to be fulfilled may be made at any time up to, and will be announced not later than, 8.00 a.m. on the relevant day (or such later time and/or date as the Panel may agree). The announcement will state the next expiry time and date unless the Offer is then unconditional, in which case it may instead state that the Offer will remain open until further notice.

2.5.3       In this Appendix 1, references to the making of an announcement or the giving of notice by or on behalf of the Offeror include the publication of an announcement on BCS's website www.bcsconsulting.com and the delivery by hand or telephone, telex or facsimile transmission or other electronic transmission of an announcement through a Regulatory Information Service.

2.6          Rights of withdrawal

2.6.1       Except as provided by this paragraph 2.6, acceptances of the Offer will be irrevocable.

2.6.2       If the Offeror, having announced the Offer to be unconditional, fails to comply by 3.30 p.m. on the relevant day (as defined in paragraph 2.5.1 of this Appendix 1) (or such later time(s) and/or date(s) as the Panel may agree) with any of the other requirements specified in paragraph 2.5.1 of this Appendix 1, an accepting Shareholder may (unless the Panel agrees otherwise) withdraw his acceptance of the Offer by written notice given by post or by hand (during normal business hours only) to Neville Registrars Limited of 18 Laurel Lane, Halesowen, West Midlands B63 3DA. Subject to paragraph 2.6.3 of this Appendix 1, this right of withdrawal may be terminated not less than eight calendar days after the relevant day by the Offeror confirming, if such is the case, that the Offer is still unconditional and complying with the other requirements relating to the Offer specified in paragraph 2.5.1 of this Appendix 1. If that confirmation is given, the first period of 14 calendar days referred to in paragraph 2.4.6 of this Appendix 1 will start on the date of that confirmation.

2.6.3       If by 1.00 p.m. (London time) on Day 42 (or such later time and/or date as the Panel agree) the Offer has not become unconditional, an accepting Shareholder may withdraw his acceptance of the Offer by written notice in the manner referred to in paragraph 2.6.2 of this Appendix 1 at any time before the earlier of:

(a)      the time that the Offer becomes unconditional; and

(b)      the final time for the lodging of acceptance of the Offer which can be taken into account in accordance with paragraph 2.4.6 of this Appendix 1.

2.6.4       If an accepting Shareholder withdraws his acceptance, all documents of title and other documents lodged with the Form of Acceptance will be returned as soon as practicable following the receipt of the withdrawal (and in any event within 14 days).

2.6.5       In this paragraph 2.6, written notice (including any letter of appointment, direction or authority) means notice in writing signed by the relevant accepting Shareholder. Telex, e-mail, facsimile or other electronic transmission or copies will not be sufficient to constitute written notice. A notice which is post-marked in, or otherwise appears to the Offeror or its agents to have been sent from, a Restricted Jurisdiction, may not be treated as valid.

2.6.6       Shares in respect of which acceptances have been validly withdrawn in accordance with this paragraph 2.6 of this Appendix 1 may subsequently be re-assented to the Offer by following one of the procedures to be described in the Offer Document.

2.6.7       All questions as to the validity (including time of receipt) of any notice of withdrawal will be determined by the Offeror whose determination (except as required by the Panel) will be final and binding. None of the Offeror, BCS or Neville Registrars Limited or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give such notification or for any determination under paragraph 2.6 of this Appendix 1.

2.7          Revised Offer

2.7.1       Although no such revision is contemplated, if the Offer is revised (in its original or previously revised form(s) and either in its terms or conditions or in the value or form of the consideration offered or otherwise), the benefit of the revised offer will, subject to paragraphs 2.7.4 and 2.7.5 of this Appendix 1, be made available to a Shareholder who has accepted the Offer (in its original or any revised form(s)) and who has not validly withdrawn such acceptance (a previous acceptor) if any such revised offer(s) represents, on the date on which it is announced an improvement (or no diminution) in the value of the consideration compared with the consideration or terms previously offered or in the overall value received and/or retained by a Shareholder (under or in consequence of the Offer or otherwise). The acceptance by or on behalf of a previous acceptor will, subject to paragraphs 2.7.4 and 2.7.5 of this Appendix 1, be deemed to be an acceptance of the revised offer and will constitute the separate appointment of each of the Offeror and any director of, or person authorised by the Offeror, as his attorney and/or agent with authority:

(a)      to accept the revised offer on behalf of such previous acceptor;

(b)      if the revised offer includes alternative form(s) of consideration, to make elections for and/or accept such alternative form(s) of consideration on his behalf in the proportions the attorney and/or agent in his absolute discretion thinks fit; and

(c)      to execute on his behalf and in his name all such further documents (if any) and to do all things (if any) as may be required to give effect to such acceptances and/or elections.

2.7.2       In making any election and/or acceptance, the attorney and/or agent will take into account the nature of any previous acceptance(s) or election(s) made by or on behalf of the previous acceptor and other facts or matters he may reasonably consider relevant.

2.7.3       The Offeror reserves the right (subject to paragraphs 2.7.4 and 2.7.5 of this Appendix 1) to treat an executed Form of Acceptance (in its original or any previously revised form(s)) which is received (or dated) after the announcement or issue of any revised offer as a valid acceptance of the revised offer (and, where applicable, a valid election for the alternative forms of consideration). The acceptance will constitute an authority in the terms of paragraph 2.7.1 of this Appendix 1, mutatis mutandis, on behalf of the relevant Shareholder.

2.7.4       The deemed acceptance and/or election referred to in paragraph 2.7.1 of this Appendix 1 will not apply, and the power of attorney and the authorities conferred by that paragraph shall not be exercised if, as a result, the previous acceptor would receive and/or retain (as appropriate) less in aggregate in consideration under the revised offer or otherwise than he would have received and/or retained (as appropriate) in aggregate in consideration as a result of his acceptance of the Offer in the form originally accepted by such previous acceptor or on his behalf.

2.7.5       The deemed acceptance and/or election referred to in paragraph 2.7.1 of this Appendix 1 will not apply, and the power of attorney and the authorities conferred by that paragraph will not be exercised in the case of a previous acceptor who lodges with Neville Registrars Limited within 14 calendar days of the publication of the document containing the revised offer to Shareholders, a Form of Acceptance (or any other form issued on behalf of the Offeror) in which he validly elects to receive consideration under the revised offer in some other manner. Any such change of election will be conditional upon Neville Registrars Limited verifying that the request is validly made.

2.8          Overseas Shareholders

2.8.1       The making of the Offer in, or to persons resident in, or citizens or nationals of, jurisdictions outside the United Kingdom (Overseas Shareholders) or to persons who are custodians, nominees of or trustees for such persons may be prohibited or affected by the laws of the relevant jurisdiction. Such Overseas Shareholders should inform themselves about and observe any applicable legal requirements of such jurisdictions. It is the responsibility of any Overseas Shareholder wishing to accept the Offer to satisfy himself as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection with the Offer, including obtaining any governmental, exchange control or other consents which may be required and compliance with other necessary formalities needing to be observed. Any such Overseas Shareholders will be responsible for the payment of any issue, transfer or other taxes or duties or other requisite payments due in that jurisdiction. Any such Overseas Shareholders shall be responsible for any such issue, transfer or other taxes and duties or other payments by whomsoever payable and the Offeror (and any person acting on behalf of the Offeror) shall be fully indemnified and held harmless by such Overseas Shareholders for any such issue, transfer or other taxes or duties or other payments which the Offeror (and any person acting on behalf of the Offeror) may be required to pay.

2.8.2       The Offer is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of, any jurisdiction where to do so would violate the laws of that jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction (unless otherwise determined by the Offeror) and the Offer cannot be accepted by any such use, means or instrumentality or otherwise from any Restricted Jurisdiction.

2.8.3       Copies of this document, the Form of Acceptance and any related documents are not being (unless determined otherwise by the Offeror in its sole discretion), and must not be, mailed or otherwise distributed or sent in, into or from any Restricted Jurisdiction including to Shareholders with registered addresses in a Restricted Jurisdiction or to persons whom the Offeror knows to be custodians, trustees or nominees holding Shares for persons with registered addresses in a Restricted Jurisdiction. Persons receiving those documents (including, without limitation, custodians, nominees and trustees) should not distribute, send or mail them in, into or from a Restricted Jurisdiction or use such mails or any such means, instrumentality or facility for any purpose directly or indirectly in connection with the Offer, and so doing may render any purported acceptance of the Offer invalid.

2.8.4       Subject to the provisions of this paragraph 2.8 of this Appendix 1 and applicable laws, a Shareholder may be deemed NOT to have accepted the Offer if the Form of Acceptance received from him is received in an envelope postmarked in, or which otherwise appears to the Offeror or its agents to have been sent from a Restricted Jurisdiction.

2.8.5       Overseas Shareholders should inform themselves about and observe any applicable legal or regulatory requirements. If you are in any doubt about your position, you should consult your appropriate adviser in the relevant jurisdiction.

2.9          General

2.9.1       Except with the consent of the Panel:

(a)      settlement of the consideration to which any Shareholder is entitled under the Offer will be implemented in full in accordance with the terms of the Offer, without regard to any lien, right of set off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against that Shareholder; and

(b)      settlement of the Initial Consideration will be not later than 14 calendar days after the date on which the Offer becomes or is declared wholly unconditional, or within 14 calendar days of the date of receipt of a valid and complete acceptance, whichever is the later.

No consideration will be sent to any address in a Restricted Jurisdiction.

2.9.2       Except otherwise agreed by the Panel:

(a)      an acceptance of the Offer will only be counted towards the fulfilling of the Acceptance Condition if the requirements of Note 3 and, if applicable, Note 6 on Rule 10 of the City Code are satisfied in respect of it;

(b)      a purchase of Shares by the Offeror or its nominee(s) or (if the Offeror is required by the Panel to make an offer for Shares under Rule 9 of the City Code) by a person acting in concert with the Offeror or its nominee(s), will only be counted towards fulfilling the Acceptance Condition if the requirements of Note 5 and, if applicable, Note 6 on Rule 10 of the City Code are satisfied in respect of it; and

(c)      before the Offer may become or be declared unconditional, Neville Registrars Limited shall issue a certificate to the Offeror (or its agents) which states the number of Shares in respect of which acceptances have been received and not validly withdrawn, and the number of Shares otherwise acquired, whether before or during the Offer Period, which comply with the provisions of paragraph 2.4 of this Appendix 1. A copy of the certificate will be sent to the Panel as soon as possible after it is issued.

2.9.3       The terms, provisions, instructions and authorities contained in or deemed to be incorporated in the Form of Acceptance constitute part of the terms of the Offer. Words and expressions defined in this document have the same meanings when used in the Form of Acceptance, unless the context otherwise requires. The provisions of this Appendix 1 shall be deemed to be incorporated and form part of the Form of Acceptance.

2.9.4       If the expiry date of the Offer is extended, a reference in this document and in the Form of Acceptance to Day 21 of the Offer will (except in the definition of Offer Period and in paragraph 2.4.1 of this Appendix 1 and where the context requires otherwise) be deemed to refer to the expiry date of the Offer as so extended.

2.9.5       No acknowledgement of receipt of any Form of Acceptance, communication, notice, share certificate(s) or other document(s) of title will be given by or on behalf of the Offeror. All communications, notices, certificates, documents of title and remittances to be delivered by, to or on behalf of Shareholders (or their designated agents) will be delivered by or sent to or from them (or their designated agent(s)) at their own risk.

2.9.6       Any omission or failure to despatch this document, the Form of Acceptance or any other document relating to the Offer and/or notice required to be despatched under the terms of the Offer to, or any failure to receive the same by any person to whom the Offer is, or should be made, shall not invalidate the Offer in any way or create any implication that the Offer has not been made to any such person. Subject to the provisions of paragraph 2.8 of this Appendix 1, the Offer is made to any Shareholder to whom this document and the Form of Acceptance or any related document may not be despatched or by whom such documents may not be received, and these persons may collect these documents from Neville Registrars Limited at the address set out in paragraph 2.6.2 of this Appendix 1.

2.9.7       Subject to paragraph 2.8 of this Appendix 1, the Offer is made on 12 June 2018 and is capable of acceptance from and after that date. Copies of this document, the Form of Acceptance and any related documents are available from Neville Registrars Limited at the address specified in paragraph 2.6.2 of this Appendix 1.

2.9.8       Save in respect of the Acceptance Condition, the Offeror shall not invoke any condition so as to cause the Offer not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the condition are of material significance to BCS in the context of the Offer and with the consent of the Panel.

2.9.9       All powers of attorney, appointments of agents and authorities on the terms conferred by or referred to in this Appendix 1 or in the Form of Acceptance are given by way of security for the performance of the obligations of the Shareholder and are irrevocable (in respect of powers of attorney in accordance with section 4 of the Powers of Attorney Act 1971), except where the Offer lapses or the donor of the power of attorney, appointment or authority validly withdraws his acceptance in accordance with paragraph 2.6 of this Appendix 1.

2.9.10     Subject to the City Code, and notwithstanding any other provisions of this Appendix 1, the Offeror reserves the right to treat as valid in whole or in part any acceptance of the Offer if received by Neville Registrars Limited or otherwise on behalf of the Offeror which is not entirely in order or in correct form or which is not accompanied by (as applicable) the relevant share certificate(s) and/or other relevant document(s) or is received by it at any place or places or in any form or manner determined by either Neville Registrars Limited or the Offeror otherwise than as set out in this document or in the Form of Acceptance. In that event, no payment of cash will be made until after the acceptance is entirely in order or the relevant share certificate(s) and/or other document(s) of title or indemnities satisfactory to the Offeror have been received by Neville Registrars Limited.

2.9.11     Any references in this Appendix 1 to the return or despatch of documents by post shall extend to the return or despatch by such other method as the Panel may approve.

2.9.12     All mandates and other instructions given by Shareholders or in force relating to holdings of Shares will, unless and until amended or revoked, continue in force.

2.9.13     The Offeror reserves the right to reduce the percentage required to satisfy the Acceptance Condition at any time prior to all the Conditions being satisfied, fulfilled or, where permitted, waived, subject always to the terms of Condition 1.1.

2.10        Procedure for acceptance of the Offer

The procedure for acceptance of the Offer will be set out in the Offer Document and the Form of Acceptance which will accompany it.

 



APPENDIX 2

SUMMARY OF FUTURE CONSIDERATION

1.            The Future Consideration payable for the Shares (including those arising from the exercise of Share Options) shall (subject to paragraph 2 below) be paid in annual amounts over a period of at least six years in respect of the Ordinary Shares and within at least a further two years in respect of the B Shares in July each year commencing in July 2019. The intention is that not less than 50 per cent of the Profits and Free Cash Flow (as defined below) of BCS in any given year would be allocated to meet these payments (subject to the availability of distributable reserves). As a result, the amount of the payments will differ from year to year.  

2.            To the extent that the Profits and Free Cash Flow (as defined below) of BCS in any given financial year are (in the reasonable opinion of the Board of BCS after considering the working capital and investment needs of BCS) sufficient to enable a Future Consideration payment to be paid, such payment will be paid to the Trust by BCS by way of contribution.

3.            The Future Consideration is not guaranteed.

In this Appendix 2 and in Appendix 3 Profits and Free Cash Flow shall be defined as follows:

Profits means earnings before interest, taxation, depreciation and amortisation (EBITDA).

Free Cash Flow means EBITDA less capital expenditure, taxation and movement in working capital.

 

 



 

APPENDIX 3

PROPOSALS TO THE HOLDERS OF SHARE OPTIONS OVER ORDINARY SHARES AND B SHARES

1.            Share Options over Ordinary Shares

The Offer will extend to any Ordinary Shares issued to or acquired by Option holders on the exercise of Share Options over Ordinary Shares at any time before the Offer becomes wholly unconditional.

Option holders will be contacted in due course with regard to the exercise of such Share Options.

2.            Options over B Shares

As at the date of this announcement there are no B Shares in issue. However, pursuant to the terms of their grant, all existing Share Options over B Shares will vest and become exercisable on the Offer being made (by the issue of the Offer Document). The holders of Share Options over B Shares may then exercise their Share Options at any time before the Offer becomes wholly unconditional.

The Offer will then extend to any B Shares issued and the holders may accept the Offer.

The offer for the B Shares shall be on the same terms as the offer for the Ordinary Shares, save that:

(i)       the holders of B Shares will only receive £10 per B Share payable from the Initial Consideration;

(ii)      the remainder of the consideration payable to the holders of B Shares will be payable from the Future Consideration; and

(iii)     such Future Consideration payable for the B Shares will be paid annually but the Offeror will only commence payment of the Future Consideration for the B Shares after the Future Consideration payable for the Ordinary Shares has been paid in full.

The Future Consideration payable for the B Shares is not guaranteed.

Assuming payment of the Future Consideration is made in full to the holders of Ordinary Shares, the Future Consideration for the B Shares will be paid in full over a period of at least a further two years.

3.            General

Further detailed proposals to Option holders will be communicated after the posting of the Offer Document.



APPENDIX 4

DEFINITIONS

 

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

AIM

the market of that name operated by the London Stock Exchange;

AIM Rules

the AIM Rules for Companies as published by the London Stock Exchange from time to time;

associated undertaking

is to be construed in accordance with section 344(3) of the Companies Act;

B Shares

B ordinary shares of £10 each in the capital of BCS;

BCS or the Company

Business Control Solutions Group Limited, a company incorporated in England and Wales with company number 02089155;

BCS Group

BCS and its subsidiary undertakings;

Board of BCS

the board of directors of BCS;

Board of the Offeror

the board of directors of the Offeror;

business day

a day (excluding Saturdays, Sundays and UK public holidays) on which banks are generally open for business in the City of London;

Code or City Code

the City Code on Takeovers and Mergers;

Companies Act

the Companies Act 2006;

Conditions

the conditions to the Offer which are set out in Appendix 1 to this announcement and which will be set out in the Offer Document;

First Closing Date

the first closing date of the Offer being 3 July 2018 or such later date as the Offeror may decide, with the consent of the Panel;

Form of Acceptance

the form of acceptance of the Offer which will accompany the Offer Document;

Future Consideration

the future consideration payable for the Shares as described in this announcement;

HMRC

Her Majesty's Revenue and Customs;

holder

in relation to shares or other securities, a registered holder, including any person entitled by transmission;

Initial Consideration

the initial consideration payable for the Shares as described in this announcement;

London Stock Exchange

London Stock Exchange plc;

Neville Registrars Limited

Neville Registrars Limited, the Offeror's receiving agent for the purposes of the Offer;

Offer

the offer, details of which are set out in this announcement and will be made by way of the Offer Document;

Offeror

Business Control Solutions Group Trustees Limited, a company incorporated in England and Wales with company number 11331363;

Offeror Directors

Paul David Brock and Roger Alan Shepherd, the directors of the Offeror;

Offer Document

the document to be dispatched to Shareholders making the Offer;

Offer Period

the period commencing on 12 June 2018 and ending on the date on which the Offer is declared or becomes wholly unconditional in accordance with the requirements of the City Code, or such other date as the Panel may decide;

Option holders

holders of Share Options;

Ordinary Shares

ordinary shares of £100 each in the capital of BCS;

overseas person

any person who is not resident in the United Kingdom, or who is a citizen, resident or national of a jurisdiction outside the United Kingdom or who is a nominee of, or custodian or trustee for, any citizen(s), resident(s) or national(s) of any other country;

Overseas Shareholder

a Shareholder who is an overseas person, including any US Person;

Panel

the Panel on Takeovers and Mergers;

Restricted Jurisdiction

any jurisdiction where the distribution of this document or any copy of it or the making of the Offer would constitute a violation of the relevant laws of such jurisdiction, including but not limited to the United States, Australia, Canada, Japan, the Republic of South Africa, and New Zealand;

Shareholders

holders of Shares;

Shares

Ordinary Shares and B Shares;

Share Options

options to subscribe for Shares granted or awarded pursuant to the Share Option Schemes;

Share Option Schemes

Enterprise Management Incentive approved schemes pursuant to which options are granted over Shares by way of Enterprise Management Incentive option agreements;

subsidiary, subsidiary undertaking and undertaking

are to be construed in accordance with the Companies Act;

Trust or Employee Ownership Trust

the Business Control Solutions Group Employee Ownership Trust;

Trust Deed

the deed dated 5 June 2018 creating the Trust;

United Kingdom or UK

the United Kingdom of Great Britain and Northern Ireland;

United States or USA

the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia;

US Person

a US Person as defined in Regulation S under the US Securities Act;

US Securities Act

the US Securities Act of 1933, as amended, and the rules and regulations promulgated under it.

All references to legislation in this announcement are to English legislation unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, extension or re-enactment of that provision.

Unless otherwise stated, all references to time in this announcement are to London time. Words in this announcement importing the singular shall include the plural and vice versa.

£ and pence means pounds and pence sterling, the lawful currency of the United Kingdom.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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