NAK.L Regulatory News (NAK)

27 September 2011

Highams Systems Services Group PLC

("Highams" or "the Company")

The AIM quoted recruitment consultancy and leading niche provider of technology, business and professional services to the insurance and financial services sectors.

Proposed acquisition of Nakama Limited and subsidiaries

Change of name to Nakama Group PLC

Notice of General Meeting

Highams Systems Services Group PLC (AIM: HSS) is pleased to announce the proposed acquisition of Nakama Limited, a technology recruitment business operating from offices in London, Melbourne, Sydney and Hong Kong and specialising in recruitment for the digital technology and interactive media industry.

Highlights

·; Acquisition of Nakama for a consideration of £1.28 million to be satisfied by the issue of 48,773,016 new Ordinary Shares, which represents 41.41 per cent of the Company's Enlarged Share Capital ("Consideration Shares")

·; The merger will provide Highams with scale and a broadening of sector and geographical reach

·; Key strategic objectives achieved both of reopening a London office and expanding internationally

·; The acquisition will deliver cost savings, risk diversity and the opportunity of cross-selling to both partner's client bases

·; Proposed change of Company's name to Nakama Group PLC, to reflect the step change in the business and the Enlarged Group's international reach

·; Stefan Ciecierski, founder Director of Nakama to join Board as Chief Executive, with responsibility to develop the Enlarged Group internationally as well as in the UK

·; Notice of a General Meeting on 13 October 2011 will be sent to shareholders today to seek their approval for the issue of the Consideration Shares

Ken Ford, Chairman of Highams, commented:

"I am delighted to announce this transformational transaction in the long history of Highams. Not only does the acquisition of Nakama allow us to broaden our sector focus, but it also provides a strong platform for the Company to grow its customer base in the London market and to exploit opportunities internationally. I believe the complementary, yet distinctly unique nature of the two businesses, provides a range of benefits upon which both can leverage, but without undue duplication.

I am furthermore very pleased Stefan Ciecierski has agreed to join our Board as Group Chief Executive. His substantial experience running businesses in the recruitment sector and his global strategic direction makes him eminently qualified to drive the enlarged group forward and I very much look forward to our joint future success."

- Ends -

Enquiries:

Highams Systems Services Group PLC

Proposed Acquisition of Nakama Limited and subsidiaries

Change of name to Nakama Group PLC

Notice of General Meeting

1. Introduction

We are pleased to announce that the Company has signed the Acquisition Agreement, under which it has conditionally agreed to acquire Nakama by acquiring the Sale Shares. Nakama is a technology recruitment business operating from offices in London, Melbourne, Sydney and Hong Kong.

Under the terms of the Acquisition Agreement, the Company will acquire the Sale Shares for a consideration of £1.28 million to be satisfied by the issue of 48,773,016 new Ordinary Shares. The issue of the Consideration Shares is conditional upon approval by Shareholders and, accordingly, the Acquisition is conditional upon the passing of Resolution 1 to be proposed at the General Meeting as contained in the notice of General Meeting being sent to shareholders today.

2. Overview of Nakama

Nakama began trading in October 2009 following the establishment of Nakama London by Stefan Ciecierski, Rob Sheffield and Paul Goodship. Nakama is a technology recruitment business operating from offices in London, Melbourne, Sydney and Hong Kong. It specialises in recruitment for the digital technology and interactive media industry.

Nakama provides the full range of recruitment services to its clients, specialising in the placement of contract and permanent staff primarily in the UK, Australia, China and Hong Kong. Its current clients include a range of companies, both national and international, in the technology, financial services, retail and travel industries.

Nakama employs 30 people, 14 of which are based in the London office, seven in Hong Kong, six in Sydney and three in Melbourne. The team comprises professionals with a proven track record for delivering results within the digital technology and interactive media sector. The company places emphasis on providing excellent levels of service and industry knowledge to deliver single or multiple solutions for its clients. The directors of Nakama believe that whilst companies may continually try to reduce their supplier base, they demand wider fulfilment and services from their recruitment partners. In response to this, Nakama supplies staff through the whole chain of technology lifecycle, where other IT or technology recruiters might supply only one part of the chain. Nakama was formed to take advantage of an opportunity the founders saw to provide services across the spectrum of the digital technology and interactive media industry on an international level.

Nakama opened its London office in October 2009, followed by the Melbourne office in April 2010 and the Sydney office in November 2010. The Hong Kong office opened in March this year. Nakama's unaudited consolidated management accounts for the eight months to 31 August 2011 show a profit before tax of £233,573 on revenue of £4,701,339. Net assets were £72,299 at 31 August 2011. For the period from incorporation on 9 September 2009 to 31 December 2010, the statutory accounts for Nakama London show a profit before tax of £160,933 on revenue of £2,990,385. Nakama falls to be treated under the special provisions relating to small companies within Part 15 of the Companies Act 2006 and was not therefore required to file consolidated group accounts for that period.

Directors and Management

Details of the directors and senior management of Nakama are set out below. All these six individuals are the Vendors who will receive Consideration Shares as set out in paragraph 5 below.

As part of the Acquisition, it is proposed that Stefan Ciecierski will join the Board as Chief Executive Officer, with responsibility to develop the Enlarged Group internationally as well as in the UK. The other directors of Nakama, Rob Sheffield and Paul Goodship, will continue to grow the Nakama brand internationally with the intention of opening offices in the Gulf, China, Eastern Europe and Brazil.

Stefan Ciecierski - Founder, Director and Proposed Chief Executive Officer of the Enlarged Group

Stefan Ciecierski, aged 49, has been in recruitment since 1985 when he joined Hays and five years later became a director at ERC Limited which became the founding company of the PSD group. His personal recruitment work was mostly in retained search for senior technology positions around Europe. PSD was formed in 1992 and Stefan was responsible for the group's technology and IT recruitment business in the UK. He also started up and managed the extension of the businesses into France, Germany, Holland, Singapore, Hong Kong and the US. PSD was floated on the London Stock Exchange in 1997. In 2001 he became CEO of the Accord Group Eastern and Central Europe, a technology and generalist search business in Poland, Czech Republic, Hungary, Russia and Romania. In 2002 he took up the position of CEO for Aquent in Europe, a company in creative and marketing recruitment where he saw employees grow from 25 people to 215 in 2008 spread over 11 offices across Europe.

Stefan Oliver Ciecierski is currently a director of Nicholson International (UK) Limited, Nakama Limited, Nakama Production Limited and Nakama Search Limited. Within the last five years he has also been a director of Price Jamieson & Partners Limited, Eloquent Staffing Limited, Designer Resource International Limited, Cadelle Limited, Recruit (Media) Limited and Saxonhurst Investments Limited.

His service agreement as proposed Chief Executive Officer of the Enlarged Group will provide for an annual salary of £102,000 and membership of a private medical scheme, permanent health insurance and life assurance cover. The service agreement may be terminated upon six months' notice by either party. Mr Ciecierski's appointment to the Board of Highams is conditional on the Resolutions being passed at the General Meeting and Completion taking place.

Rob Sheffield - Founder and Director

Rob Sheffield, aged 34, has over 11 years experience working within recruitment for the digital, creative services and advertising industries, where he has built and managed permanent, contract and executive search recruitment teamscovering a wide range of UK and international clients. Having joined Aquent's digital team in 2003 consisting of 2 people, he helped drive the growth of the division where annual digital revenues rose from £645,000 in 2003 to over £7 million in six years. He left Aquent in 2009 to establish Nakama.

Paul Goodship - Founder and Director

Paul Goodship, aged 38, started his career in advertising where he ran large multi-media sales teams working across leading consumer and b2b brands. Spotting an opportunity to use his industry experience and network of contacts he made a career change into the world of recruitment. In the past 12 years as a professional recruiter Paul has worked with a variety of different companies, from start up organisations through to some of the world's leading brands across Europe and the Asia Pacific region, delivering a variety of recruitment services, on a permanent, contract and executive search basis. Most notably, Paul worked at Aquent where he launched and developed its European marketing recruitment business. In 2009 he left Aquent after five years to set up Nakama.

Sondra Beram - Director of Nakama Sydney

Sondra Beram, aged 45, has 12 years of experience in recruitment having worked at Aquent and Korn Ferry/Futurestep in Sydney. She has worked as consultant and manager in marketing, creative and digital recruitment and currently manages a team of 6 people for Nakama in Sydney. Prior to working in recruitment Sondra worked in business development after having been in marketing and she has also worked client side in internal recruitment.

Julia Stojko - Director of Nakama Melbourne

Julia Stojko, aged 39, is a recruitment consultant with over 17 years experience, particularly within the creative and digital industry. During her time in the industry she has worked with specialist creative and digital agency Aquent, where she was the senior consultant and first Melbourne employee with responsibility for growing the brand in the Melbourne market. After her time at Aquent she was employed by human resources company Crewe Sharp, specifically to start up a creative and digital division.

David Whitaker - Director of Nakama Hong Kong

David Whittaker, aged 43, has been in recruitment for 16 years. His previous employers include Strategic Sourcing Asia (Managing Director), Charterhouse (Director), Robert Walters (Manager IT, Hong Kong) and IT@Manpower (Business Unit Manager). David has specialised in technology recruitment, including banking and digital as well as designing and providing outsourcing solutions for large international clients.

3. Background to and Reasons for the Acquisition

Your Board has been exploring the possibility of expanding by acquisition for some time now with a view to broadening the sector and geographical reach of Highams' business and enhancing shareholder value. To that end, we have seen a number of businesses in a range of sectors and your Board feels that Nakama fulfils most or all of the objectives originally set for such an acquisition. Although both Highams and Nakama supply technology, business and professional services personnel, Nakama's focus on the digital technology and interactive media sector is sufficiently distinct from our own focus on the financial services industry to provide some risk diversity and the opportunity of cross-selling to each other's client base, while providing our valuable database of contractors with a wider range of opportunity. We also expect to experience some operational cost savings from the merger of the two companies.

In addition, Nakama operates out of London, Hong Kong and Australia. Your Board has been intending to reopen a London office at the appropriate time and to seek to expand into the growth markets of the Pacific Rim. Nakama helps us to achieve both of these key strategic initiatives.

The Acquisition will also enable the Enlarged Group to develop internationally with the establishment of the Highams IT specialism overseas alongside Nakama's existing digital technology and interactive media specialisms. Furthermore, the Board believes that IT recruitment can be broadened out to other sectors and complementary teams developed to cover the whole technology lifecycle from front end digital, through software and applications, to IT.

Stefan Ciecierski has substantial experience of running businesses in the recruitment sector and will be a welcome addition to the Board.

4. Change of Name

In order to reflect the step change in the business and the Enlarged Group's international reach, at the General Meeting a resolution will be put to Shareholders proposing that the Company's name be changed to Nakama Group PLC. The current operating business of Highams will continue to operate under the Highams brand but the Board believes that the Enlarged Group will benefit from a new name to coincide with its expansion plans, particularly in the Asia-Pacific region.

5. Terms of the Acquisition

Under the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire the Sale Shares and the Vendors have agreed to sell to the Company such shares. The consideration will be satisfied by the issue of the Consideration Shares at 2.625p pence per share, being the closing price of an Ordinary Share on 23 September 2011 (the latest practicable date prior to posting this document).

Completion of the Acquisition is conditional upon the passing of Resolution 1 to be proposed at the General Meeting as contained in the notice of General Meeting being sent to shareholders today.

The Acquisition Agreement contains warranties, indemnities and undertakings from the Vendors which are customary for a transaction of this nature.

Under the Acquisition Agreement the Vendors, none of whom currently hold any Ordinary Shares in the Company, will be allocated the Consideration Shares as follows:

*to be issued to Key Idea Holdings Limited as nominee shareholder for David Whitaker

Under the terms of the Acquisition Agreement, the Vendors will at completion of the Acquisition give undertakings to the Company and Seymour Pierce Limited not to dispose of their interests in Consideration Shares for a period of 12 months from Admission and for a further 12 months thereafter to deal in their Consideration Shares only through Seymour Pierce (or the Company's broker at the time) and subject to maintaining an orderly market in the Ordinary Shares, except in certain limited circumstances.

Application will be made to the London Stock Exchange for the Consideration Shares to be admitted to trading on AIM. It is expected that Admission will become effective and dealings in the Consideration Shares will be enabled at 8.00 a.m. on 14 October 2011.

6. The City Code on Takeovers and Mergers

The Acquisition and the issue of the Consideration Shares give rise to certain considerations under the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford are described below.

The Takeover Code is issued and administered by the Panel. The Takeover Code applies to all takeover and merger transactions, however effected, where the offeree company is, inter alia, a listed or unlisted public company resident in the United Kingdom (and to certain categories of private limited companies). The Company is a listed public company to which the Takeover Code applies and its Shareholders are entitled to the protections afforded by the Takeover Code.

Dispensation from a General Offer

Under Rule 9 of the Takeover Code, if any person acquires an interest (as defined in the Takeover Code) in shares which, when taken together with shares in which he and persons acting in concert with him are already interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required to make a general offer in cash to all shareholders in the company at the highest price paid by him or any person acting in concert with him for an interest in such shares within the preceding 12 months.

Rule 9 also provides that if any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company which is subject to the Code but does not hold shares carrying more than 50 per cent. of such voting rights, and such person, or any other person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in such company in which he is interested, that person is normally required to make a general offer in cash to all shareholders in the company at the highest price paid by him or any person acting in concert with him for an interest in such shares within the preceding 12 months.

Following completion of the Acquisition, the Vendors, who are deemed to be acting in concert, will have acquired interests, in aggregate, in shares carrying 30 per cent. or more of the voting rights of the Company which, without a waiver of the obligations under Rule 9 would oblige the Vendors to make a general offer in cash to Shareholders under Rule 9.

The Panel will normally waive the requirement for a general offer to be made in accordance with Rule 9 if, inter alia, the shareholders of the company who are independent of the persons who would otherwise be required to make an offer and any person acting in concert with them pass a Whitewash Resolution approving such a waiver. The Panel may waive the requirement for a Whitewash Resolution to be considered at a general meeting if shareholders who are independent of the persons who would otherwise be required to make an offer and any person acting in concert with them holding more than 50 per cent. of the company's shares capable of being voted on such a resolution confirm in writing that they would vote in favour of a Whitewash Resolution were one to be put to the shareholders of the company at a general meeting.

The Company has obtained such written confirmation from the Independent Shareholders who, in aggregate, represent approximately 51.4% of the Existing Share Capital and the Panel has accordingly waived the requirement for a Whitewash Resolution. Accordingly, by voting in favour of the Resolutions to be proposed at the General Meeting, the Acquisition will be effected without the requirement for the Vendors to make a general cash offer and the Shareholders' shareholdings will, therefore, be diluted.

7. General Meeting and Circular

The Company will today send a Circular to shareholders containing a notice convening a General Meeting of the Company to be held at Eversheds LLP, One Wood Street, London EC2V 7WS on 13 October 2011 at 11.00 a.m. when the following resolutions will be proposed:

1. Resolution 1 being an ordinary resolution to authorise the Directors to allot the Consideration Shares; and

2. Resolution 2 being a special resolution to change the Company's name to Nakama Group PLC.

The attention of Shareholders is also drawn to the voting intentions of the Directors as set out below.

Copies of the circular can be obtained from the Company's website, www.highamsrecruitment.com.

8. Irrevocable Undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolutions from Shareholders (including the Directors) representing, in aggregate, 34,950,538 Ordinary Shares representing, in aggregate, approximately 50.64 per cent. of the Existing Share Capital.

9. Action to be taken by Shareholders

Shareholders will today be sent a Circular and Form of Proxy for use at the General Meeting. The Form of Proxy should be completed and returned in accordance with the instructions printed thereon so as to arrive at Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in any event not later than 11.00 a.m. on 11 October 2011. Completion and return of a Form of Proxy will not prevent Shareholders from attending and voting in person at the General Meeting should they so wish.

10. Recommendation

The Directors consider that the Acquisition is in the best interests of Shareholders. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of all the Resolutions at the General Meeting as they have irrevocably undertaken to do in respect of their own beneficial shareholdings representing approximately 36.46 per cent. of the Existing Share Capital.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

*assuming that Resolution 1 is passed by Shareholders

DEFINITIONS

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